[Federal Register: May 26, 2010 (Volume 75, Number 101)]
[Rules and Regulations]
[Page 29404-29420]
[DOCID:fr26my10-2]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM09-2-000; Order No. 735]

Contract Reporting Requirements of Intrastate Natural Gas
Companies

May 20, 2010.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: In this Final Rule, the Commission revises the contract
reporting requirements for those natural gas pipelines that fall under
the Commission's jurisdiction pursuant to section 311 of the Natural
Gas Policy Act or section 1(c) of the Natural Gas Act. The Final Rule
revises Sec.  284.126(b) and replaces Form No. 549--Intrastate Pipeline
Annual Transportation Report with the new Form No. 549D--Quarterly
Transportation and Storage Report for Intrastate Natural Gas and
Hinshaw Pipelines. The Final Rule makes changes so as to increase the
reporting frequency from annual to quarterly, include certain
additional types of information and cover storage transactions as well
as transportation transactions, establish a procedure for the Form No.
549D reports to be filed in a uniform electronic format and posted on
the Commission's Web site, and hold that those reports must be public
and may not be filed with information redacted as privileged. The
Commission is also modifying its policy concerning periodic reviews of
the rates charged by section 311 and Hinshaw pipelines to extend the
cycle for such reviews from 3 years to 5 years.

DATES: Effective Date: This rule will become effective April 1, 2011.

FOR FURTHER INFORMATION CONTACT:

Vince Mareino (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>James Sarikas (Technical Information), Office of Energy Markets
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426,<PHONE_NUMBER><EMAIL_ADDRESS>Thomas Russo (Technical Information), Office of Enforcement, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, and John R. Norris.

Order No. 735

Final Rule

Issued May 20, 2010.

                                                               Paragraph
                                                                 Nos.

I. Introduction and Summary.................................           1
II. Background..............................................           2
III. Statutory Authority for the Rule.......................          15
IV. Need for the Rule.......................................          22
V. Details of Pipeline Posting Requirements.................          41
    A. Overview and Summary of Requirements.................          41
    B. Definition of Reportable Service.....................          43
    C. Reporting Frequency..................................          49
    D. Identification of Receipt and Delivery Points and              54
     Shippers...............................................
    E. Requests for Exemptions and Safe Harbor..............          62
    F. Public Status of Reports.............................          68
    G. Data Format and Technical Protocols..................          80
VI. Periodic Rate Review....................................          89
VII. Effective Date of the Final Rule and Compliance                  97
 Deadlines..................................................
VIII. Information Collection Statement......................         103
IX. Environmental Analysis..................................         109
X. Regulatory Flexibility Act...............................         110
XI. Document Availability...................................         112
XII. Effective Date and Congressional Notification..........         115

I. Introduction and Summary

    1. In this Final Rule, the Commission revises the contract
reporting requirements for (1) intrastate natural gas pipelines \1\
providing interstate transportation service pursuant to section 311 of
the Natural Gas Policy

Act of 1978 (NGPA) \2\ and (2) Hinshaw pipelines providing interstate
service subject to the Commission's Natural Gas Act (NGA) section 1(c)
jurisdiction pursuant to blanket certificates issued under Sec.
284.224 of the Commission's regulations.\3\ The revised reporting
requirements are intended to increase market transparency, without
imposing unduly burdensome requirements on the pipelines. Specifically,
the Final Rule revises Sec.  284.126(b) and replaces Form No. 549--
Intrastate Pipeline Annual Transportation Report with the new Form No.
549D, so as to (1) increase the reporting frequency from annual to
quarterly, (2) include certain additional types of information and
cover storage transactions as well as transportation transactions,\4\
(3) establish a procedure for Form No. 549D to be filed in a uniform
electronic format and posted on the Commission's Web site, and (4) hold
that those reports must be public and may not be filed with information
redacted as privileged. The Commission is also modifying its policy
concerning periodic reviews of the rates charged by section 311 and
Hinshaw pipelines to extend the cycle for such reviews from 3 years to
5 years.
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    \1\ Pursuant to section 2(16) of the NGPA, 15 U.S.C. 3301(16),
the term ``intrastate pipeline'' may refer to all entities engaged
in natural gas transportation under section 311 of the NGPA or
section 1(c) of the NGA. For consistency, this Final Rule will also
use the terms ``transportation,'' ``pipeline,'' and ``shippers'' to
refer inclusively to storage activity (except where noted).
    \2\ 15 U.S.C. 3372.
    \3\ Section 1(c) of the NGA exempts from the Commission's NGA
jurisdiction those pipelines which transport gas in interstate
commerce if (1) they receive natural gas at or within the boundary
of a state, (2) all the gas is consumed within that state and (3)
the pipeline is regulated by a state Commission. This exemption is
referred to as the Hinshaw exemption after the Congressman who
introduced the bill amending the NGA to include section 1(c). See
ANR Pipeline Co. v. Federal Energy Regulatory Comm'n, 71 F.3d 897,
898 (1995) (briefly summarizing the history of the Hinshaw
exemption).
    \4\ This Final Rule does not eliminate or revise Sec.
284.126(c) and the corresponding Form No. 537, which require a semi-
annual storage report.
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II. Background

A. Current Reporting Requirements

    2. NGPA section 311 authorizes the Commission to allow intrastate
pipelines to transport natural gas ``on behalf of'' interstate
pipelines or local distribution companies served by interstate
pipelines ``under such terms and conditions as the Commission may
prescribe.'' \5\ NGPA section 601(a)(2) exempts transportation service
authorized under NGPA section 311 from the Commission's NGA
jurisdiction. Congress adopted these provisions in order to eliminate
the regulatory barriers between the intrastate and interstate markets
and to promote the entry of intrastate pipelines into the interstate
market. Such entry eliminates the need for duplication of facilities
between interstate and intrastate pipelines.\6\ Shortly after the
adoption of the NGPA, the Commission authorized Hinshaw pipelines to
apply for NGA section 7 certificates, authorizing them to transport
natural gas in interstate commerce in the same manner as intrastate
pipelines may do under NGPA section 311.\7\
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    \5\ 15 U.S.C. 3371(c).
    \6\ EPGT Texas Pipeline, 99 FERC ] 61,295 at 62,252-3 (2002).
    \7\ Certain Transportation, Sales, and Assignments by Pipeline
Companies not Subject to Commission Jurisdiction Under Section 1(c)
of the Natural Gas Act, Order No. 63, FERC Stats. & Regs. ] 30,118,
at 30,824-25 (1980).
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    3. Subpart C of the Commission's Part 284 open access regulations
(18 CFR Sec.  284.121-126) implements the provisions of NGPA section
311 concerning transportation by intrastate pipelines. Those
regulations require that intrastate pipelines performing interstate
service under NGPA section 311 must do so on an open access basis.\8\
However, consistent with the NGPA's goal of encouraging intrastate
pipelines to provide interstate service, the Commission has not imposed
on intrastate pipelines all of the Part 284 requirements imposed on
interstate pipelines.\9\ For example, when the Commission first adopted
the Part 284 open access regulations in Order No. 436, the Commission
exempted intrastate pipelines from the requirement that they offer open
access service on a firm basis.\10\ The Commission found that requiring
intrastate pipelines to offer firm service to out-of-state shippers
could discourage them from providing any interstate service, because
such a requirement could progressively turn the intrastate pipeline
into an interstate pipeline against its will and against the will of
the responsible state authorities. Similarly, Order No. 636-B exempted
intrastate pipelines from the requirements of Order No. 636.\11\ Those
requirements included capacity release, electronic bulletin boards (now
Internet Web sites), and flexible receipt and delivery points.
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    \8\ See 18 CFR Sec. Sec.  284.7(b), 284.9(b) and 284.122.
    \9\ Associated Gas Distributors v. FERC, 824 F.2d 981, 1002-1003
(D.C. Cir. 1987) (AGD); Mustang Energy Corp. v. Federal Energy
Regulatory Comm'n, 859 F.2d 1447, 1457 (10th Cir. 1988), cert.
denied, 490 U.S. 1019 (1988); see also EPGT Texas Pipeline, 99 FERC
] 61,295 (2002).
    \10\ Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, Order No. 436, FERC Stats. & Regs. ] 30,665, at 31,502
(1985).
    \11\ Pipeline Service Obligations, and Revisions to Regulations
Governing Self-Implementing Transportation Under Part 284 of the
Commission's Regulations; Regulation of Natural Gas Pipelines After
Partial Wellhead Decontrol, Order No. 636-B, 61 FERC ] 61,272, at
61,992 n.26 (1992), order on reh'g, 62 FERC ] 61,007 (1993), aff'd
in part and remanded in part sub nom. United Distribution Cos. v.
FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on remand, Order No. 636-
C, 78 FERC ] 61,186 (1997).
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    4. Section 284.224 of the regulations provides for the issuance of
blanket certificates to Hinshaw pipelines to provide open access
transportation service ``to the same extent that, and in the same
manner'' as intrastate pipelines are authorized to perform such service
by Subpart C.
    5. The Commission currently has less stringent transactional
reporting requirements for NGPA section 311 intrastate pipelines and
Hinshaw pipelines, than for interstate pipelines. In Order No. 637,\12\
the Commission revised the reporting requirements for interstate
pipelines in order to provide more transparent pricing information and
to permit more effective monitoring for the exercise of market power
and undue discrimination. As adopted by Order No. 637, Sec.  284.13(b)
requires interstate pipelines to post on their Internet Web sites basic
information on each transportation and storage transaction with
individual shippers, including revisions to a contract, no later than
the first nomination under a transaction. This information includes:
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    \12\ Regulation of Short-Term Natural Gas Transportation
Services and Regulation of Interstate Natural Gas Transportation
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, clarified,
Order No. 637-A, FERC Stats. & Regs. ] 31,099, reh'g denied, Order
No. 637-B, 92 FERC ] 61,062 (2000), aff'd in part and remanded in
part sub nom. Interstate Natural Gas Ass'n of America v. FERC, 285
F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ] 61,127 (2002),
order on reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American
Gas Ass'n v. FERC, 428 F.3d 255 (D.C. Cir. 2005).
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     The name of the shipper.
     The contract number (for firm service).
     The rate charged.
     The maximum rate.
     The duration (for firm service).
     The receipt and delivery points and zones covered.
     The quantity of natural gas covered.
     Any special terms or details, such as any deviations from
the tariff.
     Whether any affiliate relationship exists.
    6. Section 284.13(c) of the Commission's regulations also requires
interstate pipelines to file with the Commission on the first business
day of each calendar quarter an index of its firm transportation and
storage customers and to publish the same information on their Web
sites. The information required to be included in the Index of
Customers does not include the rates paid by the customers. Section
284.13(e) requires interstate pipelines to file semi-annual reports of
their storage injection and withdrawal activities, including the
identities of the

customers, the volumes injected into and withdrawn from storage for
each customer and the unit charge and total revenues received. Order
No. 637 did not modify the reporting requirements for NGPA section 311
intrastate pipelines and Hinshaw pipelines provided in Sec.  284.126(b)
and (c) of the Commission's regulations.
    7. Section 284.126(b) of the Commission's regulations requires
intrastate pipelines to file with the Commission annual reports of
their transportation transactions, but not their storage transactions.
Those Form No. 549 reports must include the following information:
     The name of the shipper receiving transportation service.
     The type of service performed (i.e. firm or
interruptible).
     The total volumes transported for the shipper, including
for firm service a separate statement of reservation and usage
quantities.
     Total revenues received for the shipper, including for
firm service a separate statement of reservation and usage revenues.
    8. Unlike the interstate pipelines' reporting requirement (Sec.
284.13(b)), the current version of Sec.  284.126(b) does not require
intrastate pipelines to include in these Form No. 549 reports the rate
charged under each contract, the duration of the contract, the receipt
and delivery points and zones or segments covered by each contract,
whether the contract includes any special terms and conditions, and
whether there is an affiliate relationship between the pipeline and the
shipper.
    9. Section 284.126(c) requires Section 311 intrastate pipelines and
Hinshaw pipelines to file Form No. 537, a semi-annual report of their
storage activity, within 30 days of the end of each complete storage
and injection season. This requirement is substantially the same as the
Sec.  284.13(e) requirement that interstate pipelines file such semi-
annual reports of their storage activity.

B. The NOPR

    10. In November 2008, the Commission issued a Notice of Inquiry
(NOI), requesting comments on whether the Commission should impose
additional reporting requirements on NGPA section 311 intrastate
pipelines and on Hinshaw pipelines.\13\ The NOI stated that, in a
contemporaneous order, the Commission was denying a request by
interstate storage provider with market based rates \14\ for waiver of
the requirements that interstate pipelines post the rates charged in
firm and interruptible transactions no later than first nomination for
service. In that order, the Commission held that the fact some
interstate storage companies have been authorized to charge market-
based rates does not justify exempting them from the requirements in
section 284.13(b) that they post the rates charged in each storage
transaction. The SGRM order held that the existing posting requirements
for interstate pipelines are necessary to provide shippers with the
price transparency they need to make informed decisions, and the
ability to monitor transactions for undue discrimination and
preference.\15\ The Commission also found that the requested exemption
would be contrary to NGA section 4(c)'s requirement that ``every
natural gas company * * * keep open * * * for public inspection * * *
all rates.'' \16\
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    \13\ Contract Reporting Requirement of Intrastate Natural Gas
Companies, FERC Stats. & Regs. ] 35,559 (2008).
    \14\ SG Resources Mississippi, L.L.C. (SGRM).
    \15\ SGRM, 125 FERC ] 61,191 (2008).
    \16\ 15 U.S.C. 717c(c).
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    11. However, in recognition of interstate storage providers'
concern about the competitive effects of the disparate reporting
requirements for interstate pipelines and section 311 intrastate
pipelines, the NOI stated that the Commission was interested in
exploring (1) whether the disparate reporting requirements for
interstate and intrastate pipelines have an adverse competitive effect
on the interstate pipelines and (2) if so, whether the Commission
should modify the posting requirements for Section 311 intrastate
pipelines and Hinshaw pipelines in order to make them more comparable
to the Sec.  284.13(b) posting requirements for interstate pipelines.
Accordingly, the Commission sought comments to assist it in evaluating
whether changes in the Commission's posting requirements should be
considered in order to remove any competitive disadvantage for
interstate pipelines, as compared to intrastate pipelines providing
interstate transportation and storage services under Section 311 of the
NGPA and to Hinshaw pipelines providing such service pursuant to a
Sec.  284.224 blanket certificate.
    12. Based upon a review of the comments received in response to the
NOI, the Commission issued a Notice of Proposed Rulemaking (NOPR),\17\
proposing to revise its transactional reporting requirements for
intrastate and Hinshaw pipelines in order to increase market
transparency, without imposing unduly burdensome requirements on those
pipelines. The Commission proposed to increase the availability and
usefulness of the transactional information reported by intrastate and
Hinshaw pipelines by requiring that (1) the existing annual Sec.
284.126(b) transactional reports be filed on a quarterly basis, (2) the
quarterly reports include certain additional types of information and
cover storage transactions as well as transportation transactions, (3)
the quarterly reports be filed in a uniform electronic format and
posted on the Commission's Web site, and (4) the reports must be public
and may not be filed with information redacted as privileged.
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    \17\ Contract Reporting Requirements of Intrastate Natural Gas
Companies, FERC Stats. & Regs. ] 32,644 (2009) (NOPR).
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    13. The Commission invited all interested parties to comment on all
aspects of the NOPR. The Commission also elaborated on the proposed
uniform electronic format in a separate Notice Requesting Comments On
Proposed Standardized Electronic Information Collection (Information
Notice).\18\
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    \18\ Contract Reporting Requirements of Intrastate Natural Gas
Companies, FERC Stats. & Regs. ] 35,051 (2009) (Information Notice).
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    14. Comments on the NOPR and Information Notice were due on
November 4, 2009. Sixteen parties filed comments. A list of Commenters
and Abbreviations is included as an appendix to this order. Most
commenters were Section 311 or Hinshaw pipelines or their associations,
but interstate pipelines, exploration & production companies, and an
association of municipal consumers also filed comments. We discuss the
comments below in the context of reviewing, amending, and promulgating
each aspect of this Final Rule.

III. Statutory Authority for the Rule

    15. In this section, we address contentions by some commenters that
the Commission lacks authority under NGPA section 311 to require
intrastate pipelines to file more detailed transactional reports. While
some commenters contest specific aspects of our proposal as it affects
Hinshaw pipelines, no commenter questions the Commission's general
authority under NGA sections 4 and 10 to require Hinshaw pipelines to
file more detailed transactional reports.

A. NOPR

    16. In the NOPR, the Commission stated that NGPA section 311(c)
authorizes the Commission to prescribe the ``terms and conditions''
under which intrastate pipelines perform interstate service. The NOPR
concluded that its proposal to require intrastate pipelines to file and
make public the proposed

transactional reports so that shippers and others can monitor NGPA
section 311 transactions for undue discrimination is well within the
Commission's broad conditioning authority under Sec.  311(c).

B. Comments

    17. TPA claims that the Commission lacks statutory authority to
enact the proposed regulations, arguing that ``Congressional intent
[was] that transactions under NGPA Section 311 are to be subjected to
minimal regulation.'' \19\ Enogex, along with TPA, adds that the
proposed reporting requirements are ``in direct contravention of
Section 311 of the NGPA and the legislative intent,'' because
compliance would be ``unduly burdensome,'' and because disclosure would
harm the pipelines' business position.\20\
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    \19\ TPA at 2. See also id. at 12, 13, 16.
    \20\ Enogex at 6. Enogex and several other commenters also raise
this concern as a policy argument instead of an argument on
statutory authority; these policy arguments are addressed in the
subsequent section on the Need for the Rule.
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    18. Other commenters, citing the legislative history of the NGPA,
argue that the proposed regulations are lawful. Clayton Williams states
that ``to the extent the intrastate pipeline is involved in an
authorized'' interstate transaction, the Commission has jurisdiction to
review that transaction.\21\ Similarly, Texas Alliance argues that
claims of undue burden are too conclusory, and that the NGPA's
jurisdiction is actually based on whether a given activity of a Section
311 pipeline is interstate or intrastate.\22\ Clayton Williams argues
that it is the purpose of Section 311 to ``help integrate gas
markets,'' and that ``reasonable rules have always been part of the 311
world.'' \23\ Further, Apache argues for even more frequent and
detailed reporting, stating, ``the Commission has jurisdiction and
discretion to require * * * [intrastate] pipelines to report the same
information during the same time frame about natural gas transactions
that the interstate pipelines are required to report.'' \24\ Apache
reasons ``that interstate pipelines and Section 311 and Hinshaw
pipelines are held to the same prohibition on undue discrimination,''
\25\ so the transparency regulations necessary to ensure compliance
should be the same as well.
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    \21\ Clayton Williams at 4 (quoting H.R. Rep. No. 543, 95th
Cong. 1st Sess. 45 (1977)).
    \22\ Texas Alliance at 8.
    \23\ Clayton Williams at 3-4.
    \24\ Apache at 3.
    \25\ Apache at 6.
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C. Commission Determination

    19. The Commission's statutory authority to impose reporting
requirements on Section 311 pipelines derives from NGPA section 311(c),
which states, ``any authorization granted under this section shall be
under such terms and conditions as the Commission may prescribe.'' \26\
This blanket authority is well-established as the ground for the
previous reporting requirements for Form No. 549. As the Commission
reasoned in the rulemaking establishing a previous version of this
reporting requirement, ``section 311 tasks the Commission with the
responsibility to ensure rates and charges are fair and equitable. For
the Commission to carry out this responsibility, it is important for
rates charged to be reported.'' \27\ None of the commenters in this
docket challenge the legality of the previous reporting requirements.
The new reporting requirements are not so different in scope or burden
as to generate serious questions about the Commission's long-
established statutory authority to require transactional reporting.
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    \26\ 15 U.S.C. 3371(c).
    \27\ Revisions to Uniform System of Accounts, Forms, Statements,
and Reporting Requirements for Natural Gas Companies, Order No. 581,
60 FR 53019, 53050-51, FERC Stats. & Regs. ] 31,026 (1995), order on
reh'g, Order No. 581-A, FERC Stats. & Regs. ] 31,032 (1996) (Order
No. 581).
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    20. TPA's characterization that the NGPA limits the Commission to
``minimal regulation,'' \28\ is misleading and unsupported. While
Congress sought to encourage intrastate pipelines to participate in the
interstate transportation market by enabling them to do so without
bearing the burden of full Commission regulation under the NGA,\29\
this does not mean that Commission regulation under NGPA section 311
was to be minimal. In Associated Gas Distributors v. FERC,\30\ the
court affirmed the Commission's use of its NGPA section 311(c)
conditioning authority to impose conditions necessary to assure that
section 311 intrastate pipelines do not engage in undue discrimination.
The court also stated ``that the Commission has been correct in its
belief that under Sec.  311 it should assert the traditional regulatory
approach in areas where it is needed to protect the public from market
dominance by natural gas companies.'' \31\ Requiring intrastate
pipelines to file quarterly transactional reports to permit the
Commission, shippers, and others to monitor for undue discrimination is
fully within the scope of this conditioning authority.
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    \28\ TPA at 2.
    \29\ Mustang Energy Corp. v. Federal Energy Regulatory Comm'n,
859 F.2d 1447, 1457 (10th Cir. 1988), cert. denied, 490 U.S. 1019
(1988); see also EPGT Texas Pipeline, 99 FERC ] 61,295 (2002).
    \30\ 824 F.2d 981, 1002-1003 (D.C. Cir. 1987) (AGD).
    \31\ Id. at 1018 (citation omitted).
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    21. While the Commission will consider the burden question in more
detail below, commenters have provided no persuasive evidence that the
Final Rule is somehow so burdensome as to be beyond Commission's
jurisdiction. As compared to the requirements for interstate pipelines,
the Final Rule is limited in the scope of the reports, the burden of
publishing a report, and the frequency of the reports. As discussed
below, the Commission held itself to these limitations so that the
Sec.  284.126(b) requirements should remain lighter than the Sec.
284.13(b) interstate requirements and so that the value of the
increased flow of information exceeds the increased burden of
reporting. Any further lightening would risk undermining the Final
Rule's ability to increase transparency and improve the functioning of
the transportation market.

IV. Need for the Rule

A. NOPR

    22. Upon review of the comments received in response to the NOI,
the Commission held that its primary goal in revising the transactional
reporting requirements for intrastate and Hinshaw pipelines would be to
increase market transparency.\32\ As the Commission reasoned,
``[t]ransactional information provides price transparency so shippers
can make informed purchasing decisions, and also permits both shippers
and the Commission to monitor actual transactions for evidence of
possible abuse of market power or undue discrimination.'' \33\ The
Commission found that certain types of additional information should be
published in order to enable shippers, other market participants, and
the Commission ``to determine the extent to which particular
transactions are comparable to one another,'' \34\ a prerequisite for
determining the rights of similarly situated shippers and for detecting
undue discrimination.
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    \32\ NOPR at 1, 16.
    \33\ NOPR at 16.
    \34\ NOPR at 19.
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    23. The Commission stated in the NOPR that it ``believes that the
revised reporting requirements * * * avoid[ ] unduly burdensome
requirements that might discourage * * * participating in the
interstate market.'' \35\ In proposing

the frequency, content, and format of the reports, the Commission
sought the best balance of minimizing the reporting burden and
maximizing the competitive effects on the markets. For example, the
Commission proposed to host reporting data on its own Web site, and
encouraged intrastate pipelines to comment on the preferred file
format, in order to help the Commission lessen the information
technology burden for pipelines.\36\
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    \35\ NOPR at 17.
    \36\ NOPR at 28-29.
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B. Comments

    24. Several intrastate pipelines argue that the Commission failed
to identify sufficiently compelling reasons for revising the reporting
requirements. These commenters argue that further transparency is
unnecessary, or that the proposal would have little practical
benefit.\37\ Enogex, for example, argues that ``[i]n view of the
minimal amount of concern expressed by interstate pipelines * * * the
Commission should have terminated this proceeding.'' \38\ AOG suggests
that the Commission should, if not abandon the proposal, at least
``more narrowly tailor[ it] to address a perceived problem [regarding]
* * * transparency.'' \39\ TPA claims that further transparency in the
section 311 and Hinshaw transportation and storage markets is not
needed because the United States' natural gas commodity sales hubs are
the most price-transparent in the world.\40\ TPA further complains that
commenters have yet to ``cite[ ] any specific examples of adverse
market impacts'' from the status quo, and ``no entity has asked the
Commission to expand the Section 311 reporting requirements to increase
transparency,'' and is therefore ``not reasoned decision making.'' \41\
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    \37\ E.g., OneOK at 3, TPA at 3.
    \38\ Enogex at 5.
    \39\ AOG at 1.
    \40\ TPA at 11.
    \41\ TPA at 2, 4, 10.
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    25. Several pipelines argue that the new regulations place them at
a competitive disadvantage compared to pipelines that only operate
under the NGA or under state jurisdiction, or compared to shippers.
Similarly, several pipelines complain that the current proposal could
be too burdensome,\42\ potentially causing some pipelines to abandon
the Section 311 or Hinshaw markets.\43\
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    \42\ E.g., AGA at 7; AOG at 7; Jefferson at 2, 6.
    \43\ E.g., Enogex at 8; TPA at 14.
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    26. Enogex and Enstor contend that the proposed reporting
requirements would harm NGPA section 311 storage providers with market-
based rates. Enogex argues that letting competitors see its rate
information would limit its own ability to ``capture rates'', calling
it ``tantamount to rescinding market-based rate authority.'' \44\
Enogex asserts the Commission should at least exempt storage services
provided at market-based rates.
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    \44\ Enogex at 8.
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    Enogex argues that sufficient public information already exists on
storage services, and that the Commission has stated when it authorizes
market-based rates that such providers lack market power, thus reducing
the need for regulatory scrutiny.\45\ Enstor is also concerned that the
proposed reporting requirements, particularly the requirement to report
quarterly revenues received from each storage customer, would allow
customers ``to recreate the storage positions'' that resulted in
another customer receiving favorable rates.\46\ Shippers, Enstor
argues, should not have more information about the pipeline than the
pipeline has about its shippers.
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    \45\ Enogex at 11-12.
    \46\ Enstor at 7.
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    27. Atmos goes further, warning ``of potential collusion or other
anticompetitive behaviors that can be facilitated by untimely public
disclosure of transaction-specific information.'' \47\
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    \47\ Atmos at 5 (citing Transparency Provisions of Section 23 of
the Natural Gas Act, Order No. 704, FERC Stats. & Regs. ] 31,260 at
P. 88 (2007); order on reh'g, Transparency Provisions of Section 23
of the Natural Gas Act, Order No. 704-A, FERC Stats. & Regs. ]
31,275 (2008); order on reh'g, Transparency Provisions of Section 23
of the Natural Gas Act, Order No. 704-B, 125 FERC ] 61,302 (2008)).
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    28. Other commenters, however, applaud the NOPR, arguing that the
information sought in the reports would help enable the market to
function more efficiently. Cities, Clayton Williams, and Texas Alliance
ask the Commission to expand reporting requirements in order to provide
greater transparency, especially in the Texas market.\48\ Cities and
others contend that this ``lack of competition in the intrastate
pipeline market in Texas'' could be ameliorated by ``making information
and records available both to the public and to shippers.'' \49\ For
example, Clayton Williams provides a detailed narrative suggesting that
it could have pursued allegations that a pipeline has been engaging in
unlawful business practices, if only it had more publicly available
information to support its allegation.\50\
---------------------------------------------------------------------------

    \48\ Cities at 3; Clayton Williams at 1; Texas Alliance at 8.
    \49\ Cities at 2, 4.
    \50\ Clayton Williams at 5-15.
---------------------------------------------------------------------------

    29. These commenters further argue that lack of transparency harms
the integrity of national price indices,\51\ and that the Commission's
proposed new regulations will help state-level transparency, and thus
state-level markets, as well.\52\ Apache also responds to TPA's
argument that interstate pipelines have not sought out the proposed
regulation: ``It can be expected that most interstate pipelines would
hope to levelize the playing field by eliminating regulation for all
pipelines, rather than increasing regulation for all.'' \53\ However,
Apache urges, new regulations are warranted based on the expected
usefulness of improved access to market information.
---------------------------------------------------------------------------

    \51\ Texas Alliance at 4.
    \52\ Cities at 4; Texas Alliance at 6.
    \53\ Apache at 8.
---------------------------------------------------------------------------

    30. These commenters also argue that publicly available data is
vital to eliminate unfair advantages.\54\ For example, Apache argues
that intrastate and interstate pipelines both face the same economic
environment and therefore should report the same information.\55\
Constellation argues that existing regulations harm the market by
leaving shippers without enough information to ``make fully informed
purchasing decisions.'' \56\ Texas Alliance and Clayton Williams,
likewise, argue that transparency helps limit the abuse of the monopoly
power that some pipelines have over upstream shippers.\57\
---------------------------------------------------------------------------

    \54\ E.g., Yates at 6.
    \55\ Apache at 7-8.
    \56\ Constellation at 4.
    \57\ Texas Alliance at 9-10; Clayton Williams at 12.
---------------------------------------------------------------------------

    31. Commenters also dismiss the notion that the current proposal
could be too burdensome.\58\ Apache argues, ``[a] Section 311 pipeline
is not going to forego the opportunity to earn money merely because it
must comply with a transactional posting requirement.'' \59\ As Texas
Alliance phrases it, the reason why the rulemaking ``is so strongly
opposed by the Texas intrastate pipelines and their association [is
that i]t threatens to let sunshine in where they prefer the dark.''
\60\
---------------------------------------------------------------------------

    \58\ E.g., Yates at 7.
    \59\ Apache at 8.
    \60\ Texas Alliance at 3.
---------------------------------------------------------------------------

C. Commission Determination

    32. In this Final Rule, the Commission is adopting the proposed
quarterly transactional reporting requirements for section 311 and
Hinshaw pipelines, with several clarifications discussed in subsequent
sections of this rule. The Commission finds that these transactional
reporting requirements appropriately balance the need for increased
transparency of intrastate and Hinshaw pipeline transactions, while

avoiding unduly burdensome requirements that might discourage such
pipelines from participating in the interstate market.
    33. Transactional information provides price transparency so
shippers can make informed purchasing decisions, and also permits both
shippers and the Commission to monitor actual transactions for evidence
of possible abuse of market power or undue discrimination. The existing
reporting requirements in Sec.  284.126 are inadequate for this
purpose. For example, the annual reports of transportation transactions
required by existing Sec.  284.126(b) do not include (1) the rates
charged by the pipeline under each contract, (2) the receipt and
delivery points and zones or segments covered by each contract, (3) the
quantity of natural gas the shipper is entitled to transport, store, or
deliver, (4) the duration of the contract, or (5) whether there is an
affiliate relationship between the pipeline and the shipper. Similarly,
the semi-annual storage reports required by existing Sec.  284.126(c)
do not include the rates charged by the storage provider in each
contract, the duration of each contract, or whether there is an
affiliate relationship between the storage provider and its customer.
    34. However, all this information is necessary to allow the
Commission, shippers, and others to determine the extent to which
particular transactions are comparable to one another for purposes of
monitoring for undue discrimination. For example, contracts for service
on different parts of a pipeline system or with different durations may
not be comparable to one another. In addition, the requirement that
affiliate relationships between the pipeline and its shippers be
reported will allow the Commission and interested parties to monitor
whether the pipeline is favoring its affiliates. The additional
information required to be reported by the Final Rule is also necessary
to allow shippers to make informed decisions about their capacity
purchases. Shippers need to know the price paid for capacity over a
particular path to enable them to decide, for instance, how much to
offer for the specific capacity they seek.
    35. The Commission also finds that the lack of transparency
ultimately harms not only shippers, but the pipelines themselves, whose
individual actions to protect market advantage work collectively to
make intrastate transportation less attractive. Without transparency
and trust, efficient free-market allocation of resources is not
possible. As the specific example reported by Clayton Williams shows,
the current market's lack of transparency fosters, at the very least,
an atmosphere of mistrust. While TPA may plausibly assert that natural
gas commodity sales hubs are the most price-transparent commodity
markets in the world, the same cannot be said of the market for
intrastate transportation. It is the Commission's obligation to ensure
transparency at all stages of the natural gas market over which it has
jurisdiction, because inefficiencies and unfair treatment in one stage
of the market can lead to harm elsewhere in the market. Accordingly, we
find that there is a need for revised regulations that improve market
transparency.
    36. Exempting storage services provided at market-based rates is
also unwarranted. A Commission finding that a service provider lacks
market power should not be read to mean that its shippers are at no
risk of undue discrimination or other unlawful practices. Furthermore,
it is still in the public interest to disseminate market information
concerning the transactions of market-based storage services. As the
Commission reasoned in a previous rulemaking, ``[i]t is even more
critical for the Commission to review pricing when the Commission is
relying on competition to regulate rates, rather than scrutinizing the
underlying cost of service. Thus, we will not exempt intrastate storage
companies charging market-based rates from the requirement to file * *
* reports.'' \61\ Posting rates charged in previous market-based
transactions leads to greater transparency and competition. As the
Commission found, in Order No. 637-A, with respect to alleged
competitive harm to individual firms:
---------------------------------------------------------------------------

    \61\ Revisions to Uniform System of Accounts, Forms, Statements,
and Reporting Requirements for Natural Gas Companies, Order No. 581,
60 FR 53019, 53051, FERC Stats. & Regs. ] 31,026 (1995), order on
reh'g, Order No. 581-A, FERC Stats. & Regs. ] 31,032 (1996) (Order
No. 581).

    While disclosure of the transactional information may cause some
commercial disadvantage to individual entities, it will benefit the
market as a whole, by improving efficiency and competition. Buyers
of services need good information in order to make good choices
among competing capacity offerings. Without the provision of such
---------------------------------------------------------------------------
information, competition suffers.\62\

    \62\ Order No. 637-A, at 31,614-615. Enstor is concerned that
the requirement to include the revenues received from each
interruptible storage customer during a quarter will cause
competitive damage, alleging that such information will allow
customers to recreate the storage positions that resulted in another
customer receiving favorable rates. However, the existing semi-
annual storage reports required by Sec.  284.126(c) already require
the reporting of revenues received from each customer. Increasing
the frequency of such revenue reports from semi-annually to
quarterly would not appear to significantly affect this concern.
---------------------------------------------------------------------------

    37. Further, we are convinced the burdens to respondents will be
small relative to the gains that the new regulations will bring to the
market. The burden test goes to the heart of our regulatory authority:
One purpose of the NGPA was to induce intrastate pipelines to
participate in the interstate market by ensuring that it would not be
unduly burdensome to do so.\63\ As discussed in more detail below, we
are minimizing the burden of these new transactional reporting
requirements in several ways. For example, we are not imposing a daily
posting requirement, such as we have required of interstate pipelines.
Therefore, the transactional reports required by the Final Rule will
not require section 311 and Hinshaw pipelines to maintain internet Web
sites. We are also clarifying several of the specific proposed
reporting requirements as requested by commenters in a manner that
should reduce the burden of compliance. Finally, while the reports must
be filed in a standardized electronic format, the Commission will
develop an electronic form in a PDF format that can be downloaded from
the FERC Web site and saved to a user's computer desktop. In addition,
the Commission will develop an XML Schema that can be used by
Respondents who wish to file an XML file.
---------------------------------------------------------------------------

    \63\ Associated Gas Distributors v. FERC, 824 F.2d 981, 1001-
1003 (D.C. Cir. 1987).
---------------------------------------------------------------------------

    38. In addition, since the establishment of the first intrastate
pipeline reporting requirements, electronic communications have reduced
the cost of reporting transactional information. Given these advances
in data management, collecting and compiling information for the
proposed quarterly reports should be no more burdensome at present than
it was to manage the lesser amount of information required when the
Commission first established transactional reporting for intrastate
pipelines.
    39. We consider the question of undue burden not only in isolation,
but in the context of a pipeline's entire jurisdictional business, and
relative to the benefits to the market.\64\ The new

requirements aim to empower shippers ``to determine the extent to which
particular transactions are comparable to one another.'' \65\ In this
way, the Commission gives shippers increased ability to protect
themselves from undue discrimination, and thus be less dependent on
Commission investigations to protect their rights. The new reporting
requirements also provide information that may assist state and local
regulatory bodies, without interfering in their autonomy of action.
---------------------------------------------------------------------------

    \64\ See, e.g., Transparency Provisions of Section 23 of the
Natural Gas Act, Order No. 704-A, FERC Stats. & Regs. ] 31,275 at P
17 (2008) (``While we acknowledge that removing purchases from
volumes that must be reported on Form No. 552 would somewhat reduce
the reporting burden on certain market participants, we continue to
believe that the substantial benefits of having such data publicly
available outweigh this burden.''), order on reh'g, Order No. 704-B,
125 FERC ] 61,302 (2008). See also Pipeline Posting Requirements
under Section 23 of the Natural Gas Act, Order No. 720, 73 FR 73494,
FERC Stats. & Regs. 31,283, at P 56 (2008) (``We also believe that
the goals of this Final Rule outweigh the burdens to be placed upon
non-interstate and interstate pipelines.''); order on reh'g, Order
No. 720-A, FERC Stats. & Regs. ] 35,302, at P 116 (2010) (``The
Commission understands commenters' arguments that posting new points
on a rolling basis would be burdensome for major non-interstate
pipelines, but believes that these burdens are overstated and
substantially outweighed by the transparency benefit of timely
posting of newly eligible points.'').
    \65\ NOPR at 19.
---------------------------------------------------------------------------

    40. In response to the pipelines that suggest that they have an
overriding confidentiality interest, or that even raise the specter
that increased transparency may cause unlawful behavior, we disagree.
The Commission's decades of experience in enforcement have confirmed
the wisdom of what jurists have long held in the related realm of
financial disclosure: ``confidentiality interest is not absolute,
however, and can be overcome by a sufficiently weighty government
purpose. * * * `Sunlight is said to be the best of disinfectants;
electric light the most efficient policeman.' '' \66\
---------------------------------------------------------------------------

    \66\ Statharos v. New York City Taxi & Limousine Comm'n, 198
F.3d 317, 323 (2d Cir. N.Y. 1999) (citing Louis Brandeis, Other
People's Money and How the Bankers Use It 62 (1914)).
---------------------------------------------------------------------------

V. Details of Pipeline Posting Requirements

A. Overview and Summary of Requirements

    41. The Final Rule, in accordance with the NOPR, requires Form No.
549D transactional reports under Sec.  284.126(b) to be filed on a
quarterly basis, to include certain additional types of information and
cover storage as well as transportation, and to be filed in a uniform
electronic format and posted on the Commission's Web site without
redaction.
    42. In addition, the Final Rule clarifies or amends the NOPR on
several points elaborated below. We clarify that pipelines are to file
their Form No. 549D transactional reports on a contract-by-contract
basis for each shipper, rather than on a transaction-by-transaction
basis. We adopt a common identification requirement for shippers. For
receipt and delivery points, however, pipelines need only use an
industry common code where one is already in use, and may report wells
and other gathering systems in the aggregate. We clarify that pipelines
should continue to only report on their jurisdictional activities.
Finally, we provide several clarifications regarding the data format
and technical protocols, with the result being a flexible framework
similar to the ``simple spreadsheet'' concept proposed by some
commenters.

B. Definition of Reportable Service

1. NOPR
    43. The version of Sec.  284.126(b)(1) proposed in the NOPR calls
for a quarterly report that contains information on ``each
transportation and storage service provided.'' Neither the proposed
regulations nor the preamble to the NOPR directly defined the word
``service.'' In the preamble, in the context of rejecting daily
posting, the Commission rejected the option of ``daily postings of
information about individual transactions.'' \67\ However, the preamble
also states that pipelines should report ``additional information
concerning each transaction.'' \68\
---------------------------------------------------------------------------

    \67\ NOPR at 25.
    \68\ NOPR at 20.
---------------------------------------------------------------------------

2. Comments
    44. Some commenters express concern that the NOPR's phrasing is
unclear as to whether pipelines are to make their reports on a
contract-by-contract basis or a transaction-by-transaction basis.\69\
They point out that a shipper may schedule numerous transactions during
a quarter under a single contract. For example, a shipper may have a
single interruptible contract, but may schedule separate transactions
at different rates using different receipt and delivery points on a
daily basis. AGA, for example, ``urges the Commission to clarify that
Hinshaw pipelines are required to report their `contracts' on a
quarterly basis in a manner similar to what they currently report
[rather than r]equiring information to be reported separately for each
individual `transaction.' '' \70\ Other commenters are concerned that
the Commission intends to require separate reports for each
transaction. TPA, for example, complains that under ``the onerous
approach * * * proposed in the NOPR,'' a pipeline with ``multiple daily
transactions under single contracts could [be] * * * reporting
thousands of individual transportation transactions.'' \71\
---------------------------------------------------------------------------

    \69\ E.g., Jefferson at 11.
    \70\ AGA at 2; see also AGA at 9-10.
    \71\ TPA at 4-5.
---------------------------------------------------------------------------

    45. Apache and Jefferson take the opportunity to propose
alternative approaches to the question of what should be reported.
Apache argues that ``[f]ull transparency regarding all natural gas
transactions on a real-time basis, comparable to the reporting
requirements of interstate pipelines, is the only comprehensive way to
protect natural gas consumers to ensure the integrity of the market.''
\72\ Nevertheless, Apache clarifies that it supports the NOPR as ``a
helpful improvement over the status quo.'' \73\ Jefferson argues that
the level of detail proposed in the NOPR for the reports is too
burdensome and too far beyond what is required to address the actual
disparities between interstate and intrastate reporting.\74\
Accordingly, Jefferson proposes limiting the report to 22 fields.\75\
---------------------------------------------------------------------------

    \72\ Apache at 3.
    \73\ Apache at 3.
    \74\ Jefferson at 16.
    \75\ Jefferson at 15-16.
---------------------------------------------------------------------------

3. Commission Determination
    46. We clarify that pipelines are to report the required
transactional information in Form No. 549D on a contract-by-contract
basis for each shipper, rather than on a transaction-by-transaction
basis. In general, a pipeline will be required to make a separate data
entry for each of a shipper's contracts under a given rate schedule.
The pipeline should aggregate all nominations and shipments under each
contract for the quarter. In other words, while the reports will
contain information on each transaction, that information will be
aggregated by contract for each shipper for each type of service
provided.
    47. If the pipeline charges a shipper multiple prices for different
transactions or shipments under a single contract and service, the
pipeline would still file a single report for that contract, with the
following information. The pipeline would report the volume-weighted
average rate charged under that contract for the quarter. The pipeline
would also include a list of all the various rates charged during the
quarter in the appropriate comment field for that contract. The
pipeline would not be required to state the volumes associated with
each rate or the dates each rate was charged. Similarly, the pipeline
would list the receipt and delivery points used during each quarter for
each contract, but is not required to separately report

the rates charged and volumes received and delivered at each point.
    48. We decline the opportunity to radically alter the type of
information reported, as suggested by Apache and Jefferson. Based on
the comments in this docket, the Commission believes that refinements
to the NOPR are more certain to ensure a fair balance of the additional
transparency benefits that would accrue to the market versus the
administrative costs of compliance.

C. Reporting Frequency

1. NOPR
    49. In the NOPR, the Commission found that increasing the frequency
of the Sec.  284.126(b) transactional reports from annual to quarterly
would provide market participants and the Commission with more timely
and more useful information concerning the transactions entered into by
intrastate pipelines. The Commission stated that it sought to balance
the benefits of increased transactional transparency against the need
to avoid creating undue burden for the responding pipelines. The
Commission highlighted that ``one primary difference will remain
between the reporting requirements for interstate pipelines and the
Section 311 and Hinshaw pipelines: Interstate Pipelines will post
transactional information daily on their Web sites, while Section 311
and Hinshaw pipelines will submit this information in a quarterly
report to the Commission.'' \76\ The Commission noted alternative
proposals from commenters, but found that a quarterly filing
requirement would strike the appropriate balance.
---------------------------------------------------------------------------

    \76\ NOPR at P 23.
---------------------------------------------------------------------------

2. Comments
    50. Most commenters support quarterly reporting. Even some parties
who urge the Commission to cancel the rulemaking docket nevertheless
state that they could accept limited quarterly reporting.\77\ Some
shippers, while generally supportive of the NOPR, state that they would
prefer daily reporting is the best way to ensure transparency and
competitive markets.\78\ The pipelines, however, consider the
possibility of daily reporting to be ``very costly, particularly if
daily posting on a Web site was required,'' \79\ due ``to the [sheer]
volume of reporting'' of each day's transactions.\80\
---------------------------------------------------------------------------

    \77\ TPA at 6; Atmos at 5.
    \78\ Apache at 2-3; Constellation at 4; Yates at 5-6.
    \79\ Duke at 5.
    \80\ TPA at 20.
---------------------------------------------------------------------------

3. Commission Determination
    51. The Final Rule adopts the NOPR's proposal to require quarterly
reporting by section 311 and Hinshaw pipelines. The Commission
continues to find that a quarterly reporting requirement strikes the
appropriate balance of increasing transparency without imposing undue
burdens on section 311 and Hinshaw pipelines. One purpose of the NGPA
was to induce intrastate pipelines to participate in the interstate
market by ensuring that it would not be unduly burdensome to do so.\81\
This participation by intrastate pipelines eliminates the need for
duplication of facilities between interstate and intrastate
pipelines.\82\ Thus, as the court has stated, ``Congress intended that
intrastate pipelines should be able to compete in the transportation
market without bearing the burden of full regulation by FERC under the
Natural Gas Act.'' \83\
---------------------------------------------------------------------------

    \81\ AGD, 824 F.2d at 1001-1003.
    \82\ EPGT Texas Pipeline, L.P., 99 FERC ] 61,295 at 62,252.
    \83\ Mustang Energy Corp. v. Federal Energy Regulatory Comm'n,
859 F.2d 1447, 1457 (10th Cir. 1988), cert. denied, 490 U.S. 1019
(1988); see also EPGT Texas Pipeline, 99 FERC ] 61,295 (2002).
---------------------------------------------------------------------------

    52. In the NOPR, the Commission stated that a daily reporting
requirement would require all intrastate and Hinshaw pipelines to
maintain their own Web sites for this purpose, and such daily postings
of information about individual transactions would be significantly
more burdensome than a quarterly reporting requirement. As described
above, several pipeline commenters have reaffirmed that a daily posting
requirement would be very costly. In addition, Constellation, while
stating that daily posting would provide more transparency, agrees that
at this time such a requirement appears unduly burdensome.\84\
---------------------------------------------------------------------------

    \84\ Constellation at 4.
---------------------------------------------------------------------------

    53. Only two commenters request that the Commission require daily
reporting. They contend that real-time reporting of individual
transaction data would allow more immediate monitoring of whether the
pipeline is engaging in undue discrimination and provide more useful
price transparency. The Commission recognizes that daily posting could
enable shippers and others to observe potentially discriminatory
actions more quickly. However, the quarterly reports will provide
similar information, enabling shippers and others to file complaints if
they believe such information suggests a pattern of discrimination by
the pipeline. Given the interest in avoiding placing undue burdens on
section 311 and Hinshaw pipelines, the Commission finds that the
quarterly reporting requirement, together with our other changes to the
reporting requirements including the requirement that all reports be
public, appropriately balances the need for more transparency with the
interest in encouraging section 311 and Hinshaw pipelines to
participate in the interstate pipeline grid.

D. Identification of Receipt and Delivery Points and Shippers

1. NOPR
    54. The NOPR proposed requiring intrastate pipelines to report
several new elements of information, among them the primary receipt and
delivery points covered by the contract. The NOPR proposed that the
reports include the ``industry common code'' for each receipt and
delivery point in order to minimize any ambiguity as to what receipt
and delivery points are being reported and to ensure that all reporting
pipelines identify such points in a consistent manner.\85\ Similarly,
the NOPR proposed that, when reporting the identity of a given shipper,
respondents should include not only the full legal name, but also an
``identification number'' for each shipper.\86\
---------------------------------------------------------------------------

    \85\ NOPR at P 33.
    \86\ NOPR at P 33.
---------------------------------------------------------------------------

    55. However, the NOPR stated that, while the Commission was aware
of some shipper identification standards and receipt and delivery point
codes that are used in the natural gas industry (for example, Dun &
Bradstreet, Inc.'s D-U-N-S identification numbers for shippers), the
Commission was reluctant to choose any particular standard without
input as to that standard's cost-effectiveness and usefulness.
Accordingly, the Commission sought comment on two related questions:
(1) What sort of shipper identification numbers and receipt and
delivery point common industry codes are currently used or readily
available to section 311 and Hinshaw pipelines?; and (2) Which shipper
identification standard or standards and receipt and delivery point
codes, if any, should be used?\87\
---------------------------------------------------------------------------

    \87\ NOPR at P 34.
---------------------------------------------------------------------------

2. Comments
    56. Some commenters argue that using industry common codes to
report receipt and delivery points would be highly burdensome, due to
the cost of obtaining common code identifiers from a third-party
registry. According to Jefferson, the annual charge for licensing
common location codes is

$1,670 for 1-20 points, $3,506 for 21-100 points, and $5,428 for 100+
points.\88\ Enogex protests that it ``does not have `primary' and
`secondary' points on its system, but rather uses standard receipt and
delivery points. As a result, Enogex does not have * * * common
codes,'' and urges that the Commission reject this element as ``base[d]
* * * on the business practices of interstate pipelines.'' \89\ TPA
voices similar concerns. Jefferson and ONEOK suggest letting
respondents use their own meter codes instead. AGA suggests, as a
compromise, that pipelines that do not already use common codes should
be allowed ``to use an interstate pipeline's Data Reference Number
(DRN) for points of interconnection with an interstate pipeline and use
[their own] proprietary code where a DRN has not already been
assigned.'' \90\
---------------------------------------------------------------------------

    \88\ Jefferson at 9.
    \89\ Enogex at 12.
    \90\ AGA at 2.
---------------------------------------------------------------------------

    57. AOG and Cranberry, whose pipelines perform gathering functions,
state that they do not keep organized records of who has contract
rights to which receipt or delivery points.\91\ AOG proposes that,
instead of differentiating among receipt points that are gas wells,
they ``would simply identify all receipt points as `AOG system.' ''
\92\ Cranberry proposes that the Commission waive the requirement to
report receipt and delivery points where, as with their system, all
shippers have access to all or numerous points, and no common industry
codes exist.\93\
---------------------------------------------------------------------------

    \91\ AOG at 6; Cranberry at 5.
    \92\ AOG at 10.
    \93\ Cranberry at 6.
---------------------------------------------------------------------------

    58. The proposal to require use of standardized shipper
identification numbers also raised some concerns. Jefferson estimated
that ``it will cost approximately $24,000 annually to utilize a third-
party service to verify a unique shipper identification number such as
a D-U-N-S[supreg] number,'' and suggests removing this requirement.\94\
TPA likewise argues that intrastate providers would have no use for D-
U-N-S numbers other than filing the proposed reports. TPA proposes
having the public reports only ``contain coded references to individual
shippers and points, with the key to the code available to the
Commission'' for investigation but otherwise kept confidential; in the
alternative TPA suggests that the exact legal name of the shipper
should be sufficient.\95\ Most pipelines, however, did not object to
standardized shipper identification, and ``AGA supports the use of the
D-U-N-S[supreg] Number as a common company identifier.'' \96\
---------------------------------------------------------------------------

    \94\ Jefferson at 9.
    \95\ TPA at 22.
    \96\ AGA at 2.
---------------------------------------------------------------------------

3. Commission Determination
    59. We acknowledge the concern of some pipelines that requiring all
pipelines to use industry common codes for receipt and delivery points
could prove to be expensive, and we have adjusted Sec.
284.126(b)(1)(iv) of the final regulations accordingly. Where
respondents already use Industry Common Codes in their existing
business practices (such as wherever an intrastate system interconnects
with an NGA interstate system), they must use those codes in their
reports. However, where respondents do not use Industry Common Codes,
they should report using the same point identification system that they
use for scheduling with shippers. In addition, respondents who do not
use Industry Common Codes must publish a list of all the jurisdictional
receipt and delivery point codes they use for scheduling, along with
the county and state of each point, and the name of the jurisdictional
pipeline (if any) that interconnects at each point. This list should be
filed as a separate narrative alongside the respondent's initial
report; if the list should change at any time, the respondent should
include a narrative alongside its next quarterly report updating the
list.
    60. The Commission also acknowledges the particular challenges in
reporting receipt points for systems that perform a gathering function.
Accordingly, for gas received from dedicated wells or gathering lines,
respondents may instead note as the receipt point the common point
where the gathered gas is considered to enter the pipeline's
transmission system. Respondents who use this method in their reports
must develop their list of jurisdictional receipt and delivery points
accordingly.
    61. In contrast with receipt and delivery points, however,
standardized shipper identification is not unduly burdensome in
comparison to the benefit to the Commission and market participants of
being certain of the true identity of a pipeline's shippers. As of the
date that the Commission approves this Final Rule, we observe that it
is possible to both create a D-U-N-S number \97\ and search for any
company's D-U-N-S number \98\ for free. Further, since standardized
shipper identification numbers, by their nature, do not change with
time, respondents will not need to spend time verifying each number
every quarter. Accordingly, the time and expense spent on verifying the
identity of one's shippers should be reasonable.
---------------------------------------------------------------------------

    \97\ Available at http://smallbusiness.dnb.com/establish-your-
business/12334338-1.html.
    \98\ Available at https://smallbusiness.dnb.com/ePlatform/
servlet/DUNSAdvancedCompanySearch?storeId=10001&catalogId=70001.
---------------------------------------------------------------------------

E. Requests for Exemptions and Safe Harbor

1. NOPR
    62. In the NOI, the Commission sought comment on whether any of the
proposed reporting requirements should exempt certain classes of
respondents, based on the type of service provided or on the
respondent's size. Having considered the comments received, the
Commission did not provide for any exemptions in the NOPR. The
Commission reasoned that so long as reports were hosted on the FERC Web
site and no more frequent than quarterly, they would not be unduly
burdensome to prepare and file.\99\
---------------------------------------------------------------------------

    \99\ See, e.g., NOPR at P 14, 24.
---------------------------------------------------------------------------

2. Comments
    63. AOG asks the Commission to exempt companies with de minimis
jurisdictional activity. In particular, AOG suggests a cut-off
``somewhere between 2.2 and 50 million MMBtu,'' \100\ or for entities
with under 500 employees. ONEOK similarly argues that it should be
excluded, but does not proffer a cut-off point.
---------------------------------------------------------------------------

    \100\ AOG at 8.
---------------------------------------------------------------------------

    64. In addition to the above exemption requests, AGA suggests two
clarifications as a means of minimizing the burden for all respondents.
First, AGA asks the Commission to ``clearly state that Hinshaw
pipelines are required to report only those contracts authorized by
their limited jurisdictional certificates and are not required to
report on retail or intrastate activities that are not regulated by the
Commission.'' \101\ Second, ``AGA also recommends that the Commission
explicitly state as part of the Final Rule in this proceeding that it
will not prosecute, penalize or otherwise impose remedies on parties
for inadvertent errors in reporting.'' \102\
---------------------------------------------------------------------------

    \101\ AGA at 1; see also AGA at 8-9.
    \102\ AGA at 3; see also AGA at 15-16.
---------------------------------------------------------------------------

3. Commission Determination
    65. The Commission rejects the requests for exemptions based on
size or type of activity. As the Commission reasoned in the NOPR, since
the reports and data are to be hosted on the FERC Web site and filed no
more frequently than quarterly, they should not be

unduly burdensome to prepare and file. The Commission has not exempted
any section 311 or Hinshaw pipelines from filing the existing reports
required by Sec.  284.126, using current Form No. 549. With the
clarifications made to the technical protocols discussed below, the
Commission is confident that, after the transition to the new reporting
format, it will not be significantly more burdensome for pipelines to
prepare and file each Form No. 549D report required by this rule, than
it has been to file the existing Form No. 549 Intrastate Pipeline
Annual Transportation report. In addition, if a pipeline has de minimis
jurisdictional activity, it follows that it should have relatively few
transactions to report, thereby minimizing its burden of completing the
necessary report.
    66. We grant AGA's requested clarification that Hinshaw pipelines
are required to report only those contracts authorized by their limited
jurisdictional certificates and are not required to report on retail or
intrastate activities that are not regulated by the Commission.
Similarly section 311 pipelines are only required to report contracts
for NGPA section 311 interstate service, and not contracts for non-
jurisdictional intrastate service.
    67. In response to the AGA's second request, the Commission states
that because Form No. 549D is a new information collection, we will
focus any enforcement efforts on instances of intentional submission of
false, incomplete, or misleading information to the Commission, of
failure to report in the first instance, or of failure to exercise due
diligence in compiling and reporting data.\103\
---------------------------------------------------------------------------

    \103\ The Commission adopted a similar guideline in Transparency
Provisions of Section 23 of the Natural Gas Act, Order No. 704, 73
FR 1014 (Jan. 4, 2008), FERC Stats. and Regs. ] 31,260 at P 114
(2007), order on reh'g, Order No. 704-A, 73 FR 55726 (Sept. 26,
2008), FERC Stats. & Regs. ] 31,275 (2008), order on reh'g, Order
No. 704-B, 125 FERC ] 61,302 (2008).
---------------------------------------------------------------------------

F. Public Status of Reports

1. NOPR
    68. The NOPR proposed to require that the reports filed pursuant to
revised Sec.  284.126(c) be posted without any information redacted as
privileged. The Commission stated that currently, when a report is
filed subject to a request for privileged treatment, any person
desiring to see the report must file a formal request, pursuant to the
Freedom of Information Act (FOIA) and Sec.  385.1112 of the
Commission's Rules of Practice and Procedure,\104\ that the Commission
make the report public. Due to the expense and delay caused by this
additional step, in practice these requests have been infrequent. The
Commission stated that allowing pricing information to be confidential
undermines the Commission's goals of preventing undue discrimination
and promoting price transparency, while a prohibition on the
confidential treatment of Sec.  284.126(b) reports would further all of
these policy goals. The Commission noted concerns about the commercial
sensitivity of the information to be reported, but found, based on the
comments filed, that ``a quarterly reporting requirement should allay
any concerns regarding the commercial sensitivity of contract data.''
\105\
---------------------------------------------------------------------------

    \104\ 18 CFR 385.1112.
    \105\ NOPR at P 31.
---------------------------------------------------------------------------

    69. In addition to the policy considerations, the Commission found
that its governing statutes support public treatment of data reported
both by Hinshaw pipelines and by NGPA Section 311 pipelines.
Accordingly, the NOPR proposed that the standardized reporting form
include a statement that the report will be public.
2. Comments
    70. TPA and some individual pipelines argue that the Commission
must retain the traditional confidentiality process in Rule 1112 and
Sec.  388.112 of the Commission's regulations.\106\ TPA argues that a
policy of public disclosure would violate both Commission precedent and
Sec.  388.112, which call for case-by-case review of requests to
release information.\107\ ONEOK and TPA argue that complying with the
proposed regulations could violate the confidentiality provisions of
existing contracts.\108\ Enstor and ONEOK suggest that many market-
oriented shippers and large industrial end-users would seek to avoid
Section 311 transactions in order to protect their trading
positions.\109\
---------------------------------------------------------------------------

    \106\ E.g., Enogex at 8.
    \107\ TPA at 18.
    \108\ TPA at 5, 16-17; ONEOK at 5.
    \109\ Enstor at 9; ONEOK at 5.
---------------------------------------------------------------------------

    71. Enstor particularly urges the Commission to amend the proposed
Sec.  284.126(b)(1)(viii) requirement to report ``Total revenues
received for the shipper.'' Enstor argues that, when applied to
``interruptible storage services (such as parking and lending),'' this
requirement would compel reporting of information ``that is not
currently disclosed by interstate natural gas companies.'' \110\
Especially if unredacted, reporting individual shipper revenues ``even
on a quarterly basis'' would do ``catastrophic'' damage to a pipeline's
``business model, as well as to market liquidity.'' \111\
---------------------------------------------------------------------------

    \110\ Enstor at 6.
    \111\ Enstor at 7.
---------------------------------------------------------------------------

    72. However Apache, Cities, Clayton Williams, Texas Alliance, and
Yates expressly support public reporting, in order for the reports to
serve the purported goal of benefitting market participants.\112\
Clayton Williams cites the specific example of Texas's ``grossly
inadequate'' \113\ state-level data, which it claims is responsible for
rampant discriminatory behavior in Texas markets.
---------------------------------------------------------------------------

    \112\ E.g., Apache at 10-11.
    \113\ Clayton Williams at 1.
---------------------------------------------------------------------------

3. Commission Determination
    73. As we clarified in the preceding section, the revised reporting
requirements adopted by this rule apply only to contracts for
interstate service which are subject to our jurisdiction under the NGA
in the case of Hinshaw pipelines or NGPA section 311 in the case of
intrastate pipelines. While we regulate the interstate services of
Hinshaw pipelines in a more light-handed manner than we regulate
interstate pipelines, nevertheless the courts have made clear that such
regulation of Hinshaw pipelines must comply with the basic requirements
of the NGA, including sections 4 and 5 of the NGA.\114\ In SGRM, the
Commission pointed out that NGA section 4(c) requires that ``under such
rules and regulations as the Commission may prescribe, every natural
gas company shall * * * keep open for public inspection * * * all rates
* * * together with all contracts which in any manner affect or relate
to such rates.'' The Commission concluded that:
---------------------------------------------------------------------------

    \114\ Consumers Energy Co. v. FERC, 226 F.3d 777 (6th Cir.
2000), holding that the Commission must comply with the requirements
of NGA section 5 in order to require a Hinshaw pipeline to modify
its rates for interstate service.

    Although the NGA gives the Commission some discretion with
respect to how to provide for the disclosure of rate schedules and
contracts, clearly the public disclosure of rate schedules and
related contracts, in some manner, is required.\115\
---------------------------------------------------------------------------

    \115\ SGRM, 125 FERC ] 61,191 at P 23, quoting Order No. 637-A,
at 31,614.

    74. Accordingly, our requirement that the quarterly reports of
Hinshaw pipelines concerning their jurisdictional contracts be posted
without any information redacted is simply carrying out NGA section
4(c)'s requirement for public disclosure of rate and contract
information ``under such regulations and regulations as the Commission
may prescribe.'' Furthermore, NGA section 23(a)(1) directs the
Commission ``to

facilitate price transparency in markets for the sale or transportation
of physical natural gas in interstate commerce.'' \116\
---------------------------------------------------------------------------

    \116\ 15 U.S.C. 717t-2(a)(1). See Energy Policy Act of 2005,
Public Law 109-58, Sec.  316 (``Natural Gas Market Transparency
Rules''), 119 Stat. 594 (2005).
---------------------------------------------------------------------------

    75. While the NGPA does not contain an express public disclosure
provision similar to NGA section 4(c), Section 311(c) of the NGPA
authorizes the Commission to prescribe the ``terms and conditions''
under which intrastate pipelines perform interstate service. Requiring
NGPA section 311 pipelines to publicly disclose transactional
information for the purpose of allowing shippers and others to monitor
NGPA Section 311 transactions for undue discrimination is well within
the Commission's broad conditioning authority under Section
311(c).\117\
---------------------------------------------------------------------------

    \117\ See, e.g., AGD, 824 F.2d at 1015-1018 (DC Cir. 1987)
(affirming the Commission's use of Section 311(c) to require
intrastate pipelines to permit their interstate sales customers to
convert to transportation-only service).
---------------------------------------------------------------------------

    76. We reject TPA's argument that the Commission procedural rules
in Sec. Sec.  385.1112 and 388.112 require the Commission to allow
pipelines to request confidential or privileged treatment of their
transactional reports. The existence of those procedural rules does not
prevent the Commission from establishing, in this rulemaking proceeding
after notice and comment, a category of document, i.e., the Form 549D
reports required by this rule, which must be made public in order for
the Commission to carry out its statutory responsibilities under the
NGA and the NGPA. Such automatic disclosure requirements already apply
to various other reports filed with the Commission, including for
example the FERC Form Nos. 2, 2-A, and 3-Q financial reports required
by Sec. Sec.  260.1, 260.2, and 260.300.\118\
---------------------------------------------------------------------------

    \118\ See Quarterly Financial Reporting and Revisions to the
Annual Reports, Order No. 646, FERC Stats. & Regs. ] 31,158,
Appendix B at 48 (``This report is also considered to be a non-
confidential public use form.''), order on reh'g, Order No. 646-A,
FERC Stats. & Regs. ] 31,163 (2004); accord Instructions for Filing
FERC Forms 2, 2-A, and 3-Q at I.
---------------------------------------------------------------------------

    77. As a matter of policy, we find that Hinshaw and section 311
pipelines must file their Form No. 549D reports as public in order to
achieve the Final Rule's purpose of improving transparency, monitoring
discrimination, and fostering efficient markets. The Commission
recognizes the concern of some pipelines that disclosure of
commercially sensitive information will enable a shipper to know what
the pipeline is charging other shippers and thus prevent the pipeline
from being able to negotiate the best price for the services it offers.
In Order No. 637-A, the Commission exercised its discretion concerning
the manner of public disclosure to delay interstate pipelines' posting
of transactional information until the first nomination of service
under the contract, rather than requiring posting upon execution of the
contract. The Commission stated that this would temper any potential
disadvantages from the public disclosure requirement, because the first
nomination could be significantly after the contract was executed. In
light of our more light-handed regulation of Hinshaw and section 311
pipelines and our desire to minimize undue burdens on such pipelines,
we are permitting a longer delay between contract execution and
disclosure by only requiring such reports to be filed quarterly. This
should temper any potential adverse effects from disclosure.
    78. However, public disclosure of all information in the quarterly
reports is necessary to permit all market participants to monitor the
market and detect undue discrimination. The Commission also expects and
hopes that market participants will use the information from these
reports in order to educate themselves about market conditions.
Regardless of any adverse effect on individual entities, public
disclosure will improve the market as a whole by improving efficiency
and competition.
    79. Finally, while ONEOK and TPA assert that the disclosure
requirement could violate the confidentiality provisions of pipelines'
existing contracts, most jurisdictional contracts include provisions
that the contract is subject to all rules adopted by the Commission.
Moreover, the Commission has previously held that such confidentiality
provisions violate Commission policy. For example, in Bay Gas Storage
Co.,\119\ the Commission required a section 311 pipeline to remove from
its Statement of Operating Conditions a provision that the terms of any
storage or transportation service agreement must be kept confidential
with certain exceptions, holding that the provision was ``contrary to
the Commission's favoring public disclosure of the provisions of
service contracts under NGPA section 311.'' If any Hinshaw or section
311 pipeline believes that it is subject to a binding contractual
obligation to keep confidential any information required to be
disclosed by this rule, it must file that contract with the Commission
so that it can be modified to remove any such provision.
---------------------------------------------------------------------------

    \119\ 110 FERC ] 61,154 at P 17 (2005).
---------------------------------------------------------------------------

G. Data Format and Technical Protocols

1. NOPR and Information Notice
    80. The NOPR proposed that Commission Staff develop a mandatory,
standardized electronic format for the Form No. 549D reports. The goals
are to facilitate data submission, to provide the public timely and
easy access to the information, and to avoid the costs of requiring
intrastate pipelines to maintain a NAESB-compliant Web site.
    81. The Commission introduced its proposed format in the
Information Notice. The Information Notice provided a table showing
proposed Form No. 549D data elements to be collected each quarter from
each respondent. It also included an example of data entries reported
by a sample pipeline for one shipper, a Proposed Form No. 549D Data
Dictionary and Reporting Units, and draft Instructions for Reporting
Data. The Commission also asked for comments on the technological issue
of whether the proposed standardized format should be developed using
XML or an ASP.NET Web-based form.
2. Comments
    82. The discussion of information technology in the NOPR and
Information Notice garnered widespread concern from pipelines. The
chief concern of pipelines is that they may have to engage in extensive
training or outsourcing in order to understand and comply with the
Commission's directive.\120\ AGA reports that ``one company has
estimated the cost of developing an in-house solution for XML Schema
reporting to be approximately $30,000.'' \121\ Jefferson reported its
own estimate of $130,000 ``to develop a quarterly report similar to the
proposed Form No. 549D in the XML Schema format.'' \122\ Jefferson also
stated, however, that it could not support ASP.NET unless the
Commission could first guarantee that the format would not ``require[]
a filer to manually enter data,'' or otherwise make the data submission
and correction process laborious.\123\
---------------------------------------------------------------------------

    \120\ E.g., Jefferson at 9-11.
    \121\ AGA at 7.
    \122\ Jefferson at 14.
    \123\ Jefferson at 10.
---------------------------------------------------------------------------

    83. In order to reduce this compliance burden, AGA along with Duke
recommend that the Commission support not only the XML and ASP.NET
approaches, but also ``a simple spreadsheet with the data in tabular
form that the intrastate and Hinshaw

pipelines could complete and file with the Commission using the eFiling
portal.'' \124\ TPA urges the Commission to not adopt a form at all,
but rather allow pipelines to continue to file reports similar in
format and content to what they file now.\125\ In the alternative, TPA
recommends making both XML and ASP.NET available.\126\
---------------------------------------------------------------------------

    \124\ AGA at 14; see also Duke at 2-3, 7-9.
    \125\ TPA at 16.
    \126\ TPA at 20; see also ONEOK at 5.
---------------------------------------------------------------------------

    84. AGA also ``recommends that the Commission develop a Frequently
Asked Questions Web page or other Web-based Query System to assist
intrastate and Hinshaw pipelines in complying with the new standardized
electronic information filing requirements.'' \127\ AGA, TPA, and
Jefferson have several questions in this vein regarding specific
elements and definitions from the Information Notice.\128\
---------------------------------------------------------------------------

    \127\ AGA at 3; see also AGA at 15.
    \128\ AGA at Appendix A; TPA at 20-25; Jefferson at 11-13.
---------------------------------------------------------------------------

    85. Cities, along with Constellation, praise the Commission's
decision ``to shoulder the burden of Web site maintenance and standards
compliance.'' \129\ Yates, while generally supporting the Commission's
proposal, argues that it would not be unduly burdensome to require
pipelines to maintain their own Web sites on which they regularly
publish transactional data.\130\
---------------------------------------------------------------------------

    \129\ Cities at 4; see also Constellation at 4.
    \130\ Yates at 7.
---------------------------------------------------------------------------

3. Commission Determination
    86. The Commission will use XML to collect and process the data
required by the Form No. 549D report and present it in a timely manner
on its Web site. The Commission recognizes that some respondents may
prefer not to use XML. Other respondents have experience with the
format or for efficiency purposes would use XML. Therefore, the
Commission will allow respondents at the beginning of each quarter to
select the method \131\ of filing most appropriate to their
circumstances as described below:
---------------------------------------------------------------------------

    \131\ Respondents must choose only one methodology in a given
quarter to file their quarterly report. They do not have to notify
Commission staff of their selection.
---------------------------------------------------------------------------

a. Fillable-PDF Form No. 549D
    For respondents who prefer not to use XML, the Commission will
develop an electronic form in a PDF format that can be downloaded from
the FERC Web site and saved to a user's computer desktop. The form can
be viewed and updated using Adobe Acrobat Reader version 9 or higher.
The fillable-PDF form will look like a standard document, so that a
clerk or any other employee(s) will be able collaborate on filling it
out, saving it, and submitting the fillable-PDF electronically to the
Commission.\132\ The data will be verified and validated before it will
be officially accepted by the Commission. Each respondent's filing
would be publicly available in eLibrary within 1 day after filing. The
public would also be able to download the entire Form No. 549D database
for the quarter from the FERC Web site a few days after the filing
deadline. Respondents would be able to correct any errors in their
initial filings by filing a revised fillable PDF Form No. 549D with the
Commission.\133\
---------------------------------------------------------------------------

    \132\ See Appendix for a paper copy of the Form No. 549D and an
example of a completed copy.
    \133\ The Form No. 549D database accessible on the FERC Web site
would only show the latest filing of each Respondent.
---------------------------------------------------------------------------

b. File an XML file that validates against an XML Schema for Form No.
549D
    This method of filing is for those respondents who have some
experience with XML, or have a relatively large number of shippers and
contracts to report on each quarter. The Commission would develop an
XML Schema for Form No. 549D and make it available for download on the
FERC Web site. Respondents would have to test and successfully validate
their XML filing against the XML Schema for Form No. 549D prior to
submitting it electronically to the Commission. Once the XML file is
submitted, the Commission will examine it to ensure that it is
formatted properly and validates against FERC's XML Schema for Form No.
549D before it is officially accepted by the Commission. Each
respondent's filing would be publicly available in eLibrary within 1
day after filing. The public would also be able to download the entire
Form No. 549D database for the quarter from the FERC Web site a few
days after the filing deadline. Respondents would be able to correct
any errors in their initial filings by resubmitting another XML file.
    87. An updated data dictionary, paper copy of the Fillable PDF Form
No. 549D, an example of the filled out Form No. 549D, and Instructions
are attached as an appendix to this order. At a date closer to the
deadline for filing the first Form No. 549D, the Commission will issue
a notice for a Workshop in which Commission Staff will explain the
overall filing process, including the fillable-PDF Form No. 549D, data
dictionary, XML Schema and will answer any technical questions.
Commission Staff are also directed to set up a form549D e-mail box
<EMAIL_ADDRESS>where respondents can send questions. Commission
staff will also provide online filing guidance and technical advice to
respondents who request it, in line with the Commission's current
guidelines for contact between Staff and regulated entities.
    88. Finally, to the extent possible, the General Instructions for
Form No. 549D developed by the Commission Staff will conform with the
instructions for eTariff filing, so that pipelines shall use the same
names to refer to the same objects and concepts in both their
Statements of Operating Conditions and their quarterly reports. In this
manner, the Commission hopes to address all of the above-noted concerns
with regard to information technology for the Form No. 549D.

VI. Periodic Rate Review

A. Current Policy

    89. Section 311 of the NGPA provides that the rates of intrastate
pipelines performing transportation service under the NGPA shall be
fair and equitable. Section 284.123 of the Commission's regulations
implements this requirement for section 311 pipelines, and Sec.
284.224(e)(i) provides that provides that Hinshaw pipelines performing
interstate service will be subject to the same rate requirements that
apply to intrastate pipelines under Sec.  284.123. As a general matter,
the Commission's review of the rates of both section 311 and Hinshaw
pipelines is more light-handed than its review of the rates of
interstate pipelines. For example, when intrastate and Hinshaw
pipelines file a request for a rate change, the Commission does not
impose the five-month suspension typically imposed on interstate
pipeline rate increases, and it uses advisory, non-evidentiary
proceedings to resolve the issues, rather than setting the case for an
evidentiary hearing before an Administrative Law Judge, as it does for
interstate pipeline rate cases.\134\
---------------------------------------------------------------------------

    \134\ Gulf Terra Texas Pipeline, L.P., 109 FERC ] 61,350, at P 9
(2004) (Gulf Terra).
---------------------------------------------------------------------------

    90. However, as part of this overall, more light-handed regulation
of intrastate and Hinshaw pipelines, the Commission has established a
policy of reviewing the rates of both types of pipelines every three
years in order to ensure that the rates affecting interstate services
remain fair and equitable.\135\ The Commission has stated that the
triennial rate review of section 311

intrastate and Hinshaw pipelines enables the Commission to determine
whether their rates have become unfair and unreasonable because the
cost of service data upon which they are based have become stale.
---------------------------------------------------------------------------

    \135\ See, e.g., id. at P 10 (citing Arkansas Western Gas
Company, 56 FERC ] 61,407 (1991), reh'g denied, 58 FERC ] 61099
(1992)).
---------------------------------------------------------------------------

    91. The primary difference in the Commission's regulation of
section 311 and Hinshaw pipelines is the procedural vehicle through
which the three-year rate review of those pipelines' rates is
performed. This difference arises from the difference in the statutes
under which we regulate the two types of pipelines. For the reasons
discussed in full in Green Canyon Pipe Line Co.,\136\ the Commission
has broad conditioning authority under NGPA section 311(c), which it
has consistently exercised to require intrastate pipelines to file new
petitions for rate approval every three years. However, the United
States Court of Appeals for the District of Columbia Circuit has held
that the Commission cannot require interstate pipelines subject to its
NGA jurisdiction to make new rate filings under NGA section 4.\137\
Consistent with that finding, the Commission in Consumers Energy
Co.\138\ only required Hinshaw pipelines performing interstate service
under a Sec.  284.224 certificate to submit a triennial informational
filing in the form specified in Sec.  154.313 of the Commission's
regulations for minor rate changes.
---------------------------------------------------------------------------

    \136\ 98 FERC ] 61,041 at 61,122-3 (2002).
    \137\ Public Service Commission of New York v. FERC, 866 F.2d
487 (D.C. Cir. 1989).
    \138\ 94 FERC ] 61,287 (2001). See also Gulf Terra at P 12.
---------------------------------------------------------------------------

    92. While the triennial rate review requirement is not part of the
Commission's regulations, the Commission has consistently imposed that
requirement as a condition of its approval of each rate filing by a
section 311 or Hinshaw pipeline. The Commission has done this, whether
the pipeline has chosen to elect a state-based rate pursuant to Sec.
284.123(b)(1) or has proposed a rate for a Commission-approved rate
pursuant to Sec.  284.123(b)(2).\139\
---------------------------------------------------------------------------

    \139\ See Centana Intrastate Pipeline Co., 75 FERC ] 61,253
(1996) (Order on Rehearing) (imposing triennial rate review on a
Sec.  284.123(b)(1) filing); Green Canyon Pipe Line Company, L.P.,
98 FERC ] 61,041 (2002) (Order on Rehearing) (imposing triennial
rate review on a Sec.  284.123(b)(2) filing).
---------------------------------------------------------------------------

B. Comments

    93. While the NOPR did not directly raise the issue of whether the
Commission should modify its triennial rate review policy, Duke points
out in its comments that Order No. 636 removed the requirement that
interstate pipelines file new rate cases every three years. It contends
that, in order to treat section 311 pipelines and Hinshaw pipelines
similarly: ``the Commission should either reimpose a periodic rate
filing requirement on interstate pipelines or eliminate the triennial
filing requirement currently imposed on intrastate and Hinshaw
pipelines.'' \140\
---------------------------------------------------------------------------

    \140\ Duke at 7.
---------------------------------------------------------------------------

    94. Other commenters argue that the triennial rate review
requirement renders any additional information collection partly or
wholly unnecessary. TPA predicts that the proposed reports ``would not
likely yield significant transparency benefits,'' because Section 311
pipelines already must file Statements of Operating Conditions with
maximum rates and submit cost of service filings to the Commission and
to state officials.\141\ Enogex argues that the triennial rate review
offers the Commission and other interested parties sufficient
opportunity to review the rates and contracts of Section 311 pipelines.
Enogex further argues that most interstate pipelines are not subject to
rate reviews that are as detailed or frequent, and that Section 311
pipelines would be unduly burdened if further reporting were
required.\142\
---------------------------------------------------------------------------

    \141\ TPA at 3.
    \142\ Enogex at 10-11.
---------------------------------------------------------------------------

C. Commission Determination

    95. As noted above, the Commission generally requires triennial
rate reviews of section 311 intrastate and Hinshaw pipelines to ensure
that the Commission has current information and rates have not become
stale. Since these pipelines are not subject to the same reporting
requirements, nor the same level of rate review, as interstate
pipelines, the Commission can not eliminate periodic rate review
without abrogating its duty to continually assure fair and equitable
rates.
    96. However, the Commission is sensitive to concerns that the
improved reporting requirements could prove too burdensome, when
considered in aggregation with other burdens such as triennial rate
review. In recent years, the Commission has found it only occasionally
necessary to impose rate reductions during these periodic reviews. It
is our expectation that the improved reporting requirements will
instill further market discipline, thus helping to continue this
favorable trend. It thus appears that requiring all section 311 and
Hinshaw pipelines to make filings for a review of their rates every
three years imposes an unnecessary burden on both the pipelines and the
Commission, as compared to the public benefits obtained by such rate
review. Accordingly, the Commission has decided to modify its triennial
rate review policy in order to decrease the frequency of review from
three to five years. Therefore, the Commission intends in future orders
approving rates filed by section 311 and Hinshaw pipelines to include a
condition requiring a review of those rates five years from the date
the approved rates took effect. Any pipelines subject to a requirement
to file a triennial rate review after the issuance of this Final Rule
may file a request for an extension of time consistent with the revised
policy announced here.

VII. Effective Date of the Final Rule and Compliance Deadlines

A. Comments

    97. Several commenters expressed concern over the speed with which
the Commission would adopt and implement the proposed reporting
requirements. Three suggestions raised by Jefferson and others were to
hold conferences or otherwise delay the issuance of the Final Rule,
delay the effective date of the Final Rule, and establish a safe harbor
period.
    98. First, Jefferson and others seek to delay the issuance of the
Final Rule. Jefferson argues that the proposed format ``[r]equires
additional guidance in the form of industry conferences and workshops
prior to the Commission's issuance of a Final Rule to avoid conflicts
in interpretation of each proposed data element, develop a consensus
regarding proposed technical reporting formats, and to give intrastate
and Hinshaw pipelines an opportunity to present information that would
more accurately represent the burden of reporting.'' \143\ TPA, while
also requesting a conference, urges the Commission to postpone any
activity in this docket until after the Commission has completed the
implementation and appeals process for the rulemaking in Order No. 720,
which also concerns intrastate pipeline reporting, and assesses the
impact of that rule before considering any further regulations.\144\
---------------------------------------------------------------------------

    \143\ Jefferson at 7.
    \144\ TPA at 6, 15; see also Atmos at 7; ONEOK at 3.
---------------------------------------------------------------------------

    99. Second, Jefferson requests ``an implementation period of at
least 18 months from the issuance of a final rule * * * regardless of
the technical format ultimately selected.'' \145\ AGA also requests a
delayed effective date, without specifying a length.\146\
---------------------------------------------------------------------------

    \145\ Jefferson at 8.
    \146\ AGA at 16.
---------------------------------------------------------------------------

    100. Third, Jefferson requests a one year safe-harbor period,
during which

pipelines will not be penalized for inadvertent reporting errors.\147\
---------------------------------------------------------------------------

    \147\ Jefferson at 8.
---------------------------------------------------------------------------

B. Commission Determination

    101. The Final Rule will become effective on April 1, 2011.
Pursuant to the regulations, the Form No. 549D quarterly report for the
period January 1, 2011 through March 31, 2011 must be eFiled on or
before May 1, 2011. Based on the comments from all shippers, we believe
that this allows a sufficient period before implementation of the
revised reporting requirement to allow reporting pipelines to
familiarize themselves with the new reporting format and update their
internal processes, if necessary. As noted above, Commission Staff
plans to hold a technical workshop on a date to be announced in the
near future for the purpose of assisting reporting pipelines in this
transition.
    102. We will not institute a safe-harbor period. However, as stated
above in this order, because this is a new information collection, the
Commission will focus any enforcement efforts on instances of
intentional submission of false, incomplete, or misleading information
to the Commission, of failure to report in the first instance, or of
failure to exercise due diligence in compiling and reporting data.\148\
---------------------------------------------------------------------------

    \148\ See, e.g., Order No. 704 at P 114.
---------------------------------------------------------------------------

VIII. Information Collection Statement

A. Original Statement

    103. In the NOPR, in accordance with the requirements of the Office
of Management and Budget (OMB), the Commission estimated that on an
annual basis the burden to comply with the rule as proposed would be as
follows:

----------------------------------------------------------------------------------------------------------------
                                              Number of         Number of         Hours per
             Data collection                 respondents        responses         response         Total hours
----------------------------------------------------------------------------------------------------------------
Form No. 549D...........................               125                 4               3.5             1,750
----------------------------------------------------------------------------------------------------------------

    Using an hourly rate of $150 to estimate the costs for filing and
other administrative processes, the Commission estimated the total cost
for all respondents to be $262,500.

B. Comments

    104. Many pipelines strongly disagreed with the Commission's burden
estimate. Most prominently, commenters urge the Commission to consider
the initial implementation burden. Atmos states that it spent five
months on the first annual report required by Order No. 704.\149\ AGA
estimates that the development of an XML Schema alone would cost
$30,000 per respondent, for an initial total burden of $3.75
million.\150\ Enogex estimates the ``major information systems upgrades
to allow Enogex to track, report, and maintain the level of detailed
data necessary * * * [at] $3 to $4 million.''\151\
---------------------------------------------------------------------------

    \149\ Atmos at 3.
    \150\ AGA at 7.
    \151\ Enogex at 7.
---------------------------------------------------------------------------

    105. Commenters also disagreed with the estimated ongoing annual
burden. AGA estimated annual reporting would take over 12 hours per
respondent to complete, which for 125 respondents would be an annual
burden of $900,000.\152\ TPA also believes that annual burdens will be
significantly higher, especially if the Commission chooses a format
that requires manual data entry.\153\ ``[D]ue to the large number of
small-volume, interruptible 311 transactions * * * the burden of
additional reporting might outweigh the benefits of participating,''
TPA warns.\154\ Jefferson estimates 24 hours per quarter per
respondent, with thousands of dollars in fees to third party
information technology vendors.\155\ In addition, Jefferson and others
provide separate estimates of the cost of using industry common codes
for shippers and receipt and delivery points, as detailed above in this
order.\156\
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    \152\ AGA at 7.
    \153\ TPA at 15.
    \154\ TPA at 24.
    \155\ Jefferson at 14.
    \156\ E.g., Jefferson at 9.
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C. Revised Statement

    106. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting, record keeping, and public
disclosure requirements (collections of information) imposed by an
agency.\157\ The Commission has submitted 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.\158\
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    \157\ 5 CFR 1320.11.
    \158\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    107. The requirement for intrastate pipelines to post additional
information regarding their transactions would impose an initial burden
on pipelines as they organize their corporate data to be compatible
with the data elements selected by the Commission for Form No. 549D.
Certain pipelines have asserted in comments that the costs could
include the reconfiguring of information collection systems. However,
given that this information is used in their business, the Commission
still believes that the burden that would be imposed by this proposed
requirement is largely for the collection of this information.\159\ As
stated above in this Final Rule, intrastate pipelines can choose to
submit their quarterly Form No. 549D using a Commission-provided
Fillable PDF form.\160\ In this instance, intrastate pipelines would
not be required to incur costs to learn XML or develop an XML Schema.
Even if an intrastate pipeline chose to file an XML file, it would not
incur costs to develop an XML Schema. The Schema would be developed by
the Commission and provided to pipelines in order to validate their
submission before eFiling it to the Commission. While the Commission
erred in not including this burden in its original estimate, we
nevertheless find that the burden estimates provided by commenters are
far too high. These estimates were based on assumptions that the
Commission would require a far more intensive volume of reports--
transaction-by-transaction reports instead of contract-by-contract
reports--and that the Commission would require the more technologically
challenging XML data format without developing a ``simple spreadsheet''
form to guide respondents.
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    \159\ 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.'').
    \160\ Respondents would have to download the free version of
Acrobat Reader version 9 to use the fillable PDF.
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    108. OMB regulations require OMB to approve certain information
collection requirements imposed by agency rule. The Commission
submitted notification of this rule to OMB. The Commission has
developed a cost estimate of the initial implementation burden and
revised the estimate of the ongoing annual burden concomitant with the
decision allow multiple versions of the

report. The analysis began with an examination of a representative
sample of over one-third of the companies currently filing a Form No.
537, the semi-annual storage report, or Form No. 549, the annual
transportation report. Studying the level and type of services
performed for their shippers made it possible to split the industry
between those that would logically file using the PDF form because of
the relatively small number of shippers and services, and those that
would incur the addition up-front effort associated with developing
tools for filing the report using the Commission's XML schema. This
analysis estimates that the 70 percent of Respondents that average less
than five shippers transacting in a given quarter would file using the
PDF form. The other 30 percent would incur addition development costs
associated with the XML-based report to offset the larger on-going
burden cost associated with reporting more shippers, services, and
contracts. Cost estimates were developed for the initial burden and the
on-going burden for each of the permissible file methods, using
prevailing Houston labor costs and the most efficient hourly split of
manpower by legal, accounting, regulatory and IT departments. The
initial burden was split between effort involved in the initial review
and planning procedures to ensure compliance with the rulemaking and
the effort required to develop and implement the new procedures. The
PDF startup effort would require an average 68 person-hours or $4,354
per Respondent. The XML startup effort would require an additional 128
person-hours, primarily associated with the increased IT development
and testing requirements, for an estimated initial burden of $11,287
per Respondent. The start-up burden estimates for complying with this
Final Rule are as follows:

                                         Initial Public Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                            Average start-up
      Data collection filing method           Number of        burden per      Total industry    Total industry
                                             respondents       respondent           hours             costs
----------------------------------------------------------------------------------------------------------------
Using PDF Form..........................                87            $4,354             5,916          $378,798
Using XML Schema........................                38            11,287             7,448           428,906
                                         -----------------------------------------------------------------------
    Total...............................               125  ................            13,364           807,704
----------------------------------------------------------------------------------------------------------------

    To estimate ongoing burden, the Commission analyzed two sets of
costs: The per-report cost for the effort by the legal accounting, IT
and regulatory departments related to changes in the mix of shippers
and services, and the per-contract costs related to the effort populate
the report with the information associated with each shipper by service
type and by contract. For the first set of costs, this analysis
estimates the PDF form to require 11 person-hours at an estimated cost
of $596 per report, and the XML Schema 10 man-hours at an estimated
cost of $556 per report. For the per-contract set of costs, this
analysis estimates the PDF form to require $663 per report and the XML
Schema $543 per report, for the average Respondent.

                                         Ongoing Public Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                             Average annual
      Data collection filing method           Number of      ongoing burden    Total industry    Total industry
                                             respondents     per respondent    hours per year    costs per year
----------------------------------------------------------------------------------------------------------------
Using PDF Form..........................                87            $2,650             4,294          $230,550
Using XML Schema........................                38             2,171             1,520            82,498
                                         -----------------------------------------------------------------------
    Total...............................               125  ................             5,814           313,048
----------------------------------------------------------------------------------------------------------------

    Title: Form No. 549D.
    Action: Proposed Information Posting and Information Filing.
    OMB Control No: xxxx-xxxx.
    Respondents: Business or other for profit.
    Frequency of Responses: Quarterly posting requirements.
    Necessity of the Information: The quarterly filing of additional
information by intrastate pipelines is necessary to provide information
regarding the price and availability of natural gas transportation
services to market participants, state commissions, the Commission, and
the public. The filing would contribute to market transparency by
empowering market participants to determine the extent to which
particular transactions are comparable to one another; and it would
allow the monitoring of potentially manipulative or unduly
discriminatory activity.
    Interested persons may obtain information on the reporting
requirements by contacting the following:

Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426. [Attention: Data Clearance, Phone: (202) 502-
8415, fax:<PHONE_NUMBER>] e-mail<EMAIL_ADDRESS>or by
contacting:

Office of Management and Budget, Office of Information and Regulatory
Affairs, Washington, DC 20503, [Attention: Desk Officer for the Federal
Energy Regulatory Commission, phone:<PHONE_NUMBER>, fax: (202) 395-
7285].

IX. Environmental Analysis

    109. 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.\161\ The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.\162\ The actions taken here fall within categorical
exclusions in the

Commission's regulations for rules that are corrective, clarifying or
procedural, for information gathering, analysis, and dissemination, and
for sales, exchange, and transportation of natural gas that requires no
construction of facilities.\163\ Therefore an environmental review is
unnecessary and has not been prepared in this rulemaking.
---------------------------------------------------------------------------

    \161\ Order No. 486, Regulations Implementing the National
Environmental Policy Act of 1969, 52 FR 47897 (Dec. 17, 1987), FERC
Stats. & Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \162\ 18 CFR 380.4.
    \163\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5) and 380.4(a)(27).
---------------------------------------------------------------------------

X. Regulatory Flexibility Act

    110. The Regulatory Flexibility Act of 1980 (RFA) \164\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The Commission is not required to make such analysis if proposed
regulations would not have such an effect.
---------------------------------------------------------------------------

    \164\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

    111. Most of the natural gas companies regulated by the Commission
do not fall within the RFA's definition of a small entity.\165\
Approximately 125 natural gas companies are potential respondents
subject to the requirements adopted by this rule. For the year 2008
(the most recent year for which information is available), 4 companies
had annual revenues of less than $7 million. This represents 3.2
percent of the total universe of potential respondents or only a very
few entities that may have a significant burden imposed on them. In
addition, by providing entities with an option of how they file the
information, the Commission has provided alternatives, thereby
lessening the economic impact for smaller entities while still
accomplishing the regulatory objective of increasing market
transparency. In view of these considerations, the Commission certifies
that this Final Rule's amendments to the regulations will not have a
significant impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \165\ See 5 U.S.C. 601(3), citing section 3 of the Small
Business Act, 15 U.S.C. 623. Section 3 of the SBA defines a ``small
business concern'' as a business which is independently owned and
operated and which is not dominant in its field of operation. The
Small Business Size Standards component of the North American
Industry Classification System defines a small natural gas pipeline
company as one that transports natural gas and whose annual receipts
(total income plus cost of goods sold) did not exceed $7 million for
the previous year.
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XI. Document Availability

    112. In addition to publishing the full text of this document,
except for the Appendix, in the Federal Register, the Commission
provides all interested persons an opportunity to view and/or print the
contents of this document, including the Appendix, 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.
    113. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document, including the
Appendix, 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.
    114. 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 email at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. E-mail the Public Reference Room at
<EMAIL_ADDRESS>
XII. Effective Date and Congressional Notification

    115. These regulations are effective April 1, 2011. The quarterly
report for transactions occurring during the period January 1, 2011
through March 31, 2011 must be filed on or before May 1, 2011. The
Commission has determined that this rule is not a ``major rule'' as
defined in section 351 of the Small Business Regulatory Enforcement
Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping
requirements.

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

0
In consideration of the foregoing, the Commission amends Part 284,
Chapter I, Title 18, Code of Federal Regulations, as follows.

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

0
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

0
2. In Sec.  284.126, paragraph (b) is revised to read as follows:

Sec.  284.126  Reporting requirements.

* * * * *
    (b) Form No. 549D, Quarterly Transportation and Storage Report of
Intrastate Natural Gas and Hinshaw Pipelines.
    (1) Each intrastate pipeline must use Form No. 549D to file a
quarterly report with the Commission and the appropriate state
regulatory agency that contains, for each transportation and storage
service provided during the preceding calendar quarter under Sec.
284.122, the following information on each transaction, aggregated by
contract:
    (i) The full legal name, and identification number, of the shipper
receiving the service, including whether there is an affiliate
relationship between the pipeline and the shipper;
    (ii) The type of service performed (i.e., firm or interruptible
transportation, storage, or other service);
    (iii) The rate charged under each contract, specifying the rate
schedule/name of service and docket where the rates were approved. The
report should separately state each rate component set forth in the
contract (i.e., reservation, usage, and any other charges);
    (iv) The primary receipt and delivery points covered by the
contract, identified by the list of points that the pipeline has
published with the Commission, which shall include the industry common
code for each point where one has already been established;
    (v) The quantity of natural gas the shipper is entitled to
transport, store, or deliver under each contract;