[Federal Register Volume 81, Number 38 (Friday, February 26, 2016)]
[Notices]
[Page 9836]
[FR Doc No: 2016-04151]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

 Notice of Effectiveness of Exempt Wholesale Generator Status

                                                   Docket No.

Pavant Solar, LLC.....................  EG15-115-000
Campbell County Wind Farm, LLC........  EG16-15-000
OCI Alamo 6 LLC.......................  EG16-16-000
OCI Alamo 7 LLC.......................  EG16-17-000
OCI Solar TRE LLC.....................  EG16-18-000
BIF III Holtwood LLC..................  EG16-19-000
Black Oak Wind, LLC...................   EG16-20-000
Central Antelope Dry Ranch C LLC......  EG16-21-000
Shelby County Energy Center, LLC......  EG16-22-000
Golden Hills Interconnection, LLC.....  EG16-23-000
Blythe Solar 110, LLC.................  EG16-24-000
NextEra Blythe Solar Energy Center,     EG16-25-000
 LLC.

    Take notice that during the months of November 2015 and January
2016, the status of the above-captioned entities as Exempt Wholesale
Generators became effective by operation of the Commission's
regulations. 18 CFR 366.7(a).

    Dated: February 22, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-04151 Filed 2-25-16; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Notices]
[Pages 55055-55058]
[FR Doc No: 2022-19412]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95664; File No. SR-MRX-2022-11]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
of Proposed Rule Change To Adopt Rules Related to ISO Functionality

September 2, 2022.

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 18, 2022, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt rules related to Intermarket Sweep
Order (``ISO'') functionality.
    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt ISO functionality in Options 3,
Section 11 that permits Members to submit ISOs in the Exchange's
Facilitation Mechanism (``Facilitation ISO''), and Solicited Order
Mechanism (``Solicitation ISO'').\3\
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    \3\ This functionality is currently offered on the Exchange, so
the proposed rule change codifies existing functionality in the
Exchange's rules.
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    As set forth in Options 3, Section 11(b), the Facilitation
Mechanism is a process wherein the Electronic Access Member seeks to
facilitate a block-size order it represents as agent, and/or a
transaction wherein the Electronic Access Member solicited interest to
execute against a block-size order it represents as agent. Electronic
Access Members must be willing to execute the entire size of orders
entered into the Facilitation Mechanism. As set forth in Options 3,
Section 11(d), the Solicited Order Mechanism is a process by which an
Electronic Access Member can attempt to execute orders of 500 or more
contracts it represents as agent against contra orders it solicited.
Each order entered into the Solicited Order Mechanism shall be
designated as all-or-none.
    An ISO is defined in Options 3, Section 7(b)(5) as a limit order
that meets the requirements of Options 5, Section 1(h) and trades at
allowable prices on the Exchange without regard to the ABBO.
Simultaneously with the routing of the ISO to the Exchange, one or more
additional ISOs, as necessary, are routed to execute against the full
displayed size of any Protected Bid, in the case of a limit order to
sell, or any Protected Offer, in the case of a limit order to buy, for
the options series with a price that is superior to the limit price of
the ISO.\4\ A Member may submit an ISO to the Exchange only if it has
simultaneously routed one or more additional ISOs to execute against
the full displayed size of any Protected Bid, in the case of a limit
order to sell, or Protected Offer, in the case of a limit order to buy,
for an options series with a price that is superior to the limit price
of the ISO.
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    \4\ ``Protected Bid'' or ``Protected Offer'' means a Bid or
Offer in an options series, respectively, that: (a) is disseminated
pursuant to the Options Order Protection and Locked/Crossed Market
Plan; and (b) is the Best Bid or Best Offer, respectively, displayed
by an Eligible Exchange. See Options 5, Section 1(o).
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    As discussed further below, none of the proposed rule changes will
amend current functionality. Rather, these changes are designed to
bring greater transparency around certain order types currently
available on the Exchange. The Exchange notes that the Facilitation ISO
and Solicitation ISO \5\ are functionally similar to the Exchange's
Price Improvement Mechanism \6\ ISO (``PIM ISO'') as set forth in
Supplementary Material .08 to Options 3, Section 13, as further
discussed below.\7\
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    \5\ The Exchange notes that it has an ISO trade through
surveillance in place that will identify and capture when a Member
marks a Facilitation or Solicitation ISO and the order possibly
trades through a Protected Bid or Protected Offer price at an away
exchange. The Exchange will monitor the NBBO prior to and after the
order trades on the Exchange to detect potential trade through
violations.
    \6\ The Price Improvement Mechanism (``PIM'') is a process that
allows an Electronic Access Member to provide price improvement
opportunities for a transaction wherein the Electronic Access Member
seeks to facilitate an order it represents as agent, and/or a
transaction wherein the Electronic Access Member solicited interest
to execute against an order it represents as agent. See Options 3,
Section 13(a).
    \7\ The Exchange also notes that its affiliates, Nasdaq BX
(``BX'') and Nasdaq Phlx (``Phlx''), currently allow ISOs to be
entered into BX's Price Improvement Mechanism (``PRISM'') and Phlx's
Price Improvement XL (``PIXL''), respectively. See BX Options 3,
Section 13(ii)(K) (describing PRISM ISOs) and Phlx Options 3,
Section 13(b)(11) (describing PIXL ISOs). Other options exchanges
similarly allow ISOs to be entered into their auction mechanisms.
See e.g., Cboe Rules 5.37(b)(4)(A) (allowing ISOs to be entered into
Cboe's Automated Improvement Mechanism (``AIM ISOs'') and 5.39(b)(4)
(allowing ISOs to be entered into Cboe's Solicitation Auction
Mechanism (``SAM ISOs'')).
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Facilitation ISO
    Today, the Exchange allows the submission of ISOs into its
Facilitation Mechanism as Facilitation ISOs. To promote transparency,
the Exchange proposes to memorialize Facilitation ISOs as an order type
in Supplementary Material .06 to Options 3, Section 11. Specifically,
the Exchange proposes:

    A Facilitation ISO order (``Facilitation ISO'') is the
transmission of two orders for crossing pursuant to paragraph (b)
above without regard for better priced Protected Bids or Protected
Offers (as defined in Options 5, Section 1) because the Member
transmitting the Facilitation ISO to the Exchange has,
simultaneously with the routing of the Facilitation ISO, routed one
or more ISOs, as necessary, to execute against the full displayed
size of any Protected Bid or Protected Offer that is superior to the
starting Facilitation auction price. Any execution(s) resulting from
such sweeps shall accrue to the Agency order.

    Today, the Exchange will accept a Facilitation ISO provided the
order adheres to the current order entry requirements for the
Facilitation Mechanism as set forth in Options 3, Section 11(b)(1),\8\
but without regard to

the ABBO (similar to a regular ISO in Options 3, Section 7(b)(5)).
Therefore, Facilitation ISOs must be entered at a price that is equal
to or better than the Exchange best bid or offer on the same side of
the market as the agency order unless there is a Priority Customer
order on the same side Exchange best bid or offer, in which case the
Facilitation ISO must be entered at an improved price. The Exchange
does not check the Exchange best bid or offer on the opposite side of
the Facilitation ISO because the underlying Facilitation Mechanism
similarly does not check the opposite side Exchange best bid or offer.
As discussed above, the Facilitation Mechanism only requires that the
opposite side of the Facilitation order be equal to or better than the
ABBO.\9\ The Facilitation Mechanism does not check the opposite side
Exchange best bid or offer because any interest that is available on
the opposite side of the market would allocate against the Facilitation
agency order and provide price improvement. As an example:
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    \8\ Specifically, Options 3, Section 11(b)(1) provides that
orders must be entered into the Facilitation Mechanism at a price
that is (A) equal to or better than the NBBO on the same side of the
market as the agency order unless there is a Priority Customer order
on the same side Exchange best bid or offer, in which case the order
must be entered at an improved price; and (B) equal to or better
than the ABBO on the opposite side. Orders that do not meet these
requirements are not eligible for the Facilitation Mechanism and
will be rejected.
    \9\ Id.
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    Assume the following market:

Exchange BBO: 1 x 2 (also NBBO)
CBOE: 0.75. x 2.25 (next best exchange quote)
Facilitation order is entered to buy 50 contracts @2.05
No Responses are received.

    The Facilitation order executes with resting 50 lot quote @2. In
this instance, the Facilitation order is able to begin crossed with the
contra side Exchange BBO because in execution, the resting 50 lot quote
@2 is able to provide price improvement to the facilitation order.
    Given that the Facilitation ISO is accepted so long as it adheres
to the order entry requirements of the underlying Facilitation
Mechanism, but without regard to the ABBO, the Exchange believes that
it is appropriate and logical to align the order entry checks of the
Facilitation ISO in the manner discussed above.
    The Exchange processes the Facilitation ISO in the same manner that
it processes any other Facilitation orders, except that it will
initiate a Facilitation auction without protecting prices away.
Instead, the Member entering the Facilitation ISO will bear the
responsibility to clear all better priced interest away simultaneously
with submitting the Facilitation ISO to the Exchange. The Exchange
believes that offering this order type is beneficial for Members as it
provides them with an efficient method to initiate a Facilitation
auction while preventing trade-throughs.
    The Exchange notes that the Facilitation ISO is similar to the PIM
ISO that is currently described in Supplementary Material .08 to
Options 3, Section 13.\10\ Similar to the Facilitation ISO, the PIM ISO
must meet the order entry requirements for PIM in Options 3, Section
13(b) but does not consider the ABBO.\11\ Further, the Exchange
processes a PIM ISO order the same way as any other PIM order except
the Exchange will initiate a PIM auction without protecting away
prices. As with Facilitation ISOs, the Member entering the PIM ISO
bears responsibility to clear all better priced interest away
simultaneously with submitting the PIM ISO to the Exchange.
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    \10\ Supplementary Material .08 to Options 3, Section 13 defines
PIM ISO as the transmission of two orders for crossing pursuant to
this Rule without regard for better priced Protected Bids or
Protected Offers (as defined in Options 5, Section 1) because the
Member transmitting the PIM ISO to the Exchange has, simultaneously
with the routing of the PIM ISO, routed one or more ISOs, as
necessary, to execute against the full displayed size of any
Protected Bid or Protected Offer that is superior to the starting
PIM auction price and has swept all interest in the Exchange's book
priced better than the proposed auction starting price. Any
execution(s) resulting from such sweeps shall accrue to the PIM
order.
    \11\ Unlike the Facilitation Mechanism, PIM requires an opposite
side NBBO check, which would include the Exchange best bid or offer.
As discussed above, the Facilitation order entry checks only require
that the opposite side of the Facilitation order be equal to or
better than the ABBO (i.e., there is no opposite side local book
check). For PIM, the order must be entered at one minimum price
improvement increment better than the NBBO on the opposite side of
the market if the Agency Order is for less than 50 option contracts
and if the difference between the NBBO is $0.01. If the Agency Order
is for 50 option contracts or more, or if the difference between the
NBBO is greater than $0.01, the PIM order must be entered at a price
that is equal to or better than the NBBO on the opposite side. See
Options 3, Section 13(b)(1) and (2). As such, PIM ISOs additionally
require the entering Member to sweep all interest in the Exchange's
book priced better than the proposed auction starting price (unlike
Facilitation ISO which does not have a similar sweep requirement).
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    The following example illustrates how Facilitation ISO operates:
    Assume:

ABBO: 1 x 1.20
MRX BBO: 0.90 x 1.30
Member enters Facilitation ISO with Agency side to buy 50 @1.25
Facilitation ISO auction period concludes with no responses arriving
Facilitation ISO executes with contra side 50 @1.25
Solicitation ISO
    Today, the Exchange allows the submission of ISOs into its
Solicited Order Mechanism as Solicitation ISOs. To promote
transparency, the Exchange proposes to memorialize Solicitation ISOs as
an order type in Supplementary Material .07 to Options 3, Section 11.
Specifically, the Exchange proposes:

    A Solicitation ISO order (``Solicitation ISO'') is the
transmission of two orders for crossing pursuant to paragraph (d)
above without regard for better priced Protected Bids or Protected
Offers (as defined in Options 5, Section 1) because the Member
transmitting the Solicitation ISO to the Exchange has,
simultaneously with the routing of the Solicitation ISO, routed one
or more ISOs, as necessary, to execute against the full displayed
size of any Protected Bid or Protected Offer that is superior to the
starting Solicitation auction price and has swept all interest in
the Exchange's book priced better than the proposed auction starting
price. Any execution(s) resulting from such sweeps shall accrue to
the Agency order.

    Today, the Exchange will accept a Solicitation ISO provided the
order adheres to the current order entry requirements for the Solicited
Order Mechanism as set forth in Options 3, Section 11(d)(1),\12\ but
without regard to the ABBO (similar to a regular ISO in Options 3,
Section 7(b)(5)). Therefore, Solicitation ISOs must be entered at a
price that is equal to or better than the Exchange best bid or offer on
both sides of the market; provided that, if there is a Priority
Customer order on the Exchange best bid or offer, the Solicitation ISO
must be entered at an improved price.
---------------------------------------------------------------------------

    \12\ Specifically, Options 3, Section 11(d)(1) provides that
orders must be entered into the Solicited Order Mechanism at a price
that is equal to or better than the NBBO on both sides of the
market; provided that, if there is a Priority Customer order on the
Exchange best bid or offer, the order must be entered at an improved
price. Orders that do not meet these requirements are not eligible
for the Solicited Order Mechanism and will be rejected.
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    The Exchange processes the Solicitation ISO in the same manner that
it processes other orders entered in the Solicited Order Mechanism,
except that it will initiate a Solicited Order auction without
protecting away prices. Instead, the Member entering the Solicitation
ISO will bear the responsibility to clear all better priced interest
away simultaneously with submitting the Solicitation ISO to the
Exchange. Similar to the Facilitation ISO discussed above, the Exchange
believes that offering this order type is beneficial for Members as it
provides them with an efficient method to initiate an auction in the
Solicited Order Mechanism while preventing trade-throughs. Furthermore,
Solicitation ISOs are similar to PIM ISOs in the manner described above
for Facilitation ISOs.\13\ In addition, another options

exchange currently offers a substantially similar order type as the
Exchange's Solicitation ISO.\14\
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    \13\ The Exchange notes that similar to the PIM ISO, but unlike
Facilitation ISO, the Solicitation ISO requires entering Members to
sweep all interest in the Exchange's book priced better than the
proposed auction starting price. The order entry checks for the
Solicited Order Mechanism, similar to PIM, requires an opposite side
NBBO check, which would include the Exchange best bid or offer. See
supra notes 11-12.
    \14\ In addition, Cboe currently offers a SAM ISO order type,
which is defined as the submission of two orders for crossing in a
SAM Auction without regard for better-priced Protected Quotes (as
defined in Cboe Rule 5.65) because the Initiating TPH routed an
ISO(s) simultaneously with the routing of the SAM ISO to execute
against the full displayed size of any Protected Quote that is
better than the stop price and has swept all interest in the Book
with a price better than the stop price. Any execution(s) resulting
from these sweeps accrue to the SAM Agency Order. See Cboe Rule
5.39(b)(4). See also Securities Exchange Act Release No. 87192
(October 1, 2019), 84 FR 53525 (October 7, 2019) (SR-CBOE-2019-063)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change related to the SAM Auction, including to adopt the SAM ISO).
---------------------------------------------------------------------------

    The following example illustrates how the Solicitation ISO
operates:
    Assume:

ABBO: 1 x 1.20
MRX BBO: 0.90 x 1.30
Member enters Solicitation ISO with Agency side to buy 500 @1.25
Solicitation ISO auction period concludes with no responses arriving
Solicitation ISO executes with contra side 500 @1.25
Intermarket Sweep Orders
    In light of the changes proposed above to adopt the Facilitation
ISO and Solicitation ISO into its Rulebook, the Exchange proposes to
make related amendments to the ISO rule in Options 3, Section 7(b)(5)
to add that ``ISOs may be entered on the single leg order book or into
the Facilitation Mechanism, Solicited Order Mechanism, or Price
Improvement Mechanism, pursuant to Supplementary Material .06 and .07
to Options 3, Section 11, and Supplementary Material .08 to Options 3,
Section 13.''
    The proposed rule text will be similar to BX's current ISO rule in
BX Options 3, Section 7(a)(6), except the Exchange's ISO rule will
refer to Exchange functionality that BX does not have today.
Specifically, BX does not currently offer Facilitation ISOs or
Solicitation ISOs. PIM ISOs are currently codified in Supplementary
Material .08 to Options 3, Section 13, so the proposed rule text herein
is a non-substantive amendment to add a cross-reference to the PIM ISO
rule. The proposed language does not amend the current ISO
functionality but rather is intended to add more granularity and more
closely align the ISO rule with BX's ISO rule.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\15\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\16\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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Facilitation and Solicitation ISOs
    The Exchange believes that the proposal to adopt Facilitation ISOs
and Solicitation ISOs in Supplementary Material .06 and .07 to Options
3, Section 11 is consistent with the Act. The proposal will codify
current functionality, thereby promoting transparency in the Exchange's
rules and reducing any potential confusion. As it relates to
Solicitation ISOs, the Exchange believes that the proposed rule change
promotes fair competition. Specifically, the proposal allows the
Exchange to offer Members an order type that is already offered by
another options exchange.\17\
---------------------------------------------------------------------------

    \17\ See supra note 14.
---------------------------------------------------------------------------

    In addition, offering the Facilitation ISO and Solicitation ISO
benefits market participants and investors because this functionality
provides an additional and efficient method to initiate a Facilitation
or Solicited Order auction while preventing trade-throughs. As
discussed above, the Exchange processes the Facilitation and
Solicitation ISO in the same manner as it processes any other order
entered into the Facilitation and Solicited Order Mechanism, except the
Exchange will initiate a Facilitation auction or Solicited Order
auction without protecting away prices (similar to a regular ISO in
Options 3, Section 7(b)(5)). Instead, the entering Member, simultaneous
with the routing of the Facilitation ISO or Solicitation ISO to the
Exchange, remains responsible for routing one or more ISOs, as
necessary, to execute against the full displayed size of any Protected
Bid or Protected Offer that is superior to the starting Facilitation or
Solicitation auction price, and for Solicitation ISO, has swept all
interest in the Exchange's book priced better than the proposed auction
starting price.\18\ As discussed above, these order types operate in a
similar manner to the PIM ISO that is currently described in
Supplementary Material .08 to Options 3, Section 13.\19\
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    \18\ See supra note 13.
    \19\ See supra notes 11 and 13.
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Intermarket Sweep Orders
    The Exchange believes that the proposed changes to the definition
of ISOs in Options 3, Section 7(b)(5) are consistent with the Act. As
discussed above, the proposed changes are intended to add more
granularity and more closely align the level of detail in the ISO rule
with BX's ISO rule in BX Options 3, Section 7(a)(6) by specifying how
ISOs may be submitted. As such, the Exchange believes that its proposal
will promote transparency in the Exchange's rules and consistency
across the rules of the Nasdaq affiliated options exchanges. While the
proposed changes to the Exchange's ISO rule generally track BX's ISO
rule, the proposed language will refer to certain Exchange
functionality that BX does not have today (i.e., Facilitation ISOs or
Solicitation ISOs).

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Offering Facilitation and
Solicitation ISOs does not impose an undue burden on competition
because it enables the Exchange to provide market participants with an
additional and efficient method to initiate a Facilitation or Solicited
Order auction while preventing trade-throughs, as discussed above. In
addition, all Members may submit a Facilitation ISO or Solicitation
ISO. As it relates to the Solicitation ISO, the Exchange believes that
the proposed rule change will promote fair competition among options
exchanges as it will allow the Exchange to compete with other markets
that already allow ISOs in their solicitation auction mechanisms.\20\
---------------------------------------------------------------------------

    \20\ See supra note 14.
---------------------------------------------------------------------------

    The Exchange further believes that the proposed changes to its ISO
rule do not impose an undue burden on competition. As discussed above,
the proposed changes are intended to add more granularity and more
closely align the level of detail in the ISO rule with BX's ISO rule in
BX Options 3, Section 7(a)(6) by specifying how ISOs may be submitted,
except the Exchange's ISO rule will refer to Exchange functionality
that BX does not have today (i.e., Facilitation and Solicitation ISOs).
With the proposed changes, the Exchange believes that its proposal will
promote

transparency in the Exchange's rules and consistency across the rules
of the Nasdaq affiliated options exchanges.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days of such
date (i) as the Commission may designate if it finds such longer period
to be appropriate and publishes its reasons for so finding or (ii) as
to which the Exchange consents, the Commission shall: (a) by order
approve or disapprove such proposed rule change, or (b) institute
proceedings to determine whether the proposed rule change should be
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-MRX-2022-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-MRX-2022-11. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MRX-2022-11 and should be submitted on
or before September 29, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-19412 Filed 9-7-22; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: October 27, 2010 (Volume 75, Number 207)]
[Proposed Rules]
[Page 66046-66050]
[DOCID:fr27oc10-19]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM11-1-000]

Capacity Transfers on Intrastate Natural Gas Pipelines

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

ACTION: Notice of inquiry.

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SUMMARY: The Federal Energy Regulatory Commission is seeking comments
on whether and how holders of firm capacity on intrastate natural gas
pipelines providing interstate transportation and storage services
under section 311 of the Natural Gas Policy Act of 1978 and Hinshaw
pipelines providing such services pursuant to blanket certificates
issued under Sec.  284.224 of the Commission's regulations should be
permitted to allow others to make use of their firm interstate
capacity.

DATES: Comments are due December 27, 2010.

FOR FURTHER INFORMATION CONTACT:  James Sarikas (Technical
Information), Office of Energy Market Regulation, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426,
(202) 502-6831<EMAIL_ADDRESS>Anna Fernandez (Legal
Information), Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6682<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Notice of Inquiry

    1. Recently, the Commission issued an order finding that the
Commission's policy prohibiting buy/sell transactions applies to
interstate open-access transportation services provided by (1)
intrastate natural gas pipelines pursuant to section 311 of the Natural
Gas Policy Act of 1978 (NGPA) \1\ and (2) Hinshaw pipelines \2\
pursuant to blanket certificates issued under section 284.224 of the
Commission's regulations.\3\ In this Notice of Inquiry (NOI), the
Commission is seeking comments on whether and how holders of firm
interstate capacity on section 311 and Hinshaw pipelines should be
permitted to allow others to make use of their firm interstate
capacity, including to what extent buy/sell transactions should be
permitted.\4\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 3371(a)(2).
    \2\ Section 1(c) of the Natural Gas Act (NGA) exempts from the
Commission's NGA jurisdiction those 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
section 1(c). See ANR Pipeline Co. v. Federal Energy Regulatory
Comm'n, 71 F.3d 897, 898 (1995) (ANR) (briefly summarizing the
history of the Hinshaw exemption).
    \3\ Arizona Public Service Co. and Sequent Energy Management,
L.P., 132 FERC ] 61,064 (2010) (APS/Sequent).
    \4\ This NOI relates to firm capacity on section 311 and Hinshaw
pipelines used for interstate service subject to our jurisdiction
under the NGPA or NGA and does not extend to non-jurisdictional
capacity used for purely intrastate service.
---------------------------------------------------------------------------

I. Current Commission Policy

    2. NGPA section 311 authorizes the Commission to allow intrastate
natural gas 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.'' \5\ NGPA section 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.\6\ Subpart C of the Commission's Part 284 open access
regulations (18 CFR Sec.  2841.121-126) implements the provisions of
NGPA section 311 concerning transportation by intrastate pipelines.\7\
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 3371(c).
    \6\ EPGT Texas Pipeline, 99 FERC ] 61,295, at 62,252 (2002)
(EPGT).
    \7\ 18 CFR 284.121-126 (2010).
---------------------------------------------------------------------------

    3. 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.\8\
Specifically, section 284.224 of the Commission's 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.
---------------------------------------------------------------------------

    \8\ 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).
---------------------------------------------------------------------------

    4. 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.\9\ 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. 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.\10\
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. For the
same reasons, when the Commission adopted Order No. 636 \11\
restructuring

the services provided by interstate pipelines, the Commission exempted
intrastate pipelines from the requirements of Order No. 636, including
capacity release, electronic bulletin boards (now Internet Web sites)
and flexible receipt and delivery points.\12\
---------------------------------------------------------------------------

    \9\ 18 CFR 284.7(b), 284.9(b) and 284.122 (2010).
    \10\ Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, Order No. 436, FERC Stats. & Regs. ] 30,665, at 31,502
(1985).
    \11\ See Pipeline Service Obligations and Revisions to
Regulations Governing Self-Implementing Transportation and
Regulation of Natural Gas Pipeline After Partial Wellhead Decontrol,
Order No. 636, FERC Stats. & Regs. ] 30,939, order on reh'g, Order
No. 636-A, FERC Stats. & Regs. ] 30,950, order on reh'g, Order No.
636-B, 61 FERC ] 61,272 (1992), order on reh'g, 62 FERC ] 61,007
(1993), aff'd in part and remanded in part sub nom. United
Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on
remand, Order No. 636-C, 78 FERC ] 61,186 (1997), order on reh'g,
Order No. 636-D, 83 FERC ] 61,210 (1998).
    \12\ Order No. 636-B, 61 FERC at 61,992 n.26.
---------------------------------------------------------------------------

    5. Order No. 636 adopted the capacity release program in order to
permit holders of firm capacity on interstate pipelines to ``reallocate
unneeded firm capacity'' to the person who values it the most.\13\ The
Commission reasoned that the capacity release program would promote
efficient load management by the pipeline and its customers and would,
therefore, result in the efficient use of firm interstate pipeline
capacity throughout the year. It further concluded that, ``because more
buyers will be able to reach more sellers through firm transportation
capacity, capacity reallocation comports with the goal of improving
nondiscriminatory, open access transportation to maximize the benefits
of the decontrol of natural gas at the wellhead and in the field.''
\14\
---------------------------------------------------------------------------

    \13\ Order No. 636, FERC Stats. & Regs. ] 30,939 at 30,418.
    \14\ Id.
---------------------------------------------------------------------------

    6. Prior to Order No. 636, the Commission had permitted interstate
pipelines to obtain certificates for capacity brokering programs that
would allow customers to assign their capacity directly to other
customers on a first-come, first-served basis, without any requirement
that the brokering shipper post the availability of its capacity or
allocate it to the highest bidder.\15\ In Order No. 636, however, the
Commission decided that it could not monitor those certificated
capacity brokering programs adequately to ensure against undue
discrimination in the allocation of capacity.\16\ When transactions
occurred directly and privately between shippers, there was no way to
verify that certain purchasers were not being favored unreasonably over
others.\17\ The Commission explained that ``there are simply too many
potential assignors of capacity and too many different programs for the
Commission to oversee.'' \18\
---------------------------------------------------------------------------

    \15\ See Algonquin Gas Transmission Corp., 59 FERC ] 61,032
(1992) (Algonquin).
    \16\ Order No. 636, FERC Stats. & Regs. ] 30,939 at 30,416.
    \17\ United Distributions Co. v. FERC, 88 F.3d at 1149-50
(quoting Order No. 636 at 30,416).
    \18\ Id.
---------------------------------------------------------------------------

    7. The capacity release program addressed those concerns by, among
other things, requiring that all reassignments be transparent. Order
No. 636 prohibited private transfers of capacity between shippers and,
instead, required that all release transactions be conducted through
the pipeline. Therefore, when a releasing shipper releases its
capacity, the replacement shipper must enter into a contract directly
with the pipeline, and section 284.13(b) of the Commission's
regulations requires the pipeline to post information about the
replacement shipper's contract including any special terms and
conditions.\19\ In addition, the capacity release program requires
certain categories of releases to be posted for bidding.\20\
---------------------------------------------------------------------------

    \19\ As Order No. 636 emphasized:
    The main difference between capacity brokering as it now exists
and the new capacity release program is that under capacity
brokering, the brokering customer could enter into and execute its
own deals without involving the pipeline. Under capacity releasing,
all offers must be put on the pipeline's electronic bulletin board
and contracting is done directly with the pipeline.
    Order No. 636, FERC Stats. & Regs. ] 30,939 at 30,420 (emphasis
in original).
    \20\ 18 CFR 284.8(c)-(e), (h) (2010).
---------------------------------------------------------------------------

    8. In orders issued concurrently with Order No. 636, the Commission
terminated the capacity brokering program.\21\ The Commission also
stated it would not authorize any more buy/sell transactions.\22\
Traditionally, a buy/sell transaction is a commercial arrangement
whereby a shipper holding interstate pipeline capacity buys gas at the
direction of, on behalf of, or directly from another entity (e.g., an
end-user), ships that gas through its interstate pipeline capacity, and
then resells an equivalent quantity of gas to the downstream entity at
the delivery point. The Commission believed that to permit buy/sell
transactions to utilize interstate pipeline capacity after the capacity
release mechanism went into effect would frustrate the new, nationally
uniform capacity release program.\23\
---------------------------------------------------------------------------

    \21\ Algonquin, 59 FERC ] 61,032.
    \22\ El Paso Natural Gas Co., et al., 59 FERC ] 61,031 (1992)
(El Paso).
    \23\ Id. at 61,080.
---------------------------------------------------------------------------

    9. On June 25, 2010, Arizona Public Service Company (APS) and
Sequent Energy Management, L.P. (Sequent) (collectively, Petitioners)
sought clarification that a certain proposed transaction involving a
Hinshaw storage facility was not a prohibited buy/sell transaction as
contemplated by Commission policy.\24\ They contended that the
Commission's buy/sell prohibition was inapplicable to service on
Hinshaw pipelines, because the buy/sell prohibition was intended to
prevent the circumvention of the Commission's capacity release program
instituted in Order No. 636 and Hinshaw pipelines do not offer capacity
release. Alternatively, Petitioners requested a limited waiver should
the Commission determine that the transaction was a prohibited buy/sell
transaction. Under the proposed agreement, APS would have the right to
deliver gas to Sequent and Sequent would take title to the gas and
inject it into storage at Chevron Keystone Gas Storage, LLC (Keystone
Storage), a Hinshaw pipeline with a limited blanket certificate to
provide certain storage and hub services in interstate commerce. APS
would have the right to require Sequent to redeliver gas to APS and
title would pass back to APS at the Keystone Storage delivery point.
Like other section 311 and Hinshaw pipelines, Keystone Storage's tariff
requires that the storage or transportation capacity holder possesses
title to the gas being stored or transported.
---------------------------------------------------------------------------

    \24\ According to their petition, APS is Arizona's largest
electric utility company and Sequent purchases and sells natural gas
and provides other energy-related services to customers throughout
the United States.
---------------------------------------------------------------------------

    10. The Petitioners raised an issue which the Commission had not
previously addressed--whether the prohibition on buy/sell transactions
applies to interstate open-access transportation services provided by
section 311 and Hinshaw pipelines, and the APS/Sequent order found that
the prohibition did apply. The Commission explained that, while Order
No. 636 adopted the prohibition on buy/sell transactions in conjunction
with the creation of the capacity release program for interstate
pipelines, the prohibition on buy/sell transactions, together with the
shipper-must-have-title rule, play a more fundamental role than just
preventing the circumvention of the capacity release program.\25\ These
rules help enforce the central requirement of the Commission's Part 284
regulations that all open-access pipelines, including section 311 and
Hinshaw pipelines, ``must provide such service without undue
discrimination, or preference.'' \26\ They do this by ensuring that
capacity is allocated among shippers in a transparent manner based on
the procedures and not unduly discriminatory priorities in the
pipeline's Commission-approved tariff, either for the direct sale of
capacity by the pipeline or for capacity release by firm shippers.\27\
---------------------------------------------------------------------------

    \25\ APS/Sequent, 132 FERC ] 61,064 at P 16.
    \26\ Id. (citing sections 284.7(b)(1) and 284.9(b) of the
Commission's regulations, which are applicable to intrastate
pipelines providing service under Subpart C of the Part 284
regulations).
    \27\ APS/Sequent, 132 FERC ] 61,064 at P 16.

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

    11. The Commission acknowledged that it does not require section
311 and Hinshaw pipelines to include capacity release provisions in
their tariffs, nor have any such pipelines done so. However, it did not
follow from this fact that the prohibition on buy/sell transactions was
unnecessary. Rather, the Commission stated that the absence of a
capacity release program for section 311 and Hinshaw pipelines means
that their tariffs contain no provisions to ensure that capacity
reassignments by shippers are transparent and non-discriminatory. In
these circumstances, a blanket authorization of buy/sell transactions
would allow holders of capacity on such pipelines to privately contract
to allow another party to make use of their capacity without informing
the pipeline or publicly disclosing the transaction. This, the
Commission stated, would create the same potential for discrimination
and inability of the Commission to monitor capacity reassignment which
led to the adoption of the capacity release program as the sole method
for capacity reassignment on interstate pipelines.\28\
---------------------------------------------------------------------------

    \28\ Id. P 17.
---------------------------------------------------------------------------

    12. Recognizing, however, that capacity reassignments could promote
more efficient use of firm pipeline capacity, and given the absence of
any generic capacity reassignment programs on section 311 and Hinshaw
pipelines, the Commission agreed to consider, on a case-by-case basis,
requests for waiver of the buy/sell prohibition, where it can be shown
that a particular buy/sell transaction provides significant benefits to
the market.\29\ Along those same lines, the Commission found that, in
this case, good cause existed to grant Petitioners a limited waiver of
the Commission's buy/sell prohibition in order to allow the proposed
agreement to proceed.\30\
---------------------------------------------------------------------------

    \29\ Id. P 19.
    \30\ Id. P 21.
---------------------------------------------------------------------------

    13. Neither of the Petitioners sought rehearing of the APS/Sequent
order. However, following that order, fifteen motions to intervene out-
of-time were filed. Also filed were five requests for rehearing of the
APS/Sequent order and each of those requests were filed by entities
seeking late intervention. The entities seeking rehearing are: (1)
Texas Pipeline Association (TPA); (2) BG Energy Merchants, LLC (BG
Energy); (3) Morgan Stanley Capital Group Inc. (Morgan Stanley); (4)
the Associations; \31\ and (5) the Marketer Group.\32\ Of the five
rehearing requests, four asked that the Commission reverse its ruling
expanding the buy/sell prohibition to section 311 and Hinshaw pipelines
and one asked the Commission to consider requiring section 311 and
Hinshaw pipelines to offer capacity release. Two of the four requests
seeking reversal stated that issues regarding the secondary market on
section 311 and Hinshaw pipelines, including the buy/sell prohibition,
should have been addressed in a NOI proceeding to examine the available
options and their implications.
---------------------------------------------------------------------------

    \31\ The Associations include Natural Gas Supply Association,
Electric Power Supply Association, and Independent Petroleum
Association of America.
    \32\ The Marketer Group includes Barclays Capital Energy Inc.,
Chevron U.S.A. Inc., Citigroup Energy Inc., ConocoPhillips Company,
Encana Marketing (USA) Inc., Iberdrola Renewables, Inc., J.P. Morgan
Ventures Energy Corporation, Tenaska Marketing Ventures, Sempra
Energy Trading LLC and Shell Energy North America (U.S.) L.P.
---------------------------------------------------------------------------

    14. The Marketer Group, Morgan Stanley, TPA and the Associations
requested that the Commission reverse its ruling expanding the buy/sell
prohibition to section 311 and Hinshaw pipelines.\33\ They contended,
among other things, that the Commission erred by expanding the buy/sell
prohibition to section 311 and Hinshaw pipelines on the basis of
discrimination concerns without a record establishing the existence of
discrimination. If the Commission seeks transparency, Morgan Stanley
argued that a necessary precursor is a capacity release mechanism. In
fact, Morgan Stanley argued that the efficiency gains cited by the APS/
Sequent order cannot be fully realized absent a capacity release
mechanism on section 311 and Hinshaw facilities. The Associations
suggested that if the Commission wishes to address any issues with
regard to the secondary market of capacity on section 311 and Hinshaw
pipelines, it should initiate a notice of inquiry proceeding to examine
any available options and their implications.
---------------------------------------------------------------------------

    \33\ TPA, in addition to the foregoing, requests that the
Commission clarify that the shipper-must-have-title rule also does
not apply to section 311 and Hinshaw pipelines. Section 311 and
Hinshaw pipelines generally include in their statements of operating
conditions a requirement that shippers possess title to the gas
being stored or transported.
---------------------------------------------------------------------------

    15. The Marketer Group, Morgan Stanley, TPA and the Associations
also argued that the APS/Sequent order failed to establish a record
addressing the potential effect, results, and impacts on shippers.
Among the issues they argued the APS/Sequent order did not consider
are: (1) The potential market uncertainty that may result from the
expansion of the buy/sell prohibition to section 311 and Hinshaw
pipelines; (2) the impact on the efficient use of section 311 and
Hinshaw pipeline capacity; (3) the burden and impracticability of
entities having to seek a waiver for buy/sell transactions on section
311 and Hinshaw pipelines; and (4) the extent of the Commission's
jurisdiction to impose the buy/sell prohibition on section 311 and
Hinshaw pipelines given Congress' decision to provide the Commission
with only limited jurisdiction over section 311 and Hinshaw pipelines.
The Marketer Group states that, if the Commission believes that it may
be in the public interest to apply the buy/sell prohibition to section
311 and Hinshaw pipelines, the Commission should issue a NOI in which a
record can be compiled to examine the necessity for and the
implications associated with the issue.
    16. In its rehearing request, BG Energy requested that the
Commission institute a notice and comment proceeding to consider
requiring a uniform capacity release program for section 311 and
Hinshaw pipelines that requires capacity to be posted and subject to
bidding on a non-discriminatory basis. It contended that a firm shipper
on a section 311 or Hinshaw pipeline that wants to release or acquire
interstate capacity encounters cumbersome, lengthy, and non-transparent
procedures.
    17. In a contemporaneous order in the APS/Sequent proceeding, the
Commission is denying the late interventions and dismissing the
requests for rehearing.\34\ In that order, the Commission finds that
the entities requesting late intervention seek only to raise general
policy issues concerning capacity reassignment on section 311 and
Hinshaw pipelines which are more appropriately addressed in a
rulemaking proceeding.
---------------------------------------------------------------------------

    \34\ Arizona Public Service Company and Sequent Energy
Management, L.P., 133 FERC ] 61,049 (2010).
---------------------------------------------------------------------------

II. Discussion

    18. As stated above, the Commission is issuing this NOI to consider
whether and how holders of firm interstate capacity on section 311 and
Hinshaw natural gas pipelines should be permitted to allow others to
make use of their firm interstate capacity, including to what extent
buy/sell transactions should be permitted. Specifically, the Commission
requests comments on the following questions:

A. Questions Related to Application of Buy/Sell Prohibition to Section
311 and Hinshaw Pipelines

    1. The requests for rehearing in APS/Sequent suggest that marketers
and others holding firm interstate capacity

on section 311 and Hinshaw pipelines are using buy/sell transactions to
allow others to make use of their capacity. Are buy/sell transactions
commonly used in connection with service on section 311 and Hinshaw
pipelines or are such transactions relatively rare? Are such
transactions more commonly used with respect to storage capacity as in
APS/Sequent or are they used with respect to all types of services?
Have such transactions provided for more efficient use of firm capacity
on section 311 and Hinshaw pipelines?
    2. Are there any experiences or concerns of undue discrimination or
preference or loss of market transparency related to the buy/sell
transactions which have occurred on section 311 and Hinshaw pipelines?
    3. Could buy/sell transactions be allowed without risk of undue
discrimination or preference or loss of market transparency? Section
311 and Hinshaw pipelines generally include in their statements of
operating conditions a requirement that shippers possess title to the
gas being stored or transported. Is application of the shipper-must-
have-title rule sufficient to minimize concerns about undue
discrimination and transparency, since it ensures that the capacity
holder has an interest in the gas being transported? \35\
---------------------------------------------------------------------------

    \35\ See El Paso, 59 FERC ] 61,031 at 61,079.
---------------------------------------------------------------------------

    4. When the Commission grandfathered existing buy/sell transactions
at the time of Order No. 636, the Commission required participants in
those transactions to notify the interstate pipeline of them, and the
Commission required the pipeline, for informational purposes, to post
notice of the transactions on its electronic bulletin board.\36\ Would
a similar reporting requirement for participants in buy/sell
transactions to notify the relevant section 311 and Hinshaw pipelines
and for those pipelines to post notice of them reasonably mitigate
concerns related to undue discrimination or preference or loss of
market transparency?
---------------------------------------------------------------------------

    \36\ Id. at 61,080.
---------------------------------------------------------------------------

    5. In ANR,\37\ the U.S. Court of Appeals for the District of
Columbia Circuit held that the Commission must provide a reasonable
justification for excluding section 311 pipelines from requirements
imposed on interstate pipelines, where such regulatory differences may
place the interstate pipelines at a competitive disadvantage. Would
allowing buy/sell transactions on section 311 and Hinshaw pipelines,
but not on interstate natural gas pipelines, cause any competitive
disadvantage to interstate pipelines?
---------------------------------------------------------------------------

    \37\ See ANR, 71 F.3d 897.
---------------------------------------------------------------------------

    6. 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. Would extending the buy/sell prohibition to
service on section 311 and Hinshaw pipelines deter intrastate pipelines
from participating in the interstate market? If so, explain what
burdens such a prohibition places on section 311 and Hinshaw pipelines
that would make them less likely to offer interstate service.

B. Questions Related to Requiring Section 311 and Hinshaw Pipelines
Providing Firm Service To Also Allow Capacity Release

    1. The Commission has consistently held that capacity reassignments
promote more efficient use of firm pipeline capacity by enabling a
holder of such capacity to permit its capacity to be used by another
party for a higher valued use. However, Order No. 636 did not require
section 311 and Hinshaw pipelines providing firm interstate services to
offer capacity release because of a concern that imposing all the
requirements of Order No. 636 on such pipelines could discourage them
from offering interstate services. Should the Commission reexamine its
decision not to require section 311 and Hinshaw pipelines to offer
capacity release in light of market changes since the issuance of Order
No. 636 in 1992 and the success of the interstate capacity release
program?
    2. As discussed above, the U.S. Court of Appeals for the District
of Columbia Circuit has held that the Commission ``must provide a
reasonable justification for excluding'' an intrastate pipeline from a
requirement that binds interstate pipelines.\38\ Similarly, the
Commission has held that it may grant intrastate facilities
``additional flexibility,'' but not if lighter regulation would ``harm
any party [or] impede the Commission's goal of fostering a national
pipeline grid.'' \39\ Does the absence of a transparent method for
shippers on section 311 and Hinshaw pipelines to reassign their
capacity interfere with the Commission's goal of fostering an efficient
national pipeline grid in which buyers and sellers of natural gas have
the maximum ability to reach one another? Would requiring some or all
section 311 and Hinshaw pipelines to offer capacity release provide
sufficient benefits to the market as a whole to outweigh any costs
incurred as a result of such a requirement? Does exempting section 311
and Hinshaw pipelines from offering capacity release give them a
competitive advantage over interstate pipelines?
---------------------------------------------------------------------------

    \38\ See ANR, 71 F.3d 897.
    \39\ See EPGT, 99 FERC ] 61,295 at 62,252-3.
---------------------------------------------------------------------------

    3. Should any requirement for section 311 and Hinshaw pipelines to
offer capacity release be limited to some category of such pipelines
whose services significantly affect interstate markets? If so, how
should that category be defined (e.g., based on size as shown by annual
throughput above a certain level, percentage of business that is
interstate, or storage providers with market-based rates)?
    4. In Order No. 720,\40\ the Commission required major non-
interstate pipelines, defined as those pipelines that are not natural
gas companies under the NGA and deliver annually more than 50 million
MMBtu measured in average deliveries over the past three years, to post
daily scheduled volume information. Should the Commission adopt the
threshold utilized in Order No. 720 to determine which section 311 and
Hinshaw pipelines would be required to offer capacity release?
---------------------------------------------------------------------------

    \40\ Pipeline Posting Requirements under Section 23 of the
Natural Gas Act, Order No. 720, FERC Stats. & Regs. ] 31,283 (2008),
Order No. 720-A, 75 FR 5178 (Jan. 21, 2010), FERC Stats. & Regs. ]
31,302 (2010), Order No. 720-B, 75 FR 44,893 (July 30, 2010), FERC
Stats. & Regs. ] 31,314 (2010).
---------------------------------------------------------------------------

    5. In this regard, based upon our review of existing section 311
and Hinshaw pipelines, there are some intrastate pipelines whose
current service consists virtually entirely of interstate service
provided under NGPA section 311.\41\ This is particularly true of some
of the newer section 311 and Hinshaw storage providers. Should any
requirement to offer capacity release be limited to section 311 and
Hinshaw pipelines whose business is predominantly interstate? If so,
what standard should be used to determine if such a pipeline's business
is predominantly interstate?
---------------------------------------------------------------------------

    \41\ For example, Regency Intrastate Gas, LLC and Bay Gas
Storage, Ltd. transport over 95 percent of their throughput as
interstate gas. Crosstex LIG, LLC and Enterprise Texas, LLC along
with Regency Intrastate Gas, LLC predominately serve the interstate
market and have recently undertaken major expansions that are
primarily dedicated to moving shale gas into the interstate
marketplace.
---------------------------------------------------------------------------

    6. The capacity release program is only applicable to firm
services, and the Commission does not require section 311 and Hinshaw
pipelines to offer firm services. Would a requirement that section 311
and Hinshaw pipelines offering firm service also offer capacity release
discourage such pipelines from offering any firm interstate service?

Would this concern be minimized if the requirement to offer capacity
release is limited to larger section 311 and Hinshaw pipelines whose
services are predominantly interstate?
    7. If section 311 and Hinshaw pipelines are required to offer
capacity release, should the regulations be the same as the capacity
release regulations for interstate pipelines set forth in section 284.8
of the Commission's regulations? Would a subset of those regulations be
sufficient for purposes of preventing undue discrimination and
promoting transparency, while minimizing any burden on the pipelines
offering capacity release?
    19. Finally, as we recognized in the APS/Sequent order, the
Commission has not previously addressed the issue of whether the buy/
sell prohibition applies to interstate service provided by section 311
and Hinshaw pipelines. Thus, until the Commission issued that order,
there was no clear policy prohibiting such transactions. Therefore, the
Commission will not institute any enforcement actions with respect to
prior buy/sell transactions involving section 311 and Hinshaw
pipelines. In addition, the Commission grants a blanket waiver of the
prohibition on buy/sell transactions to allow existing and new buy/sell
transactions involving section 311 and Hinshaw pipelines to continue to
take place until the Commission issues a further order in this
proceeding. This will avoid disrupting any ongoing relationships
established through currently existing buy/sell transactions and also
avoid discouraging beneficial new arrangements, while the Commission
considers the policy issues raised in this proceeding. As we recognized
in the APS/Sequent order, capacity reassignments can promote more
efficient use of firm pipeline capacity by enabling a holder of such
capacity to permit its capacity to be used by another party for a
higher valued use.

III. Procedure for Comments

    20. The Commission invites interested persons to submit comments
and other information on the matters, issues, and specific questions
identified in this notice. Comments are due 60 days from the date of
publication in the Federal Register. Comments must refer to Docket No.
RM11-1-000, and must include the commenter's name, the organization
they represent, if applicable, and their address.
    21. 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.
    22. Commenters unable to file comments electronically must mail or
hand deliver an original copy of their comments to: Federal Energy
Regulatory Commission, Secretary of the Commission, 888 First Street,
NE., Washington, DC 20426. The current requirements are specified on
the Commission's Web site, see, e.g., the ``Quick Reference Guide for
Paper Submissions,'' available at http://www.ferc.gov/docs-filing/
efiling.asp, or via phone from FERC Online Support at<PHONE_NUMBER> or
toll-free at 1-866-208-3676.
    23. 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 are not required to
serve copies of their comments on other commenters.

IV. Document Availability

    24. 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 print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A,
Washington, DC 20426.
    25. From the Commission's Home Page on the Internet, this
information is available in the Commission's document management
system, eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and
downloading. To access this document in eLibrary, type the docket
number (excluding the last three digits) in the docket number field.
    26. User assistance is available for eLibrary and the Commission's
Web site during normal business hours. For assistance, please contact
the Commission's Online Support at 1-866-208-3676 (toll free) or 202-
502-6652 (e-mail at<EMAIL_ADDRESS>or the Public Reference
Room at<PHONE_NUMBER>, TTY<PHONE_NUMBER> (e-mail at
public.referenceroom@ferc.gov).

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2010-27156 Filed 10-26-10; 8:45 am]
BILLING CODE 6717-01-P