Commission regarding the effect of the proposed Standards on long-range
planning, and urge the Commission to clarify that employees do not
become marketing or transmission function personnel by engaging in
activities such as integrated resource planning (IRP), competitive
solicitations, or non-competitive solicitations that are conducted
under state supervision.\152\
---------------------------------------------------------------------------

    \152\ EEI at 33; California PUC at 4, 7-8; Entergy at 2; TANC at
4-5; SCE at 7-8; Vectren at 6-8, 10.
---------------------------------------------------------------------------

    138. Some commenters ask the Commission to clarify whether
``transmission functions'' includes long-range operations of the
transmission system. SMUD and Idaho Power request that the proposed
Standards exclude long-term transmission system planning, and the
specific activities involved in that planning, from the definitions
transmission function.\153\ TDU Systems, on the other hand, requests
that the Standards do apply to transmission function employees who
engage in long-term transmission planning. However, TDU Systems also
believes that transmission function employees should be permitted to
provide limited information to marketing function employees regarding
the feasibility of generation proposals.\154\
---------------------------------------------------------------------------

    \153\ SMUD at 2; Idaho Power at 12-13.
    \154\ TDU Systems at 5, 11-12.
---------------------------------------------------------------------------

    139. SCANA requests that neither generation-related employees that
are physically located onsite at the generating facilities nor
employees that are responsible for short and long-term resource
planning be classified into one of the functions.\155\
---------------------------------------------------------------------------

    \155\ SCANA at 10-15. Similarly, PG&E requests that the
Commission confirm that the transmission function employees who have
the responsibility to serve retail load may work cooperatively to
plan transmission and generation on an integrated basis as required
to meet state mandates. PG&E at 8.
---------------------------------------------------------------------------

    140. Many commenters also object to the Commission's inclusion of
``submission of offers or bids to buy or sell'' in the proposed
definition of

marketing functions. These commenters identify numerous barriers that
the inclusion of this phrase would place on long-range planning.\156\
These stated barriers include (i) preventing employees engaged in
resource procurement from having access to transmission planning
information to meet their state obligations; \157\ (ii) limiting a
company's ability to design and implement effective demand response
programs for retail load; \158\ (iii) restricting employees from
accessing transmission information needed to engage in competitive
solicitations for service to retail native load; \159\ (iv) restricting
integrated resource planning and competitive procurement employees from
accessing transmission information needed to engage in power purchases
and requests for proposals to serve native load; \160\ and (v)
interfering with the ability of planning employees to obtain non-public
transmission function information necessary to make solicitations as
efficient and cost effective as possible.\161\
---------------------------------------------------------------------------

    \156\ Puget Sound at 5-6.
    \157\ Id.; NARUC at 7.
    \158\ LPPC at 13-14.
    \159\ Salt River at 8-10; NARUC at 7; SCE at 7-8; Xcel at 13-14;
PG&E at 12-14; EEI at 31-34.
    \160\ Salt River at 8-10; EEI at 31-36; LPPC at 8; Southern Co.
Services at 12-13. Southern Co. Services contends that including
these activities in the definition would conflict with state law
requiring IRP and requests for proposal (RFP). Southern Co. Services
at 11. Southern Co. Services requests that the Commission modify the
definition of marketing functions to exclude RFP. Id. at 14.
    \161\ Western Utilities at 7-8; SCE at 8.
---------------------------------------------------------------------------

    141. Many commenters also seek clarifications regarding whether
certain activities are considered long-range planning or marketing
functions. Idaho Power requests clarification that employees performing
non-transmission function planning may consult with transmission
function employees, without compromising their non-transmission-
function-employee status.\162\ Xcel asks the Commission to clarify (i)
how the marketing function definition applies to both short-term and
long-term transactions and to IRP related gas activities; \163\ (ii)
that marketing function excludes offers to buy or sell natural gas
transportation or storage capacity that is the product of long-range
planning to serve the native retail load of the gas LDC or to deliver
natural gas fuel to electric generating plants owned or controlled by
the utility; \164\ and (iii) that the proposed standards allow
utilities the flexibility to pursue self-build or build/transfer
options without running afoul of the Independent Functioning Rule.\165\
---------------------------------------------------------------------------

    \162\ Idaho Power at 12-13.
    \163\ Xcel at 14-16; SCANA at 10-15. Xcel believes that short-
term wholesale purchase transactions should be treated comparably
with long-term capacity and energy acquisitions to serve native
load, since the function is the same: serving native load. Xcel at
14-16.
    \164\ Xcel at 15-16.
    \165\ Xcel at 16-18. Xcel also questions whether the marketing
function definition should apply to the Xcel Energy Transmission
Access Group, which it states acts as the transmission service
customer in arranging the long-term transmission service
requirements for retail and wholesale native load customers of all
four Xcel Energy Operating Companies. Xcel notes that this group
does not offer, bid, buy, or sell electric energy or natural gas nor
does it take positions on financial transmission rights in organized
markets. Xcel at 19-20.
---------------------------------------------------------------------------

    142. Many commenters also propose amendments to the proposed
standards to remedy their concerns. Multiple commenters propose to
remove ``buy'' from section 358.3(c), asserting that the Commission
does not have direct authority over purchases.\166\ PG&E's proposed
resolution is to amend the definition by introducing language limiting
the scope of the definition to wholesale purchases and sales.\167\ Salt
River suggests defining ``marketing functions'' simply as sales for
resale.\168\ To ensure that demand response is construed as a planning,
rather than marketing, function, LPPC requests an additional exception
for development, administration or implementation of demand response
programs, including the issuance of requests for proposals or the
awarding of contracts for demand response.\169\ Commenters stress that
these modifications are sufficient because such employees would remain
subject to the No Conduit Rule to protect improper disclosure of
protected information.\170\
---------------------------------------------------------------------------

    \166\ Western Utilities at 8-9; Salt River at 8-9; SCE at 8.
    \167\ PG&E at 12-14.
    \168\ Salt River at 8-10.
    \169\ LPPC at 13-14.
    \170\ Salt River at 8-10.
---------------------------------------------------------------------------

    143. Commenters request that the Commission clarify that the
Standards do not prevent transmission providers from sharing
transmission planning information with unaffiliated network service
transmission customers. TAPS requests that the Commission clarify that
the proposed Standards do not preclude transmission providers from
providing unaffiliated network customers' planning personnel with the
same types of information as is made available to the planning
personnel of the transmission provider and its affiliates.\171\ TAPS,
TDU Systems and APPA request assurances that unaffiliated planning
representatives involved in the regional joint planning process
contemplated by Order 890 have the same access to transmission
information as does the transmission provider's own generation planners
and affiliates.\172\
---------------------------------------------------------------------------

    \171\ TAPS at 38.
    \172\ TAPS at 38; TDU Systems at 4; APPA at 6.
---------------------------------------------------------------------------

c. Commission Determination
    144. As stated in the NOPR, one of the principal concerns the
Commission had with the current Standards was the barriers they appear
to have erected to coordinated resource planning, the critical
importance of which the Commission stressed in Order Nos. 890 and 890-
A.\173\ Public utilities complained they were finding it difficult to
gather together the necessary personnel and data to efficiently analyze
their long-range needs for both transmission and generation, due to the
strictures imposed by the corporate separation approach to the
Independent Functioning Rule. For that reason, as well as others, the
Commission revised the scope of the Independent Functioning Rule to
encompass only transmission function employees and marketing function
employees, thereby concentrating the rule on the area that presented
the greatest potential for undue preferences.
---------------------------------------------------------------------------

    \173\ NOPR at P 32. See Preventing Undue Discrimination and
Preference in Transmission Service, Order No. 890, FERC Stats. &
Regs. ] 31,241, at P 425 (2007), order on reh'g and clarifications,
Order No. 890-A, FERC Stats. & Regs. ] 31,261, at P 171 (2007),
order on reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008).
---------------------------------------------------------------------------

    145. Commenters expressed approval of the Commission's efforts to
remove unnecessary barriers to resource planning, but many raised
concerns that some barriers still remain. Others sought clarification
as to the implications of the proposed Standards on the transparency of
the resource planning process. These concerns fall in two main areas:
whether ``transmission functions'' include long-range operation of the
transmission system, thereby implicating employees involved in long-
range transmission planning; and whether the definition of ``marketing
functions'' should include the phrase ``submission of offers or bids to
buy or sell,'' rather than simply ``offers to sell.'' A few commenters
also raised concerns about access by third parties to transmission
function information in the context of open planning programs.
    146. As stated earlier in connection with the discussion of the
definition of ``transmission functions,'' the Commission in this Final
Rule clarifies that the term refers to the day-to-day operation of the
transmission system, and has modified the definition accordingly. Long-
range planning regarding the transmission system would not be included,
and employees

engaged in such long-range planning, provided they were not also
actively and personally involved in the day-to-day operation of the
transmission system, would not be considered transmission function
employees. Therefore, the Independent Functioning Rule would not apply
to them.
    147. Idaho Power Company requests clarification that long-range
planning functions such as integrated resource planning and preparation
of system impact studies not be considered transmission functions. We
reiterate that so long as these activities do not implicate the day-to-
day operation of the transmission system, they are not transmission
functions. SMUD likewise questions whether long-range transmission
planning is included in the definition; our amendment in this Final
Rule clarifies that it is not. And SCANA requests that employees who
perform generation-related resource planning not be considered
transmission function employees (or marketing function employees).
These employees do not perform day-to-day transmission operations, and
thus are not transmission function employees. Furthermore, they are not
engaged in sales of energy for resale, and thus are not marketing
function employees under our revised definition of the term.
    148. As discussed above, the Commission has determined to remove
``bids to buy'' from the definition of marketing functions, in large
part because the Commission's jurisdiction centers on sales for resale
in interstate commerce, not on purchases. It is also unnecessary to
include purchases in the scope of the rule in order to categorize
marketers making off-system sales as marketing function employees;
personnel making purchases destined to serve off-system sales would be
so categorized by virtue of their involvement in the sale portion of
the transaction. The removal of purchases from the definition of
marketing functions addresses the concerns of the many commenters who
feared that barriers to long range resource planning might still remain
under the proposed Standards.
    149. LPPC is concerned that inclusion of demand response in the
definition of marketing functions could interfere with the development
of demand response programs as a part of long-range planning. As
discussed above, the Commission does not intend to interfere with
demand response programs that an LSE has established for its customers,
and inclusion of the term demand response in the definition would thus
not impede planning for demand response programs. PG&E's request to
exclude from the definition of marketing functions those purchases made
to serve bundled native load or pursuant to state obligations is mooted
by our limitation of the definition to sales and not purchases.
    150. Our revised definition of transmission functions, limiting it
to the day-to-day operation of the transmission system, should enable
the free flow of the type of transmission information needed for
planning purposes. And the removal of purchases from the definition of
marketing functions should expand the category of personnel who are
permitted access to the type of information necessary to engage in
long-range system planning and competitive solicitations, whether
conducted pursuant to state mandate or not.
    151. Idaho Power Company seeks guidance as to whether long-range
planning personnel will be able to discuss information with
transmission function employees. If the planning personnel do not
otherwise qualify as marketing function personnel, they may hold such
discussions. However, if the transmission employees in question have
access to transmission function information and share it with the
planning personnel, under the No Conduit Rule the planning personnel
may not pass such information on to marketing function personnel.
    152. In Order No. 890, the Commission deferred consideration of the
impediments to the planning process which some commenters therein
stated were created by the Standards.\174\ Our modifications to the
proposed definition of transmission functions (limiting such functions
to the day-to-day operation of the transmission system) and to the
proposed definition of marketing functions (removing purchases from the
definition) address those concerns. TAPS and TDU Systems, however,
raise a separate concern, asserting that the ability of public
utilities to enjoy the relatively free flow of information permitted
under the revised Standards may encourage them to refrain from sharing
such information with non-affiliated entities in the planning process.
We reiterate our commitment, set forth in Order No. 890, as to the
desirability of a coordinated and open planning process.\175\ This
proceeding is not the proper forum to address the appropriate extent of
participation by interested entities in the planning processes of
public utilities. However, as we stated in Order No. 890, the
transmission provider must make available to any interested party the
same data, information, and models it uses in the transmission planning
process.\176\
---------------------------------------------------------------------------

    \174\ Order No. 890 at n.269.
    \175\ Id. at P 425.
    \176\ Id. at P 471.
---------------------------------------------------------------------------

8. Exclusion for Permitted Information Exchanges
a. Commission Proposal
    153. In the NOPR, the Commission proposed an exclusion to both the
Independent Functioning Rule and the No Conduit Rule for information
that we believed required communication between transmission function
employees and marketing function employees. Two categories of
information were implicated: information regarding generation necessary
to perform generation dispatch, and information necessary to maintain
or restore operation of the transmission system. The Commission
proposed that in situations requiring the exchange of such information,
contemporaneous records be made of the communication, except in cases
of emergency, when recordation was to be made as soon after the fact as
practicable. The NOPR also proposed that the records of the
communications be retained for a period of five years. See proposed
sections 358.5(b), 358.6(b), 358.7(h).
b. Comments
    154. Commenters raised the general concern that the provisions
designating the proposed permitted interactions are drafted too
narrowly to fully cover the types of communications they purport to
exclude.\177\ With respect to generation dispatch, MidAmerican believes
that the exclusion should cover all communications necessary to perform
generation dispatch, and suggests eliminating the words ``regarding
generation.'' \178\ ALCOA suggests the exclusion should cover the
situation where transmission function employees perform generation
dispatch.\179\ NiSource asks the Commission to delineate which
generation-related information is exempted.\180\ Bonneville contends
that communications necessary to provide generation inputs for
ancillary and control area services should be permissible, and not
subject to the contemporaneous record requirement.\181\
---------------------------------------------------------------------------

    \177\ See, e.g., Nisource at 21-22; MidAmerican at 15-16.
    \178\ MidAmerican at 15.
    \179\ ALCOA at 6.
    \180\ Nisource at 23.
    \181\ Bonneville at 6.
---------------------------------------------------------------------------

    155. Commenters also seek clarification on the type of generation

information transmission function employees may share with generation
employees. E.ON and PSEG seek confirmation that employees engaged in
generation-related activities may receive transmission function
information from transmission function employees.\182\ Likewise, EEI
requests that the Commission clarify that the exclusion for information
necessary to maintain or restore operation of the transmission system
includes information necessary for the scheduling of transmission-
related generation outages.\183\ PSEG further requests that the
Commission address the circumstance where employees performing
generation-related activities are the same employees performing trading
activities.\184\
---------------------------------------------------------------------------

    \182\ PSEG at 8; E.ON at 21.
    \183\ EEI at 53; ATC at 10; Wisconsin Electric at 6-7.
    \184\ PSEG at 9.
---------------------------------------------------------------------------

    156. Numerous commenters requested clarification on the scope of
the reliability exemption.\185\ National Grid requests clarification
that the reliability exclusion is not limited to those communications
related only to transmission system reliability,\186\ and other
commenters believe the exclusion should cover all types of reliability
communications.\187\ PSEG requests, instead, specific examples of
permitted reliability communications.\188\ E.ON suggests that these
excluded communications for reliability purposes can only be made to
the same extent that a transmission provider would communicate with a
similarly situated non-affiliated entity engaged in wholesale merchant
operations.\189\
---------------------------------------------------------------------------

    \185\ See, e.g., National Grid at 10-11; PSEG at 17-18; Nisource
at 22-23; ATC at 4; EEI at 51-52; Destin at 13; E.ON at 19-20;
MidAmerican at 14. Reliability Standards refer to the standards
promulgated by the North American Electric Reliability Corporation
(NERC) and approved by the Commission.
    \186\ National Grid at 10-11.
    \187\ See, e.g., National Grid at 10-11; MidAmerican at 14;
Ameren at 25; Wisconsin Electric at 6-7.
    \188\ PSEG at 6.
    \189\ E.ON at 19-20; see also TAPS at 45.
---------------------------------------------------------------------------

    157. Destin contends that the proposed rule discriminates against
natural gas transmission providers, averring that the two types of
permitted information apply only to electric transmission
providers.\190\
---------------------------------------------------------------------------

    \190\ Destin at 12.
---------------------------------------------------------------------------

    158. Ameren notes that elsewhere in the proposed regulations, the
Commission uses the terms ``permitted information'' or ``permitted
information exchanges.'' Ameren requests that the Commission be
consistent throughout the Final Rule.\191\
---------------------------------------------------------------------------

    \191\ Ameren at 27.
---------------------------------------------------------------------------

    159. Some commenters propose alternative methods of defining
permitted exchanges. Western Utilities urges the Commission to
recategorize the descriptions proposed in sections 358.5(b), 358.6(b)
and 358.7(h) as a permissible subset of non-public transmission
function information.\192\ SCE prefers a modification to section
358.6(b) that describes a particular set of safe harbor exchanges.\193\
---------------------------------------------------------------------------

    \192\ Western Utilities at 10-11.
    \193\ SCE at 6.
---------------------------------------------------------------------------

    160. EEI contends that the Commission's exclusions for permitted
information exchanges should be phrased as ``exemptions'' rather than
``permitted communications'' to clarify that other forms of
communication, such as social conversations, are not implicitly barred
because they are not identified as ``permitted'' communications.\194\
---------------------------------------------------------------------------

    \194\ EEI at 50.
---------------------------------------------------------------------------

    161. SCANA would like confirmation that if generation dispatch
employees are part of the company's transmission function, not its
marketing function, then communications between such employees and non-
dispatch-oriented transmission function employees necessary to perform
generation dispatch and to maintain or restore operation of the
transmission system are permissible.\195\
---------------------------------------------------------------------------

    \195\ SCANA at 8-10.
---------------------------------------------------------------------------

    162. SCE requests that the Commission include the phrase ``non-
public transmission'' to the exclusion for permitted information
exchanges to avoid the unintended implication that all exchanges
between marketing function employees and transmission function
employees are banned except the specific exchanges described.\196\
---------------------------------------------------------------------------

    \196\ SCE at 6-7.
---------------------------------------------------------------------------

    163. PSEG seeks clarification that marketing function employees may
communicate with employees of a gas LDC that is not affiliated with a
gas transmission provider. PSEG asserts that communications in such a
circumstance are essential for generation dispatch purposes and pose no
threat of prohibited communications.\197\
---------------------------------------------------------------------------

    \197\ PSEG at 6, 10-11.
---------------------------------------------------------------------------

    164. Ameren requests that the Commission clarify that proposed
section 358.6(b) does not preclude support personnel from sharing
information related to a marketing affiliate's specific transmission
service request.\198\ Ameren also asks the Commission to clearly state
in the Final Rule that the permitted information exclusion includes the
operating information exemption it states is permitted under Order No.
2004.\199\
---------------------------------------------------------------------------

    \198\ Ameren at 27.
    \199\ Id.
---------------------------------------------------------------------------

    165. Many commenters express confusion with respect to the record
requirement arising from proposed sections 358.2(d) and 358.7(h).
Commenters request clarification that the record retention requirement
is limited to the two narrow categories of permitted communications
identified in section 358.7(h).\200\ Likewise, National Grid requests
the Commission confirm that the contemporaneous record requirement
applies only to the types of communications addressed in sections
358.5(b), 358.6(b) and 358.7(h).\201\
---------------------------------------------------------------------------

    \200\ See, e.g., Idaho Power at 9-10; National Grid at 22-24;
MidAmerican at 13; Xcel at 22.
    \201\ National Grid at 22-23.
---------------------------------------------------------------------------

    166. Some commenters expressed the concern that the contemporaneous
record requirement presents too great an administrative burden.\202\
NiSource would eliminate the contemporaneous requirement, stating the
Commission neither explains why the records are necessary, nor
justifies the burden placed on transmission providers.\203\
---------------------------------------------------------------------------

    \202\ See, e.g. , NiSource at 19; Destin at 13; ATC at 16.
    \203\ NiSource at 19.
---------------------------------------------------------------------------

    167. Other commenters seek clarifications on the mechanics of the
record requirement. Idaho Power and Puget Sound ask whether a recorded
phone line satisfies the recordation requirement.\204\ Puget Sound
requests that the Commission not require indexing of these recorded
communications.\205\ ATC requests that the Commission expressly clarify
that permitted communications need not also be contemporaneously posted
on the OASIS.\206\
---------------------------------------------------------------------------

    \204\ Idaho Power at 9-10; Puget Sound at 11.
    \205\ Puget Sound at 12-13.
    \206\ ATC at 8.
---------------------------------------------------------------------------

    168. Commenters disagree on how much detail should be required for
cross-functional meeting records. Puget Sound prefers to record only
who attended, the agenda, verification that no discussion of nonpublic
transmission function information took place, and any items circulated
for the meeting, instead of keeping detailed records.\207\ Similarly,
E.ON would like assurance that these meeting records need not contain a
``word-for-word'' transcription, so long as the key points are
addressed.\208\ EPSA, however, believes that there should be an actual
transcript or recording of any interaction between restricted
employees.\209\
---------------------------------------------------------------------------

    \207\ Puget Sound at 13.
    \208\ E.ON at 23.
    \209\ EPSA at 10-11.

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

    169. INGAA contends that this recordation requirement implies,
through the use of the word ``exchange,'' that it extends to
information received from the marketing function employee.\210\ INGAA
asks the Commission to clarify that the recordation requirement applies
only to non-public transmission information provided to a marketing
function employee, and not to information received from a marketing
function employee.\211\
---------------------------------------------------------------------------

    \210\ INGAA at 55-58.
    \211\ INGAA at 57-58.
---------------------------------------------------------------------------

    170. Wisconsin Electric urges the Commission to consider adopting a
six-month time period, after which disclosure of non-public
transmission function information to a marketing employee is no longer
a violation.\212\ And Williston requests that the five-year retention
requirement for the contemporaneous records of its communications be
reduced to three years.\213\
---------------------------------------------------------------------------

    \212\ Wisconsin Electric at 7-8.
    \213\ Williston at 11.
---------------------------------------------------------------------------

    171. Williston believes that the new Standards should allow
whatever steps are necessary to be taken during an emergency, without
regard to the record requirement.\214\ Likewise, ATC and EEI state that
any contemporaneous records created after an emergency should simply be
assembled only to the extent possible and to the best knowledge of that
company at that time, and that no extraordinary duties should be
imposed to meet the Standards' requirements.\215\
---------------------------------------------------------------------------

    \214\ Williston at 9-10.
    \215\ ATC at 16; EEI at 4.
---------------------------------------------------------------------------

    172. Williston asserts that requiring records for non-emergency
communications places more onerous controls on the sharing of
information, without justification.\216\ Williston also requests
assurances that in situations where such communications are provided to
the Commission, that they will remain non-public.\217\
---------------------------------------------------------------------------

    \216\ Williston at 10.
    \217\ Id. at 11.
---------------------------------------------------------------------------

    173. National Grid proposes that the Commission eliminate the
proposed requirement that each company's Chief Compliance Officer
direct and manage contemporaneous recordings, and allow each company to
individually determine how best to comply with the contemporaneous
record requirement.
c. Commission Determination
    174. As discussed above, the Commission is eliminating the
corporate separation approach to the Independent Functioning Rule, and
transmission function employees are no longer barred from interacting
with all the employees of a marketing or energy affiliate (only
marketing function employees). Therefore, the occasions where
transmission function employees will legitimately need to interact in a
professional capacity with employees barred from doing so under the
Independent Functioning Rule is greatly reduced from the current
Standards. This is especially true in the critical areas of reliability
and generation dispatch, as it is rarely marketing function personnel
who engage in these activities. However, to cover any isolated
circumstances that may remain, such as in the case of smaller utilities
whose employees may perform multiple job duties, the Commission
proposed in the NOPR an exclusion to the Independent Functioning Rule
and the No Conduit Rule to ensure that where certain critical functions
were concerned, employees would not hesitate to interact with one
another for fear of violating the Standards.
    175. The bulk of the confusion which seems to have arisen over the
exclusion, as expressed in the comments, centers on generation
dispatch. Because dispatch is not inherently a marketing function, and
because persons engaged in marketing are very unlikely to also be
engaged in generation dispatch, commenters have assumed the Commission
meant the exclusion to cover some broader situation. That is not the
case. It was intended only for those rare instances, such as with
smaller utilities, where some overlap of duties might exist.
    176. To avoid any further confusion, the Commission eliminates from
section 358.7(h) the exclusion pertaining to generation dispatch, and
instead broadens the exclusion for reliability to include generation
concerns. The Commission further broadens the exclusion for reliability
to include compliance with reliability standards generally. The
proposed first exclusion is thus eliminated and the proposed second
exclusion is split into two parts, to read as follows: ``information
pertaining to compliance with Reliability Standards approved by the
Commission,'' and ``information necessary to maintain or restore
operation of the transmission system or generating units, or that may
affect the dispatch of generating units.'' Furthermore, to avoid
duplication, the Commission deletes the redundant statements of the
exclusion in sections 358.5(b) and 358.6(b). The Commission also
deletes the statement of the exclusion from section 358.2, as it
contains a level of detail inappropriate for a statement of general
principles. The statements of both the exclusion and the retention
requirement pertaining to it are now contained in section 358.7(h),
under the Transparency Rule.
    177. The Commission agrees with SCE that the phrase ``non-public
information'' should be added to the statement of the exclusion, to
avoid the implication that exchanges of public information must also be
recorded, and modifies the text accordingly. Likewise, the Commission
clarifies, in response to a request from INGAA, that it is transmission
function information that is not to be disclosed, and as to which the
exclusion applies, and modifies the language of the exclusion
accordingly. However, we remind INGAA that with respect to the
Independent Functioning Rule, it is the interaction of transmission
function employees and marketing function employees that is at issue.
Such interactions ought not to occur, except for non-business related
activities or in connection with the exclusion under discussion.
    178. Some commenters are concerned that acceptable interactions
among employees not covered by the exclusion might be inadvertently
swept into the recordation requirement by use of the term
``permitted.'' To avoid any confusion over the scope of the term, the
heading will read: ``Exclusion for and recordation of certain
information exchanges.'' We point out, however, that while transmission
function employees and marketing function employees may talk about
personal matters, which certainly need not be recorded, they are
required to function independently from one another with respect to
their work activities. Therefore, their interactions should be limited
to social activities or to the necessary discussion of information that
falls within the exclusion discussed. And, as indicated, in the latter
case appropriate recordation is to be made.
    179. SCANA states that the employees of its affiliated utility who
perform generation dispatch are included in the utility's transmission
function, and requests guidance as to their status as it pertains to
the exclusion. The Commission confirms that if such employees are not
performing marketing functions, they may freely interact with other
transmission function employees, and need not be concerned with the
exclusion in question.
    180. PSEG seeks clarification that marketing function employees may
communicate with employees of a gas LDC that is not affiliated with a
gas transmission provider. Such communications would not involve
transmission function employees or the dissemination of transmission
function

information to an affiliated marketing function employee, and thus
would be permissible.
    181. The Commission confirms that the exclusion does not implicate
the processing of transmission service requests from an affiliate,
which is permissible. Ameren requests the Commission to carry over into
the revised Standards the following provision: ``A transmission
provider is permitted to share information necessary to maintain the
operations of the transmission system with its Energy Affiliates.''
This provision is no longer needed, due to the elimination of the
concept of energy affiliates and the restrictions pertaining to such
affiliates.
    182. Some commenters suggest the recordation requirements of the
exclusion create an added burden on their operations. To the contrary,
the Standards greatly reduce the burdens on operations. Under the
existing Standards, transmission function employees must function
independently from all the employees of a marketing affiliate, not just
the marketing function employees. It can readily be seen that limiting
the restriction on interactions to marketing function employees
virtually eliminates the need for the exclusion itself. And in those
rare cases noted in the exclusion where interaction between
transmission function employees and marketing function employees may be
required, the transmission provider is not prohibited from allowing the
interaction, it simply must keep a record to enable the Commission to
ascertain whether the communications fell within the scope of the
exclusion or not.
    183. The Commission clarifies that the recording of any meetings
and exchanges of information under the exclusion need not take any
particular form; thus, a recorded phone line is sufficient. The
Commission declines to require a transcript, as one commenter suggests,
as this would be impracticable. The important element of the
requirement is to make a record of what generally was discussed, and
the date and persons involved. Puget Sound requests that entities not
be required to index the communications. No particular extraction
method for the data is required; however, communications subject to the
exclusion must be retrievable in some fashion, in order for Commission
staff to review them if necessary.
    184. The Commission agrees that an entity may designate someone
other than its chief compliance officer as the person responsible for
managing the recordings under the exclusion, and eliminates that
restriction from the regulatory text. The five-year holding period
matches that set forth in proposed section 358.4, and will be retained.
This period, rather than the requested three-year period that governs
the retention of certain shipper data under 18 CFR 284.12 (2008), will
better enable Commission staff to access the information in the course
of periodic audits or other interactions with the entity in question,
which may occur on an infrequent basis.\218\
---------------------------------------------------------------------------

    \218\ It is also consistent with the time period adopted by the
Commission in Order No. 677, amending the retention period for price
data under 18 CFR 284.288(b) and 284.403(b) (natural gas) and 18 CFR
35.37(d) (electricity), Revisions to Record Retention Requirements
for Unbundled Sales Service, Persons Holding Blanket Marketing
Certificates, and Public Utility Market-Based Rate Authorization
Holders,FERC Stats. & Regs. ] 31,218 (2006); Order No. 670
prohibiting market manipulation under 18 CFR part 1c, Prohibition of
Energy Market Manipulation, FERC Stats. & Regs. ] 31,202 (2006); and
the generally applicable five-year statute of limitations where a
penalty provision does not impose its own statute of limitations.
See FERC Stats. & Regs. ] 31,218 at n.6.
---------------------------------------------------------------------------

    185. With respect to emergency circumstances during which
contemporaneous recordation cannot be made, the Commission clarifies
that after-the-fact recordation need be assembled only to the extent
possible; we recognize that the thoroughness of such notes or other
recordation will vary greatly depending on the nature and extent of the
emergency.
    186. The Commission declines to adopt a time period for the
possible transition of non-public information to public information.
The continued usefulness of such information to an affiliated marketing
function employee will depend on the circumstances, and thus does not
lend itself to a generic rule. The Commission also notes that its
regulations govern whether information it receives is treated as non-
public or otherwise; as a general matter, information received in
connection with investigations is so treated.\219\
---------------------------------------------------------------------------

    \219\ See 18 CFR part 1b (2008). See also 18 CFR 388.112 and
388.113 (2008).
---------------------------------------------------------------------------

    187. Lastly, Destin suggests the proposed exclusion by its terms
discriminates against the gas industry. That is not correct. The
definition of transmission in section 358.3(f) includes gas
transportation as well as electric transmission. Therefore, information
necessary to maintain or restore operation of the transmission system
refers to pipelines as well as to electric transmission.

D. The No Conduit Rule

    188. In the NOPR, the Commission proposed carrying forward the no
conduit prohibition of the existing Standards, but modified it to
encompass only marketing function employees, not all employees of a
marketing or (for the electric industry) an energy affiliate, as the
persons who could not receive transmission function information. As in
the case of the analogous reform to the Independent Functioning Rule,
this change restricts the category of individuals who should be walled
off from transmission function information to those who can capitalize
on it in the form of an undue preference.
1. Commission Proposal
    189. The Commission proposed prohibiting employees of a
transmission provider from disclosing non-public transmission function
information to the transmission provider's marketing function employees
(defined to include employees of an affiliate). The Commission also
proposed prohibiting the receipt of transmission function information
by a transmission provider's marketing function employees. See proposed
section 358.6.(a).
2. Comments
    190. EPSA agrees with all the NOPR proposals designed to strengthen
the No Conduit Rule and approves broadening the scope of the term
``non-public'' as much as feasible.\220\
---------------------------------------------------------------------------

    \220\ EPSA at 8.
---------------------------------------------------------------------------

    191. SCE states that the prohibition set forth in proposed section
358.6(a)(1), prohibiting transmission function employees from
disclosing non-public transmission function information to marketing
function employees, is redundant, since all employees are so prohibited
under proposed section 358.6(a)(4). SCE recommends that the provision
be amended by substituting the words ``non-marketing function employees
and affiliate employees'' for ``transmission function employees'' and
deleting the proposed section 358.6(a)(4).\221\
---------------------------------------------------------------------------

    \221\ SCE at 6.
---------------------------------------------------------------------------

    192. Many commenters object that the prohibition against receiving
non-public transmission function information ``from any source'' is, in
one or more ways, unworkable and unenforceable.\222\ SCE claims the
proposed section is also unfair because of what it sees as the
Commission's intent to approach violations to the proposed Standards as
per se violations.\223\ Commenters argue

that transmission providers cannot control whether affiliated marketing
function employees receive non-public transmission function information
from third parties, and many commenters further contend that the
receiving marketing function employee may not have a way to know
whether the information is non-public.\224\ SCE states that because the
proposed prohibition operates against marketing function employees who
work for transmission providers and not against those who do not, the
Commission is providing the latter a competitive advantage in that they
can receive information the former cannot.\225\ Western Utilities also
complains that no posting ``cure'' provision has been provided for
improper disclosures by a third party to a marketing function
employee.\226\
---------------------------------------------------------------------------

    \222\ See, e.g., AGA at 23-25, ALCOA at 6-8, Ameren at 29-30,
Arizona PSC at 3-5, Bonneville at 9-10, E.ON. at 14-15, EEI at 42-
44, Entergy at 3, Idaho Power at 10, INGAA at 43-45, INGAA Response
at 3, NiSource at 19-20, PG&E at 22, PSEG at 15-16, Puget Sound at
10-11, SCE at 2-5, Southern Co. Services at 25-26, Western Utilities
at 5-7, and Wisconsin Electric at 9.
    \223\ SCE at 3.
    \224\ Western Utilities observes that the rule could potentially
require a marketing function employee to maintain detailed records
of all transmission function information he or she hears, and spend
significant amounts of time investigating each item to ascertain
whether it is non-public. SCE and Western Utilities state the
prohibition could also be interpreted as preventing a marketing
function employee from attending any meeting involving an ISO, NERC
or Regional Entity because of the potential for disclosure of non-
public information. SCE at 4; Western Utilities at 6.
    \225\ SCE at 5.
    \226\ Western Utilities at 7.
---------------------------------------------------------------------------

    193. Many commenters recommend either amending this prohibition or
eliminating it. Some commenters believe that the other sections of the
No Conduit Rule adequately ensure that improper transfers of non-public
information will not occur, and request that the Commission eliminate
the proposed prohibition.\227\ SCE prefers amending the provision to
prohibit disclosure or access to, rather than receipt of, non-public
transmission function information.\228\ INGAA suggests, and others
agree, that the prohibition ``from any source'' be eliminated and
substituted with language limiting the provision to information
received from a transmission function employee of the transmission
provider.\229\
---------------------------------------------------------------------------

    \227\ NiSource at 19-20; Vectren at 6; Williston at 11-12.
    \228\ SCE at 5.
    \229\ INGAA at 45; PSEG at 15; E.ON at 3; Southern Co. Services
at 26; E.ON at 3. Western Utilities contends that while the
transmission provider cannot impose or enforce a compliance program
on unaffiliated third parties, it may be liable under the proposed
rule for prohibited disclosures by third parties. Western Utilities
at 5.
---------------------------------------------------------------------------

    194. NGSA believes that the language of the No Conduit Rule
prohibits distribution of non-public transmission information only to a
pipeline's in-house marketing function, but does not reach marketing
function employees of an affiliate. NGSA proposes amendments that it
believes ensure that the prohibition reaches both.\230\ On the other
hand, AGA does not believe that the No Conduit Rule should apply to
non-jurisdictional marketing affiliates.\231\
---------------------------------------------------------------------------

    \230\ NGSA Reply Comments at 10-11.
    \231\ AGA at 3.
---------------------------------------------------------------------------

    195. Destin is concerned that the No Conduit Rule requires a
transmission provider to ensure compliance by the marketing function
employees, a task it contends is impracticable in the context of a
large and diverse corporate family. Destin believes the proposed
Standards effectively adopt a strict liability standard for
transmission providers with respect to any violations that may be
committed by a marketing affiliate, and that could subject a company to
a double penalty for a violation.\232\ Dominion Resources agrees with
Destin and queries whether the Commission has the authority to enforce
violations of the Standards by employees of a transmission provider's
affiliates.\233\
---------------------------------------------------------------------------

    \232\ Destin at 4-6.
    \233\ Dominion Resources at 15.
---------------------------------------------------------------------------

    196. TDU Systems requests that the Final Rule clarify that
generation planners are subject to the No Conduit Rule.\234\
---------------------------------------------------------------------------

    \234\ TDU Systems at 5-6.
---------------------------------------------------------------------------

    197. Finally, Vectren asks the Commission to modify section
358.2(c) to change it from passive voice to active voice, in order to
make it consistent with other subsections of section 358.2 and to
clarify who must comply with the provision.\235\
---------------------------------------------------------------------------

    \235\ Vectren at 11.
---------------------------------------------------------------------------

3. Commission Determination
    198. The Commission believes that the No Conduit Rule is at least
equally as critical to the regulatory scheme of the Standards as is the
Independent Functioning Rule, and adopts it in this Final Rule.
However, we find that certain of the commenters' objections to the
proposed regulatory text are well-taken, and modify it to (i) eliminate
redundancies and (ii) address the concerns of those who interpret the
rule as reaching the unwitting receipt of transmission function
information by marketing function employees.
    199. We agree with SCE that the first subsection of the rule,
proposed section 358.6(a)(1), which prohibits transmission function
employees from disclosing non-public transmission function information
to their transmission provider's marketing function employees, is
redundant. This prohibition is necessarily included in the broader
prohibition of the fourth subsection, proposed section 358.6(a)(4),
which prohibits any employee of the transmission provider or of its
marketing affiliates from making such disclosures. Therefore, we revise
the regulatory text to eliminate the proposed first prohibition, and
rearrange the remaining list of prohibitions.
    200. Many commenters object to the prohibition in proposed section
358.6(a)(2), which prohibits marketing function employees from
receiving non-public transmission function information from any source.
They argue that such receipt could be unwitting, or forced upon the
employees unwillingly. In light of the difficulties in determining
whether a marketing function employee may have willingly and knowingly
received such information, or rather whether he inadvertently received
it, the Commission will eliminate this prohibition in section 358.6.
The statement of the No Conduit Rule in the general principles section,
section 358.2, is likewise revised to reflect this modification.
    201. We further clarify that contractors, consultants or agents, as
well as employees, are covered by the prohibition in section 358.6(b),
and modify the regulatory text accordingly. We also modify the
corresponding regulatory text in the statement of general principles,
section 358.2(c).
    202. NGSA contends that marketing function employees of an
affiliate would not be reached under the No Conduit Rule. That is not
the case. Marketing function employees are defined in section 358.3(d)
to include employees, contractors, consultants or agents not only of
the transmission provider, but also of an affiliate of the transmission
provider.
    203. Destin claims that the proposed rule makes transmission
providers responsible for the actions of their affiliates with respect
to the disclosure of transmission function information. That is also
not the case. Only one of the prohibitions is solely directed against
transmission providers, and it prohibits them from using anyone as a
conduit for improper disclosures, something that is clearly within
their power. Of course, to the extent transmission providers have
corporate control over an affiliate, they are expected to require the
affiliate to abide by the Standards.
    204. TDU Systems requests clarification that generation planners
are subject to the No Conduit Rule. The Commission confirms that not
only are generation planners subject to the No Conduit Rule, but so are
all other employees of a transmission provider or its marketing
affiliate. In response to

Vectrin's request that the active voice be used in section 358.2(c)
(the statement of general principles relating to the No Conduit Rule),
the Commission believes no change is appropriate. The preceding two
general principles refer to affirmative obligations, whereas the
principle in question refers to an obligation to refrain from taking
certain actions, which lends itself to the passive voice.

E. Transparency Rule

    205. In addition to the Independent Functioning Rule and the No
Conduit Rule, the NOPR proposed a Transparency Rule, the provisions of
which are designed to alert interested persons and the Commission to
potential acts of undue preference. Most of the various posting
requirements of the existing Standards were placed in this section, and
in some cases modified to streamline them and conform them to the new
approaches proposed in the NOPR. The various posting requirements are
discussed below.
1. Waivers and Exercises of Discretion
a. Commission Proposal
    206. The Commission proposed carrying forward most of the existing
provisions regarding the non-discrimination requirements of section
358.4, including the provisions regarding the posting of waivers and
exercises of discretion. These provisions were proposed to remain under
section 358.4.
b. Comments
    207. Many commenters contend that the requirement that pipelines
log and post all ``exercises of discretion'' is vague, unnecessarily
broad, and overly burdensome.\236\ Both Williston and INGAA argue that
the NOPR expands this requirement without justification.\237\ INGAA and
NiSource request that the Commission eliminate the requirement
altogether.\238\
---------------------------------------------------------------------------

    \236\ See, e.g., INGAA at 50; Nisource at 17; NGSA Reply
Comments at 5-7; Kinder Morgan at 5-6; Spectra at 9-10; Williston at
15-17.
    \237\ Williston at 15-17; INGAA at 50.
    \238\ INGAA at 50; Nisource at 17.
---------------------------------------------------------------------------

    208. As an alternative to eliminating the requirement, several
commenters request that the Commission further clarify its scope.\239\
INGAA requests that the Commission clarify that a pipeline need not
post all acts of discretion inherent in its day-to-day operations.
INGAA and Kinder Morgan request clarification that the provision does
not cover information that must be posted under other regulatory or
tariff requirements, arguing that would create duplicative posting
requirements.\240\ Many commenters request clarification that the
provision does not apply to acts of discretion regarding tariff
provisions that, by their own terms, allow for discretion in their
application.\241\ INGAA and Dominion Resources assert that subsequent
acts of discretion within the tariff's parameters should be presumed
non-discriminatory, unless and until someone raises a concern.\242\
---------------------------------------------------------------------------

    \239\ See, e.g., INGAA at 50; NGSA Reply Comments at 5-7; Kinder
Morgan at 5-6; Spectra at 9-10; Williston at 15-17.
    \240\ INGAA at 52-53; Kinder Morgan at 6.
    \241\ See, e.g., INGAA at 53-54; NGSA Reply Comments at 5-7;
Spectra at 9-10; Dominion Resources at 19; NiSource at 18.
    \242\ INGAA at 53-54; Dominion Resources at 19.
---------------------------------------------------------------------------

    209. Other commenters propose to limit the scope of this posting
requirement in varying ways. NGSA proposes that the Commission adopt
the following rule of thumb: That the pipeline need not post each
individual use of a waiver that is generic in application, posted,
available to all shippers and cannot be denied when requested; but that
the pipeline should post non-generic waivers that are not applied on
every request or that are shipper-specific.\243\ Alternatively,
Williston believes that only a discretionary waiver of a tariff
provision that specifically provides for discretionary waiver need be
posted.\244\ Similarly, Dominion Resources contends that only waivers
should be posted, and not ``acts of discretion,'' noting that myriad
acts of discretion are continually being made.\245\ Chandeleur believes
that the retention of documents requirement should refer only to the
log of the acts of waiver and exercises of discretion, contending that
retention requirements and reproduction specifications for Internet Web
site information is addressed in the Commission's regulations at
section 284.12(b)(3)(v).\246\
---------------------------------------------------------------------------

    \243\ NGSA Reply Comments at 7.
    \244\ Williston at 16.
    \245\ Dominion Resources at 17-20.
    \246\ Chandeleur at 5.
---------------------------------------------------------------------------

    210. Commenters also suggest other modifications to this
requirement. NGSA urges that the Commission clarify that the non-
discrimination posting requirements set forth in proposed section 358.4
apply uniformly to all gas industry transmission providers, regardless
of whether the transmission provider has marketing affiliates or
whether those marketing affiliates transact business on the
pipeline.\247\ In addition, NGSA requests that the Commission establish
a standardized format for the posting of offers of a discount and
discretionary waivers, to ensure that the disclosures are more
accessible and include all relevant information.\248\ And Williston
requests that the Commission reduce the retention period to three
years, instead of five.\249\
---------------------------------------------------------------------------

    \247\ NGSA Reply Comments at 3-5. NGSA alternatively requests,
in the event the Commission believes the scope of this request falls
outside of this proceeding, that the Commission initiate an
expedited ``companion proceeding'' that seeks to apply the posting
requirements generally to all pipelines and not only to a particular
subset of pipelines.
    \248\ NGSA Reply Comments at 16-17.
    \249\ Williston at 15-17.
---------------------------------------------------------------------------

    211. Commenters also request modifications to the proposed
requirement regarding posting of discounts, set forth in section
358.4(b). Chandeleur believes that proposed section 358.4(b) contains
unnecessary overlap with the existing regulatory text in section
250.16(d) of the Commission's regulations, and requests that the
Commission adopt the approach of having only one subparagraph within
the regulation setting out the elements required to meet the reporting
burden for Form 592.\250\
---------------------------------------------------------------------------

    \250\ Chandeleur at 6.
---------------------------------------------------------------------------

    212. ATC believes that the discount requirement should not apply to
transmission providers that participate in an RTO or ISO, if the
discount is granted by the RTO or ISO without the consent or approval
of the transmission provider.\251\
---------------------------------------------------------------------------

    \251\ ATC at 14.
---------------------------------------------------------------------------

c. Commission Determination
    213. Proposed section 358.4, which generally deals with non-
discrimination requirements, also contains the posting requirements for
notices of waivers, notices of exercises of discretion, and discounts.
Inasmuch as these posting aspects of the proposed section relate to the
Transparency Rule, we move them to section 358.7, which includes the
other posting requirements under the Standards. Further, in response to
NGSA's request, we clarify that section 358.4 as a whole, as well as
the posting requirements moved to section 358.7, apply to all
transmission providers, in accordance with the limitations set forth in
section 358.1.
    214. Commenters had no objections to the general requirements of
section 358.4, other than regarding waivers, exercises of discretion
and discounts. The Commission is persuaded by the arguments of many
commenters that a blanket requirement to post all waivers and exercises
of discretion goes beyond what is needed to alert customers and others
to possible acts of undue discrimination or preferences in favor of an
affiliate. Furthermore, such posting is

in some cases redundant to the posting requirements set forth elsewhere
in our regulations. Therefore, although the Commission confirms the
substantive non-discrimination requirements of section 358.4, we modify
the posting requirements in a number of ways.
    215. As a preliminary matter, the Commission clarifies that for
these purposes, a waiver is considered to be a determination to do or
not do something that is specifically required to be done or not done
by the transmission provider's tariff. An act of discretion, on the
other hand, is an action that is within the scope of the tariff
provision in question, and which typically involves an exercise of
judgment on the part of the transmission provider. The Commission has
in some cases approved tariffs for interstate pipelines that grant the
pipeline the right to waive compliance with provisions of its tariff,
typically for a given entity for a limited term.\252\ We will continue
to require transmission providers to record in a log such waivers, if
granted in favor of an affiliate, and to post the log on the
transmission provider's Internet Web site (however, if a specific
waiver is approved by Commission order, such waiver need not be posted
as it will already be public). We also add a definition of waiver to
the regulatory text, to read: ``Waiver means the determination by a
transmission provider, if authorized by its tariff, to waive any
provisions of its tariff for a given entity.'' See section 358.3(m).
Limiting the recording of waivers to those in favor of an affiliate
will reduce the administrative burden on the pipeline, while capturing
any instances of potential undue discrimination.
---------------------------------------------------------------------------

    \252\ See, e.g., CenterPoint Energy Gas Transmission Company
FERC Gas Tariff, Sixth Revised Volume No. 1, Sec.  15.1.
---------------------------------------------------------------------------

    216. The Commission further determines that transmission providers
need not post exercises of discretion that are within the scope of a
tariff provision, unless in any given instance such posting is required
under any other of our regulations. Such acts are already permitted by
the tariff, and therefore fall within the scope of matters which the
Commission has approved. Furthermore, a transmission provider, in
particular a pipeline, makes many of these judgment calls every day on
an ongoing basis; recording all these matters would place a substantial
administrative burden on it.
    217. The Commission declines to modify the proposed five-year
retention requirement for recordation of the acts of waiver, as the
five-year period will better enable Commission staff to monitor
compliance.\253\ Records may be examined only periodically, as when an
audit is performed, and therefore earlier deletion could impede the
necessary review. However, we observe that the volume of material to be
retained should be substantially reduced, in light of the Final Rule's
more circumscribed reporting requirements.
---------------------------------------------------------------------------

    \253\ See also our discussion above concerning the five-year
retention period for certain information exchanges under section
358.7(h).
---------------------------------------------------------------------------

    218. 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. Also, if a transmission owner
is a member of an RTO or ISO and has not participated in the granting
of a discount by the RTO or ISO, it would not be subject to the
obligation to post such discounts.
 2. Other Posting Requirements
a. Commission Proposal
    219. In addition to the posting requirements relating to the non-
discrimination provisions of section 358.4, the NOPR proposed
streamlining and updating other posting requirements imposed on
transmission providers by the Standards, and modifying them to take
into account elimination of the concept of energy affiliates.
b. Comments
i. Contemporaneous Disclosure
    220. INGAA requests the Commission to modify section 358.7(a),
which requires the contemporaneous posting of improper disclosures of
non-public transmission function information, to also provide for
posting of a notice of a marketing function employee's receipt of non-
public transmission function information (unless the Commission deletes
proposed section 358.6(a)(2) of the No Conduit Rule prohibiting such
receipt).\254\ NGSA disagrees with INGAA that posting be made of a
notice only, and not the disclosure itself, when the information
received by a marketing function employee comes from a third party and
not from the affiliated transmission provider.\255\ It further requests
that the Commission require that the marketing function employee
immediately alert its affiliated transmission provider when it becomes
aware it has received non-public transmission information, so that the
transmission provider may post the disclosure.\256\
---------------------------------------------------------------------------

    \254\ INGAA at 45; INGAA Response at 3.
    \255\ NGSA Reply Comments at 8.
    \256\ Id.
---------------------------------------------------------------------------

    221. EEI supports the proposed provision requiring a transmission
provider that discloses non-public transmission customer information to
only post notice that such non-public transmission customer information
was disclosed, and not the contents of the information. EEI proposes
that a similar distinction be applied to Critical Energy Infrastructure
Information (CEII) that has been inadvertently disclosed.\257\
Likewise, National Grid proposes posting only a notice when disclosure
of the information itself may breach some other public policy
goal.\258\
---------------------------------------------------------------------------

    \257\ EEI at 54.
    \258\ National Grid at 26-27.
---------------------------------------------------------------------------

    222. ATC requests that the regulatory language be revised to
indicate the transmission provider must post immediately ``upon
discovery of disclosure,'' rather than upon the actual disclosure.\259\
---------------------------------------------------------------------------

    \259\ ATC at 2, 12.
---------------------------------------------------------------------------

ii. Specific Transaction Information
    223. Many commenters request that the Commission clarify the
exclusion to contemporaneous disclosure of non-public transmission
function information that proposed section 358.7(b) provides for a
marketing function employee's specific request for transmission
service.\260\ MidAmerican proposes that the definition of
``transmission customer'' be modified to add that they could be either
affiliated or unaffiliated.\261\ Although Ameren supports proposed
section 358.7(b), it seeks clarification that the transaction-specific
exclusion includes information that relates to its ability to take
service on an ongoing basis, including outages or other system
conditions.\262\ Dominion Resources requests that the Commission modify
the exclusion so that

transmission function employees may discuss with marketing function
employees any information that relates solely to service provided by
the transmission provider to the employer of the marketing function
employee, or requests for such service.\263\
---------------------------------------------------------------------------

    \260\ NOPR at P 58.
    \261\ MidAmerican at 18-19.
    \262\ Ameren at 33.
    \263\ Dominion Resources at 21.
---------------------------------------------------------------------------

iii. Voluntary Consent Provision
    224. SCE requests that section 358.7(c), providing for a
transmission customer's voluntary consent to disclosure of its customer
information, be moved to section 358.5(c), which deals with the
separation of functions under the Independent Functioning Rule, to
suggest a limitation for non-affiliated customers.\264\
---------------------------------------------------------------------------

    \264\ SCE at 7.
---------------------------------------------------------------------------

    225. MidAmerican asks the Commission to clarify that the proposed
voluntary consent provision is unnecessary for generation output where
the host utility has a legal obligation to purchase the output of the
generator. It also requests the Commission to modify the provision to
clarify that the rule refers specifically to the transmission
``function'' and disclosure of ``non-public transmission''
information.\265\
---------------------------------------------------------------------------

    \265\ MidAmerican at 19.
---------------------------------------------------------------------------

iv. Identification of Affiliate Information
    226. APGA and EPSA urge the Commission to retain the requirement to
post organizational charts under section 358.7(e),\266\ which deals
with identification of affiliate information, and APGA requests the
charts be color-coded as well.\267\ APGA submits that the elimination
of the energy affiliates concept does not eliminate the need for such a
color-coded organizational chart.\268\
---------------------------------------------------------------------------

    \266\ APGA at 3-4; EPSA at 11.
    \267\ APGA at 3-4.
    \268\ APGA at 3-4.
---------------------------------------------------------------------------

    227. With respect to the requirement that a pipeline post the names
and addresses of all its affiliates that employ or retain marketing
function employees,\269\ INGAA requests that the Commission confirm
that the posting requirements are limited to information related only
to those marketing affiliates that hold or control capacity on their
affiliated pipeline, and that this posting requirement does not apply
to a marketing function that does not hold capacity on its affiliated
pipeline. INGAA requests that if the Commission so confirms, it should
amend the provision to make the distinction clear.\270\
---------------------------------------------------------------------------

    \269\ NOPR at P 59.
    \270\ INGAA at 54-55.
---------------------------------------------------------------------------

    228. MidAmerican requests that proposed section 358.7(e)(2), which
requires a listing of employee-staffed facilities shared by the
transmission provider and marketing function employees, be limited only
to those buildings where the transmission provider and its marketing
function employees conduct customary duties, so as to exclude
facilities where marketing function employees visit only on
occasion.\271\ Similarly, ATC requests that the Commission clarify the
definition of ``employee-staffed facilities'' to limit its
applicability to places at which both transmission function and
marketing function employees have offices or are regularly
located.\272\
---------------------------------------------------------------------------

    \271\ MidAmerican at 19-20.
    \272\ ATC at 15.
---------------------------------------------------------------------------

v. Identification of Employee Information
    229. MidAmerican requests that the provision in proposed section
358.7(f) that requires a transmission provider to post on its OASIS or
Internet Web site the job titles and job descriptions of its
transmission function employees, with the exception of clerical,
maintenance, and field positions,\273\ be clarified to indicate which
positions are excluded as ``clerical, maintenance and field
positions.'' \274\
---------------------------------------------------------------------------

    \273\ NOPR at P 59-60.
    \274\ MidAmerican at 11-12.
---------------------------------------------------------------------------

    230. EEI believes that this posting requirement should conform to
the employee functional approach. EEI asserts that the proposed
requirement, if left in place, would grandfather much of the
inefficiency and confusion of the corporate separation approach.\275\
---------------------------------------------------------------------------

    \275\ EEI at 55-56.
---------------------------------------------------------------------------

vi. Timing and General Requirements of Postings
    231. SCE recommends that the Commission eliminate the distinction
in proposed section 358.7(g) between Internet Web sites and OASIS, and
allow electric utilities as well as pipelines to post information on
their Internet Web sites.\276\ SCE states that, as a member of an ISO,
it does not maintain its own OASIS.\277\ ALCOA requests that the
Commission recognize that marketing function employees are not granted
access to OASIS, and provide an avenue for them to cure the prohibited
disclosure of non-public information.\278\
---------------------------------------------------------------------------

    \276\ The definition of Internet Web site in proposed section
358.3(b) indicated that pipelines post the information required
under sections 284.12 and 284.13 on their Internet Web site, and the
definition of OASIS in proposed section 358.3(e) indicated that
public utilities post the information required under part 37 on
their OASIS. Various subsections of proposed section 358.7 continued
this distinction between pipelines and public utilities for the
posting requirements under the Standards. See, e.g., proposed
sections 368.7(a)(1), (a)(2), (c), (d), (e)(1), (e)(2), (f)(1),
(f)(2) and (g)(1).
    \277\ SCE at 10.
    \278\ ALCOA at 7-8.
---------------------------------------------------------------------------

    232. With respect to the suspension of posting requirements during
an emergency, SCE recommends that ``earthquake'' be added to the list
of emergencies that qualify as allowing a transmission provider to
suspend posting requirements.\279\
---------------------------------------------------------------------------

    \279\ SCE at 11.
---------------------------------------------------------------------------

    233. While supporting the Commission's decision to suspend posting
requirements in the event of an emergency, Chandeleur requests
clarification on the method of implementation for this
requirement.\280\ And E.ON states that the Commission should retain the
existing exclusion from posting for emergency circumstances.\281\
---------------------------------------------------------------------------

    \280\ Chandeleur at 7.
    \281\ E.ON at 22-23.
---------------------------------------------------------------------------

vii. Other
    234. Commenters raised concerns about potential conflicts between
the proposed posting requirements in the NOPR and the posting
requirements in the NAESB standards. The Arizona PSC urges the
Commission to clarify, pending revision of the NAESB standards, that
the existing NAESB standards do not impose a posting requirement that
is different from the modified posting requirements under the new
rules.\282\ In addition, Chandeleur suggests that the Commission
provide a waiver of those NAESB standards that relate to the format and
content of postings which it contends will be outdated after the
effective date of the new Standards.\283\
---------------------------------------------------------------------------

    \282\ Arizona PSC at 7; see also EEI at 53.
    \283\ Chandeleur at 8.
---------------------------------------------------------------------------

c. Commission Determination
i. Contemporaneous Disclosure
    235. Section 358.7(a)(1) requires that if non-public transmission
function information is disclosed to a marketing function employee, the
transmission provider must post the information on its Web site. Some
commenters object to the posting requirement where non-public
information is disclosed by the transmission provider, arguing that
such posting will provide an advantage to a competitor. We disagree.
Such posting, by making the information public, will place the
competitor and the transmission provider's affiliated marketer on an
even footing. Therefore, this provision will be retained.

    236. Western Utilities and INGAA raise concerns over the posting
provision in instances where a marketing affiliate receives non-public
transmission function information from a third party. Since we are
eliminating that particular prohibition of the No Conduit Rule, no
change to the posting provision is necessary. However, we note that if
a transmission provider uses anyone as a conduit for improper
disclosures, such an event would be considered an improper disclosure
and should be posted.
    237. The Commission proposed in section 358.7(a)(2) that only a
notice be posted in the event non-public transmission customer
information is improperly disclosed, rather than requiring posting of
the disclosure itself, to prevent a further breach of confidentiality.
We extend this distinction between posting of a notice and posting the
disclosure itself to include CEII,\284\ as well as any other
information that the Commission by law has determined is to be subject
to limited dissemination. However, we decline to extend it to cover
information where disclosure may be deemed to breach some other public
policy goal, as requested by National Grid. This standard is too
imprecise to have practical application. If a transmission provider is
concerned about disclosure in any given instance, it may seek guidance
from the Commission.
---------------------------------------------------------------------------

    \284\ This limitation does not affect our determinations made
elsewhere regarding the need to disclose information that may
contain CEII, or the appropriate methods for entities to access such
CEII, nor our adoption of mandatory reliability standards for CEII.
See, e.g., Order 890 at P 403-404; Mandatory Reliability Standards
for Critical Infrastructure Protection, Order No. 706, 73 Fed. Reg.
7368 (Feb. 7, 2008), 122 FERC ] 61,040, reh'g denied and
clarification granted, Order No. 706-A, 123 FERC ] 61,174 (2008).
---------------------------------------------------------------------------

    238. We decline to adopt ATC's proposal that with respect to non-
public transmission information that was improperly disclosed, the
transmission provider must post it immediately ``upon discovery of
disclosure,'' rather than upon the actual disclosure. The provision by
its terms imposes the posting requirement on a transmission provider
that wrongfully discloses such information, and it would be anomalous
to assume the transmission provider was not aware of its own actions. A
corporation can only act through its agents and employees, and those
actions are taken on behalf of the corporation. Therefore, knowledge of
the disclosure is imputed to the transmission provider, which is
responsible both for the disclosure and for the posting.
ii. Specific Transaction Information
    239. Section 358.7(b) provides an exemption to the disclosure
requirement for requests for transmission service made by a marketing
function employee. The Commission agrees that the language should be
modified to clarify that transmission function employees may discuss
with marketing function employees the latter's specific request for
transmission service (but not non-public matters beyond the specific
request, such as outages or other system conditions). We therefore add
the following sentence: ``A transmission provider's transmission
function employee may discuss with its marketing function employee a
specific request for transmission service submitted by the marketing
function employee.''
iii. Voluntary Consent Provision
    240. The Commission declines to move the provision regarding the
posting of voluntary employee consents in section 358.7(c) to the
Independent Functioning Rule, as requested by SCE. The provision in
question relates to posting, and is therefore appropriately included in
the Transparency Rule. We also decline to include a specific exclusion
to the customer consent provision for contracts involving generator
output, as requested by MidAmerican. The posting requirements are
general in application, and ought not to be so detailed as to cover
every special circumstance that may apply to only one or a limited
number of transmission providers. To do so would make the regulations
unwieldy and subject to constant change. Therefore, we decline to
include an exclusion covering a customer's consent for contracts
involving generator output.
    241. Furthermore, we decline to distinguish between affiliated and
non-affiliated customers in connection with the voluntary consent
provision. The intent of the provision is to permit any customer to
disclose customer information to marketing function employees of the
transmission provider, should it desire to do so. Of course, an
affiliated customer will already be aware of information pertaining to
its own marketing affiliate, but there conceivably could be other
marketing affiliates of the same transmission provider as to which the
customer may wish to give its consent for disclosure.
    242. The Commission agrees that the voluntary consent provision
refers to non-public customer information (including a customer's
transmission request and accompanying information), and adds this
phrase to section 358.7(c).
iv. Identification of Affiliate Information
    243. Section 358.7(e)(1) provides that a transmission provider post
the names and addresses of all its affiliates that employ or retain
marketing function employees. The Commission declines to revert to a
requirement to post an organizational chart of all affiliates of a
transmission provider, and further declines to extend this to a color-
coded chart. With the elimination from the Standards of the concept of
energy affiliates, it is only necessary to be concerned with the
marketing affiliates of a transmission provider. Therefore, an entire
organizational chart is unnecessary, and an undue burden on
transmission providers.
    244. With respect to INGAA's request that information need not be
posted about affiliates that do not, for instance, hold or control
capacity on its affiliated pipeline, the Commission notes that the
proposed provision applies to affiliates ``that employ or retain
marketing function employees.'' If an activity falls within one of the
exclusions to the definition of marketing functions set forth in
proposed section 358.3(c), its employees will not by definition be
marketing function employees, and the posting rule would not apply. If,
however, the activities do not fall within any of the exclusions to the
definition, and the affiliate employs or retains marketing function
employees, the posting provision would apply.
    245. We agree with MidAmerican and ATC that the posting
requirements in section 358.7(e)(2) regarding shared facilities need
not include facilities where transmission function employees and
marketing function employees do not both transact their job-related
activities, and modify the regulatory text accordingly. We further
clarify that the phrase ``employee-staffed facilities'' is meant to
exclude facilities where individuals do not typically transact
business, such as substations.
v. Identification of Employee Information
    246. The Commission agrees with EEI that the proposed provision in
section 358.7(f)(1) covering the posting of job titles and names of
transmission function employees should conform more closely to the
employee functional approach. Furthermore, in accordance with the
clarification made in this Final Rule, such jobs as maintenance and
field positions are not considered transmission functions, unless the
employees also engage in the day-to-day operation of the transmission
system.

Therefore, we will modify the wording of this provision to refer only
to ``transmission function employees,'' and delete the reference to
clerical, maintenance and field positions.
vi. Timing and General Requirements of Postings
    247. Section 358.7(g)(1) requires updated posting on a transmission
provider's OASIS or Internet Web site. The Commission agrees with SCE
that transmission owners who are members of RTOs or ISOs might not have
their own OASIS. Furthermore, some interested entities or individuals
might not have access to a transmission provider's OASIS. We therefore
modify the venue for posting to require that the posting of information
required under the Standards for both public utilities and interstate
pipelines is to be made on the transmission provider's Web site, where
it will be accessible to all interested entities. The various sections
within the Transparency Rule are amended to conform to this change.
    248. Section 358.7(g)(2) provides suspension of postings in the
case of emergencies. The Commission does not deem it necessary to list
every conceivable natural disaster in this provision, but will add
``earthquakes'' to the list, as requested by SCE. Chandeleur requests
clarification as to the method of implementation of this provision. In
the event the transmission provider needs suspension of postings beyond
one month, it should publicly file with the Commission for a further
period of suspension, in accordance with the provisions of part 385 of
the Commission's regulations.
vii. Other
    249. Chandeleur suggests the Commission provide an anticipatory
waiver of any changes to NAESB standards which may be made relating to
the format and content of posting requirements, should they be
inconsistent with the Standards here adopted. The NAESB standards
currently adopted by the Commission are set forth in 18 CFR sections
38.2 and 284.12 (2008), and relate to matters other than the Standards
of Conduct. The provisions applicable to electric utilities in section
38.2 include the Business Practices for Open Access Same-Time
Information Systems (OASIS), which relate to requests for transmission
service. The provisions applicable to pipelines in section 284.12
include information which is to be posted on the pipeline's Internet
Web site, covering such matters as the name of shippers taking service,
the rate charged, the duration of the contract, receipt and delivery
points, quantity, whether the shipper is an affiliate of the pipeline,
and the like. These postings generally differ from the postings
required under the Standards of Conduct. As discussed above, to the
extent any of the information required under the Standards of Conduct
is also required under other regulations or orders, duplicative
postings are not required. Therefore, no anticipatory waiver of the
type requested by Chandeleur is needed or appropriate.

F. Other Definitions

    250. In addition to the definitions discussed above, the NOPR
either carried over or modified a number of definitions contained in
the current Standards, including ``affiliate,'' ``transmission,''
``transmission customer,'' ``transmission function information,'' and
``transmission provider.''
1. Affiliate
a. Commission Proposal
    251. The Commission proposed to modify its definition of
``affiliate'' to conform to the new definition of affiliate set forth
in 18 CFR 35.43(a)(1).\285\ The only addition in the NOPR to that
definition was the inclusion of ``a division that operates as a
functional unit of the specified company.'' See proposed section
358.3(a).
---------------------------------------------------------------------------

    \285\ This definition was promulgated in Cross-Subsidization
Restrictions on Affiliate Transactions, Order No. 707, 73 FR 11,013
(Feb. 29, 2008), FERC Stats. & Regs. ] 31,264 (2008), order on
reh'g, 73 FR 43,072 (July 24, 2008), FERC Stats. & Regs. ] 31,272
(2008).
---------------------------------------------------------------------------

b. Comments
    252. INGAA contends that the NOPR changed the definition of
affiliate to be consistent with an order that addresses only electric
transmission providers, and therefore is not a definition fairly
applicable to the natural gas industry.\286\ INGAA and Iroquois request
that the rules return to the longstanding definition of affiliate in
the Standards and also retain the prior, integrally related definition
of ``control.'' \287\ Iroquois adds that the proposed definition does
not reflect the established scheme's rebuttable presumption of control,
thereby expanding the reach of the Standards. To the extent the
Commission declines to revert to the prior definitions of affiliate and
control, Iroquois requests that the Commission modify the proposed
definition to reinstate the concept that the definition of control
establishes a rebuttable presumption, and also continue any exemptions
from the definition of affiliate that were granted under the prior
Standards.\288\
---------------------------------------------------------------------------

    \286\ INGAA at 12-13; see also Williston at 12.
    \287\ INGAA at 12-13; Iroquois at 14.
    \288\ Iroquois at 7-13.
---------------------------------------------------------------------------

    253. Both INGAA and Iroquois request that the Commission provide
clarification as to how the definition would apply to interstate
pipelines jointly owned by two or more otherwise non-affiliated
companies.\289\ INGAA would like confirmation that, in the event an
affiliate of one joint owner of a pipeline holds capacity on that
pipeline, such relationship does not create an affiliation between the
affiliates of the entities who are the joint owners.\290\
---------------------------------------------------------------------------

    \289\ Id. 13-14; INGAA at 13.
    \290\ INGAA at 13. For example, INGAA posits, if non-affiliated
Companies A and B form a joint venture that holds Pipeline C, INGAA
contends that transmission relationships between a marketing
affiliate of Company A and Pipeline C do not create an affiliation
between that marketing affiliate and other affiliates of Company B,
because there is no common ownership and control between the
marketing entity and Company B's affiliates. Id.
---------------------------------------------------------------------------

    254. TDU Systems asserts that the definition of affiliate should
not include members of generation and transmission cooperatives.\291\
---------------------------------------------------------------------------

    \291\ TDU Systems at 13-14.
---------------------------------------------------------------------------

    255. Arizona PSC proposes a modification to the proposed definition
to cure what it finds to be an inconsistency between the NOPR's
definition and the definition of ``affiliate'' in Order No. 707. It
would eliminate the words ``division that operates as a functional
unit'' from proposed section 358.3(a)(1). Both Arizona PSC and EEI
contend that this deletion is consistent with the NOPR's employee
functional approach.\292\
---------------------------------------------------------------------------

    \292\ Arizona PSC at 6-7; EEI at 47.
---------------------------------------------------------------------------

c. Commission Determination
    256. Much of the concern over the definition of affiliate appears
to stem from a misapprehension that affiliates themselves are still
subject to the Independent Functioning Rule. As discussed throughout
this Final Rule, it is only marketing function employees who are
required to operate independently of a transmission provider's
transmission function employees. Nonetheless, the concept of affiliate
does retain importance, since marketing function employees by
definition must be employed by the transmission provider or by its
affiliates (unless the marketing function employees are
contractors).\293\
---------------------------------------------------------------------------

    \293\ Inclusion of contractors in the definition of marketing
function employee is discussed in the section entitled Elimination
of Shared Employees Concept.
---------------------------------------------------------------------------

    257. Because the Standards follow a different regulatory scheme
than Order

No. 707, the definition of affiliate here does not necessarily need to
be identical to the more detailed definition set forth in Order No.
707. As regulated entities have become familiar with the existing
definition, the Commission sees no necessity to alter it. Therefore,
the Commission will reinstate the major features of the definition of
``affiliate'' found in the existing Standards, including the ability to
rebut a presumption of control. See section 358.3(a)(1). The requests
for the Commission to comment on the specifics of hypothetical
corporate arrangements are accordingly answered by reference to that
provision.
    258. The existing definition of exempt wholesale generators refers
both to regulations and the FPA as the source of the definition, and
does not provide for updating. We modify the definition so as to refer
to the currently applicable section of the regulations defining exempt
wholesale generators, section 366.1, and provide that such definition
or any successor definition shall govern. See section 358.3(a)(2).
    259. Arizona PSC and EEI would eliminate the inclusion of a
division (as opposed to a separate corporate entity) from the
definition of affiliate. This inclusion, which is contained in the
existing Standards, covers those marketing function employees who may
be employed by the transmission provider itself, rather than by an
affiliate of the transmission provider. Therefore, the provision will
be retained.
2. Transmission
a. Commission Proposal
    260. The Commission proposed to streamline the current definition
of transmission by defining it as ``electric transmission, network or
point-to-point service, ancillary services or other methods of electric
transmission, or the interconnection with jurisdictional transmission
facilities, under part 35 of this chapter; and natural gas
transportation, storage, exchange, backhaul, or displacement service
provided pursuant to subpart A of part 157 or subparts B or G or part
284 of this chapter.'' See proposed section 358.3(f).
b. Comments
    261. Many commenters raise concerns related to the Commission's
inclusion of ancillary services in the definition of transmission. TAPS
suggests that the Commission distinguish between a transmission
provider's offering ancillary services to its customers pursuant to its
Open Access Transmission Tariff, which it states is a transmission
function, and offering ancillary services competitively, which it views
as a marketing function.\294\ NCPA requests that in those markets where
ancillary services are procured pursuant to a bidding process, the
rules treat ancillary services as part of the marketing function and
not as part of the transmission function.\295\ EEI requests
clarification that the definition covers only those ``ancillary
services'' and ``interconnection'' that are offered in connection with
jurisdictional transmission service.\296\ Wisconsin Electric requests
that the Commission deem the provision of ancillary services as a
function outside of the operation of the Standards.\297\
---------------------------------------------------------------------------

    \294\ TAPS at 31-33.
    \295\ NCPA at 3-4.
    \296\ EEI at 44-46.
    \297\ Wisconsin Electric at 3-4.
---------------------------------------------------------------------------

    262. NiSource requests clarification as to whether generation is
considered a subtype of transmission. It asserts that generation
information is not a subtype of transmission or marketing function
information and therefore should not be subject to the rules or
included in its exclusions.\298\
---------------------------------------------------------------------------

    \298\ Nisource at 14-16.
---------------------------------------------------------------------------

c. Commission Determination
    263. The Commission agrees that inclusion of ancillary services in
the definition of transmission, which is carried forward from the
existing Standards, needs clarification. Ancillary services can either
be transmission or covered under the definition of marketing functions,
as discussed above. Therefore, we clarify that ancillary services, as
used in the definition of transmission, refers to the use of an
integrated public utility's own generation or demand response resources
to provide ancillary services, and does not refer to the sale for
resale of generation or demand response resources for ancillary
services purposes.
    264. NiSource raises a concern as to whether the proposed exclusion
for communications regarding generation dispatch in proposed section
358.7(h) suggests we regard generation as a form of transmission.
NiSource's concern is addressed by the modifications made in this Final
Rule to that exclusion; however, we further clarify that generation is
typically not a transmission function. Of course, operation of the
transmission system may impact generation, and therefore some
transmission function information may well implicate generation
concerns. It was for that reason the above-cited exclusion was added to
the Standards. See section 358.7(h).
    265. The Commission removes the reference to subpart A of part 157,
in accordance with its elimination of this reference from section
358.1(a), but otherwise adopts the NOPR definition of transmission. See
section 358.3(f).
3. Transmission Customer
a. Commission Proposal
    266. The Commission proposed to carry forward the existing
definition of ``transmission customer'' to mean ``any eligible
customer, shipper or designated agent that can or does execute a
transmission service agreement or can or does receive transmission
service, including all persons who have pending requests for
transmission service or for information regarding transmission.'' See
proposed section 358.3(g).
b. Comments
    267. MidAmerican requests that the Commission modify this
definition so that it expressly includes affiliated and non-affiliated
customers, shippers or designated agents.\299\
---------------------------------------------------------------------------

    \299\ MidAmerican at 10-11.
---------------------------------------------------------------------------

c. Commission Determination
    268. The Commission adopts proposed section 358.3(g). MidAmerican's
requested addition is unnecessary, as on its face the definition of
transmission customer does not distinguish between affiliated and non-
affiliated customers. To the extent clarification on this point is
desired, we clarify that all customers that fit the definition are
included.
4. Transmission Function Information
a. Commission Proposal
    269. The Commission proposed to define ``transmission function
information'' to mean ``information relating to transmission
functions,'' thus keying off the new definition of ``transmission
function'' set forth in the proposed Standards. See proposed section
358.3(j).
b. Comments
    270. Several commenters request that the Commission include in its
definition specific examples or categories of information that it deems
to be transmission information.\300\ EEI and Southern Co. Services
suggest that the Commission use the guidance found in section
358.5(b)(1) of the current Standards as a basis for amending the
definition,\301\ and SCE provides a

proposed amendment that includes its recommended examples.\302\
---------------------------------------------------------------------------

    \300\ ATC at 11-12; EEI at 46; Southern Co. Services at 26-27;
SCE at 10-11.
    \301\ EEI at 46; Southern Co. Services at 26-27.
    \302\ SCE at 10-11.
---------------------------------------------------------------------------

    271. National Grid and PSEG inquire whether the scope of the
definition is the same as, more broad or more narrow than the scope of
the definition of ``transmission'' information in the current
Standards.\303\
---------------------------------------------------------------------------

    \303\ National Grid at 20-22; PSEG at 16-17.
---------------------------------------------------------------------------

    272. Southern Co. Services asserts that proposed sections
358.6(a)(1) and 358.7(a) create ambiguity as to whether all ``customer
information'' is ``transmission information,'' and requests
clarification of the definition of ``transmission information.'' \304\
Bonneville requests clarification as to whether the definition is
limited to non-public transmission information.\305\ And TDU Systems
requests clarification that accounting records necessary for rate
design do not constitute transmission function information.\306\
---------------------------------------------------------------------------

    \304\ Southern Co. Services at 27.
    \305\ Bonneville at 5-6.
    \306\ TDU Systems at 16.
---------------------------------------------------------------------------

    273. Spectra requests the Commission to amend the definition to
indicate it does not include information relating to a marketing
function employee's specific request for transmission service or
interconnection.\307\
---------------------------------------------------------------------------

    \307\ Spectra at 11-12.
---------------------------------------------------------------------------

c. Commission Determination
    274. The Commission adopts the NOPR definition of transmission
function information as information relating to ``transmission
functions,'' which is the core definition where the crux of the
requirements of the Independent Functioning Rule and the No Conduit
Rule is found, and where any issues regarding interpretation should be
focused. Indeed, as there is no debate on the meaning of
``information,'' the Commission could have eliminated section 358.3(j)
entirely. The Commission is retaining this section, however, to
reinforce the prohibition on the improper disclosure of non-public
transmission function information.
    275. Nevertheless, to provide clarity, the Commission will give
examples of transmission function information, drawn from the current
Standards. These include, for example, available transmission
capability, price, curtailments, storage, and balancing. In response to
the request for clarification by National Grid and PSEG, we observe
that not all elements found in the existing Standards are relevant, due
to the restriction in this Final Rule of the term ``transmission
functions'' to day-to-day operations.
    276. We clarify that transmission customer information is a subset
of transmission function information, as it is submitted in connection
with a request for transmission service. We also clarify that rate
design, in and of itself, is not a transmission function under the
Standards.
    277. The term transmission function information is not limited to
non-public information; however, it is only non-public transmission
function information which the No Conduit Rule prohibits being passed
to marketing function employees.
    278. Spectra requests the definition be amended to exclude
information relating to a marketing function employee's specific
request for service. We decline to do so. Such information is indeed
transmission function information, as discussed above. Spectra's
concerns, however, are addressed by section 358.7(b), which permits
discussions regarding such requests between transmission function and
marketing function employees.
5. Transmission Provider
a. Commission Proposal
    279. The Commission proposed to define ``transmission provider''
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 this chapter.
    (3) A transmission provider does not include a natural gas storage
provider authorized to charge market-based rates that is not
interconnected with the jurisdictional facilities of any affiliated
interstate natural gas pipeline, has no exclusive franchise area, no
captive ratepayers and no market power.
    See proposed section 358.3(k).
b. Comments
    280. Hampshire requests that subsection (3) of the definition be
modified to apply to ``storage companies that already have been
authorized by FERC to charge market-based rates based on a showing that
they lacked market power,'' arguing the definition should not include
the additional criteria listed. The criterion that the storage facility
not have captive customers and not have market power is duplicative,
according to Hampshire, because if the facility has captive customers
then it has market power by definition. Hampshire further contends that
the limitation against exclusive franchises is extraneous because the
Natural Gas Act does not permit exclusive franchises.\308\
---------------------------------------------------------------------------

    \308\ Hampshire Gas at 9-12.
---------------------------------------------------------------------------

    281. The US DOI argues that the proposed language does not
recognize that certain federal agencies may own transmission facilities
without having functional responsibility for them. It requests that the
Commission clarify that it is the operator of the transmission
facility, and not the federal agency that owns the transmission
facility, that is the transmission provider subject to the
Standards.\309\
---------------------------------------------------------------------------

    \309\ US DOI at 1-2.
---------------------------------------------------------------------------

c. Commission Determination
    282. As a preliminary matter, the Commission will delete the
reference to Part 157 from the definitions of transmission and
transmission provider. See sections 358.3(f) and (k). This corresponds
to our deletion of the same reference in section 358.1, the
applicability provisions of the Standards, as discussed above.
    283. We will also accept Hampshire's proposed modification with
respect to exclusive franchises and the Commission's jurisdiction over
storage facilities under the NGA. While the Commission does not
necessarily agree with Hampshire's description regarding market-based
rates,\310\ the Commission does agree that the exclusion of natural gas
storage providers authorized to charge market-based rates, which is an
exclusion carried over from Order Nos. 497 and 2004 and not opposed in
the comments, needs no further qualification. We modify proposed
section 358.3(k)(3) accordingly.
---------------------------------------------------------------------------

    \310\ See Rate Regulation of Certain Natural Gas Storage
Facilities, Order No. 678, 71 Fed. Reg. 36612 (June 27, 2006), FERC
Stats. & Regs. ] 31,220 (2006).
---------------------------------------------------------------------------

    284. Lastly, we clarify that if a transmission provider is merely
an owner of facilities but performs none of the functions of a
transmission provider, it is in the same position as a public utility
transmission owner that participates in a Commission-approved RTO or
ISO. Section 358.1(c) provides that such a participating transmission
owner may seek a waiver from the Standards. Similarly, if any other
transmission owner meets the definition of transmission provider but
does not operate or control its transmission system and has no access
to transmission function information, it may request a waiver from the
Standards, in whole or in part.

G. Per Se Violation

    285. In the course of the NOPR's discussion on the need for reform
of the Standards, the Commission observed

that while the Standards establish per se rules, the Commission still
possesses statutory authority to rectify and sanction, where necessary,
instances of undue discrimination and preference even if they are not
specifically addressed in the per se regulations of the Standards. This
authority is derived from sections 205 and 206 of the FPA and sections
4 and 5 of the NGA.
1. Commission Proposal
    286. No proposal was made in the NOPR regarding per se rules; the
Commission merely pointed out the fact that the proposed Standards,
just as do the current Standards, contain per se rules.
2. Comments
    287. Several commenters request that the Commission clarify how the
proposed per se rules will be enforced. Idaho Power and Puget Sound
requests confirmation that transmission providers will continue to have
the opportunity to defend themselves against allegations of violations
of the Standards, and that it is not the case that the Commission
intends there will be violations of the per se rules ``for which no
further investigation would be needed.'' \311\
---------------------------------------------------------------------------

    \311\ Idaho Power at 4-5, quoting NOPR at P 55; Puget Sound at
9-10.
---------------------------------------------------------------------------

    288. INGAA and LPPC likewise note confusion about the NOPR's use of
``per se'' because, they contend, in other contexts the term refers to
the establishment of a set of facts that automatically creates a
violation of law without reference to other or additional facts. INGAA
urges that the Commission reject a per se approach and adopt a ``rule
of reason'' approach to ascertaining violations of the Standards, in
which the regulated entity may show legitimate purpose for or lack of
harm caused by the subject behavior.\312\
---------------------------------------------------------------------------

    \312\ INGAA at 3-4.
---------------------------------------------------------------------------

    289. Commenters also raise concerns about the interplay between the
Standards and the statutory prohibitions on undue discrimination and
preference. Specifically, many commenters argue that the per se concept
means a transmission provider may be accused of undue discrimination
and preference even where its activity was permissible under the
Standards.\313\ Southern Co. Services would like the Commission to
clarify that the Standards occupy the field for the potential types of
undue discrimination and preference addressed in the Standards, so that
compliance with the Standards would create a safe harbor with respect
to activities that fall within the scope of the Standards.\314\
---------------------------------------------------------------------------

    \313\ Southern Co. Services at 23-24; Ameren at 6,8; E.ON at 7;
EEI at 41-42.
    \314\ Southern Co. Services at 23-24; see also EEI at 41-42;
E.ON at 7.
---------------------------------------------------------------------------

    290. Ameren cautions the Commission against arbitrarily expanding
the scope of the behavior that is deemed to violate the Standards on a
case-by-case basis, noting that this could raise notice and due process
issues.\315\ E.ON asserts that an undue preference analysis for
subjects already covered by the Standards would greatly complicate
training efforts.\316\
---------------------------------------------------------------------------

    \315\ Ameren at 6, 18.
    \316\ E.ON at 8.
---------------------------------------------------------------------------

    291. Both INGAA and LPPC note that many of the rules within the
Standards are not amenable to a per se approach to enforcement because
they are non-specific and broad.\317\
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    \317\ INGAA at 8; LPPC at 17-18.
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    292. Puget Sound raises additional questions about the enforcement
of the Standards, e.g., how a per se violation may be distinguishable
from noncompliance with other rules; whether disclosure by a
transmission provider of non-public information to its marketing
function is a per se violation and, if so, does the posting requirement
cure the per se violation; whether a marketing function employee who
receives transmission information from an unaffiliated third party is
guilty of a per se violation; and whether inadvertent disclosure of
non-public information to a marketing function employee is
sanctionable.\318\
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    \318\ Puget Sound at 10.
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3. Commission Determination
    293. In response to commenters' confusion regarding the NOPR's
reference to the term per se, the Commission clarifies that we did not
mean to establish a new standard of review or impose different
evidentiary burdens specific to these rules. Under these regulations,
the Commission would still have to prove that a violation occurred, and
an accused maintains the right to demonstrate that such a violation did
not occur. Further, if it is established that a violation has occurred,
such matters as whether the violations were inadvertent or, under the
facts of the case, harmless, will be taken into account by the
Commission in determining whether any remedy or sanction is
appropriate.
    294. Some commenters request the Commission to declare that the
Standards occupy the field with respect to the area of undue
preferences, and that matters not specifically covered by the Standards
may not be found to be violations of the undue preferences prohibition
in the FPA or the NGA. This we decline to do. There are potentially an
infinite number of ways undue preferences might arise, and the
Standards are not intended to be exhaustive. It is possible that an
entity might embark on a course of conduct not contemplated by the
Standards, which could be found upon investigation to constitute a
violation of the statutory undue preference prohibitions. In such case,
the entity's compliance with the Standards in other aspects would not
serve as a defense.
    295. Puget Sound asks whether posting would cure a transmission
provider's disclosure of non-public transmission function information
to a marketing function employee. Posting the information does not
change the fact that a violation occurred, but it would be a vital
consideration that the Commission would certainly take into account in
deciding whether any remedy or sanction would be appropriate. We
observe also, by way of further clarification, that if the transmission
provider failed to post the disclosed information, this would
constitute a second and separate violation, in this case of section
358.7(a)(1).

H. Training Requirements

1. Commission Proposal
    296. The NOPR proposed modifications to the training requirements
for the Standards, requiring annual training for transmission function
employees, marketing function employees, officers, directors,
supervisory employees, and any other employees likely to become privy
to transmission function information; and requiring training on the
Standards to new employees within the first 30 days of their
employment. See proposed section 358.8(c)(1).
2. Comments
    297. Commenters raised various concerns about the scope of the
proposed training requirements. Destin believes that the requirements
are overly broad and unduly burdensome; arguing that a transmission
provider cannot engage in affiliate abuse with employees that do not
use its transmission services.\319\ Ameren states that the Commission's
training requirement should apply only to employees who engage in
transmission or marketing functions, as well as officers, directors and
support or other employees who can be expected to have access to non-
public transmission information.

Ameren also states that a transmission provider should provide focused
levels of training to certain specific classes of employees.\320\
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    \319\ Destin at 8.
    \320\ Ameren at 31-32.
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    298. Commenters seek clarification as to which employees must be
trained, and some suggest modifications to the proposed regulatory
text. MidAmerican and National Grid seek confirmation that the rule
excludes supervisors of departments that have nothing to do with
transmission.\321\ To clarify the regulatory text, National Grid
proposes setting out that the training requirement applies to (i)
transmission function employees; (ii) marketing functioning employees;
and (iii) officers, directors, supervisory employees, and any other
employees likely to become privy to transmission function
information.\322\
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    \321\ MidAmerican at 20-21; NationalGrid at 22.
    \322\ NationalGrid at 22.
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    299. Some commenters request clarification as to which types of
employees are captured by the ``likely to become privy to transmission
function information'' language in sections 358.8(b)(2) and
358.8(c)(1).\323\ Xcel urges the Commission to modify proposed section
358.8(b)(2) by requiring a transmission provider to distribute
materials only to those employees likely to become privy to non-public
transmission information, instead of to any and all transmission
function information.\324\
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    \323\ MidAmerican at 20-21; Williston at 17-18.
    \324\ Xcel at 22.
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    300. Commenters urge the Commission to modify the proposed
regulation so as to eliminate the requirement to train marketing
function employees. INGAA requests that marketing function employees
should be excluded, arguing such training is infeasible and unnecessary
in certain corporate structures.\325\ In addition, Williston questions
the need to conduct annual training for employees who do not have
access to non-public or privileged information and/or marketing
function employees. If a transmission provider is required to train
marketing function employees of its affiliates, Williston asserts this
is an expansion of the current rules. If not, Williston questions
whether a transmission provider would have employees that fit under the
definition of marketing function employees that would need to be
restricted from having access to company information.\326\
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    \325\ INGAA at 49-50.
    \326\ Williston at 17-18.
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    301. Commenters raise concerns over whether field and maintenance
employees fall into the training requirements and request that the
Commission exclude these employees. INGAA notes that field and
maintenance employees may pick up transmission information in the
nature of irrelevant raw data from time to time, and could therefore
fall within the training requirement as set forth in the proposed
provision.\327\ INGAA argues that these employees do not have access to
information of a commercial value and including them within the
training requirement would be an unwarranted burden. INGAA requests
that the proposed provision be amended to exclude these employees.\328\
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    \327\ INGAA at 47.
    \328\ Id. at 47; see also Vectren at 9-10.
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    302. Commenters also request clarification on the application of
these training requirements to agents, contractors, and
consultants.\329\ TDU Systems recommends that agents, contractors, and
consultants be trained only once per year, even if engaged by more than
one transmission provider during that time, provided that they receive
a copy of the current written compliance procedures for each of the
relevant transmission providers.\330\ INGAA requests that the
Commission clarify that contractor training may be limited to those
specific contractors who may be considered transmission function
employees if they worked directly for the pipeline.\331\
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    \329\ INGAA at 48; TDU Systems at 16-17.
    \330\ TDU Systems at 16-17.
    \331\ INGAA at 48.
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    303. Commenters request additional guidance on the timing of the
required training. National Grid requests confirmation that companies
may satisfy the annual training requirement by providing training once
a year for all employees, rather than providing training on a rolling
basis, to ensure that each relevant employee attends training at least
once within each 365-day cycle.\332\ Ameren requests that the
Commission clarify that employees trained within 12 months of the Final
Rule's issuance do not need to be trained again until a year passes
from the date of their most recent training.\333\
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    \332\ National Grid at 25-26.
    \333\ Ameren at 35.
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    304. E.ON urges the Commission to clarify that annual Standards
training should be mandatory only for transmission and marketing
function employees, and that employees who do not engage in
transmission and marketing functions should be allowed to be trained on
a less frequent basis.\334\ NiSource requests that the requirement in
section 358.8(c) that new employees be trained within 30 days of hire
be modified to require training within 60 days of hire, arguing that
the 30 day limitation is overly burdensome.\335\
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    \334\ E.ON at 25.
    \335\ NiSource at 28.
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    305. The PUC of Ohio proposes that the Standards include a
requirement that transmission providers post on their Internet Web
sites a general overview of their unique training programs and
schedules and the name of the designated chief compliance officer.\336\
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    \336\ PUC of Ohio at 3.
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3. Commission Determination
    306. The Commission endeavored in the NOPR to limit training to
those employees who would be most likely to be exposed to transmission
function information, or those to whom the disclosure of such
information is strictly prohibited. Obviously, transmission function
employees and marketing function employees are the two core categories
of employees that should be most cognizant of the rules. Although we
have deleted the prohibition against marketing function employees
receiving transmission function information, due to the possibility
such receipt could be inadvertent, it is expected that if someone
attempted to pass such information to a marketing function employee,
the marketing function employee would not only refuse it but would
report the individual to the company's chief compliance officer or
other appropriate individual.
    307. Officers, directors, and supervisory employees also have a
clear need for an understanding of the Standards, as it is likely they
will either be in a position to interact with both transmission
function employees and marketing function employees, or be responsible
for responding to any questions or concerns about the Standards from
the employees who report to them. Other employees likely to become
privy to transmission function information will vary from company to
company; likely categories would include rate and regulatory personnel,
lawyers, accountants, risk management personnel, and the like. This
list is by no means exhaustive, but rather is included for illustrative
purposes.
    308. Either a transmission provider or its affiliate should provide
training to marketing function personnel employed by the affiliate;
failure to do so would leave a major class of employees without the