[Federal Register: July 29, 2009 (Volume 74, Number 144)]
[Proposed Rules]
[Page 37658-37666]
[DOCID:fr29jy09-40]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM09-2-000]

Contract Reporting Requirements of Intrastate Natural Gas
Companies

Issued July 16, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is proposing to revise its contract reporting
requirements for those natural gas pipelines that fall under the
Commission's jurisdiction pursuant to section 311 of the Natural Gas
Policy Act or section 1(c) of the Natural Gas Act. The Commission is
proposing to require the existing annual Sec.  284.126(b) transactional
reports to be filed on a quarterly basis, require that the reports
include certain additional types of information and cover storage
transactions as well as transportation transactions, establish a
procedure for the Sec.  284.126(b) reports to be filed in a uniform
electronic format and posted on the Commission's Web site, and hold
that those reports must be public and may not be filed with information
redacted as privileged.

DATES: Comments are due October 27, 2009.

ADDRESSES: You may submit comments, identified by docket number, by any
of the following methods:
     Agency Web Site: http://www.ferc.gov. Documents created
electronically using word processing software should be filed in native
applications or print-to-PDF format and not in a scanned format.
     Mail/Hand Delivery: Commenters unable to file comments
electronically must mail or hand deliver an original and 14 copies of
their comments to: Federal Energy Regulatory Commission, Secretary of
the Commission, 888 First Street, NE., Washington, DC 20426.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
Vince Mareino (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>Julie Parsons (Technical Information), Office of Energy Markets
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

Table of Contents

                                                               Paragraph
                                                                  No.

I. Background...............................................           2
    A. Current Regulations..................................           2
    B. Petition and Notice of Inquiry.......................           9
    C. Industry Comments on Notice of Inquiry...............          12
II. Discussion..............................................          16
    A. Report Frequency and Content.........................          18
    B. Online Posting.......................................          28
    C. Confidentiality Policy...............................          30
    D. Miscellaneous Issues.................................          33
III. Regulatory Requirements................................          35
    A. Information Collection Statement.....................          35
    B. Environmental Analysis...............................          38
IV. Regulatory Flexibility Act [Analysis or Certification]..          39
V. Comment Procedures.......................................          41
VI. Document Availability...................................          45

Notice of Proposed Rulemaking

Issued July 16, 2009.
    1. The Commission is proposing to modify its contract reporting
requirements for (1) intrastate pipelines providing interstate services
pursuant to section 311 of the Natural Gas Policy Act of 1978 (NGPA)
\1\ and (2) Hinshaw pipelines providing interstate services subject to
the Commission's Natural Gas Act (NGA) jurisdiction pursuant to blanket
certificates issued under Sec.  284.224 of the Commission's
regulations.\2\ First, the Commission proposes to require intrastate
and Hinshaw pipelines to file quarterly reports of all transportation
and storage transactions. Second, the Commission proposes to require
that the reports include certain additional types of information not
currently reported. Third, the Commission proposes to establish a
procedure for the reports to be filed in a uniform electronic format
and posted on the Commission's Web site. Fourth, the Commission
proposes to require that reports be public and not filed with
information redacted as privileged. These proposals are intended to
improve market transparency, without making it unduly burdensome for
intrastate and Hinshaw pipelines to participate in interstate markets.
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    \1\ 15 U.S.C. 3372.
    \2\ Section 1(c) of the NGA exempts from the Commission's NGA
jurisdiction pipelines which transport gas in interstate commerce if
(1) they receive natural gas at or within the boundary of a State,
(2) all the gas is consumed within that State, and (3) the pipeline
is regulated by a State Commission. This exemption is referred to as
the Hinshaw exemption after the Congressman who introduced the bill
amending the NGA to include Sec.  1(c). See ANR Pipeline Co. v.
Federal Energy Regulatory Comm'n, 71 F.3d 897, 898 (1995) (briefly
summarizing the history of the Hinshaw exemption).
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Background

A. Current Regulations

    2. NGPA section 311 authorizes the Commission to allow intrastate
pipelines to transport natural gas ``on behalf of'' interstate
pipelines or local distribution companies served by interstate
pipelines ``under such terms and conditions as the Commission may
prescribe.'' \3\ NGPA Sec.  601(a)(2) exempts transportation service
authorized under NGPA section 311 from the Commission's NGA
jurisdiction. Congress adopted these provisions in order to eliminate
the regulatory barriers between the intrastate and interstate markets
and to promote the entry of intrastate pipelines into the interstate
market. Such entry eliminates the need for duplication of facilities
between interstate and intrastate pipelines.\4\ Shortly after the
adoption of the NGPA, the Commission authorized Hinshaw pipelines to
apply for NGA section 7 certificates authorizing them to transport
natural gas in interstate commerce in the same manner as intrastate
pipelines may do under NGPA section 311.\5\
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    \3\ 15 U.S.C. 3371(c).
    \4\ EPGT Texas Pipeline, 99 FERC ] 61,295, at 62,252-62,253
(2002).
    \5\ Certain Transportation, Sales, and Assignments by Pipeline
Companies not Subject to Commission Jurisdiction Under Section 1(c)
of the Natural Gas Act, Order No. 63, FERC Stats. & Regs. ] 30,118,
at 30,824-25 (1980).

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    3. Subpart C of the Commission's Part 284 open access regulations
(18 CFR 284.121-126) implements the provisions of NGPA section 311
concerning transportation by intrastate pipelines. Section 284.224 of
the regulations provides for the issuance of blanket certificates to
Hinshaw pipelines to provide open access transportation service ``to
the same extent that, and in the same manner'' as intrastate pipelines
are authorized to perform such service by Subpart C. The Part 284,
Subpart C, regulations require that intrastate pipelines performing
interstate service under NGPA section 311 must do so on an open access
basis.\6\ However, consistent with the NGPA's goal of encouraging
intrastate pipelines to provide interstate service, the Commission has
not imposed on intrastate pipelines all of the Part 284 requirements
imposed on interstate pipelines.\7\ For example, when the Commission
first adopted the Part 284 open access regulations in Order No. 436,
the Commission exempted intrastate pipelines from the requirement that
they offer open access service on a firm basis.\8\ The Commission found
that requiring intrastate pipelines to offer firm service to out-of-
state shippers could discourage them from providing any interstate
service, because such a requirement could progressively turn the
intrastate pipeline into an interstate pipeline against its will and
against the will of the responsible State authorities. Similarly, Order
No. 636-B exempted intrastate pipelines from the requirements of Order
No. 636.\9\ Those requirements included capacity release, electronic
bulletin boards (now Internet Web sites), and flexible receipt and
delivery points.
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    \6\ See 18 CFR 284.7(b), 284.9(b) and 284.122.
    \7\ Associated Gas Distributors v. FERC, 824 F.2d 981, 1002-1003
(D.C. Cir. 1987) (AGD); Mustang Energy Corp. v. Federal Energy
Regulatory Comm'n, 859 F.2d 1447, 1457 (10th Cir. 1988), cert.
denied, 490 U.S. 1019 (1988); see also EPGT Texas Pipeline, 99 FERC
] 61,295 (2002).
    \8\ Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, Order No. 436, FERC Stats. & Regs. ] 30,665, at 31,502
(1985).
    \9\ Pipeline Service Obligations, and Revisions to Regulations
Governing Self-Implementing Transportation Under Part 284 of the
Commission's Regulations; Regulation of Natural Gas Pipelines After
Partial Wellhead Decontrol, Order No. 636-B, 61 FERC ] 61,272, at
61,992 n.26 (1992), order on reh'g, 62 FERC ] 61,007 (1993), aff'd
in part and remanded in part sub nom. United Distribution Cos. v.
FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on remand, Order No. 636-
C, 78 FERC ] 61,186 (1997).
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    4. The Commission currently has less stringent transactional
reporting requirements for NGPA section 311 intrastate pipelines and
Hinshaw pipelines, than for interstate pipelines. In Order No. 637,\10\
the Commission revised the reporting requirements for interstate
pipelines in order to provide more transparent pricing information and
to permit more effective monitoring for the exercise of market power
and undue discrimination. As adopted by Order No. 637, Sec.  284.13(b)
requires interstate pipelines to post on their Internet Web sites basic
information on each transportation and storage transaction with
individual shippers, including revisions to a contract, no later than
the first nomination under a transaction. This information includes:
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    \10\ Regulation of Short-Term Natural Gas Transportation
Services and Regulation of Interstate Natural Gas Transportation
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, clarified,
Order No. 637-A, FERC Stats. & Regs. ] 31,099, reh'g denied, Order
No. 637-B, 92 FERC ] 61,062 (2000), aff'd in part and remanded in
part sub nom. Interstate Natural Gas Ass'n of America v. FERC, 285
F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ] 61,127 (2002),
order on reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American
Gas Ass'n v. FERC, 428 F.3d 255 (D.C. Cir. 2005).
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     The name of the shipper;
     The contract number (for firm service);
     The rate charged;
     The maximum rate;
     The duration (for firm service);
     The receipt and delivery points and zones covered;
     The quantity of natural gas covered;
     Any special terms or details, such as any deviations from
the tariff;
     Whether any affiliate relationship exists.
    5. Section 284.13(c) of the Commission's regulations also requires
interstate pipelines to file with the Commission on the first business
day of each calendar quarter an index of its firm transportation and
storage customers and to publish the same information on their Web
sites. The information required to be included in the Index of
Customers does not include the rates paid by the customers. Section
284.13(e) requires interstate pipelines to file semi-annual reports of
their storage injection and withdrawal activities, including the
identities of the customers, the volumes injected into and withdrawn
from storage for each customer and the unit charge and total revenues
received.
    6. Order No. 637 did not modify the reporting requirements for NGPA
section 311 intrastate pipelines and Hinshaw pipelines provided in
Sec.  284.126(c) of the Commission's regulations. Section 284.126(b) of
the regulations requires NGPA section 311 and Hinshaw pipelines to file
with the Commission annual reports of their transportation
transactions, but not their storage transactions. Those reports must
include the following information:
     The name of the shipper receiving transportation service;
     The type of service performed (i.e., firm or
interruptible);
     The total volumes transported for the shipper, including
for firm service a separate statement of reservation and usage
quantities;
     Total revenues received for the shipper, including for
firm service a separate statement of reservation and usage revenues.
    7. Unlike Sec.  284.13(b), Sec.  284.126(b) does not require
intrastate pipelines to include in these reports the rate charged under
each contract, the duration of the contract, the receipt and delivery
points and zones or segments covered by each contract, whether the
contract includes any special terms and conditions, and whether there
is an affiliate relationship between the pipeline and the shipper.
    8. Section 284.126(c) requires section 311 intrastate pipelines and
Hinshaw pipelines to file a semi-annual report of their storage
activity within 30 days of the end of each complete storage and
injection season. This requirement is substantially the same as the
Sec.  284.13(e) requirement that interstate pipelines file such semi-
annual reports of their storage activity.

 B. Petition and Notice of Inquiry

    9. In September 2008, an interstate storage provider with market-
based rates, SG Resources Mississippi, L.L.C. (SGRM) filed a request
for waiver of the Sec. Sec.  284.13(b)(1)(iii) and (b)(2)(ii)
requirements that interstate pipelines post the rates charged in firm
and interruptible transactions no later than first nomination for
service. SGRM requested the waiver for both itself and all interstate
storage providers with market-based rates. It contended that the
mandatory disclosure of commercially sensitive pricing information
provides prospective customers and competitors, such as NGPA section
311 intrastate storage providers that are only subject to semi-annual
reporting requirements, with an unfair competitive advantage. SGRM also
stated that a number of the NGPA section 311 storage providers submit
their semi-annual storage reports subject to a request for privileged
treatment pursuant to Sec.  388.112 of the Commission's regulations.
    10. In response, in November 2008 the Commission issued an order
denying the request for waiver and the alternative petition for a
rulemaking proceeding. The SGRM order held that the existing posting
requirements for interstate pipelines are necessary to provide shippers
with the price transparency they need to make informed decisions, and
the ability to

monitor transactions for undue discrimination and preference.\11\ The
Commission also found that the requested exemption would be contrary to
NGA section 4(c)'s requirement that ``every natural gas company * * *
keep open * * * for public inspection * * * all rates.'' \12\
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    \11\ SG Resources Mississippi, L.L.C., 125 FERC ] 61,191 (2008)
(SGRM).
    \12\ 15 U.S.C. Sec.  717c(c).
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    11. Contemporaneously with the SGRM order, the Commission issued a
Notice of Inquiry (NOI), requesting comments on whether the Commission
should impose additional reporting requirements on NGPA section 311
intrastate pipelines and on Hinshaw pipelines.\13\ The NOI stated that
the Commission was interested in exploring (1) whether the disparate
reporting requirements for interstate and NGPA section 311 and Hinshaw
pipelines have an adverse competitive effect on the interstate
pipelines and (2) if so, whether the Commission should modify the
posting requirements for section 311 intrastate pipelines and Hinshaw
pipelines in order to make them more comparable to the Sec.  284.13(b)
posting requirements for interstate pipelines. Accordingly, the
Commission sought comments to assist it in evaluating whether changes
in the Commission's posting requirements should be considered in order
to remove any competitive disadvantage for interstate pipelines, as
compared to intrastate pipelines providing interstate transportation
and storage services under section 311 of the NGPA and to Hinshaw
pipelines providing such service pursuant to a Sec.  284.224 blanket
certificate.
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    \13\ Contract Reporting Requirements of Intrastate Natural Gas
Companies, Notice of Inquiry, FERC Stats & Regs. ] 35,559 (2008).
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C. Industry Comments on Notice of Inquiry

    12. A total of eighteen parties filed comments on the NOI. Fourteen
of those represented NGPA section 311 or Hinshaw pipelines or their
advocacy associations.
    13. Seven of the section 311 and Hinshaw pipelines, along with the
Gas Processors Association (GPA) and the Texas Pipeline Association
(TPA), completely oppose any change in the existing reporting
requirements.\14\ They argue that imposing additional burdensome
reporting requirements on section 311 and Hinshaw pipelines would be
inconsistent with Congress' intent of allowing intrastate pipelines to
participate in the interstate pipeline grid without unduly burdensome
regulatory requirements. For example, they argue that the intrastate
and Hinshaw pipelines would have to invest in additional information
technology and personnel in order to comply with the Sec.  284.13
requirement that pipelines post the information on an Internet Web site
in downloadable file formats. They also maintain they already file
enough information with other State and Federal agencies. Any further
filings, they claim, would place them at a competitive disadvantage
against intrastate-only pipelines, who are often allowed to keep
confidential the identity of their shippers and the agreed-upon
prices.\15\ Moreover, they state that they generally do not compete for
the same customers as interstate pipelines, arguing that they generally
feed into interstate pipelines, rather than running parallel and
competing with them. The GPA also suggested that the Commission lacks
jurisdiction to reform the reporting requirements.\16\
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    \14\ See, e.g., Comments of Arkansas Oklahoma Gas Corporation
(AOG), Atmos Pipeline Texas (Atmos), Copano Energy, LLC (Copano),
Cranberry Pipeline Corporation (Cranberry), DCP Midstream, LLC
(DCP), Enogex LLC (Enogex), GPA, Jefferson Island Storage & Hub
(Jefferson), and TPA.
    \15\ See, e.g., Comments of Atmos, DCP, Jefferson, Niska Gas
Storage LLC (Niska), and the TPA.
    \16\ See GPA Comments at 2-5.
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    14. The remaining section 311 and Hinshaw commenters, including the
American Gas Association (AGA), also oppose changing the current
reporting requirements, and make many of the same arguments as are
summarized above.\17\ However, these commenters suggested that, if the
Commission believes increased reporting is necessary, it could consider
increasing the frequency of the existing reports to quarterly and to
hold such reports to be fully public. This more limited change in the
current reporting requirements would address perhaps their primary
concern: the cost of having to upgrade their existing information
technology systems in order to maintain the necessary Internet Web
site. If the Commission were to require reports more frequently than
quarterly, these commenters support an exemption for smaller intrastate
and Hinshaw pipelines. Several commenters propose such an exemption
apply to intrastate and Hinshaw pipelines whose average natural gas
deliveries over the previous three years did not exceed 50 million
MMBtu, consistent with the exemption from the Order No. 720 requirement
that non-NGA pipelines report scheduled gas flows.\18\
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    \17\ See, e.g., Comments of the AGA, Duke Energy Ohio/Duke
Energy Kentucky (Duke), Niska, Northwest Natural Gas Company (NW
Natural), and Pacific Gas and Electric Company (PG&E).
    \18\ Pipeline Posting Requirements under Section 23 of the
Natural Gas Act, Order No. 720, 73 FR 73494 (December 2, 2008) FERC
Stats & Regs. ] 31,283 (2008).
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    15. The other four commenters were an interstate pipeline (Tres
Palacios), a company owning both interstate and NGPA section 311
intrastate storage providers (Enstor), a producer/marketer (Apache),
and the American Public Gas Association (APGA). They contend that the
Commission should extend the Sec.  284.13 interstate pipeline reporting
requirements to intrastate and Hinshaw pipelines. They assert that
applying the same reporting requirements to all pipelines performing
interstate service is both a matter of fairness and a practical
solution to the discrimination and anti-competitive practices currently
afflicting the market. Enstor states that in order to fully equalize
the reporting requirements for interstate pipelines and intrastate and
Hinshaw pipelines, the Commission must impose tariff filing
requirements on intrastate and Hinshaw pipelines comparable to those
currently imposed on interstate pipelines. Enstor points out that
Sec. Sec.  284.13(b)(1)(viii) and 284.13(b)(2)(vi) require interstate
pipelines to post all aspects in which a service agreement deviates
from the pipeline's tariff. Enstor states that, while interstate
pipelines are required to file tariffs in a prescribed format, there is
no similar requirement for intrastate and Hinshaw pipelines, and this
would complicate any requirement for those pipelines to post how
particular contracts deviate from their tariff.

 II. Discussion

    16. Based upon a review of the comments received in response to the
NOI, the Commission is proposing to revise its transactional reporting
requirements for intrastate and Hinshaw pipelines in order to increase
market transparency, without imposing unduly burdensome requirements on
those pipelines. Transactional information provides price transparency
so shippers can make informed purchasing decisions, and also permits
both shippers and the Commission to monitor actual transactions for
evidence of possible abuse of market power or undue discrimination. The
Commission is proposing to increase the availability and usefulness of
the transactional information reported by intrastate and Hinshaw
pipelines by requiring that: (1) The existing annual Sec.  284.126(b)
transactional reports be filed on a quarterly basis, (2) the quarterly
reports

include certain additional types of information and cover storage
transactions as well as transportation transactions, (3) the quarterly
reports be filed in a uniform electronic format and posted on the
Commission's Web site, and (4) those reports must be public and may not
be filed with information redacted as privileged.
    17. The Commission is not proposing to impose on intrastate and
Hinshaw pipelines the same reporting requirements as it imposes on
interstate pipelines. For example, the Commission in this rulemaking
will not require the intrastate and Hinshaw pipelines to make daily
postings of transactional information on their own Web sites. As
discussed below, the Commission believes that the revised reporting
requirements proposed in this NOPR appropriately balance the need for
increased transparency of intrastate and Hinshaw pipeline transactions,
while avoiding unduly burdensome requirements that might discourage
such pipelines from participating in the interstate market.

A. Report Frequency and Content

    18. Increasing the frequency of the Sec.  284.126(b) transactional
reports by intrastate and Hinshaw pipelines from annual to quarterly
and requiring additional information in those reports will provide
shippers and the Commission with both more timely and more useful
information concerning the transactions entered into by section 311 and
Hinshaw pipelines. Specifically, the Commission proposes that the
transactional reports to be filed on a quarterly basis include the
following additional information not currently required by Sec.
284.126(b).
    19. First, the Commission proposes to amend Sec.  284.126(b) to
require the quarterly reports to include certain additional information
about each transaction not currently required by Sec.  284.126(b). This
information will include: (1) The rate charged under each contract,
including a separate statement of each rate component, (2) the duration
of the contract, (3) the primary receipt and delivery points covered by
the contract, (4) the quantity of natural gas the shipper is entitled
to transport, store, or deliver, and (5) whether there is an affiliate
relationship between the pipeline and the shipper. The purpose of these
reports is to allow shippers and others, including the Commission, to
monitor transactions for undue discrimination and preference. This
additional information is necessary to enable such entities to
determine the extent to which particular transactions are comparable to
one another. For example, contracts for service on different parts of a
pipeline system or with different durations may not be comparable to
one another. In addition, the requirement that affiliate relationships
between the pipeline and its shippers be reported will allow the
Commission and interested parties to monitor whether the pipeline is
favoring its affiliates.
    20. Requiring section 311 intrastate and Hinshaw pipelines to
report this additional information concerning each transaction will
make the reporting requirements for those pipelines more comparable to
the transactional posting requirements for interstate pipelines.
Section 284.13(b)(1) requires interstate pipelines to post similar
information concerning contract rates, duration, receipt and delivery
points, entitlements to service, and affiliate relationships.\19\ Most
of the remaining information which Sec.  284.13(b) requires interstate
pipelines to post, but the Commission is not proposing to require
section 311 and Hinshaw pipelines to report, relates to capacity
release, which section 311 and Hinshaw pipelines are not required to
permit.
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    \19\ See 18 CFR 284.13(b)(1)(ii), (iv), (v), and (vii) and
(2)(iv), (v), (vi), and (ix).
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    21. Second, the Commission proposes to require that the proposed
Sec.  284.126(b) quarterly reports include all storage transactions in
addition to transportation transactions. Currently, Sec.  284.126(b)
only requires section 311 and Hinshaw pipelines to report information
with respect to transportation transactions. The only information the
Commission currently requires those pipelines to report with respect to
storage transactions is the information included in the Sec.
284.126(c) semi-annual storage activity report. Aside from the fact the
storage activity report is only filed on a semi-annual, rather than a
quarterly basis, it also does not include all of the information that
we are proposing to require to be included in the quarterly reports
under revised Sec.  284.126(b). For example, Sec.  284.126(c) does not
require section 311 and Hinshaw pipelines to report the rates provided
for in each contract, the duration of each contract, or whether there
is an affiliate relationship between the storage provider and its
customer. In order to assure that section 311 and Hinshaw pipelines
report the same information about storage transactions as
transportation transactions and on the same schedule, the Commission
proposes to revise section 284.126(b) to cover both transportation and
storage transactions. Clearly, there is just as great a need for
transparency of storage transactions as of transportation transactions.
    22. While we are proposing to revise Sec.  284.126(b) to include
storage transactions, we will continue to require section 311 and
Hinshaw pipelines to make the semi-annual storage activity reports
currently required by Sec.  284.126(c). Those reports include
information that will not be contained in the proposed quarterly
transactional reports. Specifically, Sec.  284.126(c) requires section
311 and Hinshaw pipelines to report total volumes injected into storage
during each complete storage injection season and total volumes
withdrawn from storage during each complete storage withdrawal season.
Such seasonal information will not be captured by the Sec.  284.126(b)
quarterly transactional reports, because those reports will not
correlate with the typical five-month withdrawal and seven-month
injection seasons. Moreover, retaining the Sec.  284.126(c) semi-annual
storage activity report for section 311 and Hinshaw pipelines is
consistent with the Commission's existing requirement, in Sec.
284.13(e), that interstate pipelines also make such semi-annual storage
activity reports in addition to posting transactional information
pursuant to Sec.  284.13(c).
    23. In proposing to require section 311 and Hinshaw pipelines to
make quarterly transactional reports containing similar information to
that reported by interstate pipelines, the Commission has sought to
balance the benefits of increased transparency of intrastate and
Hinshaw pipeline transactions with the interest in avoiding unduly
burdensome requirements for those pipelines. Under the Commission's
proposal, one primary difference will remain between the reporting
requirements for interstate pipelines and the section 311 and Hinshaw
pipelines: interstate pipelines will post transactional information
daily on their Web sites, while section 311 and Hinshaw pipelines will
submit this information in a quarterly report to the Commission. Four
commenters \20\ requested that the Commission extend the Sec.
284.13(b) daily interstate pipeline posting requirements to intrastate
and Hinshaw pipelines. They asserted that this would address the
concern that intrastate and Hinshaw pipelines have an unfair
competitive advantage over interstate pipelines because of the
disparate reporting requirement for the two sets of pipelines, and it
would provide a greater ability to monitor the

market for potential discrimination. However, the Commission is not
proposing at this time to impose the full interstate pipeline posting
requirements on intrastate and Hinshaw pipelines for several reasons.
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    \20\ See, e.g., Comments of Tres Palacios, Enstor, Apache, and
APGA.
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    24. First, one purpose of the NGPA was to induce intrastate
pipelines to participate in the interstate market by ensuring that it
would not be unduly burdensome to do so.\21\ This participation by
intrastate pipelines eliminates the need for duplication of facilities
between interstate and intrastate pipelines.\22\ Thus, as the court has
stated, ``Congress intended that intrastate pipelines should be able to
compete in the transportation market without bearing the burden of full
regulation by FERC under the Natural Gas Act.'' \23\ AGA and several
other intrastate and Hinshaw pipeline commenters indicated that they
could make these reports on a quarterly basis, without incurring undue
hardship.\24\ For example, AGA states, ``a quarterly filing requirement
would strike an appropriate balance between any added transparency to
the wholesale, interstate natural gas markets and the burden on LDCs
and the markets in producing additional contract information.'' \25\
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    \21\ AGD, 824 F.2d at 1001-1003.
    \22\ EPGT Texas Pipeline, L.P., 99 FERC ] 61,295 at 62,252.
    \23\ Mustang Energy Corp. v. Federal Energy Regulatory Comm'n,
859 F.2d 1447, 1457 (10th Cir. 1988), cert. denied, 490 U.S. 1019
(1988); see also EPGT Texas Pipeline, 99 FERC ] 61,295 (2002).
    \24\ See, e.g., AGA Comments at 1-2, 9, 13, 16, 18-19; Duke
Comments at 9; Niska Comments at 15; NW Natural Comments at 9, 11,
13, 14; and PG&E Comments at 6, 10.
    \25\ AGA Comments at 2.
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    25. However, if the Commission were to require all intrastate and
Hinshaw pipelines to post transactional information on a daily basis,
all those pipelines would have to maintain their own Web sites for this
purpose. Such daily postings of information about individual
transactions could be significantly more burdensome than the quarterly
reporting requirement the Commission is proposing. The cost of
maintaining a Web site in compliance with NAESB standards appears to be
the primary concern of many intrastate and Hinshaw pipelines. The TPA
notes that NAESB compliance ``would require section 311 and Hinshaw
pipelines to invest in additional information technology hardware and
personnel,'' \26\ and notes that the Commission recently avoided
requiring NAESB compliance for section 311 and Hinshaw pipelines in
Order No. 720.\27\ Other pipelines expressed similar concerns about the
cost of NAESB standards.\28\ Notably, Cranberry expressed doubt that it
would be able to afford even an electronic bulletin board, given the
small size of its staff.\29\ Further, as the AGA and others note, ``a
daily reporting requirement would be unduly burdensome in light of the
information that would be obtained,'' from the typical service
provider, whose transactions often do not change on a day-to-day
basis.\30\ Based on these comments, the Commission is concerned that a
daily Internet posting requirement could discourage section 311 and
Hinshaw pipelines from performing interstate service.
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    \26\ TPA Comments at 21.
    \27\ While Order No. 720 does require daily Internet postings of
certain scheduled flow information, that requirement is only
applicable to major non-interstate pipelines and does not require
posting of information about individual transactions. By contrast,
the reporting requirement proposed here will require all section 311
and Hinshaw pipelines to report information about each customer
contract.
    \28\ See AGA Comments at 2, 11, 15, 18; Copano Comments at 7;
DCP Comments at 10; Enogex Comments at 9; NW Natural Comments at 3,
8, 13.
    \29\ Cranberry Comments at 6-8.
    \30\ AGA Comments at 12-13; see also Duke Comments at 8; NW
Natural at 14; PG&E Comments at 2, 5, 10.
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    26. Second, only two interstate pipelines filed comments claiming
that daily posting by intrastate and Hinshaw pipelines is necessary to
avoid adverse competitive effects on interstate pipelines. It thus does
not appear that there is widespread concern among interstate pipelines
that the disparate reporting requirements will cause significant
adverse competitive effects. Moreover, our proposal to increase the
frequency of intrastate and Hinshaw pipeline transactional reports and
increase the information included in those reports will reduce the
disparity in the reporting requirements for the two sets of pipelines.
We recognize that some of the commenters have raised concerns about the
ability of shippers and others to obtain access to the transactional
reports filed by section 311 and Hinshaw pipelines with the Commission.
For this reason, as discussed in the next two sections, the Commission
is also proposing to take several actions to increase the accessibility
of these reports, including providing for them to be posted in a
standardized format on the Commission's Web site. This increased
accessibility of the reports will also serve to improve market
transparency, while minimizing additional burdens on section 311 and
Hinshaw pipelines.
    27. We conclude that the comments in response to the NOI do not
demonstrate a need to impose on section 311 and Hinshaw pipelines the
increased burden of complying with the daily Sec.  284.13 transactional
posting requirements. In these circumstances, the interest in avoiding
unduly burdensome requirements that could discourage intrastate and
Hinshaw pipelines from participating in the interstate market, contrary
to the goal of the NGPA, provides a ``reasonable justification for
excluding'' the intrastate and Hinshaw pipelines from the daily posting
requirements.\31\
---------------------------------------------------------------------------

    \31\ Cf. ANR v. FERC, 71 F.3d at 902.
---------------------------------------------------------------------------

B. Online Posting

    28. In order to make the proposed quarterly reports filed with the
Commission more accessible to the public, the Commission proposes
requiring that the reports be filed in an electronic standardized
format to be developed by the Commission staff. The Commission proposes
the data be publicly available, and not filed on a redacted basis. This
method will enhance the posting of quarterly reports on the
Commission's Web site and facilitate easy access to the information by
the public. At the same time, this procedure will avoid the costs of
requiring intrastate pipelines to maintain a NAESB-compliant Web site,
discussed above.
    29. In Order No. 720, the Commission ``clarifie[d] that the
pipeline posting regulations do not impose NAESB requirements on non-
interstate pipelines,'' but that rather, ``posting pipelines need only
comply with the manner of posting outlined in'' the new regulation.\32\
The Commission proposes a similar approach here. Rather than place the
burden of Web site maintenance and standards compliance on individual
pipelines, the Commission would take on that responsibility, with the
pipelines only being responsible for collecting and filing the
information with the Commission. Under the current rules, the
Commission encourages parties to file intrastate reports using FERC-537
Semi-Annual Storage Report for Activity under Section 284.122 and FERC-
549, Annual Transportation Report. Standardized formats have proven to
be an effective way to increase practical access both for industry
members and the Commission's own staff. Currently, FERC-549 and FERC-
537 filers are not required to use a standardized format; consequently
the data collection has been inconsistent. The Commission therefore
proposes to require section 311 and Hinshaw companies to submit their
reports in a standardized electronic format. The Commission is
currently in the process of developing a

standardized electronic format for making the reports proposed in this
NOPR. Once that process is complete, the Commission will make the
standardized format available for public comment.
---------------------------------------------------------------------------

    \32\ Order No. 720 at P 98.
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C. Confidentiality Policy

    30. Finally, the Commission proposes to require such reports be
posted without any information redacted as privileged. Currently, when
a report is filed subject to a request for privileged treatment, any
person desiring to see the report must file a formal request, pursuant
to the Freedom of Information Act (FOIA) and Sec.  385.1112 of the
Commission's Rules of Practice and Procedure,\33\ that the Commission
make the report public. Due to the expense and delay caused by this
additional step, in practice these requests have been infrequent.
Further, as the APGA argues in its comments, allowing pricing
information to be confidential undermines the Commission's goals of
preventing undue discrimination and promoting price transparency.
Adopting a prohibition on the confidential treatment of Sec.
284.126(b) reports furthers all of these policy goals. Accordingly, the
proposed standardized reporting form will include a statement that the
report will be public.
---------------------------------------------------------------------------

    \33\ 18 CFR 385.1112.
---------------------------------------------------------------------------

    31. While several parties expressed concern about the commercial
sensitivity of the information to be reported, the AGA comments, ``a
quarterly reporting requirement should allay any concerns regarding the
commercial sensitivity of contract data.'' \34\ The Commission concurs
with this assessment, and finds that the public benefits of increasing
the availability of market information far outweigh the risks posted by
the commercial sensitivity of data from a previous quarter.
---------------------------------------------------------------------------

    \34\ AGA Comments at 19.
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    32. In addition to the above policy considerations, the Commission
finds that its governing statutes support public treatment of data
reported both by Hinshaw pipelines and by NPGA section 311 pipelines.
The Commission regulates interstate service performed by Hinshaw
pipelines pursuant to the NGA.\35\ Therefore, NGA section 4(c)'s
requirement that interstate pipelines publicly disclose contracts under
such rules as the Commission may prescribe applies to the interstate
services performed by Hinshaw pipelines pursuant to their Sec.  284.224
blanket certificates. Furthermore, NGA section 23(a)(1) directs the
Commission ``to facilitate price transparency in markets for the sale
or transportation of physical natural gas in interstate commerce.''
\36\ While the NGPA does not contain an express public disclosure
provision similar to NGA section 4(c), section 311(c) of the NGPA
authorizes the Commission to prescribe the ``terms and conditions''
under which intrastate pipelines perform interstate service. Requiring
public disclosure of transactional information for the purpose of
allowing shippers and others to monitor NGPA section 311 transactions
for undue discrimination is well within the Commission's broad
conditioning authority under Sec.  311(c).\37\
---------------------------------------------------------------------------

    \35\ See Consumers Energy Co. v. FERC, 226 F.3d 777 (6th Cir.
2000) (finding that the Commission must act under NGA section 5 in
order to require Hinshaw pipelines to change their rates).
    \36\ 15 U.S.C. 717t-2(a)(1). See Energy Policy Act of 2005, Pub.
L. No. 109-58, Sec.  316 (``Natural Gas Market Transparency
Rules''), 119 Stat. 594 (2005).
    \37\ See, e.g., AGD, 824 F.2d at 1015-1018 (D.C. Cir. 1987)
(affirming the Commission's use of section 311(c) to require
intrastate pipelines to permit their interstate sales customers to
convert to transportation-only service).
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D. Miscellaneous Issues

    33. The Commission is proposing that the quarterly reports required
by this NOPR include not only the full legal name, but also the
``identification number'' of each shipper.\38\ The Commission is also
proposing that the reports include the ``industry common code'' for
each receipt and delivery point.\39\ The Commission is proposing to
require that the reports include a shipper identification number, in
order to simplify recordkeeping and minimize the ambiguity and
confusion that can be caused by shippers whose names have changed, or
whose names are similar to the names of other shippers. Similarly, the
Commission is proposing to require that the reports include an industry
common code for receipt and delivery points to minimize any ambiguity
as to what receipt and delivery points are being reported and to ensure
that all reporting pipelines identify such points in a consistent
manner.
---------------------------------------------------------------------------

    \38\ 18 CFR 284.126(b)(1)(i) of the proposed regulations.
    \39\ 18 CFR 284.126(b)(1)(iv) of the proposed regulations.
---------------------------------------------------------------------------

    34. While the Commission is aware of some shipper identification
standards and receipt and delivery point codes that are used in the
natural gas industry (for example, Dun & Bradstreet, Inc.'s D-U-N-S
identification numbers for shippers), it is reluctant to choose any
particular standard without input as to that standard's cost-
effectiveness and usefulness. Accordingly, the Commission seeks
comments from interested parties on two related questions: (1) What
sort of shipper identification numbers and receipt and delivery point
common industry codes are currently used or readily available to
section 311 and Hinshaw pipelines?; and (2) Which shipper
identification standard or standards and receipt and delivery point
codes, if any, should be used?

III. Regulatory Requirements

A. Information Collection Statement

    35. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting, record keeping, and public
disclosure requirements (collections of information) imposed by an
agency.\40\ Therefore, the Commission is providing notice of its
proposed information collections to OMB for review in accordance with
section 3507(d) of the Paperwork Reduction Act of 1995.\41\ Upon
approval of a collection of information, OMB will assign an OMB control
number and an expiration date.
---------------------------------------------------------------------------

    \40\ 5 CFR 1320.11.
    \41\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    36. The Commission estimates that on an annual basis the burden to
comply with this proposed rule will be as follows:

----------------------------------------------------------------------------------------------------------------
                                                 Number of        Number of        Hours per
               Data collection                  respondents       responses         response       Total hours
----------------------------------------------------------------------------------------------------------------
FERC-549D...................................             125                4              3.5            1,750
----------------------------------------------------------------------------------------------------------------

    Total Annual Hours for Collection: 1,750 hours.
    These are mandatory information collection requirements.
    Information Collection Costs: Because of the various staffing
levels that will be involved in preparing the

documentation (legal, technical and support) the Commission is using an
hourly rate of $150 to estimate the costs for filing and other
administrative processes (reviewing instructions, searching data
sources, completing and transmitting the collection of information).
The estimated cost is anticipated to be $262,500.
    Title: FERC-549D.
    Action: Proposed Data Collection.
    OMB Control No.: To be determined.
    Respondents: Natural gas pipeline companies.
    Frequency of Responses: On occasion.
    Necessity of Information: This proposed rule will improve the
usefulness and transparency of market transactions. The increased
frequency of transactional reporting will help the Commission identify
and evaluate emerging trends and business conditions affecting
reporting entities, including undue discrimination and preference.
Additionally, the information contained in the quarterly reports will
identify the economic effects of significant transactions and events,
allow more timely evaluations of the adequacy of existing rates and aid
in the development of needed changes to existing regulatory
initiatives. Finally, more frequent and transparent reporting resulting
from this proposed rule will help the Commission achieve its goal of
vigilant oversight over reporting entities.
    37. The Commission requests comments on the utility of the proposed
information collection, the accuracy of the burden estimates, how the
quality, quantity, and clarity of the information to be collected might
be enhanced, and any suggested methods for minimizing the respondent's
burden, including the use of automated information techniques.
Interested persons may obtain information on the reporting requirements
or submit comments by contacting the Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 (Attention:
Michael Miller, Office of the Executive Director,<PHONE_NUMBER> or e-
mail michael.miller@ferc.gov). Comments may also be sent to the Office
of Management and Budget (Attention: Desk Officer for the Federal
Energy Regulatory Commission, fax:<PHONE_NUMBER> or e-mail: oira_
submission@omb.eop.gov).

B. Environmental Analysis

    38. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\42\ The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.\43\ The actions proposed to be taken here fall within
categorical exclusions in the Commission's regulations for rules that
are corrective, clarifying or procedural, for information gathering,
analysis, and dissemination, and for sales, exchange, and
transportation of natural gas that requires no construction of
facilities.\44\ Therefore an environmental review is unnecessary and
has not been prepared in this rulemaking.
---------------------------------------------------------------------------

    \42\ Order No. 486, Regulations Implementing National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \43\ 18 CFR 380.4.
    \44\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5) and 380.4(a)(27).
---------------------------------------------------------------------------

IV. Regulatory Flexibility Act [Analysis or Certification]

    39. The Regulatory Flexibility Act of 1980 (RFA) \45\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The Commission is not required to make such analysis if proposed
regulations would not have such an effect.
---------------------------------------------------------------------------

    \45\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

    40. Most of the natural gas companies regulated by the Commission
do not fall within the RFA's definition of a small entity.\46\
Approximately 125 natural gas companies are potential respondents
subject to the requirements adopted by this rule. For the year 2008
(the most recent year for which information is available), 4 companies
had annual revenues of less than $7 million. This represents 3.2
percent of the total universe of potential respondents or only a very
few entities that may have a significant burden imposed on them. In
view of these considerations, the Commission certifies that this
proposed rule's amendments to the regulations will not have a
significant impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \46\ See 5 U.S.C. 601(3), citing section 3 of the Small Business
Act, 15 U.S.C. 623. Section 3 of the SBA defines a ``small business
concern'' as a business which is independently owned and operated
and which is not dominant in its field of operation. The Small
Business Size Standards component of the North American Industry
Classification System defines a small natural gas pipeline company
as one that transports natural gas and whose annual receipts (total
income plus cost of goods sold) did not exceed $7 million for the
previous year.
---------------------------------------------------------------------------

V. Comment Procedures

    41. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due October 27, 2009. Comments must refer to
Docket No. RM09-2-001, and must include the commenter's name, the
organization they represent, if applicable, and their address in their
comments.
    42. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://
www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
    43. Commenters that are not able to file comments electronically
must send an original and 14 copies of their comments to: Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street, NE., Washington, DC 20426.
    44. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

VI. Document Availability

    45. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    46. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
    47. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. E-mail the

Public Reference Room at<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 284

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

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission proposes to amend
part 284, Chapter I, Title 18, Code of Federal Regulations, as follows:

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

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

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

    2. In Sec.  284.126, paragraph (b) is revised to read as follows:

Sec.  284.126  Reporting requirements.

* * * * *
    (b) Quarterly report.
    (1) Each intrastate pipeline must file a quarterly report with the
Commission and the appropriate State regulatory agency that contains,
for each transportation and storage service provided during the
preceding calendar quarter under Sec.  284.122, the following
information:
    (i) The full legal name, and identification number, of the shipper
receiving the service, including whether there is an affiliate
relationship between the pipeline and the shipper;
    (ii) The type of service performed (i.e., firm or interruptible
transportation, storage, or other service);
    (iii) The rate charged under each contract, specifying the rate
schedule/name of service and docket where the rates were approved. The
report should separately state each rate component set forth in the
contract (i.e., reservation, usage, and any other charges);
    (iv) The primary receipt and delivery points covered by the
contract, including the industry common code for each point;
    (v) The quantity of natural gas the shipper is entitled to
transport, store, or deliver under each contract;
    (vi) The duration of the contract, specifying the beginning and
ending month and year of the current agreement;
    (vii) Total volumes transported, stored, injected or withdrawn for
the shipper; and
    (viii) Total revenues received for the shipper. The report should
separately State revenues received under each rate component;
    (2) The quarterly report for the period January 1 through March 31
must be filed on or before May 1. The quarterly report for the period
April 1 through June 30 must be filed on or before August 1. The
quarterly report for the period July 1 through September 30 must be
filed on or before November 1. The quarterly report for the period
October 1 through December 31 must be filed on or before February 1.
    (3) Each report must be filed as prescribed in Sec.  385.2011 of
this chapter as indicated in the General Instructions set out in the
quarterly reporting form. Each report must be prepared in conformance
with the Commission's software and reporting guidance, so as to be
posted and available for downloading from the FERC Web site (http://
www.ferc.gov). One copy of the report must be retained by the
respondent in its files.
* * * * *
[FR Doc. E9-17623 Filed 7-28-09; 8:45 am]

BILLING CODE 6717-01-P