[Federal Register Volume 75, Number 20 (Monday, February 1, 2010)]
[Rules and Regulations]
[Pages 5178-5202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1546]



[[Page 5177]]

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Part II





Department of Energy





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Federal Energy Regulatory Commission



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18 CFR Part 284



Pipeline Posting Requirements Under Section 23 of the Natural Gas Act; 
Final Rule

  Federal Register / Vol. 75 , No. 20 / Monday, February 1, 2010 / 
Rules and Regulations  

[[Page 5178]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM08-2-001; Order No. 720-A]


Pipeline Posting Requirements under Section 23 of the Natural Gas 
Act

January 21, 2010.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Order on Rehearing and Clarification.

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SUMMARY: The Federal Energy Regulatory Commission modifies its 
regulations requiring major non-interstate pipelines to post daily 
scheduled volume information and other data for certain points. These 
modifications include a requirement that major non-interstate pipelines 
post information for receipt and delivery points at which design 
capacity is unknown. The Commission denies requests to revise its 
regulations requiring interstate natural gas pipelines to post 
information regarding the provision of no-notice service. The posting 
requirements will 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, 15 U.S.C. 717t-2 (2000 & 
Supp. V 2005).

 Effective Date:
    This rule will become effective March 3, 2010.

FOR FURTHER INFORMATION CONTACT: 
Steven Reich (Technical), Office of Enforcement, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-6446, [email protected].
Gabe S. Sterling (Legal), Office of Enforcement, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
(202) 502-8891, [email protected].

SUPPLEMENTARY INFORMATION: 

                            Table of Contents
                        [Issued January 21, 2010]
 
                                                              Paragraph
                                                                 Nos.
 
I. Introduction............................................            1
II. Discussion.............................................            6
    A. Authority for the Rule..............................            6
        1. Requests for Rehearing and Clarification........            8
        2. Commission Determination........................           16
    B. Need for the Rule...................................           20
        1. Requests for Rehearing and Clarification........           21
        2. Supplemental Comments...........................           23
        3. Commission Determination........................           24
    C. Definition of Major Non-Interstate Pipeline.........           37
        1. Delivery Threshold..............................           37
        2. Treatment of Non-Contiguous Pipeline Systems....           41
    D. Posting Requirements for Major Non-Interstate                  44
     Pipelines.............................................
        1. Posting Requirements at Points Where Design                44
         Capacity Is Unknown or Does Not Exist.............
        2. Posting Requirements at Points Where Design                52
         Capacity Is Known.................................
        3. Timing of Posting of Eligible Points............           61
        4. Clarifications Regarding the Major Non-                    64
         Interstate Posting Requirements...................
    E. Exemptions..........................................           75
        1. Pipelines Upstream of Processing Plants.........           75
        2. Pipelines That Deliver Primarily to End Users...           81
        3. Storage Facilities..............................           88
    F. Safe Harbor.........................................           90
    G. Interstate Pipeline Posting of No-Notice Service....           94
    H. Additional Exemptions...............................          102
        1. Natural Gas Companies With Service Area                   102
         Determinations Under NGA Section 7(f).............
        2. Pipelines Owned or Operated by End Users........          104
III. Cost of Compliance....................................          105
    A. Requests for Rehearing and Clarification............          105
    B. Commission Determination............................          106
IV. Information Collection Statement.......................          109
V. Regulatory Flexibility Act..............................          112
VI. Document Availability..................................          114
VII. Effective Date and Compliance Deadlines...............          115
    1. Requests for Rehearing and Clarification............          116
    2. Commission Determination............................          116
 

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, and John R. Norris.

Order on Rehearing and Clarification

Issued January 21, 2010

I. Introduction

    1. On November 20, 2008, the Federal Energy Regulatory Commission 
(Commission) issued Order No. 720,\1\ requiring interstate and certain 
major non-interstate natural gas pipelines to post limited information 
on publicly accessible Internet Web sites regarding their operations. 
In this order, the Commission grants and denies requests for rehearing 
and clarification of Order No. 720.
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    \1\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act, 73 FR 73494 (Dec. 2, 2008), FERC Stats. & Regs. 
31,283 (2008) (Order No. 720).
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    2. The Commission issued Order No. 720 and promulgated related 
regulations consistent with the Energy Policy Act of 2005 (EPAct 
2005).\2\ In EPAct 2005, Congress added section 23 to the Natural Gas 
Act (NGA), 15 U.S.C. 717t-

[[Page 5179]]

2 (2000 & Supp. V 2005) authorizing the Commission ``to facilitate 
price transparency in markets for the sale or transportation of 
physical natural gas in interstate commerce, having due regard for the 
public interest, the integrity of those markets * * * and the 
protection of consumers.'' \3\ Section 23 further provides that the 
Commission may issue such rules as it deems necessary and appropriate 
to ``provide for the dissemination, on a timely basis, of information 
about the availability and prices of natural gas sold at wholesale and 
interstate commerce to the Commission, State commissions, buyers and 
sellers of wholesale natural gas, and the public.'' \4\
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    \2\ Energy Policy Act of 2005, Public Law 109-58, 119 Stat. 594 
(2005).
    \3\ NGA Sec.  23, 15 U.S.C. 717t-2(a)(1) (2000 & Supp. V 2005).
    \4\ 15 U.S.C. 717t-2(a)(2).
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    3. On December 21, 2007, the Commission issued a Notice of Proposed 
Rulemaking (NOPR), proposing to require both interstate and certain 
major non-interstate natural gas pipelines to post daily information 
regarding their capacity, scheduled flow volumes, and actual flow 
volumes at major points and mainline segments.\5\ The Commission 
proposed regulations that would make available the information needed 
to track daily flows of natural gas adequately throughout the United 
States.\6\ 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.\7\
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    \5\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act, 73 FR 1116 (Jan. 7, 2008), FERC Stats. & Regs., 
Proposed Regulations 2004-2007 ] 32,626, at P 3 (2007).
    \6\ Id.
    \7\ Id. P 5.
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    4. Order No. 720 required major non-interstate pipelines, defined 
as those natural gas pipelines that are not natural gas companies under 
the NGA and deliver more than 50 million MMBtu per year, to post 
scheduled flow and other information for each receipt or delivery point 
with a design capacity greater than 15,000 MMBtu per day.\8\ While 
Order No. 720 required major non-interstate pipelines to comply with 
the new rules within 150 days of the Final Rule's publication,\9\ a 
subsequent order in this docket extended the compliance deadline for 
major non-interstate pipelines until 150 days following the issuance of 
an order on rehearing.\10\
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    \8\ Order No. 720 at P 1.
    \9\ Id. P 168.
    \10\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act, 126 FERC ] 61,047, at P 4 (2009).
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    5. Regarding interstate natural gas pipelines, Order No. 720 
expanded the Commission's existing posting requirements under 18 CFR 
284 to include no-notice service. Interstate natural gas pipelines were 
required to comply with this posting requirement no later than 60 days 
following Order No. 720's publication,\11\ and should therefore be 
currently complying with the regulations.
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    \11\ Order No. 720 at P 167.
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    6. Twenty-six requests for rehearing or clarification of Order No. 
720 were submitted.\12\ On January 16, 2009, the Commission issued an 
order granting rehearing for the purpose of providing additional time 
to respond to the requests for rehearing.\13\
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    \12\ A list of petitioners requesting rehearing and/or 
clarification is provided at Appendix A. All requests for rehearing, 
clarification, or both are referred to herein as ``Requests for 
Rehearing and Clarification.''
    \13\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act, Docket No. RM08-2-001, at 1 (Jan. 16, 2009).
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    7. A staff technical conference was held on March 18, 2009, to 
gather additional information on three issues raised in the requests 
for rehearing.\14\ The technical conference addressed: (1) The 
definition of major non-interstate pipelines; (2) what constitutes 
``scheduling'' for a receipt or delivery point; and (3) how a 15,000 
MMBtu per day design capacity threshold would be applied.\15\ Panelists 
making presentations at the conference and commenters from the audience 
represented a broad cross-section of the U.S. natural gas industry \16\ 
and the conference was widely attended.\17\
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    \14\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act , Notice of Technical Conference, Docket No. RM08-2-
001 (issued Feb. 24, 2009); Pipeline Posting Requirements under 
section 23 of the Natural Gas Act, Notice of Agenda for Technical 
Conference, Docket No. RM08-2-001 (issued March 11, 2009).
    \15\ Notice of Agenda for Technical Conference, at P 1.
    \16\ In the Matter of Pipeline Posting Requirements under 
section 23 of the Natural Gas Act Docket No. RM08-2-001, at 2-3 
(Mar. 18, 2009) (Transcript of Technical Conference).
    \17\ A transcript of this conference is available on the 
Commission's e-Library system.
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    8. On July 16, 2009, the Commission issued an order requesting 
supplemental comments in response to limited issues raised in requests 
for rehearing of Order No. 720 and at the technical conference, with 
comments due within 30 days.\18\ Eight supplemental comments were 
filed.\19\
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    \18\ Pipeline Posting Requirements under section 23 of the 
Natural Gas Act, 128 FERC ] 61,030, at P 1 (2009) (Order Requesting 
Supplemental Comments).
    \19\ A list of persons submitting supplemental comments is 
provided at Appendix B. These comments are referred herein as 
``Supplemental Comments.''
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    9. As discussed below, the Commission affirms Order No. 720, 
granting a number of requests for rehearing and clarification and 
adopting regulations consistent with our findings. As a whole, the 
modifications that are adopted substantially reduce the number of major 
non-interstate pipelines that must comply with the proposed 
transparency regulations.
    10. Major non-interstate pipelines must comply with the revised 
regulations within 150 days following publication in the Federal 
Register. Interstate pipelines must continue their current compliance 
with our transparency regulations.

II. Discussion

A. Authority for the Rule

    11. Order No. 720 implemented the Commission's authority under 
section 23 of the NGA,\20\ as added by EPAct 2005,\21\ to facilitate 
transparency in markets for the sale or transportation of natural gas 
in interstate commerce by requiring major non-interstate pipelines and 
interstate pipelines to post certain data on publicly-accessible 
Internet Web sites. Congress granted the Commission this statutory 
authority to ensure transparency of natural gas prices, natural gas 
availability, and the price formation in the interstate natural gas 
market.\22\
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    \20\ 15 U.S.C. 717t-2.
    \21\ Energy Policy Act of 2005, Public Law 109-58, sections 1261 
et seq., 119 Stat. 594 (2005).
    \22\ Id. P 8.
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    12. The Commission held in Order No. 720 that NGA section 23 
authorizes the Commission to obtain and disseminate information, 
including information regarding non-interstate natural gas markets that 
affect the interstate natural gas market. The Commission's decision 
substantially relied on the language of NGA section 23(a)(3)(A), which 
allows the Commission to ``obtain the information * * * from any market 
participant.'' \23\ The Commission identified Congress' use of the term 
``any market participant'' as an intentional expansion of ``the 
universe of entities subject to the Commission's transparency authority 
beyond the entities subject to the Commission's traditional rates, 
terms, and conditions jurisdiction under other sections of the NGA.'' 
\24\ Order No. 720 took particular note of Congress' use of ``any'' in 
section 23 as a descriptor, attaching jurisdiction to market 
participants independently of the

[[Page 5180]]

limitations prescribed elsewhere in the NGA.\25\
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    \23\ 15 U.S.C. 717t-2(a)(3)(A) (emphasis added).
    \24\ Order No. 720 at P 17.
    \25\ Id. P 18.
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    13. The NGA limits the scope of the Commission's traditional 
regulatory authority to ``natural gas companies'' as the term is 
utilized in the NGA.\26\ The Commission held in Order No. 720 that 
Congress contemplated different jurisdictional parameters for its 
transparency authority.\27\ Additionally, the Commission found that the 
scope of section 23 is not limited by section 1(b) of the NGA.
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    \26\ Id. P 19 citing 15 U.S.C. 717.
    \27\ Id.
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    14. The Commission emphasized that the regulations promulgated by 
Order No. 720 reflect the limitations that Congress placed on the 
Commission's authority in section 23. Order No. 720 explained that 
section 23 extends the Commission's authority only to the collection 
and dissemination of information for the purposes of promoting price 
transparency in the natural gas market.\28\ The Commission's 
traditional regulatory authority remains limited to ``natural gas 
companies'' under section 1(b) of the Act.\29\
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    \28\ Id. P 22.
    \29\ Natural gas producers, processors, or users who have a de 
minimis market presence are explicitly exempted from the reporting 
requirements. Id. at P 23.
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1. Requests for Rehearing and Clarification
    15. Some petitioners support the Commission's assertion of 
jurisdiction, with at least one petitioner supporting Order No. 720's 
requirement that certain major non-interstate pipelines post daily 
scheduled volume information and design capacity for certain receipt 
and delivery points ``pursuant to [the Commission's] authority under 
section 32 [sic] of the NGA.'' \30\ Yates and Agave particularly 
commend the Commission's new regulations and assertion of jurisdiction, 
stating that ``the major non-interstate pipeline posting requirements 
adopted in Order No. 720 are a good first step towards the Commission's 
stated goal of facilitating transparency in markets for the sale or 
transportation of physical natural gas in interstate commerce.'' \31\
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    \30\ Yates and Agave Request for Rehearing and Clarification at 
1; Williston Basin Request for Rehearing and Clarification at 1 
(acknowledging that the Commission has the authority to promulgate 
Order No. 720's new regulations pursuant to its authority under 
section 23 of the NGA).
    \31\ Yates and Agave Request for Rehearing and Clarification at 
3-4.
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    16. Several petitioners requesting rehearing argue that the 
Commission unlawfully expanded its statutory authority by imposing 
posting requirements on major non-interstate pipelines, including 
natural gas gathering lines.\32\ They claim that the Commission does 
not have jurisdiction to impose posting requirements on intrastate 
pipelines, and that its transparency jurisdiction does not extend to 
intrastate activities at receipt and delivery points that are not 
involved in the Commission's jurisdictional activities.\33\
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    \32\ Enogex Request for Rehearing and Clarification at 5-10; Gas 
Processors Request for Rehearing and Clarification at 3-7; LOC 
Request for Rehearing and Clarification at 3-10; California LDCs 
Request for Rehearing and Clarification at 13-15; Railroad 
Commission of Texas Request for Rehearing and Clarification at 5-10; 
Southwest Gas Request for Rehearing and Clarification at 3-5, 13-14; 
Targa Request for Rehearing and Clarification at 8-9; TPA Request 
for Rehearing and Clarification at 8-24.
    \33\ See, e.g., TPA Request for Rehearing and Clarification at 
31-32.
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    17. Many petitioners reiterated arguments, made in comments to the 
NOPR, that the reference in NGA section 23 to ``any market 
participant'' is restricted to participants in the interstate 
market.\34\ Gas Processors suggests that the Commission has derived its 
expanded jurisdictional powers from an ambiguous term without 
sufficient support, and that Congressional intent over that term ``must 
not be read in a vacuum.'' \35\ It also argues that the term ``market 
participant'' was not intended to extend the Commission's jurisdiction 
to intrastate pipelines because: (1) Section 23 was not intended to 
cover intrastate pipelines; (2) the Commission has never had 
jurisdiction over intrastate pipelines; and (3) Congress did not 
``expressly or implicitly'' provide such jurisdiction in section 
23.\36\ Quoting section 23, Gas Processors points out the repeated use 
of the term ``interstate'' throughout the section, emphasizing that if 
Congress intended an expansion into the intrastate pipelines, they 
would have selected different language.\37\ RRC agrees, stating that 
``[n]othing in the plain language of Section 23 of the NGA or the 
legislative history of [EPAct 2005] evinces Congressional intent to 
expand the FERC's authority over intrastate pipelines.'' \38\
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    \34\ California LDCs Request for Rehearing and/or Clarification 
at 14-15; Gas Processors Request for Rehearing at 3-4; LOC Request 
for Rehearing at 8-9; Railroad Commission of Texas Request for 
Rehearing at 5-8; Southwest Gas Request for Clarification and 
Rehearing at 13-14; Targa Request for Rehearing at 8-9; TPA Request 
for Rehearing and Clarification at 9-11.
    \35\ Gas Processors Request for Rehearing and Clarification at 
3-4.
    \36\ Id. at 4.
    \37\ Id.; see also RRC Request for Rehearing and Clarification 
at 6-8; TPA Request for Rehearing and Clarification at 8-12; LOC 
Request for Rehearing and Clarification at 10.
    \38\ RRC Request for Rehearing and Clarification at 6; see also 
LOC Request for Rehearing and Clarification at 9.
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    18. TPA opines that the plain language of section 23 provides that 
``market participant'' be limited to the interstate natural gas 
market.\39\ It further argues that Congress had no need to exclude 
intrastate pipelines from the Commission's transparency jurisdiction 
because those entities are not subject to the Commission's jurisdiction 
``in the first place.'' \40\
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    \39\ TPA Request for Rehearing and Clarification at 9-11.
    \40\ Id. at 11.
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    19. TPA repeats arguments made in its NOPR comments, and seeks 
rehearing of the Commission's determination that it has authority to 
issue the posting regulations. TPA argues that expansion of the 
jurisdiction of the Commission usually occurs through amendment of NGA 
section 1(b) by Congress.\41\ TPA asserts that Order No. 720 expands 
the Commission's jurisdiction using a process that is not supported by 
the Commission's own precedent.\42\ TPA cites Order No. 670,\43\ 
discussing the procedures used to process market manipulation 
allegations, in support of its claim that the Commission should wait 
until Congress explicitly expands its jurisdiction to assert such 
authority over traditionally non-jurisdictional entities.\44\ TPA 
further argues that the Natural Gas Policy Act of 1978 (NGPA) section 
311 shows a clear distinction between intrastate and interstate 
jurisdiction, and concludes that, if Congress had intended to expand 
the Commission's jurisdiction, it would have amended NGA section 1(b) 
in a similar fashion.\45\
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    \41\ TPA Request for Rehearing and Clarification at 12; Gas 
Processors Request for Rehearing and Clarification at 4-5; LOC 
Request for Rehearing and Clarification at 6; RRC Request for 
Rehearing and Clarification at 7-8.
    \42\ TPA Request for Rehearing and Clarification at 12.
    \43\ Prohibition of Energy Market Manipulation, Order No. 670, 
71 FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ] 31,202 (2006).
    \44\ TPA Request for Rehearing and Clarification at 12.
    \45\ Id. at 21 (citing 15 U.S.C. 3371(a)(2)).
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    20. Several petitioners, echoing comments that the Commission 
addressed in Order No. 720, argue that the regulations exceed the 
Commission's jurisdiction under section 1(b) of the NGA.\46\ 
Petitioners argue that NGA section 23 is not ``a stand alone

[[Page 5181]]

provision,'' but is subject to the jurisdictional limits established in 
section 1(b).\47\ Thus, they contend that the fact that Congress did 
not amend the language in section 1(b) demonstrates that Congress did 
not intend to modify the Commission's jurisdiction with section 23.\48\ 
Petitioners state that section 1(b) is ``unequivocally clear'' 
regarding the entities to which section 23 applies.\49\ The petitioners 
argue that because section 1(b) expressly bars the Commission from 
jurisdiction over intrastate pipelines, section 23 does as well.\50\
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    \46\ Enogex Request for Rehearing and Clarification at 6-7; LOC 
Request for Rehearing and Clarification at 3-4; Railroad Commission 
of Texas Request for Rehearing and Clarification at 8-9; TPA Request 
for Rehearing and Clarification at 8, 16-19.
    \47\ LOC Request for Rehearing and Clarification at 3; Enogex 
Request for Rehearing and Clarification at 7; Railroad Commission of 
Texas Request for Rehearing and Clarification at 8-9; TPA Request 
for Rehearing and Clarification at 22-23.
    \48\ LOC Request for Rehearing and Clarification at 9; RRC 
Request for Rehearing and Clarification at 8.
    \49\ RRC Request for Rehearing and Clarification at 8.
    \50\ RRC Request for Rehearing and Clarification at 8, LOC 
Request for Rehearing and Clarification at 8-9; Enogex Request for 
Rehearing and Clarification at 6-7; TPA Request for Rehearing and 
Clarification at 28-29.
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    21. Several petitioners also state that section 311 of the NGPA 
\51\ limits the Commission's transparency jurisdiction to only 
interstate activities.\52\ These petitioners claim that, although 
section 311 ``vests the Commission with the power to authorize an 
intrastate pipeline to transport natural gas on behalf of interstate 
pipelines,'' section 311 did not expand the Commission's jurisdiction 
under the NGA.\53\ In fact, the NGPA explicitly defines ``intrastate 
pipeline'' as one ``not subject to the jurisdiction of the Commission 
under the NGA.'' \54\ LOC states, for example, that the Commission 
cannot ``destroy'' this jurisdictional distinction placing intrastate 
pipelines beyond its NGA authority without express amendment from 
Congress.\55\ Moreover, TPA cites to Associated Gas Distributors v. 
FERC,\56\ where the court held that it was unreasonable for the 
Commission to presume that ``obscure'' language in section 311 
authorized an expansion of its jurisdiction without legislative history 
to support an expansion.\57\ TPA, LOC, and RRC also focus on previous 
case-law limiting the Commission's traditional rates, terms, and 
conditions jurisdiction under section 311.\58\
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    \51\ 15 U.S.C. 3371(a)(2).
    \52\ Enogex Request for Rehearing and Clarification at 9; LOC 
Request for Rehearing and Clarification at 5-8; Railroad Commission 
of Texas Request for Rehearing at 9; TPA Request for Rehearing and 
Clarification at 18-22.
    \53\ LOC Request for Rehearing and Clarification at 5-6; RRC 
Request for Rehearing and Clarification at 9; TPA Request for 
Rehearing and Clarification at 18-22.
    \54\ LOC Request for Rehearing and Clarification at 5-6; RRC 
Supplemental Comments at 9; TPA Request for Rehearing and 
Clarification at 18-22.
    \55\ LOC Request for Rehearing and Clarification at 6.
    \56\ Assoc. Gas Distrib. v. FERC, 899 F.2d 1250 (D.C. Cir. 
1990).
    \57\ TPA Request for Rehearing and Clarification at 19-20.
    \58\ TPA Request for Rehearing and Clarification at 21-22; LOC 
Request for Rehearing and Clarification at 6-10; RRC Request for 
Rehearing and Clarification at 16. TPA and LOC also raise arguments 
linking section 311 to section 601 of the NGPA. LOC Request for 
Rehearing and Clarification at 5-8; TPA Request for Rehearing and 
Clarification at 18-21.
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    22. Other petitioners focus on NGA section 23(d)(2) which provides 
that the Commission shall not require natural gas producers, 
processors, or users who have a de minimis market presence to comply 
with the reporting requirements of section 23.\59\ On rehearing, RRC 
renews arguments made in response to the NOPR regarding the de minimis 
exception. Contrary to the Commission's interpretation, RRC believes 
that, had Congress intended to give the Commission even limited 
jurisdiction over intrastate pipelines, it would have listed them in 
section 23(d)(2).\60\ Because section 23(d)(2) makes no such reference, 
RRC contends that the Commission's findings are contrary to the plain 
language of section 23.\61\
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    \59\ 15 U.S.C. 717t-2(d)(2).
    \60\ RRC Request for Rehearing and Clarification at 7; see also 
TPA Request for Rehearing and Clarification at 23-24.
    \61\ RRC Request for Rehearing and Clarification at 7-8.
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    23. Some petitioners assert that the Commission is seeking 
information on gas flows that are outside of the Commission's 
jurisdiction, regardless of the facilities at issue.\62\ TPA argues 
that the collection of design capacity and gas flow data does not 
relate to the availability and prices of natural gas, thereby exceeding 
the Commission's transparency jurisdiction.\63\ Enogex argues that the 
new regulations make it impossible to discern the Commission's 
jurisdiction from State jurisdiction because the intrastate and 
interstate volumes of gas that move on the Enogex system are so 
commingled that they cannot be distinguished for capacity posting 
purposes.\64\
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    \62\ Enogex Request for Rehearing at 9-10; TPA Request for 
Rehearing and Clarification at 13-15.
    \63\ TPA Request for Rehearing and Clarification at 13-15.
    \64\ Enogex Request for Rehearing and Clarification at 9-10.
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    24. Targa, California LDCs, RRC, and TPA all contend that Order No. 
720 is an improper regulation of intrastate operations and rates.\65\ 
These petitioners argue that the Final Rule may adversely interfere 
with State regulation of non-interstate pipelines.\66\ California LDCs 
challenge the Commission's claim that it is not regulating intrastate 
operations of non-interstate pipelines. The petitioner alleges that 
compliance with Order No. 720 entails daily postings of customer-
specific and facility-specific information, effectively regulating 
intrastate operations.\67\
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    \65\ Targa Request for Rehearing and Clarification at 9; 
California LDCs Request for Rehearing and Clarification at 14-15; 
RRC Request for Rehearing and Clarification at 9-11; TPA Request for 
Rehearing and Clarification at 25-28.
    \66\ California LDCs Request for Rehearing and Clarification at 
14-15; RRC Request for Rehearing and Clarification at 9-11; TPA 
Request for Rehearing and Clarification at 3, 25-28.
    \67\ California LDCs Request for Rehearing and Clarification at 
14-15.
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2. Commission Determination
    25. After consideration, the Commission rejects the requests for 
rehearing and reaffirms its holding that it has jurisdiction over the 
matters addressed in Order No. 720. NGA section 23 provides the 
Commission limited jurisdiction over major non-interstate pipelines for 
the purpose of requiring public disclosure of information to enhance 
market transparency.
    26. Most petitions for rehearing reiterate arguments the Commission 
considered and addressed at length in Order No. 720. For example, 
petitioners take issue with the Commission's interpretation of the 
expansive language used in NGA section 23. In Order No. 720, the 
Commission held that Congress deliberately chose the term ``any market 
participant'' in section 23 to expand the Commission's jurisdiction 
beyond the universe of natural gas companies to which it would 
otherwise be limited, recognizing that the public needs information 
from a wide variety of entities in order to facilitate 
transparency.\68\ Section 1 is not referenced in section 23 and the 
term ``natural gas company'' is not used in section 23. Petitioners 
have not raised any new arguments regarding the meaning of ``any market 
participant'' in section 23. The Commission continues to believe that 
Congress did not intend to limit the Commission's transparency 
jurisdiction to entities it traditionally regulates.\69\
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    \68\ Order No. 720 at P 18.
    \69\ Id. P 19.
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    27. As stated in Order No. 720, section 23(d)(2) would be 
unnecessary surplusage if Congress did not intend to give the 
Commission authority over entities otherwise excluded by section 1(b) 
of the NGA.\70\ Petitioners raise no new arguments regarding this 
issue.

[[Page 5182]]

Likewise, no new arguments were presented regarding the Commission's 
authority to enact rules under sections 23(a)(1) and 23(a)(2). These 
subsections grant discretion to the Commission to achieve interstate 
price transparency and to provide for public dissemination of 
information.\71\
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    \70\ Id. P 23.
    \71\ Id. P 16.
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    28. The Commission also finds no merit in arguments raised by 
petitioners related to section 311 of the NGPA. While section 311 
limits the Commission's jurisdiction regarding some intrastate natural 
gas pipeline activities, section 23 of the NGA provides a different 
jurisdictional basis promoting different Congressional goals. Section 
23 grants the Commission authority to ensure that the information 
necessary for interstate market transparency is available to the 
public. The term any market participant includes non-interstate 
pipelines, thus the Commission has the authority to require those 
participants to post certain information to facilitate market 
transparency.
    29. Petitioners also reiterated arguments, addressed in Order No. 
720, that previous case law limits the Commission's transparency 
jurisdiction.\72\ The Commission affirms its conclusion that the cases 
cited by commenters apply only to the jurisdictional limits set forth 
in section 1 of the NGA prior to the enactment of EPAct 2005.\73\ Such 
case law is not applicable to regulations adopted by the Commission 
pursuant to section 23 of the NGA.
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    \72\ Railroad Commission of Texas Request for Rehearing and 
Clarification at 15-16; LOC Request for Rehearing and Clarification 
at 6-7; Enogex Request for Rehearing and Clarification at 6-7.
    \73\ Order No. 720 at P 20.
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    30. In response to Enogex, it is immaterial for purposes of our 
transparency jurisdiction whether non-interstate and interstate volumes 
of gas are commingled. Under section 23, if natural gas volumes have a 
greater than de minimis effect on the interstate natural gas market, 
and the other requirements of section 23 are met, the Commission has 
the authority to require posting of such volumes regardless of whether 
flowing natural gas is characterized as ``interstate'' or ``non-
interstate.''
    31. The Commission emphasizes that its transparency jurisdiction is 
limited to the dissemination of information that will aid in market 
transparency. Section 23 gives the Commission no jurisdiction related 
to, and our regulations do not govern the rates, terms, and conditions 
of service of major non-interstate pipeline operations. The Commission 
is requiring only the posting of essential information to ensure market 
transparency and is not engaging in traditional regulation of rates, 
terms, and conditions of service.
    32. The Commission finds that Order No. 720 accurately implemented 
its authority under the limited jurisdiction Congress conferred in NGA 
section 23.\74\ Therefore, we deny rehearing.
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    \74\ The Commission's conclusion here is consistent with its 
findings in Order No. 704 regarding the annual reporting requirement 
for market participants adopted pursuant to our NGA section 23 
authority. See Transparency Provisions of section 23 of the Natural 
Gas Act, Order No. 704, 73 FR 1014 (Jan. 4, 2008), FERC Stats. and 
Regs. ] 31,260 (2007), order on reh'g, Order No. 704-A, 73 FR 55726 
(Sept. 26, 2008), FERC Stats. & Regs. ] 31,275 (2008), order on 
reh'g, Order No. 704-B, 125 FERC ] 61,302 (2008).
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B. Need for the Rule

    33. Order No. 720 found that a broad cross-section of the natural 
gas industry supports the transparency goals of the pipeline posting 
requirements.\75\ In Order No. 720, the Commission exercised the 
authority conferred by Congress following consideration of comments on 
the NOPR, and based on its experience regulating the interstate natural 
gas market. Order No. 720 discussed interstate pipeline postings as 
well as other sources of market information, determining that 
additional information by non-interstate pipelines would enhance 
transparency further.\76\
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    \75\ Order No. 720 at P 29.
    \76\ Id. P 39-50. Additionally, the Commission determined that 
increased transparency regarding no-notice natural gas flows was 
needed on interstate pipelines. Id. P 161.
---------------------------------------------------------------------------

    34. Order No. 720 found that information regarding wholesale 
natural gas price fundamentals was incomplete given the lack of access 
to scheduled flow information from major non-interstate pipelines.\77\ 
This informational gap exists because, while interstate pipelines must 
post daily scheduled flow information under our current regulations, no 
similar information is available regarding scheduled flows prior to or 
following transportation on interstate pipelines. Order No. 720 
attempted to fill this informational gap with supply-related 
information from large non-interstate pipelines upstream of interstate 
pipelines and demand-related information from large non-interstate 
pipelines downstream of interstate pipelines. Supply and demand 
fundamentals for the interstate natural gas market can be more fully 
understood utilizing information from non-interstate pipelines.
---------------------------------------------------------------------------

    \77\ Id. P 40.
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1. Requests for Rehearing and Clarification
    35. On rehearing, a limited number of petitioners object to Order 
No. 720's findings that transparency needs to be increased in the 
interstate natural gas market, and question whether the regulations 
adopted in Order No. 720 actually increase transparency.
    36. For example, LOC states that Order No. 720 ``failed to support 
its finding that there exists any necessity for the enactment of the 
proposed rules.'' \78\ RRC argues that our pipeline posting regulation 
is ``a solution in search of a problem,'' adding that recent Commission 
initiatives have improved market transparency and that there has been 
no showing that additional transparency is required.\79\
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    \78\ LOC Request for Rehearing and Clarification at 11. See also 
TRC Request for Rehearing and Clarification at 14-15.
    \79\ RRC Request for Rehearing and Clarification at 11-15.
---------------------------------------------------------------------------

    37. TPA requests rehearing on the grounds that the Commission has 
not demonstrated that interstate market transparency is enhanced by 
major non-interstate pipeline information. It alleges that the 
Commission has ``consistently disregarded the consensus among market 
participants'' on this point.\80\
---------------------------------------------------------------------------

    \80\ TPA Request for Rehearing and Clarification at 33.
---------------------------------------------------------------------------

    38. TPA takes Order No. 720 to task for focusing on comments ``of a 
handful of intervenors expressing general support for the [NOPR]'' 
rather than acknowledging the substantial number of intrastate 
pipelines and other participants that see no need for increased 
transparency.\81\ TPA argues, citing National Fuel Gas Supply 
Corporation v. FERC, \82\ that the Commission must cite evidence of an 
industry problem prior to rulemaking action.\83\ TPA particularly 
objects to Order No. 720's finding that the transparency rule assists 
market participants to understand the impact of hurricanes and other 
natural disasters on natural gas supply. Further, TPA argues that 
``nowhere in this proceeding has the Commission or any market 
participant provided an adequate explanation of how the proposed rule 
would detect market manipulation.'' \84\
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    \81\ Id. at 35-37.
    \82\ 468 F.3d 831, 843 (D.C. Cir. 2006).
    \83\ TPA Request for Rehearing and Clarification at 37.
    \84\ Id. at 39.
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    39. Southwest Gas argues that the transparency rule did not 
specifically demonstrate a need for information from LDCs related to 
daily capacity and

[[Page 5183]]

scheduled retail transportation.\85\ Southwest Gas complains that Order 
No. 720 did not adequately explain the nexus between data provided by 
State-regulated LDCs and price formation for natural gas sold at 
wholesale and in interstate commerce.\86\
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    \85\ Southwest Gas Request for Rehearing and Clarification at 
12.
    \86\ Id. at 13-14.
---------------------------------------------------------------------------

    40. Additionally, some petitioners request rehearing on the grounds 
that Order No. 720 failed to fully consider the existing sources of 
data regarding non-interstate natural gas flows as required by section 
23.\87\
---------------------------------------------------------------------------

    \87\ LOC Request for Rehearing and Clarification at 11; RRC 
Request for Rehearing and Clarification at 11-15; TPA Request for 
Rehearing and Clarification at 30-31.
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2. Supplemental Comments
    41. In its supplemental comments, AGA makes arguments similar to 
Southwest Gas.\88\ AGA states that LDCs are fundamentally distributors 
of natural gas and that LDC scheduled flow postings would not further 
the Commission's transparency goals.\89\ AGA notes that no wholesale 
natural gas price formation occurs on an LDC's system \90\ and argues 
that available capacity calculations for LDCs may be misleading.\91\
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    \88\ The Order Requesting Supplemental Comments requested 
additional comments on discrete issues raised by commenters in 
requests for rehearing and clarification. Order Requesting 
Supplemental Comments at P 7-10. Some commenters submitted 
supplemental comments on subjects outside the requested scope. While 
the Commission did not request such extraneous supplemental 
comments, such as AGA's supplemental comments regarding need for the 
rule, we nevertheless address such comments in this order to ensure 
that the record is complete.
    \89\ AGA Supplemental Comments at 10.
    \90\ Id. at 13.
    \91\ Id. at 16-17. See also California LDCs Supplemental 
Comments at 8.
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3. Commission Determination
    42. The Commission continues to believe that the major non-
interstate pipeline posting requirements are needed and denies the 
requests for rehearing.
    43. The Commission notes, as an initial matter, that some of the 
requests for rehearing appear to argue that the Commission has 
substantially increased transparency in interstate markets in recent 
years, but that such transparency is sufficient and more need not be 
done. However, these petitioners misconstrue section 23 of the NGA and 
Congress' transparency objectives. As discussed in Order No. 720, the 
Commission has been directed by Congress to facilitate price 
transparency in markets for the sale or transportation of physical 
natural gas in interstate commerce \92\ and given the authority to 
prescribe such rules as may be necessary to effectuate the 
Congressional goal.\93\ As the Congressional mandate implicitly 
acknowledges, lack of transparency is not a ``problem'' readily 
susceptible to a single regulatory solution. Transparency enhances the 
ability of market participants to make informed, efficient decisions 
based upon public information. In other words, enhanced transparency is 
typically beneficial to markets, even markets, such as the U.S. 
wholesale natural gas market, that are already competitive. It is not a 
necessary prerequisite to adoption of our regulations to find, as some 
petitioners appear to demand, that the interstate natural gas market 
cannot function without the rule. As petitioners acknowledge, the 
Commission has improved market transparency in several different ways 
in recent years and the interstate natural gas market is competitive 
and robust. These successes, however, do not preclude other means of 
further enhancing transparency. This is particularly true where the 
Commission has identified a ``gap'' in relevant market information 
available to market participants.
---------------------------------------------------------------------------

    \92\ 15 U.S.C. 717f-2(a)(1).
    \93\ 15 U.S.C. 717f-2(a)(2).
---------------------------------------------------------------------------

    44. Many of the petitions for rehearing repeat arguments made in 
response to the NOPR and addressed in Order No. 720. As the Commission 
found in Order No. 720, there presently exists a gap in information 
available to interstate market participants necessary to more fully 
understand supply and demand fundamentals and therefore price 
formation.\94\ A significant amount of natural gas flows from producing 
basins to interstate markets on non-interstate pipelines. These 
scheduled flows impact supply considerations in interstate markets. 
Similarly, flows on non-interstate pipelines at the end of the delivery 
chain impact demand considerations in the interstate market.\95\ These 
considerations are fundamental to Order No. 720's determination that 
information about scheduled non-interstate pipeline natural gas flows 
would enhance transparency in the interstate natural gas market. 
Without access to information about supply and demand, interstate 
natural gas market participants are left with incomplete information to 
understand interstate wholesale prices. Incomplete information leads to 
market inefficiencies because wholesale buyers and sellers of natural 
gas have inconsistent levels of market knowledge and are less able to 
understand price outcomes.\96\
---------------------------------------------------------------------------

    \94\ Order No. 720 at P 39.
    \95\ Of course, non-interstate pipelines that deliver natural 
gas to end-users may also deliver gas to other pipelines for 
subsequent transportation similar to transportation provided by 
interstate pipelines.
    \96\ Transparency plays a fundamental role in the fairness, 
efficiency, and functioning of orderly markets. Greater transparency 
results in greater market efficiency because price signals to market 
participants more accurately reflect underlying supply and demand 
fundamentals.
---------------------------------------------------------------------------

    45. Existing interstate pipeline posting data is used extensively 
by the public to understand daily market conditions and price 
formation. The public can access an interstate pipeline's Internet Web 
site to ascertain capacity availability and operational conditions. 
Also, data aggregators scour these Web sites and sell analysis and 
services based on this data, with many market participants, including 
producers, pipelines, end users, marketers, traders, and financial 
firms paying subscription fees to these data aggregators to evaluate 
the interstate natural gas market. The demand for such data by market 
participants is a persuasive factor regarding its transparency value. 
Based upon the comments in this rulemaking and our natural gas market 
experience, the Commission believes that there is robust interest by 
the public regarding similar scheduled flow data from non-interstate 
pipelines to form a more complete picture of the U.S. wholesale natural 
gas market. We therefore disagree with commenters arguing that such 
data is not valued by the public.
    46. As discussed below, data provided by major non-interstate 
pipelines will help interstate natural gas market participants 
understand both supply and demand and, thus, price formation.
Understanding of Supply Fundamentals Will Be Enhanced
    47. Some petitioners, including TPA, argue that information from 
non-interstate pipelines that provide natural gas supplies would not 
enhance interstate market transparency. Order No. 720 notes the 
substantial impact that non-interstate pipelines have on the 
establishment of national wholesale natural gas prices. Non-interstate 
pipelines, particularly those in the south-central United States, 
connect large production areas with interstate pipelines.\97\
---------------------------------------------------------------------------

    \97\ Order No. 720 at P 45.
---------------------------------------------------------------------------

    48. Despite TPA's protestations, obtaining data from TPA's members 
is particularly important for interstate market transparency. Onshore 
Texas locations account for thirty percent

[[Page 5184]]

(approximately 5.7 Tcf in 2007) of U.S. natural gas production.\98\ 
Texas has more non-interstate pipelines than any other State--45,000 of 
the 58,600 miles of natural gas pipelines in the State are intrastate 
pipelines and account for almost 16 Bcf/d of pipeline capacity.\99\ The 
pipeline network in Texas has experienced significant growth over the 
past several years as a result of increased demand for pipeline 
capacity caused by the rapid development and expansion of natural gas 
production in the Barnett Shale Formation.\100\ New pipelines have been 
built, and expansions to existing ones undertaken, to meet increased 
demand. The importance of Texas non-interstate transportation to 
understanding interstate price fundamentals is growing as production 
shifts from old depleting gas basins to new gas basins.
---------------------------------------------------------------------------

    \98\ U.S. Energy Information Administration, Natural Gas Annual 
2007, Gross Withdrawals and Marketed Production of Natural Gas by 
State and the Gulf of Mexico 2003-2007 (2007), p. 8 (available at 
http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_annual/current/pdf/table_003.pdf).
    \99\ Energy Information Administration, Intrastate Natural Gas 
Segment (available at http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/intrastate.html). The size and 
importance of non-interstate transportation in Texas is manifest. 
Sixteen Bcf/d is enough gas to serve all the industrial or power 
load in the U.S.
    \100\ U.S. Energy Information Administration, Expansion of the 
U.S. Natural Gas Pipeline Network: Additions in 2008 and Projects 
through 2011, (Sept. 2009) (available at http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2009/pipelinenetwork/pipelinenetwork.pdf) (``About 10 percent of all newly added natural 
gas pipeline capacity for 2008, or 4.6 Bcf per day, was attributable 
to new intrastate pipelines built to transport expanding Barnett 
shale production specifically'').
---------------------------------------------------------------------------

    49. The value of non-interstate pipeline supply flows is not 
confined to Texas. In Colorado, Wyoming, and Utah, development of new, 
large-diameter intrastate pipelines is proceeding at a fast pace, as 
proved reserves of coalbed methane, tight sands, and conventional 
natural gas supplies are identified.\101\ During the past several 
years, at least eight large-capacity pipeline header systems have been 
built in Wyoming to transport natural gas from local gathering 
systems.\102\ In the Piceance Basin in western Colorado and the Uinta 
Basin in eastern Utah, several new large gathering systems have been 
developed to feed expanding natural gas production into the interstate 
pipeline network.\103\ These supply sources have a significant effect 
on interstate price formation because new supply can reduce regional 
and national gas prices. The faster the implications of new supply are 
assessed, the better the market can integrate those implications into 
pricing decisions.
---------------------------------------------------------------------------

    \101\ U.S. Energy Information Administration, supra note 97.
    \102\ Id.
    \103\ Id.
---------------------------------------------------------------------------

    50. In these states and elsewhere, capacity could be limited at key 
points, impacting regional, interstate wholesale prices. Supply or 
demand driven events on non-interstate pipelines that impact regional 
wholesale prices cannot be fully understood by market participants 
without access to receipt and delivery point information.
    51. Existing data sources on gas supply flows are insufficient for 
participants to adequately evaluate physical daily market activity. As 
the Commission discussed in Order No. 720, the Energy Information 
Administration (EIA) publishes data on monthly production by State 
based on a survey and with a three month lag.\104\ Similarly, monthly 
consumption data is published by State with a four month lag.\105\
---------------------------------------------------------------------------

    \104\ Energy Information Administration, Natural Gas Deliveries 
to All Consumers by State 2007-2009 (Nov. 2009) (available at http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm/current/pdf/table_16.pdf).
    \105\ Energy Information Administration, Marketed Production of 
Natural Gas in Selected States and the Federal Gulf of Mexico (Nov. 
2009) (available at http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/current/pdf/table_05.pdf).
---------------------------------------------------------------------------

Understanding of Demand Fundamentals Will Be Enhanced
    52. Petitioners not only question the value of increased 
transparency of the operations of non-interstate pipelines at the 
beginning of the delivery chain, but also at the end of the delivery 
chain. For example, Southwest Gas and AGA argue that the Commission has 
not articulated an adequate nexus between data provided by LDCs 
(oftentimes companies that primarily deliver natural gas to end-users) 
and interstate natural gas price formation. The Commission disagrees 
and continues to believe that the pipeline posting regulations will 
enhance understanding of demand fundamentals.
    53. Order No. 720 not only identified the information gap now 
present, but also provided data explaining the possible scope of the 
transparency problem regarding demand for natural gas. For example, we 
noted that up to 90 percent of daily consumption of natural gas in 
Texas is not captured through the Commission's current interstate 
pipeline posting requirements.\106\ Instead, such consumption data is 
available only from EIA in aggregated format several months following 
actual delivery.\107\ Such stale data is unhelpful for interstate 
market participants seeking to understand price formation in today's 
rapidly-changing energy markets.
---------------------------------------------------------------------------

    \106\ Order No. 720 at P 44.
    \107\ Id.
---------------------------------------------------------------------------

    54. Demand clarity is a persistent problem in U.S. interstate 
natural gas markets. For example, California accounts for 10 percent of 
U.S. natural gas consumption, of which one-third is utilized for 
electric power generation.\108\ About 13 percent of California's 
consumption is met by in-State production with the rest met by imports 
from surrounding states.\109\ Interstate pipelines serving California, 
with four exceptions, terminate at the State border.\110\ Market 
participants can currently ``see'' imports into California, flows 
between PG&E and Southern California Gas Company (SoCal Gas), and flows 
into SoCal Gas producing zones by virtue of the Commission's existing 
interstate pipeline posting regulations and using PG&E's and SoCal Gas' 
Pipe Ranger and Envoy systems.\111\ However, market participants have 
limited information regarding gas receipts and deliveries once gas is 
delivered to PG&E's and SoCal Gas' systems. Non-interstate 
transportation and distribution are dominated by: PG&E, with 6,136 
miles of transportation pipelines); SoCal Gas, with 2,890 miles of 
transmission and storage pipelines; and SDG&E, with 168 miles of 
transmission pipelines.\112\
---------------------------------------------------------------------------

    \108\ U.S. Energy Information Administration, Natural Gas Annual 
2007: Consumption of Natural Gas 2003-2007 by State, 2007 (2007) at 
41 (available at http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_annual/current/pdf/table_015.pdf).
    \109\ Id.
    \110\ Interstate pipelines currently serving California include 
El Paso Natural Gas Company (El Paso), Kern River Transmission 
Company, Mojave Pipeline Company, Gas Transmission-Northwest, 
Transwestern Pipeline Company (Transwestern), Questar Southern 
Trails Pipeline, Tuscarora Pipeline and the Bajanorte/North Baja 
Pipeline. Kern River, Mojave, Tuscarora, and North Baja pipeline 
have significant capacity in California, while all other pipelines 
terminate at the California border. See California Public Utilities 
Commission, Natural Gas Market Study (Feb. 2006) at 28 (available at 
http://www.docs.cpuc.ca.gov/WORD_PDF/REPORT/54256.pdf).
    \111\ Sempra's Envoy system posts daily information at SoCal 
Gas' interconnection with interstate pipelines, PG&E, and five 
``producer zones.'' PG&E's Pipe Ranger system posts daily 
information only at interconnects with interstate pipelines and 
SoCal Gas' system. Most of the gas flow information posted on Envoy 
and Pipe Ranger is readily available from interstate pipeline 
postings and provides little additional market information useful 
for understanding the intrastate flow of gas. Envoy Interactive Map 
(available at https://www.envoyproj.sempra.com/help/help_pipeline_map.html).
    \112\ Pacific Gas and Electric Co., Fast Facts (available at 
http://www.pge.com/about/company/profile/); Securities and Exchange 
Commission, Sempra Energy Form 10-K Annual Report at 25 (Feb. 24, 
2009) (available at http://www.investor.shareholder.com/sre/secfiling.cfm?filingID=86521-09-10&CIK=1032208).

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[[Page 5185]]

    55. SoCal Gas and PG&E are two of the largest distribution 
companies in the U.S. When major natural gas transportation 
interruptions occur on these systems inside California, market 
participants are unable to accurately assess interstate market 
implications.\113\ For example, the western energy crisis of 2000-2001 
resulted in high power and natural gas prices in California which were 
compounded by restricted flows of gas into California due to an 
explosion on the El Paso pipeline that connects west Texas production 
to California earlier in 2000. The ability to observe flows on the PG&E 
and SoCal systems would have enabled market participants, the 
California Public Utility Commission, and the public to better 
understand the severity of local gas shortages and their impact on 
prices and gas supply.
---------------------------------------------------------------------------

    \113\ Since most information is only posted at major 
interconnections with interstate pipelines and between PG&E and 
SoCal Gas, conditions in-state are not readily discernible.
---------------------------------------------------------------------------

    56. The frequent price differences observed between PG&E and SoCal 
Gas city gate prices provide a further example of the need for greater 
transparency in the California intrastate market. Intrastate pipeline 
constraints within California likely cause these price divergences, but 
the nature and extent of these constraints is unobservable to the 
public. The public has access to flow data at the interconnects of PG&E 
with two interstate pipelines in southern California (with El Paso at 
the Topock receipt point and Transwestern at the Needles receipt 
point). Capacity at the Topock receipt point is not fully utilized and 
cheaper gas should theoretically flow north on PG&E's system to 
equalize prices between PG&E and SoCal Gas. In order to effectively 
understand constraints on intrastate pipelines (and the effects on 
interstate market prices), it is imperative that the public have access 
to better, more timely information on intrastate scheduled gas flows in 
California.
    57. Lack of demand transparency in California markets is 
detrimental to well functioning and competitive interstate markets in a 
number of ways. For example, a holder of pipeline capacity on PG&E's 
non-interstate pipeline system could potentially hoard capacity at key 
points, driving up gas prices in California, while depressing 
interstate prices at the California border. Such non-interstate 
activity not only would have an immediate impact on interstate 
wholesale prices at the border, but would have a ripple effect outward, 
perhaps affecting prices throughout the southwest. In another example, 
the regional impact of a surge in California gas demand by power 
generators, perhaps due to hot weather or a nuclear outage, could be 
more easily understood and assessed if the location of such surges 
could be identified at individual delivery points. Again, obtaining 
information only at the California border would be insufficient to 
understand interstate market prices since the price-affecting 
constraints may be occurring within the State.
    58. Based upon the foregoing examples and the Commission's 
discussion in Order No. 720, the Commission believes that there is 
sufficient nexus between demand-side non-interstate flow information 
and interstate price formation to sustain the Commission's regulations, 
contrary to the position of AGA and Southwest Gas.
Non-Interstate Pipeline Scheduled Flow Postings During Times of Natural 
Disaster Would Benefit Interstate Market Participants
    59. TPA objects to Order No. 720's conclusion that information 
regarding supply flowing through non-interstate pipelines is 
particularly important during times of natural disaster or when 
pipelines are unexpectedly shut down. TPA contends that most non-
interstate pipelines will not be able to post scheduled flow data 
during an emergency.\114\ The Commission disagrees and continues to 
believe that non-interstate pipeline postings are crucial to ameliorate 
market misunderstandings during hurricanes and other situations that 
occasion pipeline outages.
---------------------------------------------------------------------------

    \114\ TPA Request for Rehearing and Clarification at 38.
---------------------------------------------------------------------------

    60. Even if, as TPA suggests without support, major non-interstate 
pipelines would be unable to meet their posting obligations during 
hurricanes, the fact that an emergency is so severe as to preclude 
postings would provide an important signal to the market regarding the 
emergency's impact on natural gas supply. Further, posting information 
up to and following an emergency would give crucial insight regarding 
staged shutdown of supply before an emergency event and renewed 
operation of supply infrastructure following an emergency event.
    61. For example, in September 2005, hurricanes Katrina and Rita 
forced the shut down of Henry Hub for 11 days.\115\ Henry Hub is the 
location for interconnection of four non-interstate and nine interstate 
pipelines. Because of these interconnections, the location is of vital 
importance for transportation of natural gas from the producing region 
in the Gulf to the consuming markets in the Northeast and the 
Midwest.\116\ It is also a crucial pricing point for interstate natural 
gas. Although no interstate pipeline flows were scheduled or prices 
reported for this fourteen day period, the lack of postings reflected 
the outage status of Henry Hub. Resumption of scheduled flow postings 
by interstate pipelines sent an important signal to market participants 
that markets were beginning to normalize.
---------------------------------------------------------------------------

    \115\ 2008 State of Markets Report, Federal Energy Regulatory 
Commission, Division of Energy Market Oversight at 6 (available at 
http://www.ferc.gov/market-oversight/st-mkt-ovr/2008-som-final.pdf).
    \116\ Henry Hub is the interconnecting location of twelve 
pipelines and transportation capacity at the Hub is more than 1.8 
Bcf per day.
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Scheduled Flow Information Posted by Major Non-Interstate Pipelines 
Could Be Utilized To Detect Manipulation and Discriminatory Behavior
    62. We also reject TPA's assertion that non-interstate scheduled 
flow information could not be utilized to detect market manipulation 
and discriminatory behavior. As we discussed in Order No. 720, the 
Commission and other market participants regularly review supply and 
demand fundamentals to determine if prices are the result of such 
market forces.\117\ Understanding supply in large non-interstate 
pipelines leading into the interstate market and demand in large non-
interstate pipelines downstream of the interstate market will enable 
market observers to better understand prices and, therefore, identify 
potential cases of market manipulation.
---------------------------------------------------------------------------

    \117\ Order No. 720 at P 50.
---------------------------------------------------------------------------

    63. The Commission has utilized interstate scheduled flow postings 
in its investigations of market manipulation and unduly discriminatory 
behavior. The Commission will now include relevant non-interstate 
posting data in its evaluations of such allegations.

C. Definition of Major Non-Interstate Pipeline

1. Delivery Threshold
    64. Consistent with the need for greater transparency in the 
interstate natural gas market and Congress' directive in section 23 of 
the NGA, Order No. 720 required major non-interstate pipelines to post 
daily information regarding scheduled volumes at specified points of 
receipt

[[Page 5186]]

and delivery. The Commission adopted a definition of ``major non-
interstate pipeline'' as a pipeline that: (1) Is not a ``natural gas 
pipeline'' under section 1 of the NGA; and (2) delivers annually more 
than 50 million MMBtu of natural gas measured in average deliveries 
over the past three years.\118\ The Commission found that a delivery 
threshold of 50 million MMBtu would capture large non-interstate 
pipelines with operations that have a substantial impact on interstate 
natural gas prices. Further, the 50 million MMBtu threshold is 
consistent with the threshold that the Commission has adopted for 
interstate pipelines to file FERC Form No. 2.\119\ The Commission also 
held that such a threshold would eliminate compliance burdens for 
smaller non-interstate pipelines.\120\
---------------------------------------------------------------------------

    \118\ See 18 CFR 284.1(d). Fifty million MMBtu of natural gas 
deliveries per year is roughly equivalent to 136 MMcf of deliveries 
per day.
    \119\ Order No. 720 at P 66.
    \120\ Id. P 67.
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a. Requests for Rehearing and Clarification
    65. Encana requests that the Commission clarify that new pipelines 
will not be required to post information until at least three years 
following initial operation as they will not have average deliveries 
for the three previous calendar years upon which to determine if they 
exceed the threshold.\121\ TPA supports Encana's requested 
clarification.\122\ Shell requests clarification that a major non-
interstate pipeline is one that delivered annually more than 50 million 
MMBtus for each of the preceding three years.\123\
---------------------------------------------------------------------------

    \121\ Encana Request for Clarification and Clarification at 3.
    \122\ TPA Request for Rehearing and Clarification at 51-52.
    \123\ Shell Request for Rehearing and Clarification at 6-8.
---------------------------------------------------------------------------

b. Commission Determination
    66. Section 284.1(d)(2) of the Commission's regulations provides 
that major non-interstate pipelines are pipelines that deliver 
``annually more than fifty (50) million MMBtus (million British thermal 
units) of natural gas measured in average deliveries for the previous 
three calendar years.'' \124\ We believe this language to be 
unambiguous, requiring the aggregation of pipeline deliveries over the 
previous three calendar years and division by three. Shell's request 
for clarification is therefore denied.
---------------------------------------------------------------------------

    \124\ 18 CFR 284.1(d)(2).
---------------------------------------------------------------------------

    67. As Encana argues,\125\ the Commission did not explicitly state 
how the threshold calculation would apply to pipelines with less than 
three years of operational data. The Commission finds that the 
appropriate threshold to determine if a new pipeline qualifies as major 
non-interstate pipeline is whether the pipeline has the capability to 
deliver more than 50 million MMBtu of natural gas annually. That is, 
until a non-interstate pipeline has experienced three years of 
operational flow, it must utilize its maximum delivery capacity to 
determine whether it is a major non-interstate pipeline subject to this 
transparency rule. Section 284.1(d), defining ``major non-interstate 
pipeline,'' is amended accordingly.
---------------------------------------------------------------------------

    \125\ Encana Request for Rehearing and Clarification at 3.
---------------------------------------------------------------------------

    68. The Commission disagrees with Encana and TPA that new 
pipelines, including large non-interstate pipelines with possible 
natural gas flows that could have significant effects on the interstate 
markets, should be wholly exempt from the posting requirements of this 
rule for the first three years of their existence. New major non-
interstate pipelines have more than a de minimis impact on interstate 
markets and, as such, the Commission's posting requirements shall 
apply.
    69. Further, the Commission will not adopt a threshold for new 
pipelines that utilizes projected three-year natural gas deliveries as 
a proxy for actual deliveries. The Commission agrees with Encana that a 
non-interstate pipeline that gathers production may ``have difficulty 
in projecting the volume of natural gas that it will deliver.'' \126\ 
Thus, the Commission will not require new non-interstate pipelines to 
develop natural gas delivery projections simply to determine whether 
they are a major non-interstate pipeline subject to our transparency 
rules.
---------------------------------------------------------------------------

    \126\ Encana Request for Rehearing and Clarification at 4.
---------------------------------------------------------------------------

    70. Instead, the Commission determines that, until a new pipeline 
develops three years of operational flow data, it must utilize design 
capacity to determine whether the pipeline is a major non-interstate 
pipeline subject to the rule. As discussed in Order No. 720, the 
Commission believes that design capacity data typically will be readily 
accessible to pipelines, especially newly constructed pipelines. As 
such, the Commission expects that a design capacity threshold will be 
the least burdensome method for most new pipelines to determine if they 
are subject to our transparency regulations. Further, in the absence of 
scheduled flow data, capacity is the best measure of the potential 
impact of a new pipeline on the interstate natural gas markets.
    71. Accordingly, the Commission denies Encana's and TPA's requested 
clarification. However, the Commission requires pipelines without three 
years' operational data to utilize design capacity to determine whether 
they are major non-interstate pipelines. Section 284.1(d) of our 
regulations is modified to include this requirement.
2. Treatment of Non-Contiguous Pipeline Systems
    72. In Order No. 720, the Commission defined major non-interstate 
pipelines utilizing a 50 million MMBtu annual delivery threshold.\127\ 
The order clarified that the threshold would be applied on a 
``facility-by-facility'' basis.\128\
---------------------------------------------------------------------------

    \127\ This threshold is included in the definition of ``major 
non-interstate pipeline'' in 18 CFR 284.1(d).
    \128\ Order No. 720 at P 64.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    73. AGA, Southwest Gas, and Bear Paw/ONEOK Gathering Companies 
request either clarification, rehearing, or both regarding the meaning 
of ``facility-by-facility.'' Particularly, petitioners request 
clarification as to how the delivery threshold for major non-interstate 
pipelines applies to pipeline systems that are non-contiguous (i.e., 
pipelines that are not directly interconnected with each other).\129\ 
AGA argues that non-contiguous pipeline systems should be viewed 
separately to determine whether each pipeline system is a major non-
interstate pipeline or is eligible for the exceptions for posting in 
section 284.14(b)(2).\130\
---------------------------------------------------------------------------

    \129\ AGA Request for Rehearing and Clarification at 27-28; SWG 
Request for Rehearing and Clarification at 7; Bear Paw/ONEOK Request 
for Rehearing and Clarification at 10-11.
    \130\ AGA Request for Rehearing and Clarification at 27-28.
---------------------------------------------------------------------------

    74. Southwest Gas requests that the Commission clarify that 
separate facilities should be based, at least for an LDC, upon the 
LDC's own ``operational grouping of lines and facilities within an 
operational area.'' \131\ Southwest Gas also requests clarification 
that its separate operating systems need not comply with the posting 
regulations based upon factual representations made in its 
comments.\132\
---------------------------------------------------------------------------

    \131\ Southwest Gas Request for Rehearing and Clarification at 
7.
    \132\ Id. at 7-9.
---------------------------------------------------------------------------

    75. Bear Paw/ONEOK supports the Commission's determination that 
major non-interstate pipelines be determined on a facility-by-facility 
basis. However, they request clarification that ``facility-by-
facility'' analysis is appropriate where ``physically separate 
facilities are

[[Page 5187]]

not operated on an integrated basis.'' \133\ Bear Paw/ONEOK claims that 
such a clarification would eliminate incentives for non-interstate 
pipelines to splinter their facilities into individual companies to 
avoid posting obligations.\134\
---------------------------------------------------------------------------

    \133\ Bear Paw/ONEOK Request for Rehearing and Clarification 
at10-11.
    \134\ Id.
---------------------------------------------------------------------------

b. Commission Determination
    76. The Commission clarifies that the phrase ``facility-by-
facility'' as used in Order No. 720 applies both to determine whether a 
pipeline is a major non-interstate pipeline under 18 CFR 284.1(d) and 
also whether a major non-interstate pipeline is nevertheless exempted 
from the posting requirements as provided in 18 CFR 284.14(b). The 
phrase ``facility-by-facility'' was intended by the Commission to 
indicate that major non-interstate pipelines would be defined by a 
common sense grouping of related facilities.
    77. Identifying all of the facilities within a major non-interstate 
pipeline requires consideration of both physical interconnection and 
operational integration. Put differently, a major non-interstate 
pipeline is composed of a set of facilities that is both physically 
interconnected and operationally integrated. We believe that this 
clarification captures the impact that major non-interstate pipelines 
have on price formation. If a set of facilities is physically 
interconnected and operationally integrated, then the facilities, as a 
whole, impact the natural gas market as one entity rather than as 
multiple entities.
    78. By ``operationally integrated,'' the Commission means 
transportation of natural gas through a centralized scheduling process. 
It is at this level of integration that the facilities can be 
coordinated to such an extent that they may have the effect of a single 
entity in the natural gas market. Whether pipelines are organized into 
separate corporate divisions or formal operating systems is not 
relevant to this analysis. For example, if two interconnected sets of 
facilities are operated jointly from a central dispatch center, then 
the facilities together constitute a single pipeline for purposes of 
evaluation under the rule, even if the facilities are separately owned. 
On the other hand, even if two interconnected sets of facilities are 
owned by a single entity, they are nevertheless separate pipelines for 
purposes of the rule if they do not schedule natural gas through a 
joint scheduling process.
    79. Finally, the Commission will not address Southwest Gas's 
requested clarification regarding whether 18 CFR 284.14 applies to 
Southwest Gas's operating systems in Arizona, Nevada, and California. 
Southwest Gas did not provide sufficient information for the Commission 
to make such a determination. Southwest Gas should review its pipeline 
system based upon the clarifications granted herein.

D. Posting Requirements for Major Non-Interstate Pipelines

1. Posting Requirements at Points Where Design Capacity Is Unknown or 
Does Not Exist
    80. In Order No. 720, the Commission required all major non-
interstate pipelines subject to our posting regulations to post 
scheduled natural gas flow and design capacity information for each 
receipt and delivery point with a design capacity equal to or greater 
than 15,000 MMBtu/day.
    81. In the Commission's request for supplemental comments, it 
sought additional input on proposals submitted at the March 18, 2009 
technical conference and subsequent post-conference comments regarding 
application of our posting regulations to receipt and delivery points 
at virtual or pooling points.\135\ Specifically, the Commission 
requested comment on requirements to post at such points with a maximum 
flow equal to or greater than 15,000 MMBtu per day.\136\ The request 
for supplemental comments included possible revisions to our 
regulations, including revisions that would require posting by major 
non-interstate pipelines at eligible virtual and pooling points.\137\ 
Further, the order requesting supplemental comments proposed exempting 
from posting receipt points where actual flows were less than 5,000 
MMBtu each day for the prior three years.\138\
---------------------------------------------------------------------------

    \135\ Order Requesting Supplemental Comments at P 7.
    \136\ Id. P 10.
    \137\ Id. P 7.
    \138\ Id.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    82. Many petitioners requested rehearing or clarification regarding 
how Order No. 720's major non-interstate pipeline posting regulations 
apply to points where design capacity is unknown or does not exist. 
Such points may include, but are not limited to, virtual points, 
pooling points, points that are not operated by the pipeline, and other 
physical points for which the pipeline cannot reasonably determine the 
design capacity.
    83. AGA states that many LDCs schedule volumes to paper pooling 
points without reference to individual physical points.\139\ AGA 
suggests that the Commission consider requiring posting scheduled 
volumes at paper pooling points where the scheduled volumes exceed 
15,000 MMBtu per day.\140\
---------------------------------------------------------------------------

    \139\ AGA Request for Rehearing and Clarification at 25.
    \140\ Id. at 26.
---------------------------------------------------------------------------

    84. Both ONEOK Gathering and Nicor request that the Commission 
clarify whether scheduled volumes to virtual points should be 
posted.\141\ TPA also requests clarification that historical data 
utilized for planning purposes is not required to be posted.\142\
---------------------------------------------------------------------------

    \141\ Nicor Request for Rehearing and Clarification at 5-7; 
ONEOK Gathering Request for Rehearing and Clarification at 10-11.
    \142\ TPA Request for Rehearing and Clarification at 48-49.
---------------------------------------------------------------------------

b. Supplemental Comments
    85. Atmos generally supports the regulatory language proposed in 
the Commission's order requesting supplemental comments stating that 
the proposal ``represents a good compromise between the expensive and 
extensive reporting required under [the NOPR] and the very limited 
reporting requirements proposed by others.'' \143\ Atmos suggests, 
however, that the Commission allow major non-interstate pipelines to 
utilize historical data rather than actual flow data to determine 
posting eligibility for each point.\144\
---------------------------------------------------------------------------

    \143\ Atmos Supplemental Comments at 2.
    \144\ Id. at 3.
---------------------------------------------------------------------------

    86. ONEOK Gathering likewise supports the regulations proposed in 
the order requesting supplemental comments with ``minor 
clarifications.'' \145\ It requests clarification that the three-year 
review of receipt point flows to determine whether the point is 
exempted from posting is three calendar years rather than a rolling 
three year period.\146\
---------------------------------------------------------------------------

    \145\ ONEOK Gathering Supplemental Comments at 4.
    \146\ Id. at 5.
---------------------------------------------------------------------------

    87. Occidental supports the Order Requesting Supplemental Comments' 
proposal to limit posting only to scheduled points, and requests 
modification of the regulatory language to further clarify this 
subject, including a definition of virtual and pooling points.\147\ 
Occidental suggests utilizing an average of multiple days' actual flow 
rather than peak day actual flow to determine posting eligibility for 
each

[[Page 5188]]

point.\148\ Occidental states that it is inappropriate to require 
posting based upon a single-day anomaly in gas flow.\149\
---------------------------------------------------------------------------

    \147\ Occidental Supplemental Comments at 3.
    \148\ Id. at 4-5.
    \149\ Id. at p. 5.
---------------------------------------------------------------------------

    88. TPA requests that the Commission extend the proposed exemption 
for receipt points with less than 5,000 MMBtu of flow each day both to 
delivery points and to points for which a design capacity is 
known.\150\ TPA argues that points ``flowing less than 15,000 MMBtu 
every day for three years have no significant impact on pricing.'' 
\151\ TPA also suggests utilizing an average throughput as a threshold 
to determine whether a point with no known design capacity must be 
posted.\152\ KM Intrastate Pipelines support TPA's supplemental 
comments.\153\ Atmos likewise suggests that the proposed exemption be 
extended to delivery points.\154\
---------------------------------------------------------------------------

    \150\ TPA Supplemental Comments at 5.
    \151\ Id.
    \152\ Id. at 4.
    \153\ KM Supplemental Comments at 1.
    \154\ Atmos Supplemental Comments at 5.
---------------------------------------------------------------------------

    89. AGA's supplemental comments request clarification as to how 
posted capacity is determined for non-physical points where volumes are 
scheduled.\155\ AGA also suggests that the Commission clarify the 
manner in which volumes are calculated for non-physical receipt and 
delivery points.\156\ AGA suggests that the Commission adopt a 
threshold based upon scheduled volumes for posting of points with no 
known design capacity.
---------------------------------------------------------------------------

    \155\ AGA Supplemental Comments at 25.
    \156\ Id. at 26.
---------------------------------------------------------------------------

c. Commission Determination
    90. The Commission grants the requests for rehearing and 
clarification. As petitioners note, Order No. 720 did not address the 
posting of virtual, pooling, or other points to which natural gas 
volumes are scheduled and yet where design capacity is unknown or does 
not exist. Based on the additional information received, the Commission 
finds that major non-interstate pipelines must post scheduled flow data 
for points where design capacity is unknown or does not exist with 
scheduled maximum natural gas volumes equal to or greater than 15,000 
MMBtu on any day within the prior three calendar years. The Commission 
amends 18 CFR 284.14(a)(1) to implement this requirement.
    91. As petitioners and commenters have stated, some major non-
interstate pipelines schedule natural gas flows to virtual or pooling 
points where there is no physically-measurable design capacity.\157\ 
Further, there exist a small number of physical receipt and delivery 
points where major non-interstate pipelines cannot reasonably determine 
a physical design capacity. Nevertheless, transportation to these 
points may be substantial and have a significant effect on interstate 
natural gas price formation. Petitioners have presented no arguments 
that scheduled volumes to such points have only de minimis effects on 
interstate price formation.
---------------------------------------------------------------------------

    \157\ The Commission will not amend its regulations to define 
``virtual points'' or ``pooling points'' as suggested by some 
petitioners. These terms are not utilized in the regulations. 
Instead, the posting regulations distinguish between points at which 
design capacity is known, on the one hand, or is unknown or does not 
exist.
---------------------------------------------------------------------------

    92. For purposes of determining whether a point with no known 
design capacity must be posted, major non-interstate pipelines shall 
use the largest scheduled natural gas flow over the past three calendar 
years.\158\ If the largest daily scheduled flow is equal to or greater 
than 15,000 MMBtu, then the point is subject to posting. The potential 
impact on the natural gas market of a physically metered point is best 
understood through reference to its design capacity. The greater the 
capacity of the point, the greater the natural gas flows that could 
occur at the point and the greater the market impact. For this reason, 
the Commission adopted in Order No. 720 a design capacity threshold for 
posting at points where design capacity is known. For a point with no 
known design capacity, the closest approximation for design capacity is 
the maximum flow scheduled to the point. Additionally, maximum 
scheduled daily flow will not be burdensome for major non-interstate 
pipelines to calculate for points with no known design capacity.
---------------------------------------------------------------------------

    \158\ We discuss, infra, the timing of postings for all newly-
eligible receipt and delivery points, including both points for 
which design capacity is known and unknown.
---------------------------------------------------------------------------

    93. The Commission clarifies that, as with posting related to 
points with a known design capacity, postings at points with no known 
design capacity are required only for scheduled volumes. The Commission 
is not requiring the posting of unscheduled natural gas volumes or 
actual flow. Nor is it requiring posting regarding points to which no 
volumes are scheduled. As discussed in Order No. 720, the posting of 
unscheduled volumes would be unduly burdensome.\159\
---------------------------------------------------------------------------

    \159\ Order No. 720 at P 57.
---------------------------------------------------------------------------

    94. The Commission's regulations further reduce the burden on 
posting pipelines with virtual points by requiring posting based upon 
calendar year data. Thus, major non-interstate pipelines need only 
review scheduled volume data annually to determine whether points where 
no design capacity is known must be posted. Points with scheduled 
natural gas flows equal to or greater than 15,000 MMBtu per day become 
eligible for posting on January 1 of the following year.
    95. The Commission will not adopt alternative proposals regarding 
the appropriate posting threshold for points with no known design 
capacity. Atmos suggests that the Commission adopt a threshold 
utilizing historical metered flows. TPA suggests utilizing an average 
of maximum scheduled flows at each point. Neither of these suggestions 
more closely approximates design capacity than a single-day maximum 
scheduled flow. Further, identifying multiple maximum scheduled flow 
days or appropriate historical actual metered flow would be more 
burdensome than identifying a single-day maximum scheduled flow.\160\
---------------------------------------------------------------------------

    \160\ Consistent with TPA's suggestion, we have clarified 
section 284.14(a)(4) of our regulations to reflect that the ``Method 
of Determining Posted Capacity'' includes ``Maximum Volume'' rather 
than ``Maximum Average Volume.''
---------------------------------------------------------------------------

    96. The Commission also finds that the appropriate timeframe for 
the scheduled flow threshold that we adopt is three years. A three 
calendar year review is sufficient to identify reportable points on 
major non-interstate pipelines while allowing pipelines to remove 
points that are no longer significant.\161\ We also clarify, as TPA 
requests, that historical data need not be posted for points at which 
no design capacity is known.
---------------------------------------------------------------------------

    \161\ We note, as we did in Order No. 720, that our regulations 
do not require that pipelines remove any points from points that are 
posted. Indeed, we welcome the greater transparency afforded by 
postings at receipt and delivery points even where the Commission's 
regulations permit posting to terminate.
---------------------------------------------------------------------------

2. Posting Requirements at Points Where Design Capacity Is Known
    97. In Order No. 720, the Commission required major non-interstate 
pipelines to post information for receipt and delivery points with 
design capacity equal to or greater than 15,000 MMBtu per day.\162\ The 
Commission found that market participants could utilize design capacity 
and scheduled volume information to help determine available capacity 
at a particular point and, therefore, required posting of both design 
capacity and scheduled volumes.\163\ Order No. 720 clarified that, 
where the design capacity of a receipt or delivery point could vary 
according to operational or usage conditions, major

[[Page 5189]]

non-interstate pipelines must post the design capacity for the most 
common usage conditions of its system during peak periods.\164\
---------------------------------------------------------------------------

    \162\ Order No. 720 at P 82; see 18 CFR 284.14(a).
    \163\ Order No. 720 at P 82, 84.
    \164\ Id. at P 92.
---------------------------------------------------------------------------

    98. In the Order Requesting Supplemental Comments, the Commission 
sought comment on a proposal to exempt from posting all receipt points 
at which design capacity was known that experienced actual flow of less 
than 5,000 MMBtu per day on every day within the prior three 
years.\165\ The Commission explained that this proposal was based upon 
its understanding, from the record in this proceeding, that many major 
non-interstate pipelines have receipt points with design capacities 
greater than 15,000 MMBtu per day and yet consistently flow far less 
natural gas than this design capacity.\166\ The proposal balanced the 
transparency goal of the rule with the costs associated with posting at 
such receipt points.
---------------------------------------------------------------------------

    \165\ Order Requesting Supplemental Comments at P 10.
    \166\ Id.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    99. ONEOK Gathering, Nicor, Atmos, Shell, and TPA request 
clarification regarding whether posting is required for a physical 
point if natural gas flows are not scheduled to the point.\167\
---------------------------------------------------------------------------

    \167\ Nicor Request for Rehearing and Clarification at 7-8; 
ONEOK Gathering Request for Rehearing and Clarification at 11; Atmos 
Request for Rehearing and Clarification at 2-3; Shell Request for 
Rehearing and Clarification at 8-9; TPA Request for Rehearing and 
Clarification at 48-50.
---------------------------------------------------------------------------

    100. Enogex argues that the Commission erred in concluding that the 
posting of scheduled volumes and design capacity at a given point will 
allow shippers to determine how much capacity is available at the 
point.\168\ Enogex states, without further explanation, that ``capacity 
constraints and other conditions on a pipeline's system affect the 
amount of capacity that can be made available on a daily basis.'' \169\
---------------------------------------------------------------------------

    \168\ Enogex Request for Rehearing and Clarification at 11.
    \169\ Id. at 11.
---------------------------------------------------------------------------

    101. ONEOK Gathering requests clarification regarding the 
calculation of design capacity for points with meters for which the 
major non-interstate pipeline does not have control.\170\ In such 
circumstances, ONEOK Gathering suggests that the Commission permit 
major non-interstate pipelines to rely upon representations made by the 
entity controlling the point or to make reasonable estimates of design 
capacity. ONEOK Gathering also requests clarification regarding design 
capacity postings for receipt and delivery points on major non-
interstate pipelines with greater capacity than interconnected 
interstate pipelines.\171\ Further, ONEOK Gathering requests 
clarification regarding how pipeline design capacity should be 
calculated as a general matter or, in the alternative, establishment of 
a safe harbor for calculations regarding design capacity.\172\
---------------------------------------------------------------------------

    \170\ ONEOK Gathering Request for Rehearing and Clarification at 
9-10.
    \171\ Id.
    \172\ Id.
---------------------------------------------------------------------------

b. Supplemental Comments
    102. In its supplemental comments, Atmos requests that the 
Commission extend the proposed exemption for receipt points with less 
than 5,000 MMBtu of flow each day both to points for which design 
capacity is unknown.\173\ Atmos argues that extension of the exemption 
to points for which design capacity is unknown would provide regulatory 
consistency in that points with a known design capacity would be 
treated similarly to points with an unknown design capacity.\174\ TPA 
echoes these comments, urging also that the exemption threshold be 
raised to 15,000 MMBtu per day for all points, including points where 
design capacity is known or not known.\175\ TPA argues that points 
flowing less than 15,000 MMBtu per day every day for three years have 
no significant impact on pricing in the U.S.\176\
---------------------------------------------------------------------------

    \173\ Atmos Supplemental Comments at 5.
    \174\ Id. at 6.
    \175\ TPA Supplemental Comments at 4-5.
    \176\ Id. at 5.
---------------------------------------------------------------------------

    103. NGSA also urges that the proposed exemption should be adopted 
and extended to points at which design capacity is known. NGSA claims 
that the proposed exemption ``exposes a problem inherent in using 
design capacity as a threshold--it may capture points that are not 
truly significant.'' \177\ NGSA requests that the Commission modify its 
regulations to provide that points with physically metered design 
capacity are eligible for the exemption and also that the exemption 
threshold be increased to 12,000 MMBtu per day.\178\
---------------------------------------------------------------------------

    \177\ NGSA Supplemental Comments at 5.
    \178\ Id.
---------------------------------------------------------------------------

c. Commission Determination
    104. The Commission denies the requests for rehearing and 
clarification. Regarding Enogex's comments, the Commission continues to 
believe, as stated in Order No. 720, that, as a general matter, 
``[m]arket observers may estimate availability by subtracting scheduled 
volumes from design capacity.'' \179\ The Commission understands that 
day-to-day operational factors can sometimes affect available capacity 
in ways that are not readily apparent. However, just as we have 
observed regarding similar postings made by interstate pipelines, 
market participants will very often be able to ascertain available 
capacity from the data to be posted by major non-interstate pipelines.
---------------------------------------------------------------------------

    \179\ Order No. 720 at P 84.
---------------------------------------------------------------------------

    105. Additionally, the Commission's regulations do not prohibit 
major non-interstate pipelines from posting additional information, 
including, for example, operational considerations that could affect 
available capacity.
    106. Regarding the calculation of design capacity, the Commission 
confirms the statement in Order No. 720: ``[i]n the circumstance where 
the design capacity of a receipt or delivery point could vary according 
to operational or usage conditions, a major non-interstate pipeline 
must post the design capacity for the most common operating conditions 
of its system during peak periods.'' \180\ This guidance is consistent 
with the guidance that we have provided to interstate pipelines subject 
to our long standing posting requirements.\181\ Regarding ONEOK 
Gathering's specific request for guidance regarding major non-
interstate points with greater capacity than an interconnected 
interstate pipeline, the Commission clarifies that the obligation to 
post design capacity relates to the major non-interstate pipeline's 
facilities. As such, major non-interstate pipelines must post design 
capacity of their facilities even if an interconnecting facility's 
capacity is less than the major non-interstate pipeline's.
---------------------------------------------------------------------------

    \180\ Id. P 92.
    \181\ Id.
---------------------------------------------------------------------------

    107. Major non-interstate pipelines must use reasonable efforts to 
determine design capacity at physical receipt and delivery points. To 
the extent that a major non-interstate pipeline is uncertain as to how 
to calculate design capacity at a point, they are free to contact the 
Commission's compliance help desk for informal guidance.\182\ 
Therefore, the Commission will not adopt a safe harbor for the posting 
of design capacity.
---------------------------------------------------------------------------

    \182\ As we reminded major non-interstate pipelines in Order No. 
720, the Commission's help desk can facilitate responses to 
questions regarding compliance with our regulations. See Obtaining 
Guidance on Regulatory Requirements, 123 FERC ] 61,157 (2008).
---------------------------------------------------------------------------

    108. No commenter objected to the proposal, contained in the 
Commission's order requesting

[[Page 5190]]

supplemental comments, to adopt an exemption from posting for receipt 
points with actual flow of less than 5,000 MMBtu per day on each day 
within the prior three years. With two minor modifications, the 
Commission adopts this exemption. Namely, the exemption shall apply to 
receipt points with scheduled natural gas volumes of less than 5,000 
MMBtu per day on each day within the prior three calendar years. These 
modifications are consistent with the Commission's determination to 
post scheduled volumes rather than actual flow and should be less 
burdensome for major non-interstate pipelines to implement than a 
rolling exemption based upon actual flow.\183\
---------------------------------------------------------------------------

    \183\ TPA Supplemental Comments at 5; NGSA Supplemental Comments 
at 4-6; Atmos Supplemental Comments at 5.
---------------------------------------------------------------------------

    109. The Commission will not further extend this exemption as 
requested by some commenters. The Commission clarifies that the 
exemption applies to only receipt points, not delivery points or points 
that operate both as receipt and delivery points. The exemption is 
intended primarily to apply to pipelines that receive gas from 
declining production areas.\184\ These pipelines may have receipt 
points that were designed to accommodate natural gas flows of 15,000 
MMBtu per day, but, because of declining production over time, flows 
into these points have dwindled to consistently de minimis levels. In 
such circumstances, it is unlikely that excess capacity at the point 
could become utilized in the future and the burden of posting at the 
point may exceed the transparency value.
---------------------------------------------------------------------------

    \184\ While the exemption could be utilized to exempt receipt 
points under other circumstances, we decline to further restrict the 
exemption. Such restrictions would complicate application of the 
exemption, increasing the burden on major non-interstate pipelines.
---------------------------------------------------------------------------

    110. As Order No. 720 explained, one of the chief goals of our 
posting regulations for major non-interstate pipelines is to assist the 
public's estimates of available capacity on large non-interstate 
pipelines, and the potential impacts on interstate price formation. 
Delivery points with excess capacity may often be utilized to provide 
additional service. As just one example, a delivery point that supplies 
several industrial consumers of natural gas may encounter reduced 
scheduled flows during economic downturns caused by reduction of output 
from the industrial consumers. Capacity is available, however, and use 
of the point may increase as economic conditions improve. This data 
would be useful for market participants to review as they consider the 
effect of increased demand on interstate natural gas prices.\185\
---------------------------------------------------------------------------

    \185\ Further, given the determination to require updating of 
posted points only on a bi-annual basis, a delivery point that was 
``dropped'' from posting could experience resurgent flow for over 
seven months before posting resumed. Such a result is contrary to 
the transparency goals expressed in NGA section 23.
---------------------------------------------------------------------------

    111. Additionally, the Commission clarifies that the exemption 
applies only to points with a stated design capacity--we decline to 
extend the exemption to points for which no design capacity is 
known.\186\ As discussed above, the exemption is intended to apply to 
receipt points that were designed to accommodate natural gas flows of 
15,000 MMBtu per day, but, because of declining production over time, 
flows into these points have dwindled to de minimis levels. Extending 
this exemption to points for which design capacity is unknown would be 
inconsistent with our determination that such points should be subject 
to posting if scheduled flows exceed 15,000 MMBtu per day on any day 
within the prior three years.
---------------------------------------------------------------------------

    \186\ 18 CFR 284.14(a)(2) of the regulations adopted herein by 
its terms applies to the entirety of section 284.14(a)(1), including 
both points for which a design capacity is posted and those that are 
not. Section 284.14(a)(2) applies only to receipt points with 
scheduled volumes of less than 5,000 MMBtu per day for each day 
within the prior three years. Points where no design capacity is 
posted, by definition, have experienced scheduled flows equal to or 
greater than 15,000 MMBtu per day and are thus not eligible for the 
exemption.
---------------------------------------------------------------------------

    112. Lastly, the Commission clarifies that the posting exemption 
for receipt points with scheduled natural gas volumes of less than 
5,000 MMBtu per day on each day within the prior three calendar years 
does not require that pipelines remove points that have been subject to 
posting. We emphasize, as we did in Order No. 720, that our posting 
regulations are minimum posting requirements. Major non-interstate 
pipelines may elect to post additional data regarding their operations.
3. Timing of Posting of Eligible Points
    113. In the Order Requesting Supplemental Comments, the Commission 
sought additional comment on the appropriate time for posting to begin 
for newly eligible points. The order sought comments on one proposal 
that would require posting for each receipt and delivery point to begin 
within 45 days of the point's eligibility for posting.\187\
---------------------------------------------------------------------------

    \187\ Order Requesting Supplemental Comments at P 9.
---------------------------------------------------------------------------

a. Supplemental Comments
    114. TPA's supplemental comments claim that 45 days is insufficient 
time for review of flow data to determine if posting is required, even 
if such determinations utilize monthly billing data.\188\ AGA urges the 
Commission to require new receipt and delivery points to be added 
annually rather than on a rolling 45-day basis. AGA claims that such a 
modification would reduce compliance burdens for major non-interstate 
pipelines.\189\ TPA requests that the Commission require major non-
interstate pipelines to determine, on a semi-annual basis, whether 
points with no known design capacity must be posted. ONEOK Gathering 
supports TPA's request that eligible points be determined on a bi-
annual basis.\190\
---------------------------------------------------------------------------

    \188\ TPA Supplemental Comments at 3.
    \189\ AGA Supplemental Comments at 27.
    \190\ ONEOK Gathering Supplemental Comments at 4.
---------------------------------------------------------------------------

b. Commission Determination
    115. The Commission grants rehearing and revises section 
284.14(a)(3) of its regulations to require major non-interstate 
pipelines to begin Internet postings for newly eligible receipt and 
delivery points within 45 days of the point's eligibility for posting.
    116. The Commission understands commenters' arguments that posting 
new points on a rolling basis would be burdensome for major non-
interstate pipelines, but believes that these burdens are overstated 
and substantially outweighed by the transparency benefit of timely 
posting of newly eligible points.\191\ Major non-interstate pipelines 
have access to, and utilize on a daily basis, all of the information 
necessary to determine whether a receipt or delivery point must be 
posted under our regulations. The posting of newly eligible points is 
of substantial value to market participants as new receipt and delivery 
points or increased scheduled flow to points could have immediate, 
substantial effect on market prices. Balancing the transparency 
benefits of timely posting for newly eligible points with this burden, 
we believe that a 45-day requirement for the posting of newly eligible 
points is appropriate. Such a requirement would allow major non-
interstate pipelines to utilize monthly billing and report data to 
determine the eligibility of new points.\192\
---------------------------------------------------------------------------

    \191\ The Commission notes that newly eligible points may be 
newly constructed receipt and delivery points or existing points 
that have become eligible for posting due to an increase in 
scheduled natural gas volumes.
    \192\ To the extent that a major non-interstate pipeline does 
not believe that it can, using reasonable efforts, determine the 
eligibility of new points and begin posting within 45 days of their 
eligibility, it may request waiver from the Commission of this 
requirement.

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

[[Page 5191]]

    117. We decline to require only an annual or semi-annual review of 
new points as AGA and others suggest. Volumes at points that are large 
enough to require posting may have a significant impact on wholesale 
natural gas price formation. Delaying posting for a full year at such 
points would be contrary to the Commission's transparency goals.
4. Clarifications Regarding the Major Non-Interstate Posting 
Requirements
a. Confidentiality of Data To Be Posted
    118. In Order No. 720, the Commission rejected requests to abandon 
this rule on the grounds that posted information would competitively 
disadvantage non-interstate pipelines or non-interstate pipeline 
transportation customers.\193\ This determination was based upon the 
Commission's substantial experience with interstate posting 
requirements and the general, aggregated nature of the information to 
be posted by non-interstate pipelines.
---------------------------------------------------------------------------

    \193\ Order No. 720 at P 88-89.
---------------------------------------------------------------------------

    119. AGA argues on rehearing that posting at delivery points with 
one or few transportation customers could have anti-competitive effects 
in certain situations.\194\ Additionally, AGA believes that, in certain 
circumstances, the Commission's posting requirements could require LDCs 
to violate other regulatory requirements regarding the posting of 
customer-specific data.\195\
---------------------------------------------------------------------------

    \194\ AGA Request for Rehearing and Clarification at 24.
    \195\ Id.
---------------------------------------------------------------------------

    120. California LDCs make similar arguments in their request for 
rehearing of Order No. 720, echoing arguments previously made in 
response to the NOPR. They request that the Commission clarify that 
major non-interstate pipelines are not required to post confidential 
customer information.\196\ Enogex argues that the posting of certain 
information could disclose the identity of end-users on an LDCs 
system.\197\
---------------------------------------------------------------------------

    \196\ California LDCs Request for Clarification and Rehearing at 
17-18.
    \197\ Enogex Request for Rehearing and Clarification at 10.
---------------------------------------------------------------------------

    121. California LDCs' supplemental comments provide additional 
detail regarding their position. California LDCs' supplemental comments 
argue that posting scheduled flow information may violate the 
California Public Utility Commission's (CPUC's) confidentiality 
regulations. Specifically, according to these commenters, posting 
information required by Order No. 720 may cause the California LDCs to 
violate the CPUC's directives to preserve customer privacy.\198\ 
Further, the comments repeat arguments made in their request for 
rehearing and comments in response to the NOPR that disclosure of 
scheduled flows could competitively disadvantage generators that 
receive natural gas at a delivery point.\199\ Additionally, the 
California LDCs expand on prior comments that disclosure of location 
names or location information could disclose critical energy 
infrastructure information or information about military installations 
with national security implications.\200\
---------------------------------------------------------------------------

    \198\ PG&E and SoCal Gas Supplemental Comments at 6.
    \199\ Id. at 5-6.
    \200\ Id. at 5.
---------------------------------------------------------------------------

    122. In supplemental comments, NGSA requests clarification that 
posting is required only for aggregated scheduled volumes, not specific 
delivery accounts.\201\ NGSA also requests that the Commission permit 
market participants to seek exemptions for posting at certain points to 
protect commercially sensitive information.\202\
---------------------------------------------------------------------------

    \201\ NGSA Supplemental Comments at 6.
    \202\ Id.
---------------------------------------------------------------------------

    123. Most of the arguments raised by petitioners and commenters 
were discussed and rejected in Order No. 720.\203\ The regulations 
therein adopted required only posting of aggregated, not account-
specific, scheduled flow data.\204\ The Commission noted that its 
interstate pipeline posting regulations require posting at receipt and 
delivery points even if the points are customer-specific and the 
industry has benefitted from the transparency afforded by such 
postings.\205\ Congress clearly expressed an intent in NGA section 23 
to ensure that relevant market data is made available to the 
public.\206\ For these reasons, we reject petitioners' requests to 
limit the posting of information.
---------------------------------------------------------------------------

    \203\ Order No. 720 at P 88-89.
    \204\ While our major non-interstate pipeline posting 
regulations do not require the posting of account-specific data, 
they do not prohibit such postings.
    \205\ Order No. 720 at P 88-89.
    \206\ Id.
---------------------------------------------------------------------------

    124. Additionally, the Commission does not believe its regulations 
require the disclosure of potentially sensitive information regarding 
the physical location of receipt and delivery points or actual natural 
gas flows that would implicate national security. Our major non-
interstate posting requirements do not mandate disclosure of the 
physical location or composition of receipt and delivery point 
facilities.
    125. Lastly, the Commission does not believe that its regulations 
are in conflict with State public utility commissions' general 
prohibitions regarding disclosure of private customer data. We note 
that the CPUC itself has not raised this issue in this proceeding--nor 
have any other non-interstate pipelines within California other than 
the California LDCs. The California LDCs' claim that our posting 
regulations ``likely'' would identify particular customers on their 
systems and customer's usage.\207\ Such concerns are speculative and 
commenters fail to identify any specific points where application of 
our posting requirements would be inconsistent with the CPUC's privacy 
guidelines. The Commission therefore denies rehearing and declines to 
modify its regulations as requested by the petitioners.
---------------------------------------------------------------------------

    \207\ PG&E and SoCal Gas Supplemental Comments at p. 6.
---------------------------------------------------------------------------

b. Duplicate Postings
    126. AGA and National Grid request clarification regarding posting 
of information by major non-interstate pipelines at points of 
interconnection with interstate pipelines.\208\ They argue that such 
postings are duplicative of postings made by interstate pipelines. 
Additionally, Bear Paw/ONEOK argues that postings should not be 
required by major non-interstate pipelines at locations downstream of 
processing facilities if such postings would be duplicative of postings 
made by interstate pipelines.\209\
---------------------------------------------------------------------------

    \208\ AGA Request for Rehearing and Clarification at 22-24; 
National Grid Request for Rehearing and Clarification at 9-10.
    \209\ Bear Paw/ONEOK Supplemental Comments at 9-10.
---------------------------------------------------------------------------

    127. In response to AGA's, National Grid's, and Bear Paw/ONEOK's 
requests, the Commission clarifies that major non-interstate pipelines 
must post at eligible points at interconnections with interstate 
pipelines and denies the requests for rehearing. Postings at 
interconnections with interstate pipelines are not necessarily 
duplicative as the Commission's posting requirements for interstate 
pipelines differ from the requirements for major non-interstate 
pipelines. Further, available capacity at points of interconnection may 
differ between interstate and major non-interstate pipelines and this 
information would be unavailable if only interstate pipelines posted 
data. Even if posted information is, on occasion, duplicative, market 
participants can utilize posted information from one pipeline to better 
evaluate the accuracy of information posted by the interconnected 
pipeline. It has been the Commission's experience administering our 
interstate posting requirements that ``duplicative'' postings at 
interconnections between interstate

[[Page 5192]]

pipelines are very helpful to market participants.
c. Monthly and Weekly Scheduling
    128. In Order No. 720, the Commission concluded that major non-
interstate natural gas pipelines should post data on a daily 
basis.\210\ Less frequent postings would not provide sufficient 
transparency for market observers to understand price fluctuations in a 
timely manner.
---------------------------------------------------------------------------

    \210\ This requirement is contained in section 284.14(a)(4) of 
the Commission's regulations.
---------------------------------------------------------------------------

    129. On rehearing, Targa claims that the requirement to post 
scheduled data on a daily basis ``likely would require [Targa] to 
redefine the nature of its relationships with current and future 
customers.'' \211\ Targa explains that it does not utilize daily 
scheduling or nominations, but that it reads its system meters on a 
monthly basis.\212\ Targa reads Order No. 720 as requiring it ``to 
establish an internal gas control function'' to comply with the 
Commission's posting regulations.\213\
---------------------------------------------------------------------------

    \211\ Targa Request for Rehearing and Clarification at 9.
    \212\ Id.
    \213\ Id.
---------------------------------------------------------------------------

    130. As the Commission stated in Order No. 720, the Commission's 
major non-interstate pipeline posting regulations do not regulate the 
rates, terms, or conditions of service for major non-interstate 
pipelines.\214\ To the extent that Targa complains of the need to 
designate personnel to ensure compliance with the data posting 
requirements, we deny the company's rehearing request. Compliance with 
the Commission's regulations is mandatory for all non-exempt major non-
interstate pipelines. However, to the extent that Targa's comments 
assume that Order No. 720 requires major non-interstate pipelines to 
schedule natural gas transportation on a daily basis, we clarify that 
Order No. 720 imposes no such requirement. Natural gas transportation 
that is not scheduled need not be posted. If natural gas transportation 
is scheduled on a daily basis, then such scheduled volumes should be 
posted along with other required data.
---------------------------------------------------------------------------

    \214\ Order No. 720 at P 24.
---------------------------------------------------------------------------

    131. Further, the Commission clarifies that, if a major non-
interstate pipeline schedules natural gas transportation using a 
timeframe different from daily scheduling (e.g., weekly or monthly 
scheduling), postings must nevertheless occur on a daily basis 
utilizing the most recent scheduling data. Major non-interstate 
pipelines that engage in such scheduling practices must use reasonable 
efforts to estimate daily natural gas scheduled flows. Further, major 
non-interstate pipelines must explain the basis for such estimates on 
their Internet Web sites. For example, if a major non-interstate 
pipeline schedules natural gas transportation for the upcoming week, it 
could post daily scheduled flows in equal amounts each day (i.e., \1/7\ 
of the weekly scheduled amount) if it believes that deliveries will be 
uniform each day.
d. Postings for Bi-Directional Scheduled Volumes
    132. In Order No. 720, the Commission required major non-interstate 
pipelines to post, for each eligible point and on a daily basis, 
``Scheduled Volume'' \215\ and incorporated this requirement in 18 CFR 
284.14(a)(4).
---------------------------------------------------------------------------

    \215\ Order No. 720 at P 94.
---------------------------------------------------------------------------

    133. Atmos requests clarification regarding posting of Scheduled 
Volume at points with bi-directional scheduled natural gas flows (i.e., 
points of both receipt and delivery).\216\ Atmos urges the Commission 
to determine that net volumes be posted at such points. Similarly, 
Atmos requests clarification regarding posting at points where bi-
directional scheduled transportation results in displacement.\217\
---------------------------------------------------------------------------

    \216\ Atmos Request for Rehearing and Clarification at 5-6.
    \217\ Id. at 6-7.
---------------------------------------------------------------------------

    134. In response to Atmos' request, the Commission clarifies that 
bi-directional scheduled volumes should not be netted against each 
other prior to posting. The Commission modifies 18 CFR 284.14(a)(4) 
consistent with this determination and requires Scheduled Volume to be 
posted for each direction of scheduled natural gas flow. While the 
Commission agrees, as Atmos argues, that market observers should be 
aware that Atmos' and other major non-interstate pipelines' bi-
directional scheduling affects available capacity, the Commission 
believes that, for transparency purposes, posting more information 
about such scheduling is preferable than less information. Postings for 
points that operate as both receipt and delivery points should include 
Scheduled Volume in each direction separately.\218\ To the extent that 
a major non-interstate pipeline believes that such posting would 
provide misleading data regarding available capacity at the point, it 
may post a narrative explaining how such scheduled volumes affect 
available capacity.
---------------------------------------------------------------------------

    \218\ The Commission will leave the manner of posting such bi-
directional flows to the major non-interstate pipeline's discretion. 
For example, a major non-interstate pipeline may choose to reflect 
bi-directional scheduled volumes at a single point as two separate 
points, one for each direction of scheduled flow. Alternatively, it 
could list two separate volumes for a single point, identifying the 
direction of each scheduled volume.
---------------------------------------------------------------------------

e. Timing of Postings
    135. In Order No. 720, the Commission determined postings by major 
non-interstate pipelines should be made no later than 10:00 p.m. 
central clock time on the day prior to scheduled gas flow.\219\ AGA and 
National Grid request that the Commission include this requirement in 
the regulations adopted.\220\ The Commission agrees and section 
284.14(a)(4) of our regulations has been modified to require postings 
by 10 p.m. central clock time the day prior to scheduled flow.
---------------------------------------------------------------------------

    \219\ Order No. 720 at P 97.
    \220\ AGA Request for Rehearing and Clarification at 28; 
National Grid Request for Rehearing and Clarification at 10.
---------------------------------------------------------------------------

f. Reporting by Customer Class
    136. In Order No. 720, the Commission required major non-interstate 
pipelines to post information regarding scheduled flows on an 
aggregated basis.\221\ Yates requests that the Commission expand this 
requirement to include postings at each point by customer class and to 
identify affiliate relationships.\222\ Yates argues that such postings 
could enable market participants to detect unduly discriminatory 
activities by major non-interstate pipelines.\223\
---------------------------------------------------------------------------

    \221\ Order No. 720 at P 137.
    \222\ Yates Request for Rehearing and Clarification at 5-7.
    \223\ Id. at 7.
---------------------------------------------------------------------------

    137. The Commission will not require the posting of additional data 
by customer class. As explained in Order No. 720, the Commission's 
primary goal is to enhance the transparency of the interstate natural 
gas market by requiring major non-interstate pipelines to post 
information regarding scheduled natural gas volumes that may impact 
interstate natural gas price formation. Requiring customer class-
specific data would not further this goal.
g. Conversion From Standard Cubic Feet (scf)
    138. The pipeline posting regulations adopted in Order No. 720 
provided for measurements in Btu to determine whether major non-
interstate pipelines were subject to the rule and the receipt and 
delivery points to be posted. In supplemental comments, NGSA suggests 
that the Commission clarify that it is acceptable for major non-
interstate pipelines to utilize a standard conversion of 1,000 Btu per 
scf to

[[Page 5193]]

determine whether a point is required to be posted.\224\
---------------------------------------------------------------------------

    \224\ NGSA Supplemental Comments at 3-4.
---------------------------------------------------------------------------

    139. We grant the requested clarification. To the extent that a 
pipeline cannot reasonably determine scheduled volumes utilizing Btu, 
it may choose to utilize 1,000 Btu per scf as a conversion factor. This 
conversion factor may be used to establish whether a pipeline is a 
major non-interstate pipeline subject to the Commission's regulations 
and also whether specific receipt and delivery points must be posted.
h. Clarification of Information To Be Posted
    140. California LDCs request clarification that available capacity 
should be calculated, for purposes of postings by major non-interstate 
pipelines, by subtracting Design Capacity from Scheduled Volume.\225\ 
The Commission agrees and clarifies that Available Capacity for 
physical points is calculated by subtracting Design Capacity from 
Scheduled Volume. To the extent that Available Capacity is not an 
appropriate estimate of the additional volumes of natural gas that 
could be scheduled at a point, pipelines may provide an explanation 
accompanying their postings.
---------------------------------------------------------------------------

    \225\ California LDCs Request for Rehearing and Clarification at 
19.
---------------------------------------------------------------------------

E. Exemptions

1. Pipelines Upstream of Processing Plants
    141. In Order No. 720, the Commission adopted an exemption to the 
posting requirements contained in Sec.  284.14(a) for major non-
interstate pipelines that lie entirely upstream of a processing, 
treatment, or dehydration plant.\226\ The Commission declared that a 
pipeline may be upstream of a processing plant if it flows into another 
line that flows into a processing plant.\227\ The Commission did not 
provide a general exemption for gathering pipelines.\228\ The 
Commission also declined to adopt an exemption for pipelines that lie 
partially upstream and partially downstream of a processing, treatment, 
or dehydration plant, instead holding that the increased threshold 
mitigated compliance difficulties posed for such pipelines.\229\ The 
Commission held that, in contrast to the ``primary function test,'' the 
new regulation exemptions served as an easily-applied bright-line test 
for determining whether a major non-interstate pipeline should post 
information in compliance with this rule.\230\
---------------------------------------------------------------------------

    \226\ Order No. 720 at P 113.
    \227\ Id.
    \228\ Id. at P 114.
    \229\ Id. at P 115.
    \230\ Id.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    142. Anadarko and Encana request rehearing, and Shell requests 
clarification, regarding whether the Commission should extend the 
exemption to major non-interstate pipelines that are entirely upstream 
of processing, treatment or dehydration plants but for the presence of 
stub lines incidental to the operation of those plants.\231\ Anadarko 
comments that if the only portion of a major non-interstate pipeline 
system that is downstream of a processing, treatment, or dehydration 
plant is a stub line incidental to that plant, solely used to connect 
that plant to an interstate pipeline, then that major non-interstate 
pipeline should not be required to comply with the reporting 
requirements of section 284.14(a).\232\
---------------------------------------------------------------------------

    \231\ Anadarko Request for Rehearing and Clarification at 6-7; 
Encana Request for Rehearing and Clarification at 5-7; Shell Request 
for Rehearing and Clarification at 4-6.
    \232\ Anadarko Request for Rehearing and Clarification at 6.
---------------------------------------------------------------------------

    143. Anadarko cites Commission precedent, claiming that stub lines 
are generally held to be incidental to the provision of gathering 
services and, as such, are not subject to Commission jurisdiction under 
section 1 of the NGA.\233\ Anadarko and Encana both state that the 
relevant information for the gas flowing through the stub lines would 
be captured at the receipt point on whatever pipeline that sub line 
flows into; thus requiring posting under Order No. 720 would be 
duplicative.\234\ Encana further urged the Commission to adopt such an 
exemption to avoid unnecessary burdens on gathering and processing 
companies in exercising its transparency authority.\235\
---------------------------------------------------------------------------

    \233\ Id.
    \234\ Id. at 7; Encana Request for Rehearing and Clarification 
at 6-7.
    \235\ Encana Request for Rehearing and Clarification at 6.
---------------------------------------------------------------------------

    144. Copano seeks clarification that the exemption for pipelines 
lying entirely upstream of processing applies to a pipeline where, 
under normal operating conditions, the entire gas stream flowing on the 
pipeline is delivered into a downstream pipeline and is contractually 
committed to be processed at a processing plant located on the 
downstream pipeline.\236\
---------------------------------------------------------------------------

    \236\ Copano Request for Rehearing and Clarification at 5.
---------------------------------------------------------------------------

    145. Enogex comments the Commission should exempt non-contiguous 
systems located entirely upstream of processing plants.\237\ Enogex 
states that Enogex Gas Gathering LLC operates several separate, non-
contiguous systems. Enogex also requests that the Commission apply the 
modified primary function test to determine whether facilities are 
exempt under the Final Rule rather than the bright-line test 
promulgated therein.\238\ Enogex cites Commission precedent applying 
the primary function test, claiming that the modified primary function 
test is the standard the Commission has consistently applied to 
determine whether a given facility performs a gathering or transmission 
function.\239\
---------------------------------------------------------------------------

    \237\ Enogex Request for Rehearing and Clarification at 9.
    \238\ Id. at 7-9.
    \239\ Id. at 7.
---------------------------------------------------------------------------

b. Commission Determination
    146. The Commission is persuaded that a major non-interstate 
pipeline with a stub line incidental to a processing plant and that 
delivers all of its transported gas directly into a single pipeline 
should not be required to comply with the posting requirements. The 
Commission, therefore, grants rehearing on this issue. However, if a 
major non-interstate pipeline's stub line delivers gas to multiple 
pipelines or to end-users, then the major non-interstate pipeline will 
not be exempt.
    147. The Commission agrees with Anadarko and Encana that major non-
interstate pipelines with stub lines that deliver gas entirely into a 
single pipeline are in a substantially similar position regarding 
impact on interstate natural gas price formation as pipelines that lie 
entirely upstream of processing plants. As the Commission stated in 
Order No. 720, natural gas that requires processing is not fungible 
with interstate pipeline quality natural gas and, therefore, data 
regarding the transportation of such natural gas has substantially less 
transparency value.\240\ While natural gas that enters a stub line 
following processing is of ``pipeline quality,'' transportation of that 
gas directly to a single pipeline has no different price effect than if 
natural gas flowed directly from a processing plant into an adjacent, 
interconnected interstate pipeline.
---------------------------------------------------------------------------

    \240\ Order No. 720 at P 113.
---------------------------------------------------------------------------

    148. If a pipeline downstream of a processing plant makes 
deliveries of natural gas to more than one pipeline or to end-users, 
then such deliveries could have an effect on the supply of natural gas 
to different portions of the interstate market and, therefore, on price

[[Page 5194]]

formation. To the extent that Anadarko and Encana request rehearing to 
expand the exemption beyond stub line delivery directly to a single 
pipeline, the Commission rejects the requests.
    149. Further, the Commission rejects Copano's request for 
rehearing. Order No. 720 stated that, for purposes of this exemption, 
``a pipeline may be upstream of a processing plant if it flows into 
another line that flows into a processing plant.'' \241\ Copano 
requests that we extend this analysis to contractual agreements to 
process gas downstream from a major non-interstate pipeline. We 
understand Copano's request to include situations where, although a 
contractual commitment exists to deliver natural gas to a processing 
plant, some or all of the delivered natural gas molecules may be 
delivered into interstate or non-interstate pipelines without 
processing.\242\ In this circumstance, at least some of the delivered 
natural gas is fungible with pipeline quality natural gas and, for the 
reasons we expressed in Order No. 720, the Commission will not extend 
the exemption to major non-interstate pipelines that deliver pipeline 
quality natural gas.\243\
---------------------------------------------------------------------------

    \241\ Id. P 113.
    \242\ To the extent that Copano, or another major non-interstate 
pipeline, delivers natural gas to another pipeline that must then 
physically flow through a processing plant, then the exemption would 
apply as the Commission stated in Order No. 720. Id.
    \243\ Id.
---------------------------------------------------------------------------

    150. Regarding Enogex's request for clarification of the exemption 
regarding non-contiguous pipelines, the Commission directs Enogex and 
other non-contiguous gathering pipelines to our clarifications 
regarding companies operating non-contiguous pipelines, supra at P 71 
et seq. To the extent that Enogex operates separate pipelines, it must 
determine whether each pipeline is a major non-interstate pipeline 
subject to the posting requirements.
    151. For the reasons expressed in Order No. 720, the Commission 
denies Enogex's request for rehearing regarding use of the modified 
primary function test to define the exemption for unprocessed gas 
transportation. As Enogex correctly observes, the test is the method 
utilized by the Commission ``to determine whether a given facility 
performs a gathering or transmission function.'' \244\ The test was 
created to assist the Commission to determine whether facilities are 
transmission facilities subject to our traditional rates, terms, and 
conditions regulation. NGA section 23 embodies a different purpose 
(i.e., transparency of interstate natural gas price formation) with a 
different jurisdictional reach (i.e., any market participant) and the 
modified primary function test is therefore inapposite. Further, 
application of the test would require case-by-case evaluation by each 
potential major non-interstate pipeline to determine its status under 
the rule. As Order No. 720 held, application of the test would be 
unnecessarily burdensome for pipelines and the Commission.\245\
---------------------------------------------------------------------------

    \244\ Enogex Request for Rehearing and Clarification at p. 7.
    \245\ Order No. 720 at P 114.
---------------------------------------------------------------------------

2. Pipelines That Deliver Primarily to End Users
    152. Order No. 720 adopted an exemption to the posting requirements 
in section 284.14 of the Commission's regulations for major non-
interstate pipelines that deliver more than 95 percent of their volumes 
to retail customers as measured by average deliveries over the 
preceding three calendar years.\246\ This exemption is codified at 18 
CFR 284.14(b)(2).
---------------------------------------------------------------------------

    \246\ Id. P 120.
---------------------------------------------------------------------------

    153. The Commission explained that many sales to end-users have 
substantial impacts on wholesale energy markets.\247\ In part, the 
Commission relied upon its findings in Order No. 704-A to define 
``retail'' sales of natural gas as bundled transactions through an LDC 
at State-approved tariff rates.\248\ Order No. 720 concluded that, 
where such transactions dominate a major non-interstate pipeline's 
deliveries, the transparency importance of a pipeline's postings is 
diminished. Balancing this lessened transparency benefit with the 
burdens on LDCs to post data, the Commission decided to exempt LDCs 
from posting if a pipeline's retail deliveries exceed 95 percent of the 
total deliveries averaged over three calendar years. The Commission 
also noted that, by increasing the threshold to become a major non-
interstate pipeline from 10 million MMBtu (as proposed in the NOPR) to 
50 million MMBtu, it had already exempted a large number of small LDCs 
from the posting regulations.\249\
---------------------------------------------------------------------------

    \247\ Id. P 121 (citing Order No. 704-A at P 40-43).
    \248\ Id.
    \249\ Id. P 122.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    154. AGA, MidAmerican, National Grid, NICOR, Dow Pipeline, ONEOK 
Gathering, and California LDCs argue on rehearing that the Commission 
should extend the retail delivery exemption to major non-interstate 
pipelines with the requisite deliveries to all end-users, not just 
retail transactions.\250\
---------------------------------------------------------------------------

    \250\ AGA Request for Rehearing and Clarification at 10-16; 
MidAmerican Request for Rehearing and Clarification at 3-5; National 
Grid Request for Rehearing and Clarification at 4-8; NICOR Request 
for Rehearing and Clarification at 2-5; Dow Pipeline Request for 
Rehearing and Clarification at 3-5; ONEOK Gathering Request for 
Rehearing and Clarification at 6-8; California LDCs Request for 
Rehearing and Clarification at 18-19.
---------------------------------------------------------------------------

    155. AGA, MidAmerican, and National Grid complain that Order No. 
720 substantially departed from the NOPR in that the NOPR proposed to 
exempt pipelines based upon deliveries to end-users rather than retail 
deliveries.\251\ These companies argue that, as a result, affected 
companies had no opportunity to comment on the scope of this exemption.
---------------------------------------------------------------------------

    \251\ AGA Request for Rehearing and Clarification at 5-6; 
MidAmerican Request for Rehearing and Clarification at 6-9; National 
Grid Request for Rehearing and Clarification at 4-8.
---------------------------------------------------------------------------

    156. MidAmerican states that the only rationale provided by the 
Commission explaining the exclusion of unbundled transactions was a 
reference to Order No. 704.\252\ MidAmerican understands Order No. 704-
A as confirming the Commission's concern regarding interstate 
transportation to end-users and not transportation from LDCs to end-
users.\253\ MidAmerican argues that data regarding deliveries to any 
customers under State-approved transmission tariffs is not useful to 
understand wholesale natural gas prices.
---------------------------------------------------------------------------

    \252\ MidAmerican Request for Rehearing and Clarification at 7.
    \253\ Id. at 7-10. MidAmerican suggests that the paragraphs 
cited in Order No. 704-A relate to interstate transportation only.
---------------------------------------------------------------------------

    157. Nicor argues that the Commission's analogy to Order No. 704-A 
is misplaced. Nicor states that Order No. 704-A imposed an annual 
reporting requirement for wholesale purchases and sales by market 
participants while Order No. 720 imposes posting requirements for major 
non-interstate pipelines.\254\ Nicor argues that all sales of natural 
gas on its system are either being sold at retail or ``just 
delivered.'' \255\ Nicor's argument stems from its conclusion that 
``flows on a LDC's system would not meaningfully add to * * * 
understanding of the supply and demand fundamentals that affect 
wholesale natural gas prices.'' \256\ Even if the Commission does not 
modify the exemption, Nicor argues that the regulatory text should be 
clarified that retail transactions are only those bundled transactions 
at a tariff rate.\257\
---------------------------------------------------------------------------

    \254\ Nicor Request for Rehearing and Clarification at 3-4.
    \255\ Id.
    \256\ Id. at 4.
    \257\ Id. at 2-5.

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

[[Page 5195]]

    158. Targa claims that the Commission's determination in Order No. 
720 to exempt only major non-interstate pipelines with greater than 95 
percent of deliveries to retail customers is unsupported by the record 
in this proceeding.\258\ Targa points to the fact that the only 
comments received on this point were submitted by pipelines and 
pipeline representatives counseling against this type of limitation to 
the exclusion.\259\ Targa also claims that the Commission has not drawn 
a legally cognizable distinction between pipelines that deliver more 
than 95 percent of annual flows to end-users and pipelines that deliver 
95 percent of flows to retails customers.\260\
---------------------------------------------------------------------------

    \258\ Targa Request for Rehearing and Clarification at 10-14.
    \259\ Id. at 12.
    \260\ Id. at 14.
---------------------------------------------------------------------------

    159. Other petitioners seek to expand the exemption not only to 
cover deliveries to all end-users, but to other transactions as well. 
For example, Targa argues for further expansion of the exemption to 
cover Hinshaw pipelines that supply natural gas to end-users and other 
pipelines within a State. Targa states that there is no justification 
for disparate treatment of such supply pipelines and LDCs for purposes 
of the exemption.\261\ AGA agrees with Targa on this point.
---------------------------------------------------------------------------

    \261\ Targa Request for Rehearing and Clarification at 10-14.
---------------------------------------------------------------------------

    160. National Grid and AGA argue that two other transactions should 
also be part of the 95 percent of deliveries included in the exclusion: 
volumes delivered to and from a liquefied natural gas storage facility 
behind an LDC's city-gate and volumes that flow through delivery points 
shared with other LDCs.\262\ National Grid states that these 
transactions, like all deliveries to end-users, cannot contribute to an 
understanding of wholesale price formation.
---------------------------------------------------------------------------

    \262\ National Grid Request for Rehearing and Clarification at 
9-10; AGA Request for Rehearing and Clarification at 11-17.
---------------------------------------------------------------------------

    161. AGA additionally argues that deliveries from one LDC to 
another should be deemed a delivery to end use customers.\263\ 
California LDCs request that the Commission require LDCs to post 
information only at citygates and not within the LDC systems 
themselves.\264\
---------------------------------------------------------------------------

    \263\ AGA Request for Rehearing and Clarification at 20-21.
    \264\ California LDCs Request for Rehearing and Clarification at 
15-17; California LDCs Supplemental Comments at 6-9.
---------------------------------------------------------------------------

b. Commission Determination
    162. The Commission grants rehearing to provide an exemption from 
the posting requirements for all major non-interstate pipelines that 
deliver more than 95 percent of their annual flows to end-users as 
measured by average deliveries over the preceding three calendar years. 
We agree with AGA, MidAmerican, National Grid, NICOR, Dow Pipeline, 
ONEOK Gathering, and California LDCs that deliveries to end-users 
generally have the same effect on deliveries to retail customers (a 
subset of all end-users). As the Commission explained elsewhere in 
Order No. 720 and above, transparency is enhanced through an 
understanding of natural gas scheduled flows on non-interstate systems. 
The structure of natural gas price sales and transportation 
transactions by an LDC to end-users is irrelevant for purposes of 
interstate price formation.\265\
---------------------------------------------------------------------------

    \265\ Because we grant the rehearing request and revise our 
regulations consistent with the proposal contained in the NOPR, we 
need not address AGA's, MidAmerican's, and National Grid's arguments 
regarding the notice provided regarding the Final Rule or Dow 
Pipeline's alternative request for waiver.
---------------------------------------------------------------------------

    163. The Commission also clarifies, as National Grid and AGA 
suggest, that deliveries to on-system storage facilities (including 
deliveries to on-system liquefied natural gas (LNG) storage) are 
included within the exemption. Such deliveries have no effect on 
interstate natural gas price formation. The Commission modifies section 
284.14(b)(2) to include deliveries to on-system storage.
    164. We deny AGA's request to include deliveries from one LDC to 
another in the end-use exemption and California LCDs' request to limit 
posting by LDCs only to citygates. In such circumstances, LDCs are not 
providing service to end-users, but are operating in essentially the 
same fashion as traditional intrastate pipelines. To the extent that 
National Grid's and AGA's requests regarding shared points relate to 
deliveries and receipts from one LDC to another, those requests are 
also denied.
    165. The Commission will also clarify that major non-interstate 
pipelines other than LDCs can qualify for this exemption if they meet 
the delivery threshold. However, we deny rehearing as requested by 
Targa and AGA to broadly exempt Hinshaw pipelines that supply natural 
gas to end-users and other pipelines within a State. Pipelines that 
deliver substantial quantities of natural gas to other pipelines for 
subsequent re-delivery to end-users are not similarly situated with 
pipelines that deliver 95 percent of their volumes to end-users. 
Receipts and deliveries at interconnections between pipelines provide 
useful market information to understand changes in daily flows in 
response to such things as regional prices; pipeline maintenance; and 
pipeline disruptions, for example caused by a compressor outage.
    166. Lastly, the Commission notes that reference to NGA section 
23(d)(2) is unavailing to most non-interstate pipelines seeking to 
avoid posting of data.\266\ That section prohibits the Commission from 
requiring compliance from ``natural gas producers, processors, or users 
who have a de minimis market presence.'' Most non-interstate pipelines 
are not producers, processors, or users of natural gas.
---------------------------------------------------------------------------

    \266\ 15 U.S.C. 717t-2(d)(2).
---------------------------------------------------------------------------

3. Storage Facilities
    167. In Order No. 720, the Commission adopted an exemption for 
major non-interstate pipelines that function as stand-alone storage 
providers.\267\ This exemption is codified in 18 CFR 284.14(b)(3). The 
Commission reasoned that much of the flow data that could be obtained 
from storage providers would be provided by interconnected interstate 
or major non-interstate pipeline postings.\268\ Further, the Commission 
clarified that flow data affecting interstate price formation, not 
natural gas storage inventory, would enhance transparency and, thus, 
posting of storage-specific data was unnecessary.\269\ Given these 
facts, the Commission exempted major non-interstate pipeline storage 
providers from the posting requirements of the rule as such postings 
would be unduly burdensome.\270\
---------------------------------------------------------------------------

    \267\ Order No. 720 at P 136.
    \268\ Id. P 136-37.
    \269\ Id. P 136.
    \270\ Id. P 137.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    168. Enogex argues on rehearing that the exemption should be 
extended to all major non-interstate pipelines that provide storage 
service in addition to transportation service.\271\ Enogex states that 
the Commission provided no explanation for excluding from the exemption 
major non-interstate pipelines with storage and transportation 
service.\272\
---------------------------------------------------------------------------

    \271\ Enogex Request for Rehearing and Clarification at 10.
    \272\ Id.
---------------------------------------------------------------------------

b. Commission Determination
    169. The Commission denies Enogex's request for rehearing. As 
explained in Order No. 720 and supra at P 33 et

[[Page 5196]]

seq.,\273\ the posting of scheduled flow information on major non-
interstate pipelines will enhance interstate transparency and market 
efficiency. In Order No. 720, the Commission exempted non-interstate 
storage providers from the posting regulations because it determined 
that scheduled flow, not natural gas storage inventory information, 
furthered the rule's transparency goal. The Commission also noted that, 
because major non-interstate pipelines that provide transportation 
service would provide scheduled flow information to receipt and 
delivery points connected to non-interstate storage providers, at least 
some flow data into and out of storage providers would be publicly 
available. Given these facts, the Commission determined that the 
exemption was warranted.
---------------------------------------------------------------------------

    \273\ Order No. 720 at P 39-56.
---------------------------------------------------------------------------

F. Safe Harbor

    170. In response to the NOPR, certain commenters requested a safe 
harbor for postings made by major non-interstate pipelines under the 
promulgated regulations to excuse inadvertent posting errors by non-
interstate pipelines that make a good-faith effort to comply with the 
posting requirements. The Commission declined to adopt a safe harbor, 
differentiating between the posting requirements set forth in the order 
and the very limited circumstances where the Commission has, in the 
past, provided a safe harbor.\274\
---------------------------------------------------------------------------

    \274\ Id. P 151-52.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    171. Certain petitioners and commenters request rehearing of the 
Commission's determination to not adopt a safe harbor provision based 
on claimed uncertainties and ambiguities in the posting 
requirements.\275\
---------------------------------------------------------------------------

    \275\ California LDCs Request for Rehearing and Clarification at 
17; Occidental Request for Rehearing and Clarification at 6-7; TPA 
Supplemental Comments at 46.
---------------------------------------------------------------------------

    172. TPA and Occidental seek clarification that the Commission will 
not penalize unintentional mistakes by parties acting in good 
faith.\276\ TPA comments that enforcement of our regulations regarding 
major non-interstate pipelines within six months is a narrow timeframe 
and that such pipelines will be hard pressed to design and implement 
systems to post the required data.\277\ TPA also notes that errors are 
likely to occur during the normal course of business.\278\ Occidental 
comments that the potential for inadvertent posting errors is 
particularly significant based on the fact that the posting 
requirements apply to parties who historically have not been subject to 
posting requirements and because many have not tracked the data that 
the Commission is requiring them to report.\279\
---------------------------------------------------------------------------

    \276\ TPA Supplemental Comments at 46; Occidental Supplemental 
Comments at 6-7.
    \277\ TPA Supplemental Comments at 46.
    \278\ Id.
    \279\ Occidental Request for Rehearing and Clarification at 7.
---------------------------------------------------------------------------

    173. California LDCs do not take issue with the Commission's 
determination to not adopt a safe harbor provision in perpetuity. 
Instead, it recommends that the Commission adopt a limited safe harbor 
for the first six months after the new regulations are implemented so 
that non-interstate pipelines which make a good faith effort to comply 
will not be penalized if they make inadvertent errors in 
reporting.\280\
---------------------------------------------------------------------------

    \280\ California LDCs Request for Rehearing and Clarification at 
17.
---------------------------------------------------------------------------

b. Commission Determination
    174. Nothing in the supplemental comments persuades the Commission 
to depart from the reasoning in Order No. 720 and the petitioners' 
requests are denied. While the Commission has, on rare occasions, 
adopted a safe harbor in other contexts, it does not believe one is 
warranted here. The safe harbor adopted in the Policy Statement on 
Price Indices was a direct extension of our policy goal to ``encourage 
[industry participants] voluntarily to report energy transactions to 
providers or price indices.'' \281\ The posting requirements set forth 
in Order No. 720 and this order are mandatory posting requirements 
adopted consistent with the directives of EPAct 2005, and are not the 
voluntary reporting of price data to an index developer; therefore, 
there is no policy need to provide an incentive for posting the 
information required.\282\ As discussed in Order No. 720, other 
mandatory requirements, such as the filing of FERC Form No. 2, 
generally do not include a safe harbor.\283\
---------------------------------------------------------------------------

    \281\ Price Discovery in Natural Gas and Electric Markets; 
Policy Statement on Natural Gas and Electric Price Indices, 104 FERC 
] 61,121 (2003), clarified, 109 FERC ] 61,184 (2004).
    \282\ Order No. 720 at P 152.
    \283\ Id.
---------------------------------------------------------------------------

    175. The Commission further distinguishes the decision here not to 
adopt a safe harbor from the temporary safe harbor adopted in Order No. 
704-A. There, the Commission determined that, as FERC Form No. 552 
would be completed by a large number of relatively unsophisticated 
companies with little experience filing materials with the Commission, 
a one-time safe harbor for initial filings of the form was 
appropriate.\284\ Major non-interstate pipelines tend to be large, 
sophisticated natural gas transportation businesses, often with 
substantial experience complying with State public service commission 
reporting requirements, and with dedicated regulatory staff available 
to ensure compliance with our regulations.
---------------------------------------------------------------------------

    \284\ Order No. 720 at P 71.
---------------------------------------------------------------------------

    176. Further, the Commission does not believe that the posting 
requirements set forth in Order No. 720 were unclear or ambiguous; 
however, to the extent that commenters believed they were unclear or 
ambiguous, they have been provided an opportunity to request 
clarification or rehearing, which many did. Additionally, major non-
interstate pipelines will have 150 days following publication of this 
Order No. 720-A in the Federal Register before they must comply with 
the posting regulations. The Commission expects that all major non-
interstate pipelines will have sufficient opportunity to create 
internal operating procedures to ensure compliance.\285\
---------------------------------------------------------------------------

    \285\ We remind major non-interstate pipelines that they may 
contact our Compliance Help Desk for assistance regarding compliance 
with our regulations, including questions regarding posting 
scheduled flow data at receipt and delivery points.
---------------------------------------------------------------------------

    177. The Commission will exercise discretion evaluating non-
compliance by major non-interstate pipelines with our posting 
requirements. As the Commission has explained,\286\ Office of 
Enforcement staff considers a number of factors to determine whether 
investigations involving noncompliance are warranted and whether a 
violation of the Commission's regulations warrants sanctions or other 
remedies. In fact, Office of Enforcement staff ``frequently exercises 
prosecutorial discretion to resolve minor infractions with voluntary 
compliance measures rather than with penalties.'' \287\ The most recent 
Office of Enforcement Annual Report is replete with examples of self-
reports of minor errors which were not pursued by the Office of 
Enforcement.\288\
---------------------------------------------------------------------------

    \286\ Enforcement of Statutes, Regulations and Orders, Revised 
Policy Statement on Enforcement, 123 FERC ] 61,156, at P 23-26 and P 
31-32 (2008).
    \287\ Id. P 9.
    \288\ 2009 Report on Enforcement, Docket No. AD07-13-002 at 10-
14 (2009) (inadvertent errors in Electric Quarterly Report 
submissions not sanctioned; inadvertent violation of price reporting 
guidelines not sanctioned).
---------------------------------------------------------------------------

G. Interstate Pipeline Posting of No-Notice Service

    178. Order No. 720 required interstate natural gas pipelines to 
post volumes of

[[Page 5197]]

no-notice service flows at each receipt and delivery point before 11:30 
a.m. central clock time (the timely cycle under NAESB Nomination 
Standard 1.32) three days after the day of gas flow.\289\ In the NOPR, 
the Commission considered requiring interstate natural gas pipelines to 
post actual flow information within twenty-four hours, but upon further 
consideration in Order No. 720, the Commission required the posting of 
only no-notice volumes within three days after the day of gas flow. 
Order No. 720 found that this would achieve the goals of the Commission 
with less of a burden than full posting of actual flows with a twenty-
four hour deadline.\290\ Because the Commission gave interstate 
pipelines more time to post and because an interstate pipeline should 
already have the no-notice information that we are requiring them to 
post, the Commission found that this requirement was not unduly 
burdensome.\291\
---------------------------------------------------------------------------

    \289\ Order No. 720 at P 160.
    \290\ Id. P 162, 166.
    \291\ Id. P 166.
---------------------------------------------------------------------------

    179. The Commission explained that making information on no-notice 
volumes available is important because it allows interstate natural gas 
market participants and other market observers to better understand 
price formation and historical patterns of flow.\292\ Without no-notice 
information, the market cannot see large and unexpected increases in 
gas demand and, therefore, cannot understand price formation both 
during and after no-notice service is utilized.
---------------------------------------------------------------------------

    \292\ Id. P 165.
---------------------------------------------------------------------------

    180. The Commission noted that no-notice service information would 
be of particular importance in understanding price behavior in the 
northern tier of the country during extreme weather conditions.\293\ 
The Commission also noted that no-notice information could also prevent 
manipulation and unduly discriminatory behavior because it would 
increase transparency and therefore discourage such activities.\294\ In 
addition, the Commission noted that no-notice postings would help 
shippers understand why capacity that appears to be available is 
actually not available during situations when no-notice service is 
being used.\295\
---------------------------------------------------------------------------

    \293\ Id. P 163.
    \294\ Id. P 165.
    \295\ Id. P 164.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    181. Williston Basin seeks rehearing and INGAA requests 
clarification and rehearing of the Commission's decision to require 
interstate natural gas pipelines to post volumes of no-notice service 
flows, both claiming that the requirement is arbitrary and 
capricious.\296\
---------------------------------------------------------------------------

    \296\ Williston Basin Request for Rehearing and Clarification at 
1; INGAA Request for Rehearing and Clarification at 1-2.
---------------------------------------------------------------------------

    182. Williston Basin comments that the requirement to post 
information on no-notice service would not provide any useful market 
information and would therefore have no impact on market 
decisions.\297\ Williston Basin claims that the majority of no-notice 
service relates to storage activity which is based on weather-driven 
demand, and because most no-notice shippers inject in the summer months 
at prevailing market rates and withdraw at a different time when prices 
are different, the true market price of the gas on that particular day 
is not reflected.\298\ Williston Basin states that the posting of 
scheduled pipeline capacity and volume data provides the timeliest and 
accurate information for assessing market fundamentals, and reporting 
no-notice service is not necessary and would not provide any relevant 
market information.\299\
---------------------------------------------------------------------------

    \297\ Williston Basin Request for Rehearing and Clarification at 
1-2.
    \298\ Id. at 2.
    \299\ Id.
---------------------------------------------------------------------------

    183. Williston Basin and INGAA both request that the Commission 
adopt the same de minimis standard for no-notice interstate pipeline 
postings as applied to major non-interstate pipeline postings.\300\ 
Williston Basin claims that it is discriminatory for the Commission to 
not apply the same standard for interstate pipelines.\301\ INGAA states 
that there are certain delivery points that are so small that they have 
no measureable impact on market fundamentals and are not worth the cost 
and administrative burden necessary to comply with the rule; therefore, 
INGAA suggests that the Commission establish a de minimis rule that 
would exempt delivery points with an average annual delivery rate of 
less than 2,500 Mcf per day.\302\
---------------------------------------------------------------------------

    \300\ Id. at 3; INGAA Request for Rehearing and Clarification at 
6-7.
    \301\ Williston Basin Request for Rehearing and Clarification at 
3.
    \302\ INGAA Request for Rehearing and Clarification at 7.
---------------------------------------------------------------------------

    184. On rehearing, INGAA argues that the no-notice reporting 
requirement is not supported by a substantial record of evidence 
because the Commission did not develop a record on the various ways 
pipelines provide and measure no-notice service.\303\ INGAA asks the 
Commission to consider that interstate pipelines have varying tariffs 
and contracts for how they provide no-notice transportation services 
for customers. INGAA requests that the Commission clarify that a 
pipeline can satisfy the no-notice posting requirement by providing 
data corresponding to how it provides no-notice transportation 
service.\304\ For example, INGAA claims that in the majority of cases, 
there is no way for a pipeline to determine a receipt point for its no-
notice service, therefore, it recommends that the Commission clarify 
that interstate pipelines are not required to post no-notice volumes at 
receipt points.\305\ In addition, INGAA asks the Commission to 
recognize the role of aggregation in the administration of no-notice 
service and asks the Commission to clarify that interstate pipelines 
who report aggregate volume to customers and who use aggregate volume 
to administer no-notice service contracts satisfy the no-notice posting 
requirement by posting aggregate volumes.\306\
---------------------------------------------------------------------------

    \303\ Id. at 1-2.
    \304\ Id. at 2.
    \305\ Id. at 2-3.
    \306\ Id. at 3-5.
---------------------------------------------------------------------------

    185. INGAA also asks that the Commission take into consideration 
that interstate pipelines have varying metering and measurement 
equipment, and INGAA requests that the Commission clarify that a 
pipeline can satisfy the no-notice posting requirement by posting 
estimated volumes when a pipeline estimates its no-notice volumes for 
operational purposes (e.g., volumes are posted on a monthly or weekly 
basis; meters are controlled by third parties).\307\ INGAA states that 
it would not be economic for pipelines to install real-time 
measurements equipment at each delivery point; therefore, INGAA asks 
the Commission to clarify that it is appropriate for a pipeline to 
report whatever information is available to the pipeline within the 
three days allowed for posting.
---------------------------------------------------------------------------

    \307\ Id. at 5-6.
---------------------------------------------------------------------------

b. Commission Determination
    186. The Commission denies Williston Basin's and INGAA's requests 
for rehearing. The Commission believes that the posting of information 
about no-notice service will enhance transparency and that this 
requirement is not unduly burdensome. The Commission continues to 
believe that no-notice service has an impact on market decisions and 
price formation as described in Order No. 720. The Commission 
recognizes that a large percentage of no-notice service relates to

[[Page 5198]]

weather-driven storage activity, and many no-notice shippers inject in 
the summer months at prevailing market rates and withdraw at a 
different time when prices are different; however, during such 
occasions, when no-notice shippers withdraw gas, the absence of posting 
of no-notice service means that the market cannot see these large 
responses to gas demand at a time when the market is particularly 
sensitive to variations in natural gas availability. Market 
participants do not have access to information necessary to understand 
price formation during such occasions, and for this very reason, the 
Commission believes that the posting of no-notice service volumes is 
necessary to achieve transparency.
    187. The Commission denies petitioners' requests for rehearing and 
clarification that would establish a de minimis standard for posting of 
information about no-notice service. The Commission is not persuaded to 
adopt a de minimis standard for no-notice posting because it believes 
that all interstate no-notice volumes are relevant to interstate 
wholesale price formation.\308\ Even very small or transitory no-notice 
volumes can have a substantial impact on natural gas prices during 
times of system stress. Indeed, it is precisely at these times when no-
notice service is most utilized.
---------------------------------------------------------------------------

    \308\ Unlike non-interstate transportation that has an indirect 
effect on interstate natural gas price formation, interstate 
transportation has a direct effect on prices.
---------------------------------------------------------------------------

    188. The Commission's conclusion is reinforced by our authority, 
exercised in Order No. 637 and elsewhere, to require interstate 
pipelines to post substantial data regarding their operations.\309\ 
However, if a pipeline believes that its no-notice service is so 
insubstantial so as to not influence price formation, the pipeline may 
submit a detailed description of its no-notice operations and request a 
waiver from our regulations. The Commission will consider such requests 
on a case-by-case basis.
---------------------------------------------------------------------------

    \309\ Regulation of Short-Term Natural Gas Transportation 
Services and Regulation of Interstate Natural Gas Transportation 
Services, Order No. 637, 65 FR 10156 (Feb. 25, 2000), FERC Stats. & 
Regs. ] 31,091, at 31,332, clarified, Order No. 637-A, FERC Stats. & 
Regs. ] 31,099, reh'g denied, Order No. 637-B, 92 FERC ] 61,062 
(2000), aff'd in part and remanded in part sub nom. 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).
---------------------------------------------------------------------------

    189. The Commission takes into consideration the fact that 
interstate pipelines have varying tariffs and contracts for providing 
no-notice service. The Commission recognizes that sometimes there is no 
way for a pipeline to determine a receipt point for its no-notice 
service; however, the Commission denies the request that interstate 
pipelines not be required to post no-notice volumes at receipt points. 
To the extent that the receipt point data is available for no-notice 
service, pipelines must post that information. In the event that a 
pipeline does not have receipt point data, then the pipeline may 
indicate that the required data field is left intentionally blank. The 
Commission also recognizes that some pipelines traditionally report 
aggregate no-notice volumes to their customers. However, posting 
aggregate volumes does not satisfy the no-notice posting requirement if 
a pipeline has access to the records of the daily volumes. If the data 
is available or could be made available, then the pipeline must post 
the non-aggregated volume data, even if it prefers a different format 
when dealing with customers. If a pipeline does not have access to non-
aggregated data, then it should post aggregated data.
    190. Finally, the Commission assures petitioners that it has taken 
into consideration the fact that interstate pipelines have varying 
metering and measurement equipment and clarifies that pipelines must 
only post information that is available to them. Our transparency 
regulations do not require the construction of new metering equipment. 
Instead, an interstate pipeline should post whatever data it has 
available within three days of the flow, noting any deficiencies in the 
posting on its Web site. A pipeline should not post estimated volumes, 
but rather actual flow. If, subsequent to an initial posting, more 
complete no-notice service data becomes available, interstate pipelines 
must update previously posted information.

H. Additional Exemptions

1. Natural Gas Companies With Service Area Determinations Under NGA 
Section 7(f)
    191. In Order No. 720, the Commission stated that local 
distribution companies with service area determinations under section 
7(f) of the NGA were not categorically excluded from the posting 
requirements as such companies that exceed the 50 million MMBtu annual 
threshold may have a substantial impact on regional interstate natural 
gas markets.\310\
---------------------------------------------------------------------------

    \310\ Order No. 720 at P 149.
---------------------------------------------------------------------------

    192. WGL requests clarification and, in the alternative, rehearing 
regarding the definition of ``major non-interstate pipeline'' as 
applied to natural gas companies that have obtained service area 
determinations under section 7(f) of the NGA.\311\ Our pipeline posting 
requirements apply to ``major non-interstate pipelines.'' As provided 
in 18 CFR 284.1(d), major non-interstate pipelines are comprised only 
of those pipelines not subject to our NGA jurisdiction as ``natural gas 
companies.'' \312\ WGL contends that a strict reading of the regulation 
would exclude local distribution companies with service area 
determinations under section 7(f) as such companies are ``natural gas 
companies'' under the NGA.
---------------------------------------------------------------------------

    \311\ WGL Request for Rehearing and Clarification at 3.
    \312\ 18 CFR 284.1(d).
---------------------------------------------------------------------------

    193. AGA requests clarification that LDCs that have service area 
determinations under section 7(f) can qualify for the posting 
exemptions contained in 18 CFR 284.14(b).
    194. The Commission grants WGL's request for rehearing and modifies 
18 CFR 284.1(d) to provide that pipelines with a Commission-approved 
service area determination may be major non-interstate pipelines if 
they exceed the delivery threshold and otherwise do not qualify for an 
exemption. The Commission agrees with WGL that there is no practical 
difference between an LDC operating entirely within a single State and 
LDCs operating in multiple states under a section 7(f) service area 
determination. Consistent with WGL's and AGA's requests, the Commission 
also clarifies that LDCs with service area determinations may be major 
non-interstate pipelines for purposes of this rule.
2. Pipelines Owned or Operated by End Users
    195. Dow Chemical requests clarification, or in the alternative 
rehearing, regarding application of the Commission's pipeline posting 
regulations to pipelines that are owned and/or operated by an end-user 
to transport natural gas to that end-user.\313\ Dow Chemical argues 
that price transparency in the interstate market would not be enhanced 
by requiring such pipelines to post scheduled flow information.\314\
---------------------------------------------------------------------------

    \313\ Dow Chemical Request for Rehearing and Clarification at 3.
    \314\ Id. at 4.
---------------------------------------------------------------------------

    196. The Commission grants the requested clarification. Where a 
pipeline delivers all of its transported natural gas directly to an 
end-user that owns or operates the pipeline, the pipeline is an 
extension of the end-user's plant or other natural gas consumption 
facilities. To require

[[Page 5199]]

posting in such circumstances would be the functional equivalent of 
requiring each large consumer of natural gas to post consumption 
information on a daily basis. However, if a pipeline delivers natural 
gas to entities other than the owner or operator of the pipeline, then 
it is not exempted from the regulation. The Commission modifies section 
284.14(b) of our regulations to incorporate this exemption.

III. Cost of Compliance

    197. In Order No. 720, the Commission estimated the compliance 
costs of the pipeline posting regulations for both interstate and major 
non-interstate pipelines.\315\ The order found that the average annual 
cost of compliance for interstate pipelines and major non-interstate 
pipelines was approximately $5,000 and $30,000, respectively.\316\
---------------------------------------------------------------------------

    \315\ Order No. 720 at P 86.
    \316\ Id. P 171.
---------------------------------------------------------------------------

A. Requests for Rehearing and Clarification

    198. No petitioner objects to the Commission's estimate of 
compliance costs for interstate pipelines. However, two petitioners 
question the compliance costs for major non-interstate companies. 
California LDCs claim that initial compliance costs for each LDC may 
exceed $500,000 to calculate and record the design capacity of delivery 
points as well as establishing procedures to capture new delivery 
points for which posting is required. Based upon these costs, the 
California LDCs conclude that the cost of compliance far outweighs the 
benefits of the rule.\317\
---------------------------------------------------------------------------

    \317\ California LDCs Request for Rehearing and Clarification at 
12-13.
---------------------------------------------------------------------------

    199. TPA argues that some TPA members will encounter increased 
compliance costs to design and implement scheduling processes at points 
where they currently do not schedule natural gas.\318\ Further, TPA 
notes that non-interstate pipelines may schedule delivery of natural 
gas to LDCs at sets of delivery points rather than individual delivery 
points. TPA claims that the rule would require such pipelines to 
establish mechanisms to account for scheduled flows to each point.\319\ 
Further, TPA claims that ``[s]ome TPA members * * * estimate 
implementation and start-up costs in the hundreds of thousands of 
dollars.'' \320\ While TPA acknowledges that Order No. 720 did not 
adopt posting requirements for segments or actual flow, and thus, 
reduced the potential cost of compliance, it argues that Order No. 720 
ignores other costs estimated by TPA members.\321\
---------------------------------------------------------------------------

    \318\ TPA Request for Rehearing and Clarification at 41.
    \319\ Id.
    \320\ Id. at 42.
    \321\ Id. at 43.
---------------------------------------------------------------------------

B. Commission Determination

    200. The Commission disagrees with the California LDCs and TPA and 
finds, as it did in Order No. 720, that the benefits of our 
transparency regulations substantially outweigh the cost of compliance. 
Enhanced transparency will result in a more efficient wholesale natural 
gas market, more informed and better market choices made by market 
participants, and, ultimately, lower natural gas prices for consumers.
    201. The Commission notes that Order No. 720's cost of compliance 
estimates were based upon comments received in response to the NOPR and 
the substantial reduction in compliance costs attendant in the 
Commission's decision not to require posting of actual natural gas 
flows or on pipeline segments. Further, Order No. 720 acknowledged that 
both start-up and annual compliance costs would vary among 
pipelines.\322\
---------------------------------------------------------------------------

    \322\ Order No. 720 at P 171.
---------------------------------------------------------------------------

    202. The Commission emphasizes that only scheduled natural gas 
volumes are to be posted. The comments by TPA do not dissuade the 
Commission from the determination that ``most if not all of the gas 
control divisions of the affected companies currently have ready access 
to the information captured'' by the rule.\323\ In large part, it 
appears that TPA's concerns stem from fundamental misunderstandings of 
the Final Rule. For example, TPA notes that some of its member 
pipelines do not schedule flows at certain points, but that the rule 
requires such pipelines to restructure their operations to adopt a 
scheduling process.\324\ The regulations do not require pipelines to 
modify their operations so as to schedule natural gas flows at point 
where such flows have not heretofore been scheduled. Section 284.14(a) 
of the Commission's regulations makes clear that major non-interstate 
pipelines must post the amount of natural gas scheduled at each 
relevant point ``whenever capacity is scheduled.'' \325\ Likewise, TPA 
assumes that volumes scheduled to an aggregated receipt point for an 
LDC customer must be broken out by physical receipt point. As clarified 
in this order, the Commission's regulations will allow for posting of 
aggregated scheduled flows to virtual or pooling points. The Commission 
does not believe that major non-interstate pipelines will incur 
significant expenses adopting new scheduling procedures as our 
regulations do not require such changes.
---------------------------------------------------------------------------

    \323\ Id. P 56.
    \324\ TPA Request for Rehearing and Clarification at p. 41.
    \325\ 18 CFR 284.14(a).
---------------------------------------------------------------------------

    203. TPA and the California LDCs claim that the major non-
interstate pipelines that they represent may incur start-up costs of 
hundreds of thousands of dollars to comply with Order No. 720. Such 
costs seem disproportionately high given that other major non-
interstate pipelines have not expressed similar concerns on rehearing. 
The Commission also finds such claims doubtful given the sophistication 
of these pipelines, their experience with electronic data capture, 
their familiarity with the receipt and delivery points on their 
systems, and, for at least some of these pipelines, their substantial 
experience with posting flow data on electronic databases. For these 
reasons and given the generality of the compliance cost claims by TPA 
and the California LDCs, the Commission will not modify the conclusion 
that compliance costs for the rule exceed the substantial value of 
enhanced market transparency.

IV. Information Collection Statement

    204. The Office of Management and Budget (OMB) regulations require 
it to approve certain reporting and recordkeeping (information 
collection) requirements imposed by an agency.\326\ In the Final Rule 
and in this Order on Rehearing and Clarification, the Commission 
addresses two requirements for the posting or collection of 
information, one for interstate and one for major non-interstate 
pipelines.\327\ The Commission adopts no changes to its regulations 
regarding posting requirements for interstate pipelines. However, the 
Commission has submitted notification of the modified information 
collection requirements for major non-interstate pipelines to OMB for 
its review and approval under section 3507(d) of the Paperwork 
Reduction Act of 1995.\328\
---------------------------------------------------------------------------

    \326\ 5 CFR 1320.11.
    \327\ 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.
    \328\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    205. The requirement for major non-interstate pipelines to post 
scheduled volume information would impose an information collection 
burden on major non-interstate pipelines. Certain non-interstate 
pipelines have asserted on rehearing that costs would be high if

[[Page 5200]]

additional equipment were needed to meet quick posting deadlines. 
However, the Commission does not believe that installation of 
additional equipment will be necessary to meet major non-interstate 
pipelines' obligations. The burden that is imposed by these regulations 
is largely for the collection and posting of this information in the 
required format.\329\ Elsewhere in this preamble, the Commission has 
further addressed requests for rehearing and clarification regarding 
the burden of the requirements.
---------------------------------------------------------------------------

    \329\ 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.'').
---------------------------------------------------------------------------

    206. OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission 
submitted notification of this rule to OMB.

Public Reporting Burden:

    The start-up and annual burden estimates for complying with this 
rule are as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Number of daily    Estimated annual     Total annual    Estimated  start-
                     Data collection                           Number of         postings per     burden hours per    hours for all      up burden per
                                                              respondents         respondent         respondent        respondents         respondent
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Part 284
FERC-551:
    Major Non-Interstate Pipeline Postings...............                70                  2                365             25,550                 40
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The total annual hours for collection (including recordkeeping) for 
all respondents is estimated to be 25,550 hours.
    Information Posting Costs: The average annualized cost for each 
respondent is projected to be the following (savings in parenthesis):

----------------------------------------------------------------------------------------------------------------
                                                             Annualized
                                                          capital/startup                       Annualized costs
                                                          costs  (10 year      Annual costs          total
                                                           amortization)
----------------------------------------------------------------------------------------------------------------
FERC-551:
    Major Non-Interstate Pipeline Postings.............              $142            $30,000            $30,142
----------------------------------------------------------------------------------------------------------------

    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.
    Necessity of the Information: The daily posting of additional 
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 
Commission 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.

V. Regulatory Flexibility Act

    207. The Regulatory Flexibility Act of 1980 (RFA) \330\ 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. 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 
$7.0 million.\331\ In Order No. 720, the Commission stated its belief 
that none of the pipelines required to comply with requirements in the 
rule had receipts of less than $7.0 million annually and therefore, the 
daily posting proposal will not impact small entities.
---------------------------------------------------------------------------

    \330\ 5 U.S.C. 601-612.
    \331\ 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).
---------------------------------------------------------------------------

    208. In keeping with the provisions of the RFA, the Commission 
established a delivery threshold of 50 million MMBtu which would 
eliminate compliance burdens for smaller non-interstate pipelines by 
taking into account the resources that are available to small entities 
in order to comply with the posting requirements. In response to the 
comments on rehearing and supplemental comments, the Commission is also 
exercising an additional regulatory alternative by exempting some major 
non-interstate pipelines with certain operational characteristics from 
the posting requirements and otherwise modifying the requirements to 
lessen the burden on posting pipelines. For example, the Commission is 
directing major non-interstate pipelines to review points with no known 
design capacity annually, rather on a rolling basis, to determine 
whether information for the point must be posted. Further, major non-
interstate pipelines are exempt from posting scheduled natural gas 
volumes at points that have scheduled flows less than 5,000 MMBtu per 
day on each day within the prior three calendar years.
    209. Additional exemptions include: Major non-interstate pipeline 
that have stub lines incidental to a processing plant and that delivers 
all of its transported gas directly into a single pipeline; major non-
interstate pipelines that deliver more than 95 percent of their annual 
flows to end-users as measured by average deliveries over the preceding 
three calendar years; major non-interstate pipelines that deliver to 
on-system storage facilities (including deliveries to on-system LNG 
storage);

[[Page 5201]]

pipelines that transport all of their natural gas directly to an end-
user that owns or operates the pipeline.

VI. Document Availability

    210. In addition to publishing the full text of this document in 
the Federal Register, the Commission will provide 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.
    211. 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.
    212. 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].

VII. Effective Date and Compliance Deadlines

    213. Order No. 720 set compliance deadlines for interstate and 
major non-interstate pipelines to comply with the transparency posting 
requirements.\332\ The Commission ordered interstate pipelines subject 
to the new posting requirements to comply with the promulgated 
regulations no later than 60 days following publication in the Federal 
Register; major non-interstate pipelines were given 150 days after such 
publication to comply.\333\ On January 15, 2009, in response to motions 
from major non-interstate pipelines for an extension of time to comply 
with Order No. 720, the Commission extended compliance for major non-
interstate pipelines until 150 days following the publication of an 
order addressing the pending requests for rehearing.\334\ The 
Commission did not modify the deadline by which interstate pipelines 
must comply with the requirements of Order No. 720.\335\ The compliance 
deadlines were chosen to allow the applicable entities sufficient time 
to update their information technology systems and establish an 
Internet Web site for the postings.
---------------------------------------------------------------------------

    \332\ Order No. 720 at P 167-68.
    \333\ Id.
    \334\ Pipeline Posting Requirements Under section 23 of the 
Natural Gas Act, 126 FERC ] 61,047, at P 2, 4 (2009).
    \335\ Id. at P 4. Thus, interstate pipelines were required to 
begin posting no-notice flow no later than January 30, 2009.
---------------------------------------------------------------------------

A. Requests for Rehearing and Clarification

    214. No parties submitted requests for rehearing or comments 
regarding the deadline for compliance with the Final Rule.

B. Commission Determination

    215. The Commission's regulations regarding the posting of data 
related to no-notice service by interstate pipelines are not modified 
in this order. Interstate pipelines should continue compliance with our 
regulations.
    216. The Commission's revised regulations regarding postings by 
major non-interstate pipelines will become effective 30 days following 
publication in the Federal Register. The Commission continues to 
believe, that, for major non-interstate pipelines, a compliance 
deadline of 150 days following the issuance of this order on rehearing 
allows sufficient time for pipelines to update their information 
technology systems and establish an Internet Web site for the required 
postings. This time frame for compliance will allow major non-
interstate pipelines to complete the current heating season without the 
need to implement new posting procedures while ensuring that new 
postings are available prior to the next heating season. Therefore, 
major non-interstate pipelines must comply within 150 days of the 
issuance of this order on rehearing.

List of Subjects in 18 CFR Part 284

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

    By the Commission. Commissioner Norris voting present.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

0
For the reasons stated in the preamble, the Federal Energy Regulatory 
Commission amends 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

0
1. The authority citation for part 284 continues to read as follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 
43 U.S.C. 1331-1356.



0
2. In Sec.  284.1, revise paragraph (d) 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, or is a ``natural gas company'' and has obtained a 
service area determination under section 7(f) of the Natural Gas Act 
from the Commission;
    (2) It delivers annually more than fifty (50) million MMBtu 
(million British thermal units) of natural gas measured in average 
deliveries for the previous three calendar years; or, if the pipeline 
has been operational for less than three years, its design capacity 
permits deliveries of more than fifty (50) million MMBtu of natural gas 
annually.

0
3. Section 284.14 is revised to read as follows:


Sec.  284.14  Posting requirements of major non-interstate pipelines.

    (a) Daily posting requirement. A major non-interstate pipeline must 
post on a daily basis on a publicly-accessible Internet Web site and in 
downloadable file format equal and timely access to information 
regarding receipt or delivery points, including non-physical scheduling 
points.
    (1) A major non-interstate pipeline must post data for each receipt 
or delivery point, or for any point that operates as both a delivery 
and receipt point for the major non-interstate pipeline, to which 
natural gas transportation is scheduled:
    (i) With a physically metered design capacity equal to or greater 
than 15,000 MMBtu (million British thermal units)/day; or
    (ii) If a physically metered design capacity is not known or does 
not exist for such a point, with a maximum volume scheduled to such a 
point equal to or greater than 15,000 MMBtu on any day within the prior 
three calendar years.
    (2) Notwithstanding the requirements of subsection 284.14(a)(1), a 
receipt point is not subject to the posting requirements of this 
section if the

[[Page 5202]]

maximum scheduled volume at the receipt point was less than 5,000 MMBtu 
on every day within the prior three calendar years. If a point has 
operated as both a receipt and delivery point any time within the prior 
three calendar years, subsection 284.14(a)(2) shall not apply to that 
point.
    (3) A major non-interstate pipeline that must post data for a 
receipt or delivery point shall do so within 45 days of the date that 
the point becomes eligible for posting.
    (4) For each delivery or receipt point that must be posted, a major 
non-interstate pipeline must provide the following information by 10:00 
p.m. central clock time the day prior to scheduled natural gas flow: 
Transportation Service Provider Name, Posting Date, Posting Time, 
Nomination Cycle, Location Name, Additional Location Information if 
Needed to Distinguish Between Points, Location Purpose Description 
(Receipt, Delivery, Bilateral, or Non-physical Scheduling Point), 
Posted Capacity (physically metered design capacity or maximum flow 
within the last three years), Method of Determining Posted Capacity 
(Capacity or Maximum Volume), Scheduled Volume, Available Capacity 
(Calculated as Posted Capacity minus Scheduled Capacity), and 
Measurement Unit (Dth, MMBtu, or MCf). For receipt or delivery points 
with bi-directional scheduled flows, the Scheduled Volume for scheduled 
flow in each direction must be posted. The information in this 
subsection must remain posted for at least a period of one year.
    (b) Exemptions to daily posting requirement. The following 
categories of major non-interstate pipelines are exempt from the 
posting requirement of Sec.  284.14(a):
    (1) Those that are located upstream of a processing, treatment or 
dehydration plant;
    (2) Those that deliver more than ninety-five percent (95%) of the 
natural gas volumes they flow directly to end-users or on-system 
storage as measured in average deliveries for the previous three 
calendar years;
    (3) Storage providers;
    (4) Those that deliver the entirety of their transported natural 
gas directly to an end-user that owns or operates the major non-
interstate pipeline.

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


            Appendix A: List of Petitioners and Abbreviations
------------------------------------------------------------------------
           Petitioners                         Abbreviations
------------------------------------------------------------------------
1. American Gas Association......  AGA.
2. Anadarko Petroleum Corporation  Anadarko.
3. Atmos Pipeline-Texas..........  Atmos.
4. Bear Paw Energy LLC and ONEOK   Bear Paw/ONEOK.
 Field Services Company, LLC.
5. Copano Energy LLC.............  Copano Energy.
6. Dow Chemical Company..........  Dow Chemical.
7. Dow Pipeline Company and Dow    Dow Pipeline.
 Intrastate Gas Company.
8. Ecana Oil & Gas (USA) Inc.....  Encana.
9. Enogex LLC and Enogex Gas       Enogex.
 Gathering LLC.
10. Gas Processors Association...  Gas Processors.
11. Interstate Natural Gas         INGAA.
 Association of America.
12. Louisiana Office of            LOC.
 Conservation.
13. MidAmerican Energy Company...  MidAmerican.
14. National Grid Gas Delivery     National Grid.
 Companies.
15. Nicor Gas Company............  Nicor.
16. ONEOK Gas Transportation, LLC  ONEOK Gathering.
 and ONEOK Gas Transmission, LLC.
17. Pacific Gas & Electric         PG&E.
 Company.
18. Pacific Gas & Electric         California LDCs.
 Company, Southern California Gas
 Company, and San Diego Gas &
 Electric Company.
19. Railroad Commission of Texas.  Railroad Commission of Texas.
20. Shell Offshore, Inc..........  Shell.
21. Southwest Gas Corporation....  Southwest Gas.
22. Targa Louisiana Intrastate     Targa.
 LLC.
23. Texas Pipeline Association...  TPA.
24. Washington Gas Light Company.  WGL.
25. Williston Basin Interstate     Williston Basin.
 Pipeline Company.
26. Yates Petroleum Corporation    Yates.
 and Agave Energy Corporation.
------------------------------------------------------------------------


      Appendix B: List of Supplemental Commenters and Abbreviations
------------------------------------------------------------------------
     Supplemental Commenters                   Abbreviations
------------------------------------------------------------------------
1. American Gas Association......  AGA.
2. Atmos Pipeline--Texas.........  APT.
3. Kinder Morgan Texas Intrastate  KM.
 Pipeline Group.
4. Occidental Permian Ltd........  Occidental.
5. ONEKOK Gas Transmission, LLC    ONEOK Gathering.
 and ONEOK Westex Transmission,
 LLC.
6. Natural Gas Supply Association  NGSA.
7. Pacific Gas & Electric          California LDCs.
 Company, Southern California
 Gas, and San Diego Gas &
 Electric Company.
8. Texas Pipeline Association....  TPA.
------------------------------------------------------------------------

[FR Doc. 2010-1546 Filed 1-29-10; 8:45 am]
BILLING CODE 6717-01-P