[Federal Register: January 7, 2008 (Volume 73, Number 4)]
[Proposed Rules]
[Page 1116-1131]
[DOCID:fr07ja08-13]

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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM08-2-000]

Pipeline Posting Requirements Under Section 23 of the Natural Gas
Act

December 21, 2007.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this Notice of Proposed Rulemaking, the Commission proposes
to require both interstate and certain major non-interstate pipelines
to post capacity, daily scheduled flow information and daily actual
flow information. This proposal incorporates one contained in an
earlier Notice of Proposed Rulemaking to require the posting of
capacity and daily actual flow information by some intrastate
pipelines, with some changes. Under this proposal, interstate pipelines
would be required to post daily actual flow information in addition to
their currently required posting of capacity and daily scheduling
information. Non-interstate pipelines would be required to post daily
scheduled flow information in addition to the earlier Notice of
Proposed Rulemaking proposal to require posting capacity and daily
actual flow information. The posting proposal would facilitate price
transparency in markets for the sale or transportation of physical
natural gas in interstate commerce to implement section 23 of the
Natural Gas Act.

DATES: Comments are due February 21, 2008. Reply comments are due March
24, 2008.

ADDRESSES: You may submit comments, identified by docket number by any
of the following methods:
     Agency Web Site: http://ferc.gov Follow the instructions

for submitting comments via the eFiling link found in the Comment
Procedures section of the preamble. 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. Please
refer to the Comment Procedures section of the preamble for additional
information on how to file paper comments.

FOR FURTHER INFORMATION CONTACT:
    Stephen J. Harvey (Technical), Office of Enforcement, Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426,<PHONE_NUMBER><EMAIL_ADDRESS>    Charles Whitmore (Technical), Office of Enforcement, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
(202) 502-6256<EMAIL_ADDRESS>    Eric Ciccoretti (Legal), Office of Enforcement, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426,
(202) 502-8493<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Introduction and Summary of Proposal

    1. On April 19, 2007, the Commission issued a Notice of Proposed
Rulemaking (Initial NOPR) to implement section 23 of the Natural Gas
Act, which was added to the act by the Energy Policy Act of 2005 (EPAct
2005).\1\ In the Initial NOPR, the Commission proposed an annual
reporting requirement for certain natural gas sellers and buyers and a
daily posting requirement for intrastate pipelines.\2\ The Commission
also asked in the Initial NOPR whether posting requirements for
interstate pipeline should be changed.\3\
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    \1\ Transparency Provisions of Section 23 of the Natural Gas
Act, 72 FR 20791 (Apr. 26, 2007), FERC Stats. and Regs. ] 32,614
(2007). Congress enacted section 23 of the Natural Gas Act as part
of the Energy Policy Act of 2005. Energy Policy Act of 2005, Pub. L.
No. 109-58, 119 Stat. 594 (2005).
    \2\ Initial NOPR at P 1-2.
    \3\ Initial NOPR at P 43.
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    2. Concurrently, the Commission is issuing a Final Rule with
respect to the annual reporting requirement. With respect to the
pipeline posting proposal, based on Staff experience as well as the
comments received, the Commission has determined to issue the instant
notice of proposed rulemaking (NOPR) to develop the record more fully
with respect to the posting proposal. The Initial NOPR may not have
given sufficient notice to interstate pipelines of changes that seem
necessary to implement adequately section 23 of the Natural Gas Act. In
addition, the Commission believes that more information regarding the
technical implementation of daily posting of actual flow information by
interstate pipelines is required in order to consider the costs and
benefits of such a regulatory change. For those purposes, the
Commission incorporates by reference the Initial NOPR and all comments
filed in response to the Initial NOPR in Docket No. RM07-10-000 with
respect to the pipeline posting proposal.
    3. The Commission intends the instant proposal to make available
the information needed to track daily flows of natural gas adequately
throughout the United States. Specifically, the Commission proposes to
require both interstate pipelines and major non-interstate pipelines
\4\ to post daily information regarding their capacity, scheduled flow
volumes, and actual flow volumes at major points and mainline segments.
The proposal would result in both interstate and non-interstate
pipelines posting the same types of information.
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    \4\ In the Initial NOPR, the Commission used the term
``intrastate pipeline;'' herein, the Commission uses the term ``non-
interstate pipeline''--a point explained further below.
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    4. For interstate pipelines, this proposal would add to the
existing posting requirements in Sec.  284.13(d) a requirement to post
daily actual flow volume.\5\ To bring the requirements for major non-
interstate pipelines into alignment with the existing and proposed
posting requirements for interstate pipelines, this proposal adds to
the proposal in the Initial NOPR a requirement that major non-
interstate pipelines post daily scheduled flow volumes.\6\ For the
purposes of this NOPR, a ``major non-interstate pipeline'' is defined
as one that is not a ``natural gas company'' under section 1 of the
Natural Gas Act \7\ and that flows greater

than 10 million (10,000,000) MMBtus of natural gas per year, with two
exceptions.\8\ The first exception is non-interstate pipelines that
fall entirely upstream of a processing plant.\9\ The second exception
is non-interstate pipelines that deliver more than ninety-five percent
(95%) of the natural gas volumes they flow directly to end-users.\10\
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    \5\ Proposed 18 CFR 284.13(d).
    \6\ Proposed 18 CFR 284.14(a).
    \7\ 15 U.S.C. 717.
    \8\ Proposed 18 CFR 284.1.
    \9\ Proposed 18 CFR 284.14(b)(1).
    \10\ Proposed 18 CFR 284.14(b)(2).
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    5. With these proposed additions of flow information from major
non-interstate pipelines to the information already available from
interstate pipelines, market observers, such as the Commission, state
commissions and market participants, could develop a better
understanding of the supply and demand conditions that directly affect
the U.S. wholesale natural gas markets. Market participants would have
a better basis for evaluating the prices at which they transact.
Consequently, this proposal to increase information from non-interstate
pipelines and from interstate pipelines would directly ``facilitate
price transparency for the sale * * * of physical natural gas in
interstate commerce'' as authorized in the natural gas transparency
provisions.\11\
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    \11\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
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    6. The Commission's proposal would apply to major non-interstate
pipelines even though section 1 of the Natural Gas Act \12\ excludes
them from the Commission's ratemaking authority under sections 4 and 5
of the Natural Gas Act \13\ and the Commission's certificate authority
under section 7 of the Natural Gas Act.\14\ As discussed below,
Congress placed market participants, which include non-interstate
pipelines, within the Commission's transparency authority under section
23 of the Natural Gas Act to ensure ``the dissemination, on a timely
basis, of information about the availability and prices of natural gas
sold at wholesale and in interstate commerce.'' \15\ Aware that the
pre-EPAct 2005 limits on the Commission's authority would have left
gaps in the transparency of the wholesale, physical natural gas
markets, Congress did not restrict the Commission's transparency
authority to those same limits in enacting section 23 of the Natural
Gas Act. As we stated in the Initial NOPR: ``While distinctions between
intrastate and interstate natural gas markets may be meaningful from a
legal perspective, they are not meaningful from the perspective of
market price formation.'' \16\ Congress was aware of the legal
distinctions between natural gas markets in enacting EPAct 2005 and, in
choosing to use the term ``any market participant'' indicated that
these distinctions should not apply to the Commission's transparency
authority. At the same time, by not amending section 1 of the Natural
Gas Act, Congress retained the legal distinctions between intrastate
and interstate pipelines for the purposes of delineating the entities
subject to the Commission's authority over ratemaking in sections 4 and
5 and over certification of construction and sales of new facilities
and transportation services in section 7 of the act.
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    \12\ 15 U.S.C. 717.
    \13\ 15 U.S.C. 717c; 15 U.S.C. 717d.
    \14\ 15 U.S.C. 717f.
    \15\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
    \16\ Initial NOPR at P 20.
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    7. The Commission issues this NOPR in order to solicit further
comment on requiring actual flow information from both interstate and
non-interstate pipelines and to consider whether the posting
requirements for both interstate and non-interstate pipelines should be
similar. In the Initial NOPR, the Commission did not propose to require
the posting of actual flow information by interstate pipelines, but it
did seek comment on such posting.\17\ Further comment in response to
the instant NOPR will allow the Commission to give more consideration
to requiring actual flow information on interstate pipelines, in
particular the technical issues associated with quick posting of that
information. In addition, the Commission seeks further comment
regarding how the posting requirements should apply to storage
facilities and regarding its daily pipeline posting proposal for major
non-interstate pipelines.
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    \17\ Initial NOPR at P 43.
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    8. To address implementation issues associated with the posting
proposal, such as obtaining and posting actual flow information and
obtaining and posting information from storage facilities, the
Commission directs Staff to conduct a technical conference before
comments on this NOPR are due.

II. The Commission's Transparency Authority Over Non-Interstate
Pipelines Under Section 23 of the Natural Gas Act

    9. At the outset, the Commission addresses the jurisdictional
issues raised by its proposal in the Initial NOPR. In the Initial NOPR,
the Commission explained how section 23 of the Natural Gas Act
authorizes the Commission to require an intrastate pipeline to post
information regarding its transportation of natural gas, even though
section 1 of the Natural Gas Act excludes such companies from the
Commission's authority to regulate transportation of natural gas under
sections 4, 5, and 7 of the Natural Gas Act.\18\
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    \18\ Initial NOPR at P 11-18, 21-24, & 37.
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A. Comments

1. Comments: Section 23 of the Natural Gas Act
    10. The Texas Pipeline Association (TPA) \19\ argued that, contrary
to the Commission's explanation, the plain language of section 23 of
the Natural Gas Act shows that the term ``market participant'' is
limited to those entities that participate in wholesale interstate
natural gas markets and does not include intrastate pipelines.\20\ TPA
concluded that the plain language of section 23 of the Natural Gas Act
does not support the Commission's assertion of authority to collect
information from intrastate pipelines because they do not participate
in markets for the sale or transportation of natural gas in interstate
commerce.\21\
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    \19\ Eight entities expressed support for the Texas Pipeline
Association's comments: Atmos Energy Corporation, Copano Energy,
L.L.C., Crosstex Energy Services, LP, DCP Midstream, LLC, Enbridge
Energy Co., Inc., Gas Processors Association, Kinder Morgan Texas
Intrastate Pipeline Group, Targa Resources, Inc.
    \20\ Comments of TPA at 16-17.
    \21\ Id.
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    11. Enterprise Products Partners L.P. (Enterprise) also asserted
that an entity must be participating in the interstate market to be a
``market participant'' under section 23 of the Natural Gas Act.
Enterprise reasoned that an entity subject to the Commission's
authority under section 23 but not to its authority under other
sections of the Natural Gas Act is an entity that ``participat[es] in
the interstate market (whether by buying, selling, shipping or trading
physical natural gas) but not already subject to [Natural Gas Act]
jurisdiction as natural gas companies.'' \22\ According to Enterprise,
the Commission's proposal to impose posting requirements on intrastate
pipelines bears no relation to Congress's intention to restrict the
Commission's jurisdiction to entities participating in the interstate
market.\23\
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    \22\ Comments of Enterprise at 13.
    \23\ Id.
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    12. Similarly, the Railroad Commission of Texas argued that the
term ``market participant'' does not indicate that Congress
contemplated the expansion of Commission authority to

include intrastate pipelines as asserted by the Commission.\24\ The
Railroad Commission of Texas explained that there is no reference at
all in the relevant statutory provisions or legislative history of
EPAct 2005 to intrastate pipelines, the intrastate natural gas market
or intrastate gas flows and no express indication that the Commission's
authority was being extended in any manner over ``intrastate'' market
participants.\25\
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    \24\ Comments of Railroad Commission of Texas at 6-7; see also
Comments of Atmos Pipeline-Texas at 6-7.
    \25\ Comments of Railroad Commission of Texas at 7.
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    13. One commenter, Enterprise, contended that the Commission does
not have the authority to require posting of information by intrastate
pipelines because Congress limited the information that may be
collected from market participants to ``information about natural gas
sold at wholesale and in interstate commerce.'' \26\ Enterprise
interpreted Congress's use of the word ``about'' as limiting language
and asserted that Congress deliberately chose the word ``about'' as
opposed to ``affect'' or ``at least impacts'' in order to stress that
the Commission does not have the authority to compel reporting for any
activity that might have some impact on the interstate wholesale
natural gas markets.\27\
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    \26\ Comments of Enterprise Products Partners, L.P. at 11
(emphasis in original).
    \27\ Id. at 11-12.
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2. Comments: Section 1(b) of the Natural Gas Act
    14. TPA argued that section 1(b) of the Natural Gas Act precludes
the Commission from prescribing rules under its section 23 authority
that apply to intrastate transportation or sale of natural gas.\28\ TPA
asserted that Congress has consistently respected the distinction
between interstate and intrastate pipelines which first appeared in
section 1(b) of the Natural Gas Act and was recognized by Congress in
amendments to the Natural Gas Act and in the Natural Gas Policy Act of
1978.\29\ TPA referred to numerous appellate court decisions that
recognized this distinction in reviewing the Commission's
jurisdiction.\30\
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    \28\ Comments of TPA at 7; see also Comments of Louisiana Office
of Conservation at 5.
    \29\ Comments of TPA at 9.
    \30\ Id. at 11 (citations omitted).
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    15. Several commenters argued that if Congress intended the
transparency provisions to cover intrastate pipelines, it would have
amended section 1 of the Natural Gas Act.\31\ TPA argued that if
Congress intended to expand the Commission's authority over intrastate
transportation of natural gas, it would have amended section 1(b) to
include new posting obligations for intrastate pipelines for all daily
flows and capacity at major points.\32\ TPA explained that, in EPAct
2005, Congress amended section 1(b) of the Natural Gas Act to include
application to the importation or exportation of natural gas in foreign
commerce and to persons engaged in such importation or exportation.\33\
TPA contended that without a similar amendment to section 1(b) to
provide for the posting of information Congress cannot ``cross the
jurisdictional line'' by imposing a posting requirement on intrastate
pipelines.\34\
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    \31\ Comments of TPA at 10-11; Comments of Enterprise at 15;
Comments of Louisiana Office of Conservation at 5; Comments of
Railroad Commission of Texas at 6-7.
    \32\ Comments of TPA at 10-11.
    \33\ Id. (citing EPAct 2005 section 311 (amending section 1(b)
of the Natural Gas Act)).
    \34\ Comments of TPA at 11.
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3. Comments: Section 1(c) of the Natural Gas Act
    16. Several commenters, such as the Railroad Commission of Texas,
asserted that the Commission's proposal to require intrastate pipelines
to post information impermissibly intrudes on states' regulation of
natural gas transportation.\35\ Cranberry Pipeline Corporation argued
that the Commission cannot have jurisdiction over intrastate
transactions when those transactions are already subject to the
jurisdiction of the state regulatory commission.\36\ Similarly, DCP
argued that the Commission ignored section 1(c) of the Natural Gas Act
which exempts intrastate transportation because it is viewed as a
matter of local concern subject to regulation by the states.\37\
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    \35\ Comments of Railroad Commission of Texas at 8-9; see also
Reply Comments of the RRC of Texas at 8; Reply Comments of the Texas
Pipeline Association at 12.
    \36\ Comments of Cranberry Pipeline Corporation at 8 (internal
citations omitted).
    \37\ Comments of DCP Midstream, LLC at 7 (internal citations
omitted).
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4. Comments: Other
    17. TPA argued that there is no indication in the legislative
history of section 23 that Congress intended to modify the Commission's
jurisdiction to include intrastate transportation.\38\ Atmos Energy
Corporation (Atmos) and the Railroad Commission of Texas similarly
stated that there is no reference at all in the relevant statutory
provisions or legislative history of EPAct 2005 to intrastate
pipelines, the intrastate natural gas market or intrastate gas flows
and certainly no express indication that the FERC's authority was being
extended in any manner over ``intrastate'' market participants.\39\
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    \38\ Comments of TPA at 21.
    \39\ Comments of Atmos at 12 (internal citations omitted);
Comments of the Railroad Commission of Texas at 6-7 (internal
citations omitted).
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    18. DCP Midstream, LLC argued that intrastate pipelines should not
be held to the same reporting burden as interstate pipelines because
intrastate pipelines have not submitted to the jurisdiction of the
Commission. The burdens that an interstate pipeline assumes, DCP
contended, accompany a certificate of public convenience and necessity
and should not be imposed on an intrastate pipeline. DCP asserted that
the Commission's policy historically has been that only gas pipelines
that affirmatively accepted a jurisdictional certificate to provide
transportation in interstate commerce would be subject to Commission
regulation, such as daily scheduled volume or pipeline capacity
reporting.\40\
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    \40\ Comments of DCP Midstream, LLC at 9-10.
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    19. Atmos argued that the Commission's interpretation of Natural
Gas Act section 23 is inconsistent with the Commission's prior analysis
of its own jurisdiction in Order No. 670 \41\ and Order No. 636.\42\
Atmos pointed to Order No. 670, in which the Commission interpreted the
phrase ``any entity'' from section 4A of the Natural Gas Act to
encompass any person or form of organization, regardless of its legal
status, function or activities, and further concluded that this
language did not specifically exclude entities engaged in non-
jurisdictional activities.\43\ Atmos also described the Commission
interpreting the phrase ``in connection with'' from section 4A so as to
conclude that not every common-law fraud that touches a jurisdictional
transaction would constitute market manipulation.\44\ According to
Atmos, in Order No. 670, the Commission further determined, that had
Congress intended to expand the Commission's jurisdiction

so significantly as to give it anti-manipulation authority over non-
jurisdictional transactions such as first sales of natural gas, sales
of imported natural gas, sales of imported liquefied natural gas, or
sales and transportation by entities exempt from Commission regulation
under Natural Gas Act section 1(b), then it would have done so
explicitly.\45\
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    \41\ Prohibition of Energy Market Manipulation, Order No. 670,
71 FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ] 31,202 (2006)
(Order No. 670).
    \42\ Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of
Natural Gas Pipelines After Partial Wellhead Decontrol, Order No.
636, 57 FR 13267 (Apr. 16, 1992), FERC Stats. & Regs. ] 30,939
(1992), order on reh'g, Order No. 636-A, 57 FR 36128 (Aug. 12,
1992), FERC Stats. & Regs. ] 30,950 (1992), 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 No. 636).
    \43\ Comments of Atmos at 9.
    \44\ Id. at 9-10.
    \45\ Id. at 9 (internal citations omitted).
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    20. As to Order No. 636, Atmos argued that the Commission's
assertion of transparency authority over intrastate pipelines is
contrary to its holdings in that order, in which the Commission held
that a non-interstate pipeline ``providing service under section 311 of
the [Natural Gas Policy Act of 1978] is not required to meet the
service requirements of the Commission's Order No. 636 such as offering
firm service, having a capacity release program, posting available
capacity electronically, offering flexible receipt and delivery points,
or unbundling distinct services.'' \46\ By contrast, the pipeline
posting proposal, asserted Atmos, would not only extend daily posting
requirements to section 311 transportation by intrastate pipelines, but
also to transportation that is purely intrastate in nature.\47\
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    \46\ Id. at 15 (emphasis in original).
    \47\ Id. at 12 (internal citations omitted). Atmos stated that
it would not object if the Commission limits the posting
requirements applicable to intrastate pipelines to section 311
transportation or other activity regulated under the Natural Gas
Policy Act of 1978. Id.
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    21. Some commenters, such as the Railroad Commission of Texas,
expressed concern that a requirement for intrastate pipelines to post
information would lead to further regulation of those intrastate
pipelines.\48\
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    \48\ Comments of the Railroad Commission of Texas at 8-9.
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B. Discussion

    22. The Commission proposes here to require major non-interstate
pipelines to post information regarding capacity, scheduled flow
volumes, and actual flow volumes.\49\ This proposal would impose
posting requirements on major non-interstate pipelines in a limited
way. The Commission does not intend to regulate the intrastate
operations of those non-interstate pipelines; nor do we intend to
regulate the rates or terms and conditions of intrastate service for
those non-interstate pipelines. The Commission proposes to require
those non-interstate pipelines only to post information.
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    \49\ Proposed 18 CFR 284.14(a).
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    23. In the Initial NOPR, the Commission used the term ``intrastate
pipeline.'' In this proposal, the Commission uses the term ``non-
interstate pipeline.'' The latter term more accurately describes the
scope of the proposed rule, which is issued pursuant to section 23 of
the Natural Gas Act.\50\ This section applies to both interstate and
non-interstate pipelines, a point explained further below, and does not
use the term ``intrastate pipeline.'' In this NOPR, the Commission
proposes to collect important information about the physical, natural
gas market from certain pipelines in the continental United States
regardless of whether the pipeline is an intrastate pipeline, a Hinshaw
pipeline, or any other type of pipeline that is not an interstate
pipeline under the Natural Gas Act. The subjects of the posting
requirement proposed herein are set by their participation in the
physical, natural gas market not by their legal status under section 1
of the Natural Gas Act.\51\
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    \50\ 15 U.S.C. 717t-2 (2000 & Supp. V 2005).
    \51\ 15 U.S.C. 717.
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    24. The proposed posting requirements for non-interstate pipelines
are consistent with Congress's intent as expressed in section 23 of the
Natural Gas Act. There, Congress permitted the Commission to impose on
a broad set of market participants requirements for a limited purpose,
i.e., to obtain and disseminate ``information about the availability
and prices of natural gas at wholesale and in interstate commerce.''
\52\ At the same time, as the Commission explicitly acknowledges,
Congress did not expand the Commission's authority to impose on the
same set of market participants requirements related to the
Commission's traditional regulatory activities, e.g., ratemaking under
sections 4 and 5 of the Natural Gas Act and certification of
construction and sales and transportation services under section 7 of
the Natural Gas Act.
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    \52\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
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    25. Congress placed non-interstate pipelines within the
Commission's transparency authority under section 23 of the Natural Gas
Act in order to ensure--for the entirety of the wholesale, physical
natural gas market--transparency of price and availability, including
transparency of market price formation. Aware that the pre-EPAct 2005
limits on the Commission's authority would have left gaps in the
transparency of the wholesale, physical natural gas markets, Congress
did not restrict the Commission's transparency authority to those same
limits in enacting section 23 of the Natural Gas Act. As we stated in
the Initial NOPR, ``While distinctions between intrastate and
interstate markets may be meaningful from a legal perspective, they are
not meaningful from the perspective of market price formation.'' \53\
Congress was aware of the legal distinctions between non-interstate and
interstate natural gas markets in enacting EPAct 2005. In choosing to
use the term ``any market participant'' and focusing section 23 on
``information about the availability and prices of natural gas at
wholesale and in interstate commerce,'' Congress indicated that these
distinctions should not apply to the Commission's transparency
authority. At the same time, by not amending section 1, Congress
retained the legal distinctions between intrastate and interstate
markets for the purposes of delineating the entities subject to the
Commission's authority over ratemaking in sections 4 and 5 and over
construction of natural gas facilities in section 7 of the Natural Gas
Act.
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    \53\ Initial NOPR at P 20.
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1. Discussion: Section 23 of the Natural Gas Act
    26. The language in section 23 of the Natural Gas Act supports the
Commission's authority to require non-interstate pipelines to post
information about capacity, scheduled flow volumes and actual flow
volumes. In section 23(a)(1), Congress directed the Commission to
``facilitate price transparency in markets for the sale or
transportation of physical natural gas in interstate commerce * * *.''
\54\ In section 23(a)(2), Congress authorized the Commission to
``provide for the dissemination, on a timely basis, of information
about the availability and prices of natural gas sold at wholesale and
in interstate commerce * * *.'' \55\ Congress expressly delegated to
the Commission the task of adopting rules to give life to this
provision \56\ and, in section 23(a)(3), provided that the Commission
may ``obtain the information'' about the availability and prices of
natural gas sold at wholesale and in interstate commerce from ``any
market participant.'' \57\
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    \54\ 15 U.S.C. 717t-2(a)(1) (2000 & Supp. V 2005).
    \55\ 15 U.S.C. 717t-2(a)(2) (2000 & Supp. V 2005).
    \56\ Id.
    \57\ 15 U.S.C. 717t-2(a)(3) (2000 & Supp. V 2005).
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    27. Congress could have limited the Commission's transparency
authority to obtaining information from any ``natural gas company''
subject to the Commission's traditional regulatory authority. It did
not do so. Instead, in using the broad new term ``any market
participant,'' Congress deliberately

expanded the universe subject to the Commission's transparency
authority beyond ``natural gas compan[ies].'' \58\ The term ``any
market participant'' is not defined in the Natural Gas Act; however, it
is not on its face limited to entities made subject to the Natural Gas
Act under section 1.\59\ Indeed, the language of section 23 indicates
that entities excluded from the Commission's authority under section 1
of the Natural Gas Act would be included in section 23. First, in
section 23, Congress did not reference the limitations of section 1
explicitly (discussed further below).
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    \58\ Contrary to the assertions of Bridgeline Holdings, L.P.
(Bridgeline), Comments of Bridgeline at 6, this grant of
transparency authority is not an implied grant.
    \59\ Initial NOPR at P 12.
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    Second, in section 23, Congress did not use the term ``natural gas
company'' from section 2(6), which is defined as ``a person engaged in
the transportation of natural gas in interstate commerce, or the sale
in interstate commerce of such gas for resale.'' \60\ This limiting
term is used in section 1 of the Natural Gas Act to limit the
Commission's authority, for instance, under sections 4, 5, and 7 of the
Natural Gas Act.\61\ These approaches would have been the simplest ways
for Congress to have indicated an intent to limit the Commission's
transparency authority in the same manner it limited the Commission's
comprehensive regulatory authority in other sections of the Natural Gas
Act. Thus, commenters' arguments that the Commission has authority to
obtain information only from those subject to the Commission's
authority under section 1 of the Natural Gas Act are inconsistent with
the language of the statute.
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    \60\ 15 U.S.C. 717a(6).
    \61\ 15 U.S.C. 717c, 717d & 717f.
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    28. In granting the Commission broad authority to obtain
information, the Congress not only used the new term ``market
participant'' but it also specifically referred to ``any'' market
participant, instead of limiting the Commission's authority to obtain
information from market participants subject to the Commission's
traditional Natural Gas Act jurisdiction. The word ``any'' gives the
term it modifies (in this case, ``market participant'') an expansive
meaning.\62\
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    \62\ Norfolk S. Rwy. Co. v. Kirby, 543 U.S. 14, 31-32 (2004)
(the word ``any'' gives the word it modifies an expansive reading);
Department of Housing and Urban Dev. v. Rucker, 535 U.S. 125, 130-31
(2002); TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (one must give
effect to each word in a statute so that none is rendered
superfluous); United States v. Gonzales, 520 U.S. 1, 5 (1997)
(``any'' is an expansive term, meaning ``one or some
indiscriminately of whatever kind,''); New York v. EPA, 443 F.3d
880, 885-87 (D.C. Cir. 2006) (the word ``any'' is broadly construed
to reflect Congress' intent that all types of physical changes are
subject to the Clean Air Act's New Source Review program).
---------------------------------------------------------------------------

    29. In addition, in section 23(d)(2), Congress created a de minimis
exception to the other provisions in section 23. Specifically, Congress
instructed the Commission to create a de minimis exception for
gatherers and producers, which section 1(b) of the Natural Gas Act
explicitly excludes from Commission's traditional regulation. If, as
some commenters asserted, Congress did not intend to give the
Commission authority over any entity excluded by section 1(b) of the
Natural Gas Act, a de minimis exception would have been unnecessary; in
other words, section 23(d)(2) would have been surplusage. Congress is
not presumed to enact surplus language.\63\ To avoid this improper
result, the Commission interprets section 23 of the Natural Gas Act to
give effect to the de minimis language by interpreting the term ``any
market participant'' to include those entities otherwise excluded from
the Commission's Natural Gas Act jurisdiction by section 1(b) of the
act.
---------------------------------------------------------------------------

    \63\ City of Roseville v. Norton, 348 F.3d 1020, 1028 (D.C. Cir.
2003) (citing Babbitt v. Sweet Home Chapter of Community for a Great
Oregon, 515 U.S. 687, 698 (1995)).
---------------------------------------------------------------------------

    30. The Commission disagrees that the term ``about'' in section 23
is a limiting term as asserted by Enterprise. In the Initial NOPR, the
Commission described the information proposed to be collected from
intrastate pipelines as information ``about'' interstate, wholesale
natural gas markets because the flows on intrastate pipelines affect
interstate, wholesale natural gas markets.\64\ The Commission used the
term ``pertains'' as a synonym for ``about.'' Indeed, contrary to
Enterprise's reading, we read the term ``about'' as broader than the
terms ``affect'' or ``impacts.'' Information may be ``about'' a subject
without ``affecting'' it; hence, flow information may be ``about
natural gas sold at wholesale and in interstate commerce'' even if it
does not ``affect'' such natural gas (even though it normally does).
---------------------------------------------------------------------------

    \64\ Initial NOPR at P 15.
---------------------------------------------------------------------------

    31. More specifically, as explained below, the information that
would be posted by major non-interstate pipelines is ``information
about the availability and prices of natural gas sold at wholesale and
in interstate commerce.'' \65\ There is a relationship between capacity
and flow information on non-interstate pipelines and the interstate,
natural gas market because non-interstate flows affect the supply and
demand fundamentals that underlie the market. As explained below,
posted flow information from only interstate pipelines cannot provide a
complete picture of natural gas flows in the United States--or even of
those flows directly relevant to the pricing of natural gas flowing in
interstate commerce.\66\ To avoid such incompleteness, the Commission
sets forth the proposal to require major non-interstate pipelines to
post flow information. This proposal would provide a complete picture
of natural gas supply and demand fundamentals without the gaps that
would appear were the non-interstate pipelines excluded by section 1 of
the Natural Gas Act also excluded by section 23 of the Natural Gas Act.
In enacting section 23 of the Natural Gas Act, Congress sought to avoid
any such gaps in the transparency of the physical natural gas markets
by avoiding the legal distinctions set forth in section 1 of the
Natural Gas Act.
---------------------------------------------------------------------------

    \65\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(2) (2000 & Supp. V 2005).
    \66\ See below at P 50-59.
---------------------------------------------------------------------------

2. Discussion: Section 1(b) of the Natural Gas Act
    32. The Commission disagrees with commenters who argued that
section 1(b) of the Natural Gas Act precludes the Commission from
imposing the daily posting requirement on intrastate pipelines. Section
1(b) of the Natural Gas Act provides that the ``provisions of this
chapter * * * shall apply to the transportation of natural gas in
interstate commerce, to the sale in interstate commerce of natural gas
for resale * * *'' and that such provisions ``shall not apply to any
other transportation or sale of natural gas.'' \67\ These arguments
ignore the fact that, in section 23, Congress provided the Commission a
new and broad grant of authority that goes beyond prior Commission
jurisdiction over natural gas companies to facilitate transparency in
the wholesale natural gas markets.
---------------------------------------------------------------------------

    \67\ Section 1(b) of the Natural Gas Act, 15 U.S.C. 717(b).
---------------------------------------------------------------------------

    33. In stating that the Commission may obtain information from
``any market participant,'' \68\ Congress contemplated that the
transparency provisions would differ from other provisions of the
Natural Gas Act as to the entities covered by the Commission's
authority. Commenters' reliance on section 1 of the Natural Gas Act,
therefore, improperly ignores the intent of Congress to subject a
different set of entities to the Commission's

transparency authority as evidenced by Congress's use of the term ``any
market participant.'' In light of this intent, commenters' reliance on
case law setting forth the limits on the Commission's authority under
section 1 of the Natural Gas Act is misplaced.
---------------------------------------------------------------------------

    \68\ Section 23(a)(3) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(3) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    34. The Commission does not find persuasive the argument that
Congress could have expressed its intent to subject intrastate
pipelines to the Commission's transparency authority only by amending
section 1 of the Natural Gas Act. First, altering the exceptions in
section 1, as commenters suggested, is not the only way to alter the
statute to give the Commission transparency authority. Indeed, it would
have been more cumbersome for the Congress to take that approach.
Instead of that approach, the Commission interprets the addition of
section 23 as providing the Commission transparency authority over non-
interstate pipelines. This latter interpretation is the more reasonable
interpretation of section 23 and reflects Congress's intent to subject
non-interstate pipelines to only the Commission's transparency
authority. Second, it could be stated equally that if Congress intended
to exclude intrastate (or non-interstate) pipelines from the
Commission's authority under section 23 of the Natural Gas Act, it
would have used the term ``natural gas company'' in section 23, instead
of the term ``any market participant.''
    35. Commenters' arguments that section 23 should be interpreted
consistent with pre-EPAct 2005 case law are likewise misplaced. Those
cases apply the jurisdictional limits set forth in section 1 of the
Natural Gas Act. These arguments run afoul of the principle of
statutory construction that ``Congress is presumed to be aware of an
administrative or judicial interpretation of a statute.'' \69\ Thus,
Congress was presumably aware that prior to the enactment of section
23, the Natural Gas Act, as explained by TPA, ``limit[ed] the gathering
of intrastate data to gathering it from companies falling under the
Commission's jurisdiction.'' \70\ In using the term ``any market
participant,'' Congress signaled its intent to expand the Commission's
transparency authority beyond the universe of natural gas companies to
which it would otherwise be limited.\71\
---------------------------------------------------------------------------

    \69\Lorillard v. Pons, 434 U.S. 575, 580 (1978) (internal
citations omitted); accord 2A Norman J. Singer, Sutherland Statutory
Construction sec. 45.12 (5th ed. 1992) (``legislative language will
be interpreted on the assumption that the legislature was aware of *
* * judicial decisions'').
    \70\ Comments of Texas Pipeline Association at 13 (citing Union
Oil v. FPC, 542 F.2d 1036, 1039 (9th Cir. 1976)).
    \71\ TPA observed that courts have held that the Commission
cannot exceed its statutory authority. Reply Comments of TPA at 16-
17 (citing Transmission Agency of Northern California v. FERC, 495
F.3d 663 (D.C. Cir. 2007) and United Distribution Cos. v. FERC, 88
F.3d 1105 (D.C. Cir. 1996)). This is an unremarkable and
unassailable conclusion, but one that provides no guidance where the
issue is not whether the Commission may exceed its statutory
authority but what is the extent of the Commission's transparency
authority.
---------------------------------------------------------------------------

3. Discussion: Section 1(c) of the Natural Gas Act
    36. Several commenters, including a state commission, contended
that the pipeline posting proposal as applied to intrastate pipelines
would improperly interfere with states' regulation of intrastate
pipelines as set forth in section 1(c) of the Natural Gas Act, commonly
known as the Hinshaw amendment. Section 1(c) of the Natural Gas Act
reads:

    The provisions of this chapter shall not apply to any person
engaged in or legally authorized to engage in the transportation in
interstate commerce or the sale in interstate commerce for resale,
of natural gas received by such person from another person within or
at the boundary of a State if all the natural gas so received is
ultimately consumed within such State, or to any facilities used by
such person for such transportation or sale, provided that the rates
and service of such person and facilities be subject to regulation
by a State commission.\72\
---------------------------------------------------------------------------

    \72\ 15 U.S.C. 717(c).

    The Commission's proposal does not impermissibly interfere with
states' regulation of Hinshaw pipelines. Under the Commission's
proposal, states will continue to regulate the rates and services of
those companies. As stated, section 23 of the Natural Gas Act does not
authorize the Commission to undertake such comprehensive regulation and
the Commission does not propose to do so. The Commission would require
only that non-interstate pipelines, including Hinshaw pipelines, post
information regarding their flows. Section 1(c) of the Natural Gas Act,
in light of the later enacted EPAct 2005, does not preclude such a
posting requirement.
4. Discussion: Other
    37. The Commission disagrees with DCP's argument that the burden of
a posting requirement is related to the Commission's grant of a
certificate of convenience and necessity under section 7 of the Natural
Gas Act. DCP's argument ignores the mandate Congress set forth in the
transparency provisions for the Commission to facilitate transparency.
Nothing in section 23 indicates or even implies that the Commission's
transparency authority depends on whether a market participant has a
certificate of public convenience and necessity. Indeed, the use of the
modifier ``any,'' as discussed above, demonstrates that Congress had no
intention to limit the Commission authority to disseminate adequate
information about the natural gas market.
    38. Contrary to commenters' assertions, the Commission's
interpretation of section 23 is consistent with the Commission's
interpretation of section 4A of the Natural Gas Act, which Congress
also enacted in EPAct 2005. In Order No. 670, the Commission stated
that Congress chose the undefined term ``any entity'' in section 4A as
a broader term than the existing defined term of ``natural gas
company.'' \73\ Similarly, in interpreting section 23, Congress chose
the undefined term ``any market participant'' in section 23 as a
broader term than the existing defined term ``natural gas company.''
Also, in Order No. 670, to determine the transactions subject to the
Commission's market manipulation authority, the Commission interpreted
the section 4A phrase ``in connection with'' broadly.\74\ To delineate
what type of information the Commission could obtain and disseminate,
in section 23 of the Natural Gas Act, Congress used the term ``about,''
which is a concept similarly as broad as the concept described by the
phrase ``in connection with.''
---------------------------------------------------------------------------

    \73\ Order No. 670 at P 18.
    \74\ Section 4A of the Natural Gas Act reads:
    It shall be unlawful for any entity, directly or indirectly, to
use or employ, in connection with the purchase or sale of natural
gas or the purchase or sale of transportation services subject to
the jurisdiction of the Commission, any manipulative or deceptive
device or contrivance * * * in contravention of [Commission] rules
and regulations.
    15 U.S.C. 717t-2c-1 (2000 & Supp. V 2005). In Order No. 670, the
Commission observed that the Supreme Court interpreted the phrase
``in connection with'' broadly in interpreting section 10(b) of the
Securities Exchange Act. As noted in that order, section 4A
``closely track[s] the prohibited conduct language in section 10(b)
of the Securities Exchange Act of 1934, Securities Exchange Act of
1934, 15 U.S.C. 78j(b), and specifically dictate[s] that the terms
`manipulative or deceptive device or contrivance' '' are to be used
``as those terms are used in section 10(b) of the Securities
Exchange Act of 1934.'' Order No. 670 at P 6.
---------------------------------------------------------------------------

    39. The Commission's interpretation of section 23 is also
consistent with its holdings in Order No. 636.\75\ As described in
subsequent orders, the Commission has not ``requir[ed] intrastate
pipelines to introduce all the

features of open-access service that we have required of interstate
pipelines'' because requiring intrastate pipelines to do so ``could
make it unduly burdensome to participate in interstate markets,
contrary to the intent of the [Natural Gas Policy Act of 1978].'' \76\
Here, the Commission proposes to impose only a posting burden on non-
interstate pipelines that is equivalent to the posting requirements of
interstate pipelines. In other respects, the burden on non-interstate
pipelines remains far less than that on interstate pipelines in keeping
with the Natural Gas Policy Act of 1978. While in the past, the
Commission exempted intrastate pipelines from open-access requirements,
such as electronic bulletin boards,\77\ any change in that exemption
would be justified in order to further the Commission's transparency
goals as set forth in section 23 of the Natural Gas Act.
---------------------------------------------------------------------------

    \75\ See, e.g., Order No. 636, FERC Stats. & Regs. ] 30,939, at
30,406 (permitting, but not requiring intrastate pipelines, to offer
open-access, contract storage).
    \76\ EPGT Texas Pipeline, L.P., 99 FERC ] 61,295, at 62,252
(2002).
    \77\ Order No. 636-B, 61 FERC ] 61,272, at 61,992, n.26.
---------------------------------------------------------------------------

    40. Finally, the Commission recognizes commenters' concern that the
Commission's proposal could appear to lead to further regulation. As
explained above, however, the Commission's transparency authority over
non-interstate pipelines is limited to obtaining and disseminating
information. The Commission has no interest in comprehensive regulation
of non-interstate pipelines. The Commission reiterates, section 1 of
the Natural Gas Act continues to exclude non-interstate pipelines from
such comprehensive regulation.\78\
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 717.
---------------------------------------------------------------------------

III. Interstate Pipeline Posting Requirements

    41. In the Initial NOPR, the Commission sought comment on whether
it should revise its posting requirements applicable to interstate
pipelines to require posting actual flow information.\79\ The
Commission raised the question because we proposed to require
intrastate pipelines to post actual flow information, a requirement
beyond that applied to interstate pipelines under Sec.  284.13(d)(1) of
the Commission's regulations, and because posting of actual flow
information could provide useful information regarding actual capacity
use, for instance, by giving insight into the use of no-notice
service.\80\ In this regard, Commission Staff observed that its ability
to monitor flows in the interstate pipeline system is limited in
certain locations, by the lack of actual flow information. In the case
of ``no-notice'' service,\81\ specifically, interstate pipeline
schedules do not reflect actual flows. Consequently, information about
interstate flows in areas using no-notice service is less useful. In
its comments on the Initial NOPR, the Natural Gas Supply Association
(NGSA) observed that, ``[o]n heating season peak days or days with wide
intra-day weather swings, no-notice volumes can be significant;
therefore, scheduled flow volumes are not a proxy for physical flow
and, thus, do not necessarily provide an accurate picture of underlying
market fundamentals.'' \82\ Similarly, Commission Staff observed that
the gap between scheduled and actual flows occurs most commonly in the
northern tier of the country, particularly where a pipeline serves a
local distribution company with significant space heating demand. In
such circumstances, market observers find it more difficult to ascribe
price behavior to physical changes in flows.
---------------------------------------------------------------------------

    \79\ Initial NOPR at P 43.
    \80\ Initial NOPR at P 43.
    \81\ See 18 CFR 284.7(a)(4).
    \82\ NGSA Comments at 10.
---------------------------------------------------------------------------

    42. Public posting of information reflecting no-notice service
could also prevent other forms of misconduct with direct effects on
natural gas in interstate commerce. Commission investigations of
interstate and intrastate pipeline activity resulted in two settlements
in which the settling party admitted it sought to obtain and exploit
non-public storage inventory information to gain a competitive
advantage in wholesale gas markets.\83\ Though this proposal would make
public flow information, not storage information, the importance of the
non-public information is analogous. These admissions indicate that the
lack of public flow information provides the opportunity for parties to
engage in manipulative or unduly discriminatory behavior. By making
major non-interstate pipeline flow information public, such
transparency could discourage market participants from engaging in such
manipulative or unduly discriminatory activity.
---------------------------------------------------------------------------

    \83\ Dominion Resources, Inc., 108 FERC ] 61,110 (2004)
(Dominion Resources, DTI and DEC admit that DTI violated section
161.3(f) of the Commission's regulations, former 18 CFR 161.3(f)
(2003)); The Williams Companies, Inc., 111 FERC ] 61,392 (2005)
(Transco admits that it violated section 161.3(f) of the
Commission's regulations, former 18 CFR 161.3(f) (2002)).
---------------------------------------------------------------------------

    43. In this NOPR, the Commission proposes to require interstate
pipelines to post actual flow information in addition to the capacity
and scheduled flow information that interstate pipelines are currently
required to post. Accordingly, the Commission proposes adding to Sec.
284.13(d) this requirement: ``An interstate pipeline must also provide
in the same manner [as other information is provided] access to
information on actual flowing volumes at receipt points, on the
mainline, at delivery points, and in storage fields.'' \84\
---------------------------------------------------------------------------

    \84\ Proposed 18 CFR 284.13(d).
---------------------------------------------------------------------------

    44. In response to the Initial NOPR, several commenters supported
requiring interstate pipelines to post actual flow volumes.\85\ The
NGSA asserted that posting of actual flow data ``could lead to even
more accurate and near real-time indication of underlying market supply
and demand fundamentals'' \86\ The National Association of Royalty
Owners (NARO) contended that requiring interstate pipelines to post
actual flow volumes would allow an ``apples to apples'' comparison with
the postings of intrastate pipelines.\87\
---------------------------------------------------------------------------

    \85\ See, e.g., NGSA at 10; and Apache Corp. at 8-9.
    \86\ NGSA Comments at 10.
    \87\ NARO Comments at 4.
---------------------------------------------------------------------------

    45. The Interstate Natural Gas Association of America (INGAA)
opposed any proposal for interstate pipelines to post actual flows.
INGAA contended that: (1) Scheduled flows are adequate for market
participants to estimate demand and supply conditions in order to price
market transactions; (2) actual flows include operational data that is
not relevant and may be counterproductive, such as flows reflecting
maintenance activities, storage injection and withdrawal schedules,
line pack management, balancing at interconnects, and blending to meet
quality specifications not related to commercial flows and (3) the no-
notice activity that would be captured by posting actual flows does not
reflect trading activity, but rather reflects storage withdrawals.\88\
Williston Basin Interstate Pipeline Company (Williston) indicated that
scheduled flow volumes were adequate and actual volumes not
necessary.\89\
---------------------------------------------------------------------------

    \88\ INGAA Comments at 3-4.
    \89\ Williston Reply Comments at 4.
---------------------------------------------------------------------------

    46. In order to effectively balance the benefits of the additional
flow information with the costs of such a requirement, the Commission
seeks further information regarding both the benefits of the additional
information available if actual flow volumes were posted by interstate
pipelines, and the costs imposed on interstate pipelines to develop and
post that information. In providing comments on this proposal, the
Commission encourages

commenters to support their comments by providing specific examples.
    47. Regarding benefits, is information lost by not providing actual
flows? What is the extent of any such lost information? How extensive
is the use of no-notice service? Is information regarding operational
flows, such as flows reflecting maintenance activities, storage
injection and withdrawal schedules, line pack management, balancing at
interconnects, and blending to meet quality specifications, useful to
understand supply and demand fundamentals? Does the no-notice activity
that would be captured by posting actual flows reflect trading activity
or does it reflect storage withdrawals? Can trading activity and
storage withdrawals be considered as separate activities? How?
    48. Regarding costs, how is actual flow information collected today
for operational, balancing, billing or other purposes? What process
changes, if any, would be required for interstate pipelines to post
actual flow information? How much time after flow would be required
before such information would be available for posting? Would posting
actual volumes reveal any information that might be harmful to any
competitive interests? How could it be harmful?

IV. Postings by Non-Interstate Pipelines

    49. In the Initial NOPR, the Commission proposed to require certain
intrastate pipelines to post daily information regarding the capacity
and actual flows at major receipt and delivery points and mainline
segments. In the instant NOPR, the Commission proposes to require non-
interstate pipelines to post scheduled flow information in addition to
capacity and actual flow information.\90\ Only a ``major non-interstate
pipeline'' would be required to post information. For the purposes of
this NOPR, a ``major non-interstate pipeline'' is defined as one that
is not a ``natural gas company'' under section 1 of the Natural Gas Act
and that flows greater than 10 billion cubic feet of natural gas per
year, with two exceptions.\91\ The first exception is non-interstate
pipelines that fall entirely upstream of a processing plant.\92\ The
second exception is non-interstate pipelines that deliver more than
ninety-five percent (95%) of the natural gas volumes they flow directly
to end-users.\93\
---------------------------------------------------------------------------

    \90\ Proposed 18 CFR 284.14(a).
    \91\ Proposed 18 CFR 284.1.
    \92\ Proposed 18 CFR 284.14(b)(1).
    \93\ Proposed 18 CFR 284.14(b)(2).
---------------------------------------------------------------------------

A. Rationale

    50. Through the information that would be obtained from the daily
posting requirement on major non-interstate pipelines, the Commission,
market participants, and the public could obtain a picture of daily
supply and demand conditions that directly affect U.S. wholesale
natural gas markets--a picture that is currently incomplete without
information from major non-interstate pipelines.\94\ Consequently, this
proposal to increase information from certain major non-interstate
pipelines would directly ``facilitate price transparency for the sale *
* * of physical natural gas in interstate commerce'' as authorized in
the natural gas transparency provisions.\95\
---------------------------------------------------------------------------

    \94\ In this section, the Commission reiterates its discussion
from the Initial NOPR.
    \95\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    51. The posted information from major non-interstate pipelines
would qualify as, in the words of the transparency provisions,
``information about the availability and prices of natural gas sold at
wholesale and in interstate commerce.'' \96\ Notwithstanding their
status under section 1 of the Natural Gas Act, most major non-
interstate pipelines today transport or buy and sell wholesale natural
gas that eventually enters or at least impacts the interstate natural
gas market. Further, supply and demand in non-interstate markets have a
direct effect on prices of gas destined for interstate markets because
both intrastate and interstate consumers draw on the same sources of
supply. This is the case because of the statutory, regulatory and
market changes that have taken place in the last three decades.
---------------------------------------------------------------------------

    \96\ Section 23(a)(2) of the Natural Gas Act, 15 U.S.C.A. 717t-
2(a)(2) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    52. In the Natural Gas Policy Act of 1978, Congress allowed an
intrastate pipeline to transport natural gas in interstate commerce on
behalf of any interstate pipeline or local distribution company served
by an interstate pipeline, without losing its intrastate status.\97\
Congress likewise permitted an intrastate pipeline to sell natural gas
to any interstate pipeline or any local distribution company served by
any interstate pipeline, without losing its intrastate status.\98\ In
addition, at the same time that the Commission issued Order No. 636 in
1992, it promulgated a new subpart of Part 284 (revised several times
in the past 15 years) that provides blanket authority to any person who
is not an interstate pipeline (including intrastate pipelines) to make
sales for resale of natural gas in interstate commerce.\99\ This
authorization is a limited jurisdiction sales certificate, which means
that the holder does not become subject to the panoply of Natural Gas
Act regulation by exercising its rights under the certificate.\100\
---------------------------------------------------------------------------

    \97\ See section 311(a)(2) of the Natural Gas Policy Act of
1978, 15 U.S.C. 3371(a)(2); see also 18 CFR part 284, subpart C
(Certain Transportation by Intrastate Pipelines).
    \98\ See section 311(b) of the Natural Gas Policy Act of 1978,
15 U.S.C. 3371(b); see also 18 CFR part 284, subpart D (Certain
Sales by Intrastate Pipelines).
    \99\ Order No. 636 FERC Stats. & Regs. ] 30,939, at 30,391.
    \100\ See 18 CFR part 284, subpart L (Certain Sales for Resale
by Non-interstate Pipelines).
---------------------------------------------------------------------------

    53. The market understandably reacted to these statutory and
regulatory changes since 1978. As relevant here, natural gas sold at or
destined to be sold at wholesale in the interstate market is frequently
exchanged or the transactions consummated at market hubs where
interstate and non-interstate pipelines interconnect (e.g., Waha, Katy,
Houston Ship Channel, and Carthage in Texas and at Henry Hub in
Louisiana). Prices formed at these hubs are, in effect, prices for
wholesale transactions in interstate commerce, even if a portion of the
gas priced at each market hub is consumed intrastate. In addition,
transfer of natural gas can take place directly between parties who
ship gas on both interstate and non-interstate pipelines at any
pipeline interconnection.
    54. Currently, through the availability of information regarding
daily scheduled flows of natural gas through interstate pipelines,
market participants have an increased, daily understanding of natural
gas markets, including regional conditions and the pipeline capacity
available to resolve different geographic supply/demand balances. This
is due in part to Order No. 637, where the Commission required posting
of capacity and scheduled volume information on interstate pipelines
with the direct intention of allowing shippers to monitor capacity
availability.\101\ Accordingly, interstate pipelines must

post available capacity information, specifically:

    The availability of capacity at receipt points, on the mainline,
at delivery points, and in storage fields, whether the capacity is
available directly from the pipeline or through capacity release,
the total design capacity of each point or segment on the system;
the amount scheduled at each point or segment whenever capacity is
scheduled, and all planned and actual service outages or reductions
in service capacity.\102\
---------------------------------------------------------------------------

    \101\ Regulation of Short-Term Natural Gas Transportation
Services, and Regulation of Interstate Natural Gas Transportation
Services, Order No. 637, 65 FR 10156, at 10204-10205, (Feb. 25,
2000), FERC Stats. & Regs. ] 31,091, at 31,320-31,321 (2000); order
on reh'g, Order No. 637-A, 65 FR 35706 (June 5, 2000), FERC Stats. &
Regs. ] 31,099 (2000); order on reh'g, Order No. 637-B, 65 FR 47284
(Aug. 2, 2000), affirmed in relevant part, 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) (Order No. 637).
    \102\ 18 CFR 284.13(d).

In Order No. 637, the Commission anticipated that such postings would
provide useful information regarding supply and demand fundamentals:
The changes to the Commission's reporting requirements will enhance the
reliability of information about capacity availability and price that
shippers need to make informed decisions in a competitive market as
well as improve shippers' and the Commission's ability to monitor
marketplace behavior to detect, and remedy anticompetitive
behavior.\103\
---------------------------------------------------------------------------

    \103\ Order No. 637, 65 FR at 10169.
---------------------------------------------------------------------------

    55. Today, interested market participants as well as commercial
vendors retrieve this information from the Web sites of interstate
pipelines to obtain schedule information that is then used to estimate
a variety of supply and demand conditions including geographic and
industrial sector consumption, storage injections and withdrawals and
regional production in almost real-time.\104\ Market participants have
come to rely on this information to help price transactions. Commission
Staff has also come to rely on this information to perform its
oversight and enforcement functions. In fact, market observers believe
that posting of this information contributes to market transparency by
revealing the underlying volumetric (or availability) drivers behind
price movements.\105\
---------------------------------------------------------------------------

    \104\ See, e.g., Comments of Bentek Energy, LLC., Docket No.
AD06-11-000 (filed Oct. 10, 2006).
    \105\ See, e.g., Comments of Platt's, at 11-13, Docket No. AD06-
11-000 (information regarding the supply and demand of natural gas
explains prices and such information is available from interstate
pipelines, but not intrastate pipelines).
---------------------------------------------------------------------------

    56. Notwithstanding the contribution of posted interstate schedule
information to the transparency of price and availability of natural
gas, this information cannot provide a complete picture of natural gas
flows in the United States--or even those flows directly relevant to
the pricing of natural gas flowing in interstate commerce. Several
major U.S. natural gas pricing points sit at the confluence of multiple
interstate and non-interstate pipelines. A recent study by the U.S.
Department of Energy's Energy Information Administration (EIA)
identified twenty-eight national market centers or pricing hubs, of
which thirteen are served by a combination of interstate and non-
interstate pipelines.\106\ The table below shows the capacity of
interstate and non-interstate pipelines connected to each of these
thirteen hubs.
---------------------------------------------------------------------------

    \106\ Department Of Energy, Energy Information Administration,
Natural Gas Market Centers And Hubs: A 2003 Update, Oct. 2003,
http://www.eia.doe.gov/pub/ oil--gas/natural--gas/feature--articles/

2003/market--hubs/mkthubs03.pdf

 Table 1.--Inter- and Intrastate Pipeline Delivery Capacity at Selected
                     U.S. Natural Gas Pricing Points
------------------------------------------------------------------------
                                                  Receipt and delivery
                                                        capacity
                                               -------------------------
               Hub name                 State                    Non-
                                                 Interstate   interstate
                                                 pipelines    pipelines
                                                  (MMcfd)      (MMcfd)
------------------------------------------------------------------------
 Carthage............................       TX        1,120        1,355
Henry Hub............................       LA        2,770        1,215
Katy--Enstor.........................       TX        1,370        3,815
Katy--DEFS...........................       TX          260        2,360
Mid Continent........................       KS        1,112          627
Moss Bluff...........................       TX        1,050        1,800
Nautilus.............................       LA        1,200        1,350
Perryville...........................       LA        3,652          350
Aqua Dulce...........................       TX          855          835
Waha--Lone Star......................       TX          810        1,140
Waha--Encina.........................       TX          525          800
Waha--El Paso........................       TX        1,165        1,660
Waha--DEFS...........................       TX          300       1,850
------------------------------------------------------------------------
Source: Unpublished Energy Information Administration update to March
  2005 of information presented in Natural Gas Market Centers and Hubs:
  A 2003 Update, October 2003.

    57. Many of these pricing points are closely connected to other
regions of the United States, influencing prices across the country.
The figure below shows the location and flow patterns of natural gas
moving between interstate and non-interstate markets through several of
these pricing points.

[GRAPHIC] [TIFF OMITTED] TP07JA08.000

    58. One pricing point directly connected to both interstate and
non-interstate pipelines is Henry Hub, Louisiana, the location for
delivery of natural gas under the New York Mercantile Exchange's
(NYMEX) futures contract. Monthly settlement of NYMEX's Henry Hub
natural gas future contract has become important in determining a
variety of monthly index prices used to set natural gas prices in a
variety of transactions, some in interstate commerce, particularly
along the East Coast and Gulf Coast of the United States. The nature of
this influence is detailed in Commission Staff's 2006 State of the
Markets Report.\107\
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    \107\ Federal Energy Regulatory Commission, 2006 State of the
Markets Report at 48-50 (Jan. 2007), http://www.ferc.gov/market-oversight/market-oversight.asp
 (follow link to the State of the

Markets Full Report).
---------------------------------------------------------------------------

    59. Further, purchasers of natural gas in interstate commerce draw
on the same sources of supply as users and buyers of natural gas in
intrastate commerce. For example, much of the recent Barnett Shale
development in the Fort Worth basin flows into intrastate systems
before moving into interstate markets. In total, slightly more than
forty percent of total on-shore production in Texas is connected to
interstate pipelines, less than sixty percent in Louisiana and less
than eighty percent in Oklahoma.\108\ Though daily volume flowing from
non-interstate into interstate pipelines can be estimated, the supply
dynamics that make these volumes available cannot.
---------------------------------------------------------------------------

    \108\ Bentek Energy, LLC analysis of supply scheduled into
interstate pipelines compared with EIA data from its table Natural
Gas Gross Withdrawals and Production for Texas and Oklahoma
available at http://tonto.eia.doe.gov/dnav/ng/ng_prod_sum_dcu_NUS_m.htm
.

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    60. The daily posting of flow information by major non-interstate
pipelines would provide several benefits to the functioning of natural
gas markets in ways that would protect the integrity of physical,
interstate natural gas markets, protect fair competition in those
markets and consequently serve the public interest by better protecting
consumers. First, by providing a more complete picture of supply and
demand fundamentals, these postings would improve market participants'
ability to assess supply and demand and to price physical natural gas
transactions. Second, during periods when the U.S. natural gas delivery
system is disturbed, for instance due to hurricane damage to facilities
in the Gulf of Mexico, these postings would provide market participants
a clearer view of the effects on infrastructure, the industry, and the
economy as a whole. Finallly, these postings would allow the Commission
and other market observers to identify and remedy potentially
manipulative activity. we discuss each of these points in turn.
    61. First, the proposed daily capacity and volume postings by major
non-interstate pipelines would improve market participants' ability to
assess supply and demand and price physical natural gas transactions by
providing a more complete picture of supply and demand
fundamentals.\109\ As discussed

above and noted in comments filed in these proceedings, interstate
pipeline information does not provide a complete picture of the supply
and demand fundamentals that apply to interstate commerce because much
of the natural gas in the U.S. is moved through the non-interstate
pipeline system.\110\
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    \109\ See, e.g., Comments of Platt's at 11, Docket No. AD06-11-
000 (filed Nov. 1, 2006) (explaining that, to understand prices,
``the marketplace must look to * * * information on [the]
availability of and demand for natural gas * * *'').
    \110\ See Comments of Platt's at 13, Docket No. AD06-11-000
(filed Nov. 1, 2006) (stating that much of the fundaamental supply
and demand data is missing from natural gas markets and advocating
for reporting by intrastate pipelines).
---------------------------------------------------------------------------

    62. Second, the proposed daily non-interstate pipeline capacity and
volume postings would provide market participants--and the Commission
in its market oversight efforts--a clearer view of the effects on
infrastructure, the industry, and the economy as a whole during periods
when the U.S. natural gas delivery system is disturbed. For example,
after landfall of hurricanes Katrina and Rita in late 2005, even the
most interested of governmental and commercial market observers were
not able to obtain complete information regarding the output by
potentially-damaged production facilities.\111\ By monitoring receipt
and delivery points for production facilities on interstate pipelines,
market observers were able to obtain only a limited sense of production
facility output.\112\ Similarly, market participants, state commissions
and other market observers were unable to assess effects on natural gas
consumption in the Gulf Coast, including consumption by the
petrochemical industry, for some period. The significance and duration
of these effects on this industry--vulnerable to energy price and
availability disruptions--remain unclear. This proposal would allow
interested governmental and private parties to gain a much better
picture of disruptions in natural gas flows in the case of future
hurricanes in the Gulf region.\113\
---------------------------------------------------------------------------

    \111\ See, e.g., Comments of Public Service Commission of New
York (NYPSC) at 2; Comments of Bentek Energy LLC at 15-16 21-22;
Comments of APGA at 3-4; Comments of NARO at 2; Transcript of the
Oct. 13, 2006 Technical Conference (Tr.), at 25, Transparency
Provisions of the Energy Policy Act of 2005, Docket No. AD06-11-000
(Comments of Sheila Rappazzo, Chief of Policy Section of the Office
of Gas and Water of the New York State Department of Public
Service).
    \112\ Tr. 25 (Comments of Sheila Rappazzo) (describing how after
the 2005 hurricanes data availability differed widely).
    \113\ Along these lines, this proposal is consistent with a
recent Commission final rule and a proposed survey by EIA. On August
23, 2006, the Commission revised its reporting regulations to
require jurisdictional natural gas companies to report damage to
facilities due to a natural disaster or terrorist activity that
results in a reduction in pipeline throughput or storage
deliverability. Revision of Regulations to Require Reporting of
Damage to Natural Gas Pipeline Facilities, Order No. 682, 71 FR
51098 (Aug. 29, 2006), FERC Stats. and Regs. ] 31,227 (2006), order
on reh'g, 118 FERC ] 61,118 (2007). On January 30, 2007, EIA
proposed to survey natural gas processing plants ``to monitor their
operational status and assess operations of processing plants during
a period when natural gas supplies are disrupted.'' Agency
Information Collection Activities, 72 FR 4248 (Jan. 30, 2007). The
purpose of the survey would be to ``inform the public, industry, and
the government about the status of supply and delivery activities in
the area affected by the disruption.'' Id.
---------------------------------------------------------------------------

    63. Third, the proposed daily non-interstate pipeline capacity and
volume postings would allow the Commission and other market observers
to identify and remedy potentially manipulative activity more actively
by tracking price movement in the context of natural gas flows.\114\ In
particular, information regarding availability on non-interstate
pipelines could be used to track manipulative or unduly discriminatory
behavior intended to cause harm to consumers by distorting market
prices in interstate commerce. For example, Commission Staff overseeing
markets routinely check for unused interstate pipeline capacity between
geographically distinct markets with substantially different prices as
a sign that flows may be managed to manipulate prices. Given the
importance of non-interstate pipeline connections to thirteen major
pricing hubs, including Henry Hub, as discussed above, the lack of flow
information on non-interstate pipelines hinders the Commission's market
oversight and enforcement efforts.
---------------------------------------------------------------------------

    \114\ See Comments of NGSA at 8-10.
---------------------------------------------------------------------------

    64. This benefit comports with EPAct 2005, in which Congress
directed the Commission to facilitate price transparency in physical,
interstate natural gas markets ``with due regard for the public
interest, the integrity of those markets, fair competition, and the
protection of consumers.'' \115\ By this language, Congress intended
that the improvement of Commission market oversight activities is a
legitimate justification for proposing rules under the natural gas
transparency provisions. Monitoring and preventing manipulative or
unduly discriminatory activity would meet the Commission's
responsibility for ensuring the integrity of the physical interstate
natural gas markets. The proposal to make non-interstate pipeline
information available to the public would assist the Commission in
fulfilling that responsibility.
---------------------------------------------------------------------------

    \115\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

B. Revisions to the Proposal Set Forth in the Initial NOPR

    65. The Commission has developed a more particular definition of
the types of non-interstate pipelines that would be required to post.
The Commission is not interested in burdening smaller non-interstate
pipelines like gathering systems, or individual consumers to post daily
information regarding capacity, scheduled flow volumes, and actual flow
volumes at major points and mainline segments. Consequently, the
Commission has altered its proposal from the initial NOPR that used the
term ``intrastate pipeline'' to the current proposal which defines
``major non-interstate pipeline'' to capture directly U.S. wholesale
natural gas transportation systems of significant size and contribution
to overall wholesale gas flows across the United States. The Commission
seeks comment on this proposal. In providing comments, again, the
Commission encourages commenters to support their comments by providing
specific examples.
    66. The Commission also proposes to limit the daily posting
requirement by limiting the definition of ``major non-interstate
pipeline'' based on whether the non-interstate pipeline flows more than
10 million MMBtus of natural gas per year. The intention is to focus on
non-interstate pipelines of significant size and that consequently make
a significant contribution to wholesale U.S. natural gas flows. Too low
a limit would pick up non-interstate pipelines too small to contribute
to wholesale market flows of natural gas. Too high a limit would lose
information about flows that affect wholesale pricing, either directly
by losing information at major hubs, or less directly by missing
important components of wholesale demand or supply not attached to
interstate pipelines. By way of contrast, Platts reports that total
reporting for its next-month indices at all geographical locations
across the country over the past 12 months (November 2006 through
October 2007) totaled only a little more than 8 billion cubic feet last
year.\116\ Thus, by rough comparison, movements of that size on a
pipeline could easily affect wholesale prices in any particular
location. According to EIA statistics from its 2005 Form 176 filings by
companies that do business (at least in part) as intrastate pipelines,
the 10 million MMBtu threshold would

capture 102 pipelines.\117\ The number of these non-interstate
pipelines qualifying as major non-interstate pipelines required to post
information would be further reduced by the other criteria, such as
excluding non-interstate pipelines that fall entirely upstream of
processing plants and those that deliver more than ninety-five percent
(95%) of the natural gas volumes they flow directly to end-users.
---------------------------------------------------------------------------

    \116\ As reported on the natural gas.org informational Web site,
maintained by the Natural Gas Supply Association, http://www.naturalgas.org/business/marketactivity.asp
 (as of November 29,

2007).
    \117\ See Comments of Bentek Energy, LLC, Attachment A, Docket
Nos. RM07-10-000 and AD06-11-000 (filed Aug. 21, 2006).
---------------------------------------------------------------------------

    67. The Commission seeks comment on these criteria. For the volume
criterion, are average flows of 10 billion cubic feet of natural gas
per year too low a threshold for non-interstate pipelines to require
posting at major points and mainline segments? Too high?
    68. The Commission would exempt from the daily posting requirement
two types of non-interstate pipelines that meet the volume criterion.
First, a major non-interstate pipeline that lies entirely upstream of a
processing plant would be exempt.\118\ The Commission seeks comment on
its proposed exemption of a non-interstate pipeline that lies entirely
upstream of processing plants. If these non-interstate pipelines were
excluded from the pipeline posting requirement, would significant
information useful for determining price and availability of natural
gas likely be lost?
---------------------------------------------------------------------------

    \118\ Proposed 18 CFR 284.214(b)(1).
---------------------------------------------------------------------------

    69. Second, the Commission proposes to exempt any major non-
interstate pipeline that makes greater than ninety-five percent (95%)
of its deliveries directly to end-users. The Commission seeks comment
on this exemption.\119\ If these non-interstate pipelines were excluded
from the pipeline posting requirement, would significant information
useful for determining price and availability of natural gas likely be
lost? Overall, are there any other categories of major non-interstate
pipelines that should be exempt from the daily posting requirements?
---------------------------------------------------------------------------

    \119\ Proposed 18 CFR 284.214(b)(2).
---------------------------------------------------------------------------

    70. The comments on the Initial NOPR inform the Commission's
revised proposal to limit posting to major non-interstate pipelines. In
its comments on the Initial NOPR, affiliates Agave Energy Corp. and
Yates Petroleum Corp. (Agave-Yates) urged the Commission to limit the
requirement for daily posting of flow data to those intrastate
pipelines with receipt or delivery points connected to the 13 major
market hubs served by both interstate and intrastate pipelines.\120\
Bentek Energy LLC (Bentek) proposed determining on a case by case basis
which intrastate pipelines should post.\121\ As for this approach,
Bentek observed that it ``would solve the issue of small regional
pipelines being too small to meet a threshold applied nationally, but
would require considerable analysis by the Commission to implement
[including] ongoing analysis as pricing points change periodically.''
\122\ The Commission seeks further comment on which non-interstate
pipelines should be subject to the daily posting proposal.
---------------------------------------------------------------------------

    \120\ Comments of Agave-Yates at 9-10; Reply Comments of Agave-
Yates at 1-2.
    \121\ Reply Comments of Bentek Energy LLC at 6.
    \122\ Reply Comments of Bentek Energy LLC at 6.
---------------------------------------------------------------------------

    71. The Commission seeks comment on whether this proposal would
meet the three purposes discussed above. Specifically, would the
proposal: (1) Provide a more complete picture of supply and demand
fundamentals and improve market participants' ability to assess supply
and demand and to price physical natural gas transactions; (2) provide,
during periods when the U.S. natural gas delivery system is disturbed,
for instance due to hurricane damage to facilities in the Gulf of
Mexico, a clearer view of the effects on infrastructure, the industry,
and the economy as a whole; and (3) allow the Commission and other
market observers to identify and remedy potentially manipulative
activity? \123\ Alternatively, would these three purposes be met if the
Commission limited the pipeline posting proposal to those non-
interstate pipelines with receipt or delivery points connected to the
13 major market hubs served by both interstate and intrastate
pipelines?
---------------------------------------------------------------------------

    \123\ See, supra, at P 61-64.
---------------------------------------------------------------------------

    72. In the Initial NOPR, the Commission sought comment on how to
define ``major'' receipt and delivery points and mainline segments on
intrastate pipelines for the purpose of any posting requirement.
Developing an operational definition of ``major'' receipt and delivery
points and mainline segments on major non-interstate pipelines is
crucial to making the proposal work effectively and reasonably. The
Commission stated that it ``does not wish to include extremely small
points connected to one or a few customers, which it would consider
burdensome and possibly even anti-competitive in certain cases.'' \124\
---------------------------------------------------------------------------

    \124\ Initial NOPR at P 39.
---------------------------------------------------------------------------

    73. Commenters provided suggestions for which receipt and delivery
points on non-interstate pipelines should be subject to the posting
requirement. The NARO commented that it would like to see as many
points posted as possible explaining that more than ninety percent of
flows in Texas occur in pipelines that move more than 5,000 MMBtu/
day.\125\ The Texas Alliance of Energy Producers (Texas Alliance) said
that the definition of ``major points'' should capture flows at
locations used to establish market prices (i.e., index points), with
the definition crafted to capture enough points to reduce the
opportunity for market manipulation.\126\ The Petroleum Association of
Wyoming (PAW) said the definition of ``major points'' should be limited
to those on interstate pipelines.\127\ Copano Energy LLC, in its reply
comments, said that (at most) the posting requirement should apply to
major market hubs and centers identified by the Energy Information
Administration and other current market hubs or centers for which a
daily price is published by a nationally recognized industry
publication.\128\ Crosstex Energy Services stated that the Commission
should, at most, require the posting of available capacity and
scheduled flow volumes (not actual flow information) at receipt and
delivery points (not segments) at the 13 major interstate/intrastate
pricing hubs identified in the NOPR as directly affecting interstate
pricing.\129\ The Kinder Morgan Texas Intrastate Pipeline Group (Kinder
Morgan) stated that posting of scheduled quantities at major hub points
where index prices are published would be less burdensome than the NOPR
proposal.\130\
---------------------------------------------------------------------------

    \125\ NARO Comments at 2-3.
    \126\ Texas Alliance Comments at 12.
    \127\ PAW Comments at 2.
    \128\ Copano Reply Comments at 3.
    \129\ Crosstex Reply Comments at 8.
    \130\ Kinder Morgan Reply Comments at 12.
---------------------------------------------------------------------------

    74. Comments on the Initial NOPR on how to define ``major'' receipt
and delivery points and mainline segments, in many cases, focused less
on developing effective operational definitions than they did on
jurisdictional and burden issues. The goal of the pipeline posting
proposal is to allow the development of a more complete and more
immediate picture of wholesale natural gas flows across the United
States, regardless of the traditional regulatory authority under which
a particular pipeline operates, at a reasonable cost. To accomplish
this task, the Commission needs to develop a stronger record about the
possible measurement points on major non-interstate pipelines that
could contribute valuable information at a reasonable trade-off with
costs of implementation. Consequently, the Commission seeks further
comment on which points should be posted by major non-interstate
pipelines. In order to effectively balance the benefits of a

better understanding of national natural gas flows based on more
detailed flow information against the costs of the equipment and
systems necessary to deliver that information, the Commission seeks
comment regarding how to determine the points at which it should
require posting of flow information. Again, the Commission encourages
commenters to support their assertions with specific examples.
    75. In particular, related to Kinder Morgan's comments, could
sufficient information be developed with posting only of flows in and
out of major pipeline hubs? In that case, how should those hubs be
determined? Should they be limited only to those hubs for which index
prices are produced? By looking only at flows into and out of major
pipeline hubs for which index prices are produced, would market
participants lose information important to the assessment of national
supply and demand balances lost? What other criteria could be used to
make the determination of points to be posted? Is a volumetric limit
sufficient? If a line sees flows in both directions during the day, is
a net directional flow for the day valuable, or confusing?

V. Storage Information and Non-Public Postings

    76. Prompted by comments of storage providers in response to the
Initial NOPR, the Commission seeks comment on how its posting proposal
herein would affect storage providers. By way of background, in its
comments, Enstor Operating Company (Enstor), an independent gas storage
service provider with market-based rates, said it should not be
required to post information regarding scheduled flows because gas
storage information is readily available.\131\ If required to post
information, the Commission should provide for non-public reporting and
analysis of flow data and disseminate such information to the public
only in aggregated form.\132\ Enstor stated that if its flow
information were public, it would lose negotiating strength in the
marketplace because its customers with multiple service options would
know storage capacity available at its facility, even though it would
have no knowledge of such customers' needs and limited knowledge about
capacity levels at competing, regulated storage facilities.\133\ Enstor
cautioned that release of flow data from individual storage facilities
would lead to the practice of reading other market participants'
movements and buying or selling in front of anticipated future
movements to take advantage of resulting price swings, which would
raise prices.\134\ Without non-public treatment of its flow data,
Enstor contended that its margins would be squeezed and it would make
less money.\135\ Enstor added that aggregated information disseminated
by the Commission would be more useful to end-users than disaggregated
data.\136\
---------------------------------------------------------------------------

    \131\ Comments of Enstor at 4.
    \132\ Comments of Enstor at 9.
    \133\ Comments of Enstor at 8; Reply Comments of Enstor at 5.
    \134\ Reply Comments of Enstor at 6.
    \135\ Reply Comments of Enstor at 8.
    \136\ Reply Comments of Enstor at 10.
---------------------------------------------------------------------------

    77. In order to assess the concerns expressed by Enstor (notably
the only storage provider to raise this concern), the Commission seeks
comments on the following questions. Regarding flows of gas in the
United States, does existing gas storage information provide the same
value of the information that would be collected in the Commission's
proposal? Interested commenters should compare the benefits of
requiring storage providers to post flow information publicly with the
benefits and costs of providing information to the public only in
aggregated form. Those who address this issue should address whether
non-public reporting to the Commission would support the goals of the
natural gas transparency provisions to ``facilitate price transparency
for the sale * * * of physical natural gas in interstate commerce''?
\137\ Further, commenters addressing the application of the pipeline
posting proposal to storage facility should answer the following
questions: Can individual storage facilities lose negotiating strength
when its customers know the supply of available storage capacity? Would
release of flow data from individual storage facilities lead to
increased prices? How many storage facilities would likely face this
situation if required to post flow information? Would fewer storage
facilities face this situation if the pipeline posting proposal were
modified to reduce the number of points to be posted, for example, by
limiting posting to lines running into or out of major pipeline hubs?
---------------------------------------------------------------------------

    \137\ Section 23(a)(1) of the Natural Gas Act, 15 U.S.C. 717t-
2(a)(1) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

VI. Information Collection Statement

    78. The Office of Management and Budget (OMB) regulations require
it to approve certain reporting and recordkeeping (information
collection) requirements imposed by an agency.\138\ In this NOPR, the
Commission makes two proposals that would require the posting or
collection of information, one for interstate and one for major non-
interstate pipelines.\139\ The Commission is submitting notification of
these proposed information collection requirements to OMB for its
review and approval under section 3507(d) of the Paperwork Reduction
Act of 1995.\140\
---------------------------------------------------------------------------

    \138\ 5 CFR 1320.11.
    \139\ The OMB regulations cover both the collection of
information and the posting of information. 5 CFR 1320.3(c). Thus,
the proposal to post information would create an information
collection burden.
    \140\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    79. One proposal, to require interstate pipelines to post actual
flow information, would impose an additional information collection
burden on interstate pipelines. The other proposal, to require major
non-interstate pipelines to post actual flow information, would impose
an additional information collection burden on major non-interstate
pipelines. Interstate and major non-interstate pipelines already
collect flow information for major receipt and delivery points. Certain
non-interstate pipelines have asserted in the Initial NOPR that costs
would be quite high if additional equipment was needed to meet quick
posting deadlines. However, given that this information is used in
their business within fairly quick periods, the Commission still
believes that the burden that would be imposed by this proposed
requirement is largely for the collection and posting of this
information in the required format.\141\
---------------------------------------------------------------------------

    \141\ See 5 CFR 1320.3(b)(2) (``The time, effort, and financial
resources necessary to comply with a collection of information that
would be incurred by persons in the normal course of their
activities (e.g., in compiling and maintaining business records)
will be excluded from the ``burden'' if the agency demonstrates that
the reporting, recordkeeping, or disclosure activities needed to
comply are usual and customary.'')
---------------------------------------------------------------------------

    80. OMB regulations require OMB to approve certain information
collection requirements imposed by agency rule. The Commission is
submitting notification of this proposed rule to OMB.
    Public Reporting Burden:
    The start-up and annual burden estimates for complying with this
proposed rule are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                Estimated
                                     Number of       Number of       Estimated     Total annual      start-up
         Data collection            respondents   daily postings   annual burden   hours for all    burden per
                                        142       per respondent     hours per      respondents     respondent
                                                                    respondent                        (hours)
----------------------------------------------------------------------------------------------------------------
        Part 284 FERC-551
Major Non-Interstate Pipeline                102             365             365          37,230           2,080
 Postings.......................
Additional Interstate Pipeline               109             365             365          39,785             520
 Postings.......................
                                 -------------------------------------------------------------------------------
    Total.......................             211  ..............  ..............          77,015  ..............
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection (including recordkeeping) for
all respondents is estimated to be 77,015 hours.
---------------------------------------------------------------------------

    \142\ The Commission estimated the number of respondents for
major non-interstate pipelines from EIA information. See Department
of Energy, Energy Information Administration, U.S. Intrastate
Natural Gas Pipeline Systems, http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/PIPEintra.xls.
 The

Commission estimated the number of respondents that would be
interstate pipelines also from EIA information. See Department of
Energy, Energy Information Administration, Thirty Largest U.S.
Interstate Natural Gas Pipeline Systems, 2005, http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/MajorInterstatesTable.html
 (Listing thirty largest

interstate pipelines and referencing seventy-nine other interstate
pipelines).
---------------------------------------------------------------------------

    Information Posting Costs: The average annualized cost for each
respondent is projected to be the following (savings in parenthesis):

----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                                                                     capital/
                                                                   startup costs   Annual costs     Annualized
                                                                     (10 year                       costs total
                                                                   amortization)
----------------------------------------------------------------------------------------------------------------
                            FERC-551
Major Non-Interstate Pipeline Postings..........................         $20,800         $36,500         $57,300
Additional Interstate Pipeline Postings.........................           5,200          36,500          41,700
----------------------------------------------------------------------------------------------------------------

    Title: FERC-551.
    Action: Proposed Information Posting and Information Filing.
    OMB Control No: 1902-0243.
    Respondents: Business or other for profit.
    Frequency of Responses: Daily posting requirements and annual
filing requirements.
    Necessity of the Information: The daily posting of additional flow
information by interstate and major non-interstate pipelines is
necessary to provide information regarding the price and availability
of natural gas to market participants, state commissions, the FERC and
the public. The posting would contribute to market transparency by
aiding the understanding of the volumetric/availability drivers behind
price movements; it would provide a better picture of disruptions in
natural gas flows in the case of disturbances to the pipeline system;
and it would allow the monitoring of potentially manipulative or unduly
discriminatory activity.
    Internal Review: The Commission has reviewed the requirements
pertaining to natural gas pipelines and determined they are necessary
to provide price and availability information regarding the sale of
natural gas in interstate markets.
    81. These requirements conform to the Commission's plan for
efficient information collection, communication, and management within
the natural gas industry. The Commission has assured itself, by means
of internal review, that there is specific, objective support for the
burden estimates associated with the information posting requirements.
The Commission seeks comment on these estimates.
    82. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426, [Attention: Michael Miller,
Office of the Chief Information Officer], phone:<PHONE_NUMBER>, fax:
(202) 208-2425, e-mail<EMAIL_ADDRESS>Comments on the
requirements of the proposed rule also may be sent to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Washington, DC 20503, [Attention: Desk Officer for the Federal Energy
Regulatory Commission].
    83. Comments on the requirements of the proposed rule may also be
sent to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, DC 20503 [Attention: Desk Officer
for the Federal Energy Regulatory Commission]<PHONE_NUMBER> or
<EMAIL_ADDRESS>

VII. Environmental Analysis

    84. 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.\143\ The
actions taken here fall within categorical exclusions in the
Commission's regulations for information gathering, analysis, and
dissemination, and for sales, exchange, and transportation of natural
gas that require no construction of facilities.\144 \Therefore, an
environmental assessment is unnecessary and has not been prepared in
this rulemaking.
---------------------------------------------------------------------------

    \143\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \144\ 18 CFR 380.4(a)(5) and (a)(27).
---------------------------------------------------------------------------

VIII. Regulatory Flexibility Act

    85. The Regulatory Flexibility Act of 1980 (RFA) \145\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The RFA requires consideration of regulatory alternatives that
accomplish the stated objectives of a proposed rule and that minimize
any significant economic impact on such entities. The RFA does not,
however,

mandate any particular outcome in a rulemaking. At a minimum, agencies
are to consider the following alternatives: establishment of different
compliance or reporting requirements for small entities or timetables
that take into account the resources available to small entities;
clarification, consolidation, or simplification of compliance and
reporting requirements for small entities; use of performance rather
than design standards; and exemption for certain or all small entities
from coverage of the rule, in whole or in part. The proposal to require
daily postings by interstate and non-interstate pipelines will not
impact small entities. Natural gas pipelines are classified under NAICS
code, 486210, Pipeline Transportation of Natural Gas.\146\ A natural
gas pipeline is considered a small entity for the purposes of the
Regulatory Flexibility Act if its average annual receipts are less than
$6.5 million.\147\ The Commission does not believe that any pipeline
that would be required to post under the proposal in this NOPR has
receipts less than $6.5 million. Thus, the daily posting proposal will
not impact small entities.
---------------------------------------------------------------------------

    \145\ 5 U.S.C. 601-612.
    \146\ This industry comprises establishments primarily engaged
in the pipeline transportation of natural gas from processing plants
to local distribution systems. 2002 North American Industry
Classification System (NAICS) Definitions, http://www.census.gov/epcd/naics02/def/ND486210.HTM
.

    \147\ See U.S. Small Business Administration, Table of Small
Business Size Standards, http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
 (effective July 31,

2006).
---------------------------------------------------------------------------

IX. Comment Procedures

    86. The Commission incorporates by reference the comments filed in
Docket No. RM07-10-000 into the instant docket and will consider them
in this proceeding. In addition, 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
February 21, 2008. Reply comments are due March 24, 2008. Comments must
refer to Docket No. RM08-2-000, and must include the commenter's name,
the organization they represent, if applicable, and their address in
their comments. Comments may be filed either in electronic or paper
format.
    87. Comments may 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.
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.
    88. 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.

X. Document Availability

    89. 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.
    90. 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.
    91. 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

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

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    For the reasons discussed in the preamble, the Federal Energy
Regulatory Commission proposes to amend 18 CFR chapter I as follows:

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

    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.  284.1, paragraph (d) is added to read as follows:

Sec.  284.1  Definitions.

* * * * *
    (d) Major non-interstate pipeline means a pipeline that fits the
following criteria:
    (1) It is not a ``natural gas company'' under section 1 of the
Natural Gas Act; and
    (2) It flows annually more than 10 million (10,000,000) MMBtus of
natural gas measured in average receipts or in deliveries for the past
3 years.
    3. In Sec.  284.13, the heading of paragraph (d) is revised and two
sentences are added to the end of paragraph (d)(1) to read as follows:

Sec.  284.13  Reporting requirements for interstate pipelines.

* * * * *
    (d) Capacity and flow information. (1) * * * An interstate pipeline
must also provide in the same manner access to information on actual
flowing volumes at receipt points, on the mainline, at delivery points,
and in storage fields. This information must be posted within 24 hours
from the close of the gas day on which gas flows, i.e., on or before
9:00 a.m. central clock time for flows occurring on the gas day that
ended 24 hours before.
* * * * *
    4. Section 284.14 is added to read as follows:

Sec.  284.14  Flow information of major non-interstate pipelines.

    (a) Daily posting requirement. A major non-interstate pipeline must
provide on a daily basis on an Internet Web site and in downloadable
file formats, in conformity with Sec.  284.12 of this chapter, equal
and timely access to information relevant to the capacity of major
points and mainline segments and the amount scheduled at each such
major point or mainline segment whenever capacity is scheduled. A major
non-interstate pipeline must also provide in the same manner access to
information on actual flowing volumes at major points and mainline
segments. This information must be posted within 24 hours from the
close of the gas day on which gas

flows, i.e., on or before 9:00 a.m. central clock time for flows
occurring on the gas day that ended 24 hours before.
    (b) Exemptions to daily posting requirement. The following
categories of major non-interstate pipelines are exempt from the
reporting requirement of paragraph (a) of this section:
    (1) Those that fall entirely upstream of a processing plant; and
    (2) Those that deliver more than ninety-five percent (95%) of the
natural gas volumes they flow directly to end-users.
    (3) To determine eligibility for the exemption in paragraph (b)(2)
of this section, a major non-interstate pipeline must measure volumes
by average deliveries over the preceding three calendar years.

 [FR Doc. E7-25435 Filed 1-4-08; 8:45 am]

BILLING CODE 6717-01-P