[Federal Register Volume 75, Number 59 (Monday, March 29, 2010)]
[Rules and Regulations]
[Pages 15336-15342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-6770]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 157

[Docket No. RM05-1-002]


Regulations Governing the Conduct of Open Seasons for Alaska 
Natural Gas Transportation Projects

March 18, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is amending its regulations, in order to 
clarify them in response to Order Nos. 717 and 717-

[[Page 15337]]

A, governing the Standards of Conduct for transmission providers. These 
amendments are required in order to make clear to prospective 
applicants for an Alaska natural gas transportation project which 
Standards of Conduct are applicable to conducting open seasons for 
Alaska natural gas transportation projects. This clarification will 
benefit both prospective applicants and prospective shippers of an 
Alaska natural gas transportation project by eliminating any 
uncertainties those parties may have pertaining to the standards of 
conduct governing open seasons for such a project.

DATES: Effective Date: This rule will become effective April 28, 2010.

FOR FURTHER INFORMATION CONTACT: Jacqueline Holmes, Assistant General 
Counsel, Energy Projects, Office of the General Counsel, 888 First 
Street, NE., Washington, DC 20426. [email protected]. Whit 
Holden, Office of the General Counsel, 888 First Street, NE., 
Washington, DC 20426. [email protected].

SUPPLEMENTARY INFORMATION: 

Order No. 2005-B; Final Rule

                            Table of Contents
 
                                                              Paragraph
                                                               numbers
 
I. Introduction............................................            1
II. Background.............................................            3
III. Discussion............................................            8
IV. Information Collection Statement.......................           33
V. Environmental Analysis..................................           34
VI. Regulatory Flexibility Act.............................           35
VII. Document Availability.................................           36
VIII. Effective Date.......................................           39
 

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

I. Introduction

    1. By this instant final rule, the Commission is amending part 157, 
subpart B of its regulations, specifically 18 CFR 157.34 and 157.35, in 
order to clarify and reconcile them in response to Order Nos. 717 and 
717-A,\1\ governing the Standards of Conduct for transmission 
providers. Part 157, subpart B contains the regulations governing open 
seasons for Alaska natural gas transportation projects. Specifically, 
the Commission is eliminating references to ``energy affiliates'' in 
Sec. Sec.  157.34 and 157.35 of the Commission's regulations in order 
to be consistent with Order No. 717, in which the Commission eliminated 
the concept of ``energy affiliates'' in response to the U.S. Court of 
Appeals for the DC Circuit decision in National Fuel Gas Corporation v. 
FERC (National Fuel).\2\
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    \1\ Standards of Conduct for Transmission Providers, Order No. 
717, 73 FR 63796 (Oct. 27, 2008); FERC Stats. & Regs. ] 31,280 
(2008), order on reh'g and clarification, Order No. 717-A, FERC 
Stats. & Regs. ] 31,297 (2009), order on reh'g, Order No. 717-B, 129 
FERC ] 61,123 (2009).
    \2\ 468 F.3d 831 (DC Cir. 2006).
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    2. The Commission, in Order No. 717, also eliminated the corporate 
functional approach taken in Order No. 2004's \3\ Standards of Conduct 
in favor of an employee functional approach. In doing so, the 
Commission revised and reformed the Standards of Conduct to combine the 
best elements of Order No. 2004, with those of the Standards of Conduct 
originally adopted by the Commission in Order Nos. 497 \4\ (for the gas 
industry) and 889 \5\ (for the electric industry). By this rule, the 
Commission is reconciling in Sec.  157.35(d) to the specific Standards 
of Conduct with which a project sponsor conducting an open season for 
an Alaska natural gas transportation project must comply, as they have 
been revised and now appear in the Commission's regulations as a result 
of Order Nos. 717 and 717-A.
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    \3\ Standards of Conduct for Transmission Providers, Order No. 
2004, FERC Stats. & Regs. ] 31,155 (2003), order on reh'g, Order No. 
2004-A, FERC Stats. & Regs. ] 31,161, order on reh'g, Order No. 
2004-B, FERC Stats. & Regs. ] 31,166, order on reh'g, Order No. 
2004-C, FERC Stats. & Regs. ] 31,172 (2004), order on reh'g, Order 
No. 2004-D, 110 FERC ] 61,320 (2005), vacated and remanded as it 
applies to natural gas pipelines sub nom. National Fuel Gas Supply 
Corp. v. FERC, 468 F.3d 831 (DC Cir 2006); see Standards of Conduct 
for Transmission Providers, Order No. 690, FERC Stats. & Regs. ] 
31,237, order on reh'g, Order No. 690-A, FERC Stats. & Regs. ] 
31,243 (2007); see also Standards of Conduct for Transmission 
Providers, Notice of Proposed Rulemaking, FERC Stats. & Regs. ] 
32,611 (2007); Notice of Proposed Rulemaking, FERC Stats. & Regs. ] 
32,630 (2008).
    \4\ Inquiry into Alleged Anticompetitive Practices Related to 
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR 
22139 (Jun. 14, 1988), FERC Stats. & Regs. Regulations Preambles 
1986-1990 ] 30,820 (1988), Order No. 497-A, order on reh'g, 54 FR 
52781 (Dec. 22, 1989), FERC Stats. & Regs., Regulations Preambles 
1986-1990 ] 30,868 (1989) Order No. 497-B, order extending sunset 
date, 57 FR 9 (Jan. 2, 1992), FERC Stats. & Regs., Regulations 
Preambles January 1991-June 1996 ] 30,934 (1991), reh'g denied, 57 
FR 5815 (Feb. 18, 1992), aff'd in part and remanded in part sub nom. 
Tenneco Gas v. FERC, 969 F.2d 1187 (DC Cir. 1992) (Tenneco) 
(collectively, Order No. 497).
    \5\ Open Access Same-Time Information System and Standards of 
Conduct, Order No. 889, FERC Stats. & Regs. ] 31,035 (1996), order 
on reh'g, Order No. 889-A, FERC Stats. & Regs. ] 31,049, reh'g 
denied, Order No. 889-B, 81 FERC ] 61,253 (1997).
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II. Background

    3. In 1988, the Commission, in Order No. 497, first adopted 
Standards of Conduct for transmission providers. In Order No. 497, the 
Commission sought to deter undue preferences by (i) separating a 
transmission function provider's employees engaged in transmission 
services from those engaged in its marketing services, and (ii) 
requiring that all transmission customers, affiliated and non-
affiliated, be treated on a non- discriminatory basis.
    4. In 2003, the Commission issued Order No. 2004, which broadened 
the Standards of Conduct to include a new category of affiliate, the 
energy affiliate.\6\ The new standards were made applicable to both the 
electric and gas industries, and provided that the transmission 
employees of a transmission provider \7\ must function independently 
not only from the company's marketing affiliates but from its energy 
affiliates as well, and that

[[Page 15338]]

transmission providers may not treat either their energy affiliates or 
their marketing affiliates on a preferential basis.
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    \6\ The Order No. 2004 Standards of Conduct defined an energy 
affiliate as an affiliate of a transmission provider that (1) 
engages in or is involved in transmission transactions in U.S. 
energy or transmission markets; (2) manages or controls transmission 
capacity of a transmission provider in U.S. energy or transmission 
markets; (3) buys, sells, trades, or administers natural gas or 
electric energy in U.S. energy or transmission markets; or (4) 
engages in financial transactions relating to the sale or 
transmission of natural gas or electric energy in U.S. energy or 
transmission markets. Order No. 2004, FERC Stats. & Regs. ] 31,155 
at P 40; see also 18 CFR 358.3(d). Certain categories of entities 
were excluded from this definition in subsequent sections of the 
regulations.
    \7\ A transmission provider was defined as (1) any public 
utility that owns, operates, or controls facilities used for the 
transmission of electric energy in interstate commerce; or (2) any 
interstate natural gas pipeline that transports gas for others 
pursuant to subpart A of Part 157 or subparts B or G of Part 284 of 
the same chapter of the regulations. Order No. 2004, FERC Stats. & 
Regs. ] 31,155 at P 33-34; see also 18 CFR 358.3(a).
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    5. In 2005, the Commission issued Order No. 2005,\8\ amending its 
regulations to establish requirements governing the conduct of open 
seasons for proposals to construct Alaska natural gas transportation 
projects.\9\ In order to further the Commission's goal of a non-
discriminatory open season, Order No. 2005 applied certain of the 
Standards of Conduct requirements of Order No. 2004, several of which 
incorporated Order No. 2004's ``energy affiliate'' concept.
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    \8\ Regulations Governing the Conduct of Open Seasons for Alaska 
Natural Gas Transportation Projects, Order No. 2005, FERC Stats. & 
Regs. ] 31,174 (2005), order on reh'g, Order No. 2005-A, FERC Stats. 
& Regs. ] 31,187 (2005).
    \9\ Order No. 2005 fulfilled the Commission's responsibilities 
under section 103 (e)(1) of the Alaska Natural Gas Pipeline Act (the 
Act), enacted on October 13, 2004, which directed the Commission, 
within 120 days from enactment of the Act, to promulgate regulations 
governing the conduct of open seasons for Alaska natural gas 
transportation projects, including procedures for allocation of 
capacity.
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    6. In 2006, in National Fuel, the U.S. Court of Appeals for the DC 
Circuit overturned the standards as applied to gas transmission 
providers on the ground that the evidence of energy affiliate abuse 
cited by the Commission was not in the record.\10\ As a result of the 
court's decision in National Fuel, on January 9, 2007, the Commission 
issued an interim rule, Order No. 690,\11\ which repromulgated the 
portions of the Standards of Conduct not challenged in National Fuel as 
applied to natural gas transmission providers. Subsequently, on October 
16, 2008, the Commission issued Order No. 717 amending the Standards of 
Conduct for transmission providers to make them clearer and to refocus 
the rules on the area where there is the greatest potential for abuse.
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    \10\ National Fuel, 468 F.3d at 841.
    \11\ Standards of Conduct for Transmission Providers, Order No. 
690, 72 FR 2427 (Jan. 19, 2007); FERC Stats. & Regs. ] 31,237 (2007) 
(Interim Rule); clarified by, Standards of Conduct for Transmission 
Providers, Order No. 690-A, 72 FR 14235 (Mar. 27, 2007); FERC Stats. 
& Regs. ] 31,243 (2007).
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    7. The reforms in Order No. 717 were intended to eliminate the 
elements that had rendered the Standards of Conduct difficult to 
enforce and apply. The Commission strove to conform the Standards of 
Conduct with the court's opinion in National Fuel and combine the best 
elements of Order No. 2004 with those elements of the Standards of 
Conduct originally adopted in Order Nos. 497 and 889. Specifically, 
Order No. 717 (i) eliminated the concept of energy affiliates, and (ii) 
eliminated the corporate separation approach in favor of the employee 
functional approach used in Order Nos. 497 and 889.

III. Discussion

    8. The Commission's goal in promulgating Sec. Sec.  157.34 and 
157.35 of its regulations was to prevent unduly discriminatory behavior 
and limit the ability of a project applicant for an Alaska natural gas 
transportation project to unduly favor its affiliates in the open 
season process. The Commission sought to do this by applying certain of 
the Standards of Conduct requirements of Order No. 2004 to all project 
applicants conducting open seasons for an Alaska natural gas 
transportation project because this would minimize the risk that an 
affiliate of a project applicant would have an advantage over non-
affiliates in obtaining capacity through the open season.
    9. First, in Sec.  157.35(c), the Commission required project 
applicants to create/designate a unit or division to conduct the open 
season. The employees of this unit or division are treated as 
transmission function employees, and as such are required, under Order 
No. 2004, to function independent of the other non-regulated divisions 
of the project applicant, as well as the project applicant's Marketing 
and Energy Affiliates.\12\ This, the Commission stated, would prevent 
Energy Affiliates or Marketing Affiliates of the project applicant who 
participate in the open season from having the advantage of information 
or strategy that non-affiliated open season participants do not have.
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    \12\ See 18 CFR 358.4(a)(1).
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    10. Second, in Sec.  157.35(d), the Commission provided that the 
project sponsor's unit or division conducting an open season would be 
subject to certain provisions of the Standards of Conduct, 
specifically, those pertaining to: separation of functions (18 CFR 
358.4(a)(1) and (3)); written procedures (18 CFR 358.4(e)(3), (4), (5) 
and (6)); information access (18 CFR 358.5(a)); information disclosure 
(18 CFR 358.5(b)); prohibitions against discrimination (18 CFR 
358.5(c)(3) and(5)) and discounts (18 CFR 358.5(d).

A. Concept of ``Energy Affiliates''

1. Current Alaska Open Season Regulations--Sec. Sec.  157.34(c)(19), 
(20)(i) and (ii), and (21), and 157.35(c)
    11. The current regulations governing the conduct of open seasons 
for Alaska natural gas transportation projects refer in several 
sections to ``energy affiliates.'' In particular, paragraphs (19), 
(20)(i) and (ii), and (21) of Sec.  157.34(c): include ``Energy 
Affiliates'' among the entities that a prospective applicant must list 
and identify in organizational charts to be included in the prospective 
applicant's Notice of Open Season.
    12. Additionally, as part of the Commission's regulations to 
prevent undue discrimination or preference in the conduct of open 
seasons for Alaska natural gas transportation projects, Sec.  
157.35(c): Requires that all prospective applicants conducting open 
seasons for an Alaska natural gas transportation project function 
independent of, among others, their Energy Affiliates, as defined the 
Commission's Standards of Conduct.

B. New Alaska Open Season Regulations--Sec. Sec.  157.34(c)(19), 
(20)(i) and (ii), and (21), and 157.35(c)

    13. As stated above, Order No. 717 eliminated the concept of 
``energy affiliates'' by deleting that term, as it was defined in Sec.  
358.3(d) \13\ of the pre-Order No. 717 Standards of Conduct. Order No. 
717 also deleted from the Standards of Conduct the definition of 
``marketing affiliate,'' consistent with its goal of eliminating Order 
No. 2004's corporate functional approach. In its stead, Order No. 717 
refers to the terms ``marketing function'' in new Sec.  358.3(c) \14\ 
and ``marketing function employee'' in new Sec.  358.3(d).\15\ In the 
case of interstate pipelines and their affiliates, marketing function 
means ``the sale for resale in interstate commerce, or the submission 
of offers to sell interstate commerce, natural gas'' subject to several 
exclusions, including ``sales of natural gas solely from a seller's own 
production, or a ``seller's own gathering or processing facilities.'' 
\16\ However, for purposes of these regulations, these exclusions, 
which also existed under the definition of ``marketing'' under the 
Order No. 2004 Standards of Conduct (see 18 CFR 358.3(l)(1)), cannot be 
read to exclude any prospective project sponsors that comprised or were 
affiliated with the owner of the Alaskan North Slope natural gas. The 
Commission made this clear by providing in Sec.  157.35(d) of the open 
season regulations that all project applicants, even those who would 
not otherwise be subject to the Standards of Conduct provisions, must 
comply with certain enumerated sections of the Standards of Conduct.
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    \13\ 18 CFR 358.3(d).
    \14\ 18 CFR 358.3(c).
    \15\ 18 CFR 358.3(d).
    \16\ 18 CFR 358.3(c)(iii) and (iv).
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    14. Therefore, in order to render the regulations governing the 
conduct of

[[Page 15339]]

open seasons for Alaska natural gas transportation projects consistent 
with the current Standards of Conduct, the Commission is amending 
paragraphs (19), (20) and (21) of Sec.  157.34(c) to eliminate 
references to ``energy affiliates'' and ``marketing affiliates,'' and 
is adopting Order No. 717's employee functional approach as reflected 
in the marketing function/marketing function employee concept. However, 
the Commission is also making clear that the ``producer exemption'' of 
Sec.  358.3(c)(iii) does not apply in the case of prospective 
applicants conduction open seasons for Alaska natural gas 
transportation projects.
    15. The Commission is also amending Sec.  157.35(c) to eliminate 
references to ``Energy Affiliates'' in that provision of the open 
season regulations, and to replace the term ``marketing affiliates'' 
with ``affiliates'' performing a ``marketing function,'' as those terms 
are defined in the current Standards of Conduct. Again, the Commission 
is making clear in this section that the ``producer exemption'' of 
Sec.  358.3(c)(iii) does not apply in the case of prospective 
applicants conduction open seasons for Alaska natural gas 
transportation projects.

C. Specific Provisions of the Standards of Conduct; Current Alaska Open 
Season Regulations--Sec.  157.35(d)

    16. As explained above, Commission provided in Sec.  137.35(d) that 
the project sponsor's unit or division conducting an open season would 
be subject to certain provisions of the Commission's Standards of 
Conduct, namely, Sec. Sec.  358.4(a)(1) and (3); 358.4(e)(3), (4), (5), 
and (6); 358.5(a), (b), (c)(3) and (5); and 358.5(d). That section also 
provided that the exemptions from Sec.  358.4(a)(1) and (3) set forth 
in Sec.  358.4(a)(4), (5), and (6) of the open season regulations also 
applied to any project applicant conducting an open season for an 
Alaska natural gas transportation project.
    17. Below, we will discuss the specific Standards of Conduct with 
which an applicant for an Alaska natural gas transportation project 
must comply and compare those requirements with those contained in the 
Standards of Conduct as revised by Order No. 717.

D. Separation of Functions--Sec. Sec.  358.4(a)(1) and (3) (2004)

    18. Under Sec.  157.35(d) of the Commission's open season 
regulations, any project applicant conducting an open season for an 
Alaska natural gas transportation project must comply with the 
separation of functions requirements of the Standards of Conduct found 
in Sec. Sec.  358.4(a)(1) and (3) of the Commission's regulations.\17\
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    \17\ Old 18 CFR 358.4(a)(1) and (3).
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    19. The independent functioning requirements of Sec.  358.4(a)(1) 
now appear in the new Standards of Conduct, as amended by Order No. 
717, at Sec.  358.5(a) of the Commission's regulations.\18\ The new 
standard has two minor differences from the Order No. 2004 standard. 
First, the exception for emergency circumstances affecting system 
reliability was replaced by a broader exception ``as permitted in this 
part or otherwise permitted by Commission order.'' This change should 
have no impact on a project applicant's obligations since no emergency 
circumstances affecting system reliability would occur at the open 
season stage. The second difference is that reference to ``Marketing 
and Energy Affiliates'' has been replaced by reference to ``marketing 
function employees,'' reflecting Order No. 717's elimination of the 
Energy Affiliate and the adoption of an employee functional approach in 
lieu of a corporate functional approach. The separation of functions 
requirements described in Sec.  358.4(a)(3) are now found in Sec.  
358.5(b) of the new standards,\19\ although they, too, are now 
expressed in terms that reflect Order No. 717's employee functional 
approach by replacing reference to ``Marketing and Energy Affiliates'' 
with reference to ``marketing function employees.''
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    \18\ 18 CFR 358.5(a).
    \19\ 18 CFR 358.5(b).
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E. Written Procedures--Sec. Sec.  358.4(e)(3), (4), (5) and (6)

    20. Section 157.35(d) of the Commission's open season regulations 
also imposes on any project applicant conducting an open season for an 
Alaska natural gas transportation project certain requirements 
pertaining to written procedures, training, and compliance oversight as 
set out in Sec. Sec.  358.4(e)(3), (4), (5) and (6).\20\ Specifically, 
Sec.  358.4(e)(3) requires each project applicant to post on its 
Internet Web site its written procedures describing how it will comply 
with the applicable Standards of Conduct and pursuant to Sec.  
358.4(e)(4), these procedures are to be distributed to specified 
employees. Also, under the requirements of Sec.  358.4(e)(5), each 
project applicant is required to train its employees involved in the 
open season or part of the open season unit/division, officers, 
directors and employees with access to transportation information or 
information concerning gas purchases, sales or marketing functions. 
Finally, the project applicant must also designate a Chief Compliance 
Officer who will be responsible for Standards of Conduct compliance as 
set out in Sec.  358.4(e)(6).
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    \20\ Old 18 CFR 358.4(e)(3), (4), (5) and (6).
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    21. Requirements pertaining to written procedures, training, and 
compliance oversight are now set out in Sec. Sec.  358.7(d) (posting 
written procedures); 358.8(b)(2) (distribution of written procedures); 
358.8(c)(1) (employee training); and 358.8(c)(2) (designation of 
compliance officer). Although there are some differences in the details 
of these procedures, they are minor, and should impose no undue burdens 
on project applicants conducting open seasons. Likewise, they will not 
dilute or alter the Commission's goal to ensure a non-discriminatory 
open season for an Alaska natural gas transportation project.
    22. For example, the new Standards of Conduct do not specifically 
require that the procedures to be posted must be ``in such detail as 
will enable customers and the Commission to determine that the 
Transmission Provider is in compliance with the requirements of this 
section.'' \21\ Additionally, the training requirements of the old 
Standards of Conduct must now be met annually and new employees must be 
trained within 30 days.\22\ Finally, in addition to designating a Chief 
Compliance Officer, the new Standards of Conduct require that the Chief 
Compliance Officer's name and contact information be posted.\23\
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    \21\ Compare old 18 CFR 358.4(e)(3) with 18 CFR 358.7(d).
    \22\ Compare old 18 CFR 358.4(e)(5) with 18 CFR 358.8(c)(1).
    \23\ Compare old 18 CFR 358.4(e)(6) with 18 CFR 358.8(c)(2).
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F. Information Access and Disclosure--Sec. Sec.  358.5(a) and (b)

    23. The application of the information access (18 CFR 358.5(a)) and 
disclosure (18 CFR 358.5(b)) requirements also apply to project 
applicants in order to ensure that employees of Marketing/Energy 
Affiliates \24\ participating in the Open Season will not have access 
to any transmission information that is not publicly available to non-
affiliated participants and to require that any disclosure of non-
public transmission information to a Marketing/Energy Affiliate will be 
immediately disclosed to all other actual and potential open season 
participants by posting that

[[Page 15340]]

information on the project applicant's Internet Web site. Additionally, 
Sec.  157.35(d) provides that the requirements set out in Sec.  
358.5(b)(4) for written consent before releasing non-affiliated 
customer information to a Marketing or Energy Affiliate and posting 
that consent on the Internet also apply to project applicants.
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    \24\ As explained infra, the concept of Energy Affiliate has 
been eliminated, and the marketing affiliate has been supplanted by 
the concept of the marketing function employee.
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    24. Requirements pertaining to information access and disclosure 
are now set out in Sec. Sec.  358.6 and 358.7(a), (b), and (c). 
Although reworded to reflect the elimination of the Energy Affiliate 
and the replacement of references to Marketing Affiliates with the 
concept of marketing function employees, the new Standards of Conduct 
similarly ensure that a project sponsor's affiliated employees who 
conduct a marketing function will not have access to any transmission 
information that is not publicly available to non-affiliated open 
season participants and similarly require that any disclosure of non-
public transmission information to a marketing function employee will 
be immediately posted on project applicant's Internet Web site for all 
other actual and potential open season participants to see.

G. Prohibition Against Discrimination--Sec. Sec.  358.5(c)(3) and (5)

    25. In Order No. 2005, the Commission sought to broadly prohibit 
discrimination by a project applicant conducting an open season and 
limit its ability to unduly favor a Marketing/Energy Affiliate by 
imposing some of the non-discrimination requirements of Order No. 2004. 
Specifically, under Sec.  157.35(d), the non-discrimination provisions 
of the Standards of Conduct contained in Sec. Sec.  358.5(c)(3) and (5) 
\25\ were made to apply to project applicants. Section 358.5(c)(3) 
requires a Transmission Provider to process all similar requests for 
transmission in the same manner and within the same period of time; and 
Sec.  358.5(c)(5) prohibits transmission providers from giving their 
Marketing or Energy Affiliates any preference over any other wholesale 
customer in matters relating to the sale or purchase of transmission 
service. The Commission felt that these provisions would ensure that a 
project applicant will not provide any preferences to affiliated 
participants in the context of an open season. These prohibitions 
remain intact under new Sec. Sec.  358.4(c) and (d).
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    \25\ Old 18 CFR 358.5(c)(3) and (5).
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H. Discounts--Sec.  358.5(d)

    26. Finally, Sec.  157.35(d) imposes on a project applicant the 
provisions of Sec.  358.5(d),\26\ under which a Transmission Provider 
is required to post an offer of a discount for transmission service at 
the time an offer is contractually binding.\27\ This, too, was done to 
ensure the transparency of the open season process and discourage undue 
preferences.
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    \26\ Old 18 CFR 358.5(d).
    \27\ If an offer of a discount becomes contractually binding 
through the execution of a precedent agreement, the offer must be 
posted at that time, not at the time of the final agreement. See 
Order No. 2004-A, FERC Stats. & Regs. ] 31,161 at P 227.
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    27. In Order No. 717, the Commission deleted the obligation of 
Sec.  157.35(d) to post discount information from the current Standards 
of Conducts. In P 218 of Order No. 717, we stated the following:

    The Commission further clarifies that where the information 
called for under the posting requirements of the Standards is 
duplicative of information required to be posted by transmission 
providers under other provisions of our regulations or orders, such 
as the posting requirements of 18 CFR part 284 and 18 CFR part 37, 
only a single posting is required, and the transmission provider is 
to follow the posting requirements, inclusive of substance, venue, 
and timing, of the other regulations or orders. We believe the 
posting requirements contained in such regulations or orders are 
sufficient to fulfill the transparency goals of the Standards of 
Conduct. Inasmuch as discount information is required to be posted 
both for the gas and electric industries under other provisions of 
our regulations, we delete proposed section 358.4(b), which had set 
forth proposed requirements for the posting of discount 
information.\28\
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    \28\ FERC Stats. & Regs. ] 31,280, at P 218 (2008).

    28. The Commission recognizes that other provisions of our 
regulations or orders, such as the posting requirements of 18 CFR part 
284 and 18 CFR part 37, might not attach to a prospective applicant for 
an Alaska natural gas transportation project. However, under the open 
season regulations, such an applicant may not give undue preference to 
any person in matters relating to the sale or purchase of transmission 
service (including, but not limited to, issues of price * * *).\29\ 
Under Sec.  157.34(d)(4) of the Commission's regulations, a prospective 
applicant must submit copies of all precedent agreements to the 
Commission, at which time any discounted rates would be revealed, and 
the Commission can address any concerns or complaints regarding 
preferential treatment at that time.
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    \29\ This requirement appears in both the Order No. 2004 
Standards of Conduct (18 CFR 358.5(c)(5)) and the Order No. 717 
Standards of Conduct (18 CFR 358.4(d)).
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I. Exemptions--Sec. Sec.  358.4(a)(4), (5), and (6)

    29. In addition, Sec.  157.35(d) provides that the exemptions from 
Sec. Sec.  358.4(a)(1) and (3) set forth in Sec. Sec.  358.4(a)(4), 
(5), and (6) also apply to each project applicant conducting an Alaska 
natural gas transportation project open season. The applicable 
exemptions from the separation of functions would also apply to permit 
the project applicant to share various categories of employees, 
including: Support, field and maintenance employees (Sec.  
358.4(a)(4)); senior officers and directors who are not ``Transmission 
Function Employees'' (as defined by 18 CFR 358.3(j)), provided that 
they do not participate in directing, organizing, or executing 
transmission system operations or market functions or act as conduits 
for sharing prohibited information with a Marketing or Energy Affiliate 
(Sec.  358.4(a)(5)); and risk management employees who are not engaged 
in transmission functions or sales or commodity functions (Sec.  
358.4(a)(6)).
    30. The new Standards of Conduct do not specifically enumerate 
similar categories of employees that may be shared. Instead, the 
sharing of these types of employees may be permitted by virtue of, and 
to the extent that, the employee in question is not one ``who actively 
and personally engages on a day-to-day basis in marketing functions.'' 
\30\
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    \30\ See 18 CFR 358.3(d).
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    31. As discussed above, applying the new Standards of Conduct 
provisions regarding the functional separation, information access and 
disclosure, and non-discrimination provisions of Order No. 717 to the 
open season process will ensure, in the same way that the Standards of 
Conduct currently listed in the open season regulations do, that the 
open season is conducted in a manner that is non-discriminatory and 
provides equal access to all participants, particularly those not 
affiliated with the project applicants. If during or following the open 
season the Commission determines that the project applicant has 
violated any of these requirements, the results of the open season with 
regard to the affiliates of that project applicant may be voided and a 
new open season held for that capacity.
    32. Therefore, in order to render the regulations governing the 
conduct of open seasons for Alaska natural gas transportation projects 
consistent with the current Standards of Conduct, the Commission is 
amending paragraph (d) of Sec.  157.35 to replace the various Order No. 
2004 Standards of Conduct which

[[Page 15341]]

project sponsors conducting open seasons for an Alaska natural gas 
transportation project must comply with the applicable new Standards of 
Conduct promulgated under Order No. 717, as discussed above.

IV. Information Collection Statement

    33. Office of Management and Budget (OMB) regulations require OMB 
to approve certain information collection requirements imposed by 
agency rule.\31\ However, this instant Final Rule does not increase or 
decrease the information collection requirements that are already 
imposed under the Commission's open season regulations for Alaska 
natural gas transportation projects already imposed and compliance with 
OMB regulations is thus not required.
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    \31\ 5 CFR 1320.12.
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V. Environmental Analysis

    34. The Commission is required to prepare an Environmental 
Assessment or Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\32\ 
Issuance of this instant Final Rule does not represent a major Federal 
action having a significant adverse effect of the human environment 
under the Commission's regulations implementing the National 
Environmental Policy Act of 1969. Part 380 of the Commission's 
regulations lists exemptions to the requirement to draft an 
Environmental Assessment or Environmental Impact Statement. Included is 
an exemption for procedural, ministerial, or internal administrative 
actions.\33\ This rulemaking is exempt under that provision.
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    \32\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 
] 30,783 (1987).
    \33\ 18 CFR 380.4(a)(1).
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VI. Regulatory Flexibility Act

    35. The Regulatory Flexibility Act of 1980 (RFA) \34\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
This instant Final Rule concerns amendments to certain provisions of 
the Commission's regulations governing the conduct of open seasons for 
Alaska natural gas transportation projects, namely, 18 CFR 157.34 and 
157.35. These changes are being made in order to render the open season 
regulations consistent with the Commission's current Standards of 
Conduct by reconciling references to the specific Standards of Conduct 
with which a project sponsor conducting an open season for an Alaska 
natural gas transportation project must comply. In large measure, the 
amendments made in this instant rule do not impose obligations on any 
Alaska natural gas transportation project applicants that are different 
than the obligations imposed under the current open season regulations. 
Rather than being substantive in nature, this rulemaking merely 
reconciles the references to specific requirements under the Standards 
of Conduct imposed under Order No. 2004, with those requirements as 
they now appear in the Standards of Conducts as a result of Order No. 
717. Other than in minor details, such as training and posting 
requirements, as discussed above, any differences in the 
responsibilities imposed as a result of this rulemaking are differences 
in form rather than in substance as a result of the new employee 
functional approach taken by Order No. 717. The Commission certifies 
that it will not have a significant economic impact upon participants 
in Commission proceedings. Therefore, an analysis under the RFA is not 
required.
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    \34\ 5 U.S.C. 601-12.
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VII. Document Availability

    36. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission'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.
    37. From the Commission'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.
    38. User assistance is available for eLibrary and the Commission'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].

VIII. Notice and Comment and Effective Date

    39. The Commission is issuing this rule as an instant Final Rule 
without a period for public comment. Under 5 U.S.C. 553(b), notice and 
comment procedures are unnecessary where a rulemaking concerns only 
agency procedure or practice, or where the agency finds that notice and 
comment is impracticable, unnecessary, or contrary to the public 
interest.
    40. This rule concerns the amendment of 18 CFR 157.34 and 157.35 in 
order to clarify them in response to Order Nos. 717 and 717-A, 
governing the Standards of Conduct for transmission providers. The 
changes made in this rulemaking pertain to certain of these standards 
with which all project applicants conducting open seasons for an Alaska 
natural gas transportation project must comply.
    41. Moreover, on January 29, 2010, TransCanada Alaska Company LLC 
filed, pursuant to Sec.  157.38 of the Commission's regulations, a 
Request for Commission Approval of Detailed Plan for Conducting an Open 
Season in Docket No. PF09-11-001, and the Commission is aware that 
another potential sponsor of a proposed Alaska natural gas 
transportation project is preparing to soon file with the Commission 
its plan for conducting an open season. It is therefore important to 
clarify as expediently as possible exactly what is required of 
prospective applicants in order for them to comply with the open season 
regulations involving the Commission's Standards of Conduct.\35\ For 
these reasons, the Commission finds that notice and public procedure on 
this rulemaking are impracticable, unnecessary, and contrary to the 
public interest.
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    \35\ In this regard, the Commission is mindful of the Alaska 
Natural Gas Pipeline Act's overall objective of facilitating the 
timely development of an Alaska natural gas transportation project 
to bring Alaskan natural gas to markets in Alaska and in the lower 
48 States.
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    42. The provisions of 5 U.S.C. 801 regarding Congressional review 
do not apply to this Final Rule, because this Final Rule concerns 
agency procedure and practice and will not substantially affect the 
rights of non-agency parties.
    43. These regulations are effective April 28, 2010.

List of Subjects in 18 CFR Part 157

    Administrative practice and procedure; Natural gas; Reporting and 
recordkeeping requirements.


[[Page 15342]]


    By the Commission.

Nathaniel J. Davis, Sr.,
Deputy Secretary.


0
In consideration of the foregoing, the Commission amends part 157, 
Chapter I, Title 18, Code of Federal Regulations, as follows:

PART 157--APPLICATIONS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND 
NECESSITY AND FOR ORDERS PERMITTING AND APPROVING ABANDONMENT UNDER 
SECTION 7 OF THE NATURAL GAS ACT

0
1. The authority citation for part 157 continues to read as follows:

    Authority: 15 U.S.C. 717-717w.


0
2. In Sec.  157.34, paragraphs (c)(19), (20), and (21) are revised to 
read as follows:


Sec.  157.34  Notice of open season.

* * * * *
    (c) * * *
    (19) A list of the names and addresses of the prospective 
applicant's affiliated sales and marketing units and affiliates 
involved in the production of natural gas in the State of Alaska. 
Affiliated unit means ``Affiliate'' as defined in Sec.  358.3(a) of 
this chapter. Marketing units and or affiliates are those conducting a 
``marketing function'' as defined in Sec.  358.3(c) of this chapter, 
except that the exemption in Sec.  358.3(c)(2)(iii) shall not apply;
    (20) A comprehensive organizational chart showing:
    (i) The organizational structure of the prospective applicant's 
parent corporation(s) with the relative position in the corporate 
structure of marketing and sales units and any affiliates involved in 
the production of natural gas in the State of Alaska.
    (ii) The job titles and descriptions, and chain of command for all 
officers and directors of the prospective applicant's marketing and 
sales units and any affiliates involved in the production of natural 
gas in the State of Alaska; and
    (21) A statement that any officers and directors of the prospective 
applicant's affiliated sales and marketing units and affiliates 
involved in the production of natural gas in the State of Alaska named 
in paragraph (c)(19) of this section will be prohibited from obtaining 
information about the conduct of the open season or allocation of 
capacity that is not posted on the open season Internet Web site or 
that is otherwise also available to the general public or other 
participants in the open season.
* * * * *

0
4. In Sec.  157.35, paragraphs (c) and (d) are revised to read as 
follows:


Sec.  157.35  Undue discrimination and preference.

* * * * *
    (c) Each prospective applicant conducting an open season under this 
subpart must function independent of the other divisions of the 
prospective applicant as well as the prospective applicant's 
``affiliates'' performing a ``marketing function'' as those terms are 
defined in Sec.  358.3(a) and (c) of the Commission's regulations, 
except that the exemption in Sec.  358.3(c)(2)(iii) shall not apply. In 
instances in which the prospective applicant is not an entity created 
specifically to conduct an open season under this subpart, the 
prospective applicant must create or designate a unit or division to 
conduct the open season that must function independent of the other 
divisions of the project applicant as well as the project applicant's 
``affiliates'' performing a ``marketing function'' as those terms are 
defined in Sec.  358.3(a) of this chapter, except that the exemption in 
358.3(c)(2)(iii) shall not apply.
    (d) Each project applicant conducting an open season under this 
subpart that is not otherwise subject to the provisions of part 358 of 
this chapter must comply with the following sections of that part: 
Sec. Sec.  358.4(c) and (d), 358.5, 358.6, 358.7(a), (b), and (c), and 
358.8 (b) and (c) of this chapter.

[FR Doc. 2010-6770 Filed 3-26-10; 8:45 am]
BILLING CODE 6717-01-P