[Federal Register Volume 83, Number 189 (Friday, September 28, 2018)]
[Notices]
[Pages 49103-49107]
[FR Doc No: 2018-21200]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2018-N-3522]

Use of the Names of Dairy Foods in the Labeling of Plant-Based
Products

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice; request for comments.

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SUMMARY: The Food and Drug Administration (FDA or we) invites comments
on the labeling of plant-based products with names that include the
names of dairy foods such as ``milk,'' ``cultured milk,'' ``yogurt,''
and ``cheese.'' We are interested in learning how consumers use these
plant-based products and how they understand terms such as, for
example, ``milk'' or ``yogurt'' when included in the names of plant-
based products. We also are interested in learning whether consumers
are aware of and understand differences between the basic nature,
characteristics, ingredients, and nutritional content of plant-based
products and their dairy counterparts. We are taking this action to
inform our development of an approach to the labeling of plant-based
products that consumers may substitute for dairy foods.

DATES: Submit either electronic or written comments on this document by
November 27, 2018.

ADDRESSES: You may submit comments as follows. Please note that late,
untimely filed comments will not be considered. Electronic comments
must be submitted on or before November 27, 2018. The https://www.regulations.gov electronic filing system will accept comments until
midnight Eastern Time at the end of November 27, 2018. Comments
received by mail/hand delivery/courier (for written/paper submissions)
will be considered timely if they are postmarked or the delivery
service acceptance receipt is on or before that date.

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2018-N-3522 for ``Use of the Names of Dairy Foods in the Labeling
of Plant-Based Products.'' Received comments, those filed in a timely
manner (see ADDRESSES), will be placed in the docket and, except for
those submitted as ``Confidential Submissions,'' publicly viewable at
https://www.regulations.gov or at the Dockets Management Staff between
9 a.m. and 4 p.m., Monday through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' We will review
this copy, including the claimed confidential information, in our
consideration of comments. The second copy, which will have the claimed
confidential information redacted/blacked out, will be available for
public viewing and posted on https://www.regulations.gov. Submit both
copies to the Dockets Management Staff. If you do not wish your name
and contact information to be made publicly available, you can provide
this information on the cover sheet and not in the body of your
comments and you must identify this information as ``confidential.''
Any information marked as ``confidential'' will not be disclosed except
in accordance with 21 CFR 10.20 and other applicable disclosure law.
For more information about FDA's posting of comments to public dockets,
see 80 FR 56469, September 18, 2015, or access the information at:
https://www.gpo.gov/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Mabel Lee, Center for Food Safety and
Applied Nutrition, Food and Drug Administration, 5001 Campus Dr.,
College Park, MD 20740,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

A. Introduction

    Over the past several years, there has been an emergence and
expansion of plant-based products labeled with names that include the
names of dairy foods such as ``milk'' (e.g., ``soy milk,'' ``almond
milk''), ``cultured milk'' (e.g., ``coconut kefir''), ``yogurt'' (e.g.,
``soy yogurt,'' ``almond milk yogurt''), and ``cheese'' (e.g., ``vegan
mozzarella cheese''). These products are often packaged in the same
kinds of cartons, tubs, or bottles as their dairy counterparts and
sometimes are sold in or adjacent to the dairy display in stores.
However, these plant-based products may not have the same basic nature,
essential characteristics, and characterizing ingredients as their
dairy counterparts and may differ in their performance characteristics
(e.g., physical properties, flavor characteristics, functional
properties, or shelf life) such that they are not suitable substitutes
for certain uses. Some plant-based products also may contain less
nutrients than their dairy counterparts and may not meet the
recommendation for dairy food group intake in the ``2015-2020 Dietary
Guidelines for Americans'' (Dietary Guidelines) (Ref. 1).
    We are interested in learning how consumers use these plant-based
products and how they understand terms such as, for example, ``milk''
or ``yogurt'' when included in the labeling of plant-based products. We
are interested in learning whether consumers are aware of and
understand the basic nature, essential characteristics, characterizing
ingredients, and nutritional differences between plant-based products
and dairy foods.

B. Legal Authority

1. What is FDA's statutory and regulatory authority relating to the
naming of food?
    The Federal Food, Drug, and Cosmetic Act (FD&C Act) provides for
two general categories of food: Standardized food and nonstandardized
food. (See sections 401 and 403(g), (h), and (i) of the FD&C Act (21
U.S.C. 341 and 343(g), (h), and (i)).) Both standardized foods and
nonstandardized foods are generally named by their common or usual
names. When a food is standardized, the standard is promulgated in a
regulation under the common or usual name of the food under section 401
of the FD&C Act. The common or usual name of the food must be declared
on the principal display panel of the label when the food is in package
form. (See Sec.  101.3(b)(1) (21 CFR 101.3(b)(1).) Foods that are not
standardized are also required to bear the common or usual name of the
food on their labels when such a name exists (section 403(i)(1) of the
FD&C Act and Sec.  101.3(b)(2)). The common or usual name of a food is
the name by which it is known to the American public and is generally
established by common usage (Sec.  102.5(d) (21 CFR 102.5(d)).
    However, in certain instances where the common or usual name of a
nonstandardized food is found to be misleading or to cause
confusion,\1\ we have established a new common or usual name by
regulation (see 21 CFR part 102, subpart B). When establishing the
name, we consider the principles set forward in Sec.  102.5(a) through
(c), such as whether the name accurately identifies the food or
describes its basic nature or characterizing properties or ingredients.
We also consider whether the name is uniform among similar products and
is not confusingly similar to the name of any other food that is not
reasonably encompassed within the same name. The common or usual name
established by regulation is then the name required to be declared on
the label of the food (Sec.  101.3(b)(1)).
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    \1\ The FD&C Act prohibits labeling that is false or misleading
(sections 403(a)(1) and 201(n) of the FD&C Act).
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2. What is FDA's statutory and regulatory authority regarding food
standards?
    Our authority to establish food standards is set forth in section
401 of the FD&C Act, which provides, in part, that to promote honesty
and fair dealing in the interest of consumers we can promulgate
regulations fixing and establishing for any food, under its common or
usual name so far as practicable, a reasonable definition and standard
of identity, a reasonable standard of quality, or reasonable standards
of fill of container.
    Under section 403(g) of the FD&C Act, a food is misbranded if it
purports to be or is represented as a food for which a definition and
standard of identity has been prescribed by regulation, unless it
conforms to such definition and standard. Misbranded food is prohibited
from introduction or delivery for introduction into interstate commerce
(section 301(a) of the FD&C Act) (21 U.S.C. 331(a))). The factors
considered

in determining whether a food purports to be or is represented as a
standardized food are not limited to the name or labeling of the food;
other factors (for example, location in the grocery store or appearance
of the package or container) may be relevant.
3. FDA's Standard of Identity Regulations for Certain Dairy Foods:
Milk, Cultured Milk, Yogurt, and Cheese
    Standards of identity are established for milk and cream in 21 CFR
part 131, subpart B. Each of these standards requires the use of milk
or ingredients derived from milk (e.g., cream, nonfat milk). In this
document, we discuss the standards of identity for milk, cultured milk,
yogurt, lowfat yogurt, and nonfat yogurt for illustration purposes. We
also discuss 21 CFR part 133, which sets forth definitions and
standards of identity for cheeses and related cheese products.
    Milk is a standardized food and is described in Sec.  131.110(a)
(21 CFR 131.110(a)), in part, as the lacteal secretion, practically
free of colostrum, obtained by the complete milking of one or more
healthy cows. Generally, milk serves as a dietary source of protein,
calcium, vitamin A, and potassium. The standard of identity permits
optional fortification with vitamins A and D to increase nutrient
content (Sec.  131.110(b)). The common or usual name of food that
purports to be or is represented as milk and conforms to the standard
of identity is ``milk.''
    Cultured milk is a standardized food and is produced by culturing
cream, milk, partially skimmed milk, and/or skim milk with
characterizing microbial organisms (Sec.  131.112(a) and (c) (21 CFR
131.112(a) and (c))). The standard of identity permits optional
fortification with vitamins A and D to increase nutrient content (Sec.
131.112(b)). The common or usual name of a food that purports to be or
is represented as cultured milk and conforms to the standard of
identity is ``cultured milk.'' However, the name of the food may be
accompanied by a declaration such as the traditional name of the food
or the generic name of the organisms used, thereby indicating the
presence of the characterizing microbial organisms or ingredients,
e.g., ``kefir cultured milk'' (Sec.  131.112(f)).
    Yogurt is a standardized food produced by culturing cream, milk,
partially skimmed milk, and/or skim milk with a characterizing
bacterial culture (Sec.  131.200(a) (21 CFR 131.200(a))). The common or
usual name of a food that purports to be or is represented as yogurt
and conforms to the standard of identity is ``yogurt.'' Lowfat yogurt
and nonfat yogurt are also standardized foods produced by culturing
cream, milk, partially skimmed milk, and/or skim milk with a
characterizing bacterial culture (Sec.  131.203(a) and Sec.  131.206(a)
(21 CFR 131.203(a) and 131.206(a))); their common or usual names are
``lowfat yogurt'' and ``nonfat yogurt,'' respectively. We note that
certain provisions of the standards of identity for yogurt, lowfat
yogurt, and nonfat yogurt have been stayed (47 FR 41519, September 21,
1982). We also note that, in the Federal Register of January 15, 2009
(74 FR 2443), we issued a proposed rule that would amend the standard
of identity for yogurt and revoke the standards of identity for lowfat
yogurt and nonfat yogurt. Revocation of the standards of identity for
lowfat yogurt and nonfat yogurt would result in lower fat yogurt
products being covered under the general standard in Sec.  130.10 (21
CFR 130.10).
    Standards of identity are established for cheeses and related
cheese products in 21 CFR part 133, subpart B. Each of these standards
requires the use of milk or ingredients derived from milk (e.g., cream,
nonfat milk). Milk is defined in Sec.  133.3(a) (21 CFR 133.3(a)), in
part, as the lacteal secretion, practically free of colostrum, obtained
by the complete milking of one or more healthy cows. However, some
standardized cheeses (e.g., Caciocavallo siciliano cheese (Sec.
133.111 (21 CFR 133.111)) and mozzarella cheese (Sec.  133.155 (21 CFR
133.155)) allow for the use of milk from other mammals like sheep,
goat, or water buffalo. When cheese is made from sheep's milk, goat's
milk, or water buffalo's milk, the animal source of the milk is often
declared on the label in conjunction with the name of the cheese (e.g.,
see Sec.  133.111(e)). The common or usual name of a food that purports
to be or is represented as a standardized cheese or cheese product and
conforms to the standard of identity is the name specified in the
corresponding standard (e.g., cheddar cheese, provolone cheese, and
swiss cheese).
    Standardized foods that have been modified in accordance with a
nutrient content claim defined by regulation (e.g., ``low fat,''
``skim'') and that substitute for the standardized food are subject to
the general standard under Sec.  130.10. If the modification results in
loss of essential nutrients, the general standard requires the
nutrients to be restored so that the modified food is not nutritionally
inferior to the standardized food (Sec.  130.10(b)). Both the nutrient
content claim and the name of the standardized food are included in the
name of the modified food (e.g., ``low fat milk,'' ``skim milk''). In
general, a standardized food that has been modified in accordance with
a nutrient content claim defined by regulation and that substitutes for
the standardized food is subject to the general standard under Sec.
130.10, unless a specific standard of identity related to the
modification exists (e.g., lowfat yogurt, nonfat yogurt, low sodium
cheddar cheese).
    Plant-based products that resemble dairy foods, such as milk,
cultured milk, yogurt, and cheese do not have standards of identity,
and therefore are nonstandardized foods. Thus, these foods are subject
to section 403(i)(1) of the FD&C Act and their labels must bear the
common or usual name of the food.

II. Additional Issues for Consideration and Request for Information

    We invite comment, particularly data and other evidence, about: (A)
The current market conditions and labeling costs of plant-based
products; (B) consumer understanding, perception, purchase, and
consumption of plant-based products, particularly those manufactured to
resemble dairy foods such as, for example, milk, cultured milk, yogurt,
and cheese; (C) consumer understanding regarding the basic nature,
characteristics, and properties of these plant-based products; (D)
consumer understanding of the nutritional content of plant-based
products and dairy foods and the effect, if any, on consumer purchases
and use; and (E) the role of plant-based products and dairy foods in
meeting the recommendations in the Dietary Guidelines (Ref. 1).
Specifically, we are interested in responses to the following
questions. In responding to these questions, please identify the
question by its associated letter and number (such as ``B.1'') so that
we can easily associate your response with a specific question.

A. The Current Market Conditions and Labeling Costs of Plant-Based
Products

    1. How many different types of plant-based products that are
manufactured to resemble dairy foods such as, for example, milk,
cultured milk, yogurt, and cheese, are on the market? Please provide
any data or evidence to support your answer.
    2. What percentage of each subclass (e.g., soy or almond) of plant-
based products is marketed as a substitute for its dairy counterpart
(e.g., milk, cultured milk, yogurt, or cheese)? What percentages of
each subclass of plant-based products are marketed with names that
include the name of a dairy

food (e.g., ``milk'') versus names that include another term (e.g.,
``beverage'' or ``drink'')? Please provide any data or evidence to
support your answer.
    3. What are the costs associated with label changes? How often are
labels revised?
    4. How are plant-based products displayed in stores? For example,
are they sold in grocery stores next to or mixed with their dairy
counterparts or are they sold in areas of the store that are separate
or distinct from the areas where their dairy counterparts are sold?
Does the packaging or display of these plant-based products affect
consumers' perception or expectation about the nutritional properties
or performance of these products?

B. Consumer Understanding, Perception, Purchase, and Consumption of
Plant-Based Products, Particularly Those Manufactured To Resemble Dairy
Foods Such as, for Example, Milk, Cultured Milk, Yogurt, and Cheese

    1. Why do consumers purchase and consume these types of plant-based
products? How do they use these products? Specifically, do consumers
purchase these plant-based products for use as substitutes for their
dairy counterparts, or do consumers purchase these plant-based products
for distinct uses? If consumers use these plant-based products as
substitutes for dairy foods (for example plant-based beverages as
alternatives to milk), what are their reasons? Do consumers think they
are healthier, and if so, why? Are consumers purchasing these plant-
based products because they may be allergic to dairy or are lactose-
intolerant? Are consumers purchasing these plant-based products for
reasons related to their personal consumption habits, such as a vegan
diet? If consumers do not use these plant-based products as substitutes
for dairy foods, what are their reasons for choosing these products?
(For example, do these products provide unique taste, flavor, or
texture?) Does consumer purchasing behavior differ if the consumer is
purchasing the product for himself/herself as opposed to purchasing the
product for a family member? Please provide any data or evidence to
support your answer.
    2. Do consumers perceive these plant-based products to be more
nutritious, as nutritious, or less nutritious than their dairy
counterparts? If consumers perceive these plant-based products to be
more nutritious or as nutritious as their dairy counterparts, to what
extent does this affect their decision to buy plant-based products?
Please provide any data or evidence to support your answer.
    3. Do consumers perceive or expect these plant-based products to
perform in the same manner as their dairy counterparts? For example,
milk can be an ingredient in preparing other foods. Do consumers expect
plant-based beverage products to perform in the same manner as milk
when preparing other foods or in recipes that use milk? Please provide
any data or evidence to support your answer.
    4. How do consumers perceive or understand labeling of these plant-
based products? For example, do consumers perceive the labeling as
suggesting that these plant-based products are equivalent to or can be
substituted for their dairy counterparts? Do consumers perceive the
labeling as suggesting that plant-based products are different or
distinct from their dairy counterparts? Please provide any data or
evidence to support your answer.
    5. We are aware that some plant-based beverage manufacturers use
the term ``milk'' as part of the name of these foods while other
manufacturers use terms such as ``beverage'' or ``drink'' as part of
the name of these foods. Do consumers perceive plant-based beverages to
be different if the term ``milk'' is used instead of ``beverage'' or
``drink''? For example, how do consumers perceive or understand ``soy
milk'' in comparison to ``soy-based beverage'' or ``soy drink''? Please
provide any data or evidence to support your answer.

C. Consumer Understanding Regarding the Basic Nature, Characteristics,
and Properties of Plant-Based Products

    1. What do consumers believe to be the basic nature,
characteristics, or properties of plant-based products manufactured to
resemble dairy foods such as, for example, milk, cultured milk, yogurt,
and cheese? Is consumer understanding of the basic nature of plant-
based products influenced by inclusion of terms such as milk, cultured
milk, yogurt, and cheese in the names in the labeling of these
products? Do consumers expect plant-based products labeled with such
names to have physical characteristics, performance characteristics, or
properties of their dairy counterparts? If so, in what ways? Please
provide any data or evidence to support your answer.
    2. What do consumers believe are the main ingredients of plant-
based products? What do consumers understand/think about the different
protein sources being used to make these plant-based products? Do they
understand that some of these plant-based products contain proteins
from more than one plant source (e.g., almond and pea protein)? Are
these beliefs or understanding influenced by the inclusion of dairy
food names, particularly ``milk,'' ``cultured milk,'' ``yogurt,'' or
``cheese,'' in the product name? Please provide any data or evidence to
support your answer.
    3. What is consumers' understanding of the amount or proportion of
plant-based ingredient(s) relative to other ingredients in plant-based
products? Are consumers aware that other ingredients (e.g.,
emulsifiers, thickeners, sweeteners, and added nutrients such as
vitamins and minerals) are used in the manufacture of these plant-based
products? How does the use of these ingredients impact consumer
perception of these products? Please provide any data or evidence to
support your answer.
    4. Do these plant-based products vary in ingredients, even when
manufactured using the same type of plant source (e.g., soy or almond)?
If so, how? What are consumers' expectations regarding the ingredients
of different brands of each subclass (e.g., soy or almond) of plant-
based products? What impact, if any, does the compositional variation
have on purchase and consumption decisions? Please provide any data or
evidence to support your answer.

D. Consumer Understanding of the Nutritional Content of Plant-Based
Products and Dairy Foods and the Effect, if Any, on Consumer Purchases
and Use

    1. Dairy foods, such as milk, cultured milk, yogurt, and cheese,
may differ in nutritional content compared to plant-based products
manufactured to resemble these dairy foods. What nutrients, if any, do
consumers believe to be provided from dairy foods such as milk,
cultured milk, yogurt, and cheese? What nutrients, if any, do consumers
believe to be in plant-based products that resemble dairy foods, such
as milk, cultured milk, yogurt, and cheese? Do consumers expect certain
nutrients to be present in both plant-based products and their dairy
counterparts, and, if so, what nutrients do they expect? Do these
expectations change depending on the terms included in the names of
plant-based products, e.g., ``milk,'' ``beverage,'' ``drink,''
``yogurt,'' ``yogurt alternative,'' ``vegan cheddar cheese,'' ``cheese
shreds''? Please provide any data or evidence to support your answer.
    2. Do parents and caregivers who purchase these plant-based
products for young children or other family members

believe that these plant-based products are nutritionally equivalent to
their dairy counterparts and can replace them as a food choice? Are
expectations of nutritional equivalency a factor in parents' and
caregivers' decisions to purchase these plant-based products as part of
young children's or other family members' balanced diet? Please provide
any data or evidence to support your answer.
    3. Do these plant-based products vary in nutrient composition, even
when manufactured using the same type of plant ingredients (e.g., soy
or almond)? If so, how? What are consumers' expectations regarding the
nutrient compositions of different brands of each subclass (e.g., soy
or almond) of plant-based products? What impact, if any, does the
compositional variation have on purchase and consumption decisions?
Please provide any data or evidence to support your answer.
    4. We are aware that the United States Department of Agriculture's
National Nutrient Database for Standard Reference (USDA Nutrient
Database) provides information about the nutritional content of dairy
foods as well as some plant-based products that resemble dairy foods
(Ref. 2). However, we believe the USDA Nutrient Database may not be a
full representation of all the varieties of dairy foods, including
milk, cultured milk, yogurt, cheese, and of the plant-based products
manufactured to resemble these dairy foods, currently in the United
States marketplace. We are interested in any data regarding the
nutritional profiles of different dairy foods, such as, for example,
milk, modified milk, cultured milk, yogurt, and cheese products, and
any data regarding the nutritional profiles of the various plant-based
products that resemble dairy foods, including fortified versions of
those plant-based products. We are particularly interested in obtaining
data that compares the amounts of protein, calcium, vitamin D, and
potassium in these plant-based products and their dairy counterparts.
    5. How do the protein qualities of plant-based products compare to
their dairy counterparts? How does the variation, if any, impact
consumer perception, and purchasing and consumption decisions? Please
provide any data or evidence to support your answer.

E. The Role of Plant-Based Products and Dairy Foods in Meeting the
Recommendations in the Dietary Guidelines

    The Dietary Guidelines contain nutritional and dietary information
and guidelines for the public. The Dietary Guidelines are based on the
preponderance of current scientific and medical knowledge and are
intended to help individuals ages 2 years and older consume a healthy,
nutritionally adequate diet. As part of these recommendations, the
Dietary Guidelines refer to several ``food groups,'' including a
``dairy group,'' which includes fortified soy beverages. [Note:
Although the Dietary Guidelines refer to a ``dairy group,'' as
indicated in section I.A., by ``dairy foods,'' FDA is referring to
foods such as milk, cheese, and yogurt, and not to their plant-based
counterparts.]
    The Dietary Guidelines state that healthy eating patterns in the
dairy group include fat-free and low-fat (1 percent) dairy, including
milk, yogurt, cheese, or fortified soy beverages (see Ref. 1 at page
23). The Dietary Guidelines explain that soy beverages fortified with
calcium, vitamin A, and vitamin D, are included as part of the dairy
group because they are similar to fortified low- and non-fat milk based
on nutrient composition and in their use in meals. The Dietary
Guidelines also state that other plant-based beverages sold as
``milks'' (such as almond, rice, coconut, and hemp ``milks'') are not
included as part of the dairy group because their overall nutritional
content is not similar to that of milk and fortified soy beverages
(id.).
    According to the Dietary Guidelines, the key nutrient contributions
in the dairy group include calcium, phosphorus, vitamin A, vitamin D
(in products fortified with vitamin D), riboflavin, vitamin B12,
protein, potassium, zinc, choline, magnesium, and selenium (id.).
    1. Do consumers understand that certain plant-based products might
have a nutritional content that is not adequate to place them in the
dairy group as described in the Dietary Guidelines? How does this
influence their purchasing behavior with respect to plant-based
products and dairy foods? Please provide any data or evidence to
support your answer.
    2. Do consumers who purchase or consume plant-based products
instead of dairy foods, such as yogurt or cheese, believe that these
plant-based products meet the dairy group recommendation described in
the Dietary Guidelines? Please provide any data or evidence to support
your answer.

III. References

    The following references are on display at the Dockets Management
Staff (see ADDRESSES) and are available for viewing by interested
persons between 9 a.m. and 4 p.m., Monday through Friday; they are also
available electronically at https://www.regulations.gov. FDA has
verified the website addresses, as of the date this document publishes
in the Federal Register, but websites are subject to change over time.

1. U.S. Department of Health and Human Services and U.S. Department
of Agriculture. ``Dietary Guidelines for Americans, 2015-2020.''
Eighth Edition. December 2015. Accessed online at https://health.gov/dietaryguidelines/2015/guidelines/.
2. U.S. Department of Agriculture. National Nutrient Database for
Standard Reference (Release 23), Food items with NDB Numbers: 01077,
01079, 01082, 01085, 16222, 16229, 16230, 14091, and 14639 accessed
online at http://www.nal.usda.gov/fnic/foodcomp/search on August 1,
2018.

    Dated: September 25, 2018.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018-21200 Filed 9-27-18; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 78, Number 219 (Wednesday, November 13, 2013)]
[Notices]
[Page 68060]
[FR Doc No: 2013-27151]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9902-81--Region 4]

Availability of FY 12 Grantee Performance Evaluation Reports for
the Eight States of EPA Region 4 and 17 Local Agencies

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of availability; Clean Air Act Section 105 grantee
performance evaluation reports.

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SUMMARY: EPA's grant regulations require the Agency to evaluate the
performance of agencies which receive grants. EPA's regulations for
regional consistency require that the Agency notify the public of the
availability of the reports of such evaluations. EPA performed end-of-
year evaluations of eight state air pollution control programs (Alabama
Department of Environmental Management; Florida Department of
Environmental Protection; Georgia Department of Natural Resources;
Commonwealth of Kentucky Energy and Environment Cabinet; Mississippi
Department of Environmental Quality; North Carolina Department of
Environment and Natural Resources; South Carolina Department of Health
and Environmental Control; and Tennessee Department of Environment and
Conservation) and 17 local programs (City of Huntsville Division of
Natural Resources, AL; Jefferson County Department of Health, AL;
Broward County Environmental Protection and Growth Management
Department, FL; City of Jacksonville Environmental Quality Division,
FL; Hillsborough County Environmental Protection Commission, FL; Miami-
Dade County Air Quality Management Division, FL; Orange County
Environmental Protection Division, FL; Palm Beach County Health
Department, FL; Pinellas County Parks and Conservation Resources, FL;
Louisville Metro Air Pollution Control District, KY; Forsyth County
Environmental Affairs Department, NC; Mecklenburg County Land Use and
Environmental Services Agency, NC; Western North Carolina Regional Air
Quality Agency, NC; Chattanooga-Hamilton County Air Pollution Control
Bureau, TN; Shelby County Health Department, TN; Knox County Department
of Air Quality Management, TN; and Metropolitan Government of Nashville
and Davidson County Public Health Department, TN). The 25 evaluations
were conducted to assess the agencies' Fiscal Year 2012 performance
under the grants awarded by EPA under authority of section 105 of the
Clean Air Act. EPA Region 4 has prepared reports for each agency
identified above and these reports are now available for public
inspection.

ADDRESSES: The reports may be examined at the EPA's Region 4 office, 61
Forsyth Street SW., Atlanta, Georgia 30303, in the Air, Pesticides and
Toxics Management Division. The Regional Office's official hours of
business are Monday through Friday, 8:30 to 4:30, excluding federal
holidays.

FOR FURTHER INFORMATION CONTACT: Marie Persinger<PHONE_NUMBER> for
information concerning the state and local agencies of Alabama and
Kentucky; Artra Cooper<PHONE_NUMBER> for the state and local agencies
of Florida; Mary Echols<PHONE_NUMBER> for the state agency of Georgia;
Shantel Shelmon<PHONE_NUMBER> for the state and local agencies of
North Carolina; Angela Isom<PHONE_NUMBER> for the state agencies of
Mississippi and South Carolina; and Gwendolyn Graf<PHONE_NUMBER> for
the state and local agencies of Tennessee. They may be contacted at the
Region 4 address mentioned in the previous section of this notice.

    Dated: October 29, 2013.
Beverly H. Banister,
Acting Deputy Regional Administrator, Region 4.
[FR Doc. 2013-27151 Filed 11-12-13; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 78, Number 120 (Friday, June 21, 2013)]
[Notices]
[Pages 37599-37600]
[FR Doc No: 2013-14802]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

    Extension:
    Rule 206(4)-7, OMB Control No. 3235-0585, SEC File No. 270-523.

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (the ``Commission'') has submitted to the Office of
Management and Budget (``OMB'') a request for extension of the
previously approved collection of information discussed below.
    The title for the collection of information is ``Investment
Advisers Act rule 206(4)-7 (17 CFR 275.206(4)-7), Compliance procedures
and practices.'' Rule 206(4)-7 requires each investment adviser
registered with the Commission to (i) Adopt and implement internal
compliance policies and procedures, (ii) review those policies and
procedures annually, (iii) designate a chief compliance officer, and
(iv) maintain certain compliance records. Rule 206(4)-7 is designed to
protect investors by fostering better compliance with the securities
laws. The collection of information under rule 206(4)-7 is necessary to
assure that investment advisers maintain comprehensive internal
programs that promote the advisers' compliance with the Investment
Advisers Act of 1940. The information collection in the rule also
assists the Commission's examination staff in assessing the adequacy
advisers' compliance programs. This collection of information is found
at 17 CFR 275.206(4)-7 and is mandatory.
    The information documented pursuant to rule 206(4)-7 is reviewed by
the Commission's examination staff; it will be accorded the same level
of confidentiality accorded to other responses provided to the
Commission in the context of its examination and oversight program. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid control number.
    The respondents to this information collection are investment
advisers registered with the Commission. Our latest data indicate that
there were 10,773 advisers registered with the Commission as of
February 1, 2013. The Commission has estimated that

compliance with rule 206(4)-7 imposes an annual burden of approximately
87 hours per respondent. Based on this figure, the Commission estimates
a total annual burden of 937,251 hours for this collection of
information.
    The public may view background documentation for this information
collection at the following Web site, www.reginfo.gov. Please direct
general comments regarding the above information to the following
persons: (i) Desk Officer for the Securities and Exchange Commission,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503 or email to<EMAIL_ADDRESS>and (ii) Thomas Bayer Director/Chief Information
Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon,
6432 General Green Way, Alexandria, VA 22312 or send an email to<EMAIL_ADDRESS>Comments must be submitted to OMB within 30 days of
this notice.

     Dated: June 17, 2013.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14802 Filed 6-20-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Proposed Rules]
[Pages 20571-20575]
[FR Doc No: 2011-8915]

=======================================================================
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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM11-15-000]

Bidding by Affiliates in Open Seasons for Pipeline Capacity

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking, DOE.

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SUMMARY: The Federal Energy Regulatory Commission is proposing
revisions to its regulations governing interstate natural gas pipelines
to prohibit multiple affiliates of the same entity from bidding in an
open season for pipeline capacity in which the pipeline may allocate
capacity on a pro rata basis, unless each affiliate has an independent
business reason for submitting a bid. The Commission is also proposing
that if more than one affiliate of the same entity participates in such
an open season, then none of those affiliates may release any capacity
obtained in that open season pursuant to a pro rata allocation to any
affiliate, or otherwise allow any affiliate to obtain the use of the
allowed capacity.

DATES: Comments are due May 31, 2011.

ADDRESSES: You may submit comments, identified by docket number and in
accordance with the requirements posted on the Commission's Web site,
http://www.ferc.gov. Comments may be submitted by any of the following
methods:
     Agency Web Site: Documents created electronically using
word processing software should be filed in native applications or
print-to-PDF format, and not in a scanned format, at http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery: Commenters unable to file comments
electronically must mail or hand deliver an original copy of their
comments to: Federal Energy Regulatory Commission, Secretary of the
Commission, 888 First Street, NE., Washington, DC 20426. These
requirements can be found on the Commission's Web site, see, e.g., the
``Quick Reference Guide for Paper Submissions,'' available at http://www.ferc.gov/docs-filing/efiling.asp or via phone from FERC Online
Support at<PHONE_NUMBER> or toll-free at 1-866-208-3676.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process,

see the Comment Procedures section of this document.

FOR FURTHER INFORMATION CONTACT:

Jennifer Kunz, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
<EMAIL_ADDRESS>(202) 502-6102.
Robert McLean, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
<EMAIL_ADDRESS>(202) 502-8156.

Notice of Proposed Rulemaking

Table of Contents

(April 7, 2011)

------------------------------------------------------------------------
                                                              Paragraph
                                                                 Nos.
------------------------------------------------------------------------
I. Background..............................................            2
II. Prohibition on Multiple Affiliate Bidding in Open                  9
 Seasons for Pipeline Capacity.............................
III. Prohibition on Release of Capacity....................           15
IV. Regulatory Requirements................................           18
    A. Information Collection Statement....................           18
    B. Environmental Analysis..............................           19
    C. Regulatory Flexibility Act..........................           20
    D. Comment Procedures..................................           22
    E. Document Availability...............................           26
------------------------------------------------------------------------

    1. In this Notice of Proposed Rulemaking, the Commission proposes
to revise its Part 284 regulations to prohibit multiple affiliate
bidding in open seasons for interstate natural gas pipeline capacity
and the subsequent release of acquired capacity to affiliates under
certain circumstances. Specifically, the Commission proposes to
prohibit multiple affiliates of the same entity from bidding in an open
season for pipeline capacity in which the pipeline may allocate
capacity on a pro rata basis, unless each affiliate has an independent
business reason for submitting a bid. The Commission also proposes that
if more than one affiliate of the same entity participates in such an
open season, then none of those affiliates may release any capacity
obtained in that open season pursuant to a pro rata allocation to any
affiliate, or otherwise allow any affiliate to obtain the use of the
allowed capacity. These proposals would prevent anticompetitive gaming
of the pro rata allocation methodology by using multiple affiliates of
the same entity to acquire a larger share of the available capacity
than one affiliate would be able to acquire by itself.

I. Background

A. Open Seasons for Pipeline Capacity

    2. The Commission's policy under the Natural Gas Act (NGA) \1\ is
to allocate available interstate pipeline capacity to the shipper that
values it the most, up to the maximum rate.\2\ In furtherance of this
goal, the Commission favors the use of open seasons to allocate
capacity and permits but does not require a net present value (NPV)
evaluation as a tool for determining the highest valued use.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 717 et al. (2006).
    \2\ N. Natural Gas Co., 108 FERC ] 61,044, at P 11 (2004);
Texican N. La. Transport, LLC v. Southern Natural Gas Co., 129 FERC
] 61,270, at P 70 (2009) (Texican I), order on reh'g, 132 FERC ]
61,167, at P 23, 26 (2010) (Texican II).
    \3\ Texican II, 132 FERC ] 61,167 at P 26.
---------------------------------------------------------------------------

    3. Some pipelines hold open seasons to alert shippers to the
availability of capacity on the pipeline and allow the shippers to bid
for available capacity. The pipeline's open season process is an open
and transparent procedure that is set forth in the pipeline's tariff.
The pipeline notifies shippers of the availability of capacity by
posting an open season notice on its EBB and/or Web site for the
available capacity. During the open season, the Commission requires
pipelines to sell all available capacity to shippers willing to pay the
pipeline's maximum recourse rate.\4\
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    \4\ Promotion of a More Efficient Capacity Release Market, 72 FR
65916 (November 26, 2007), FERC Stats. & Regs. ] 32,625, at P 40
(2007), (citing Tenn. Gas Pipeline Co., 91 FERC ] 61,053 (2000),
reh'g denied, 94 FERC ] 61,097 (2001), petitions for review denied
sub nom., Process Gas Consumers Group v. FERC, 292 F.3d 831, 837 (DC
Cir. 2002)).
---------------------------------------------------------------------------

    4. NPV is a method for awarding capacity from the bids received
during the open season.\5\ NPV is a standard method of evaluating bids
for capacity by using the time value of money to determine the present
value of a time series of discounted cash flows.\6\ The highest bidder,
based on the NPV of the bid, receives the capacity. Factors determining
NPV are price, volume of gas, and duration of the contract. The
Commission has stated that a ``net present value evaluation * * *
allocates capacity to the shipper who will produce the greatest revenue
and the least unsubscribed capacity. As such, it is an economically
efficient way of allocating capacity and is consistent with Commission
policy.'' \7\
---------------------------------------------------------------------------

    \5\ NPV is not the only method a pipeline could use. Another is
the ``first come-first served'' approach, where the first shipper to
submit a qualifying bid receives the capacity.
    \6\ Saltville Gas Storage Co., L.L.C., 128 FERC ] 61,257, at P 2
n.3 (2009).
    \7\ Tenn. Gas Pipeline Co., 76 FERC ] 61,101, at 61,522 (1996),
order on reh'g, 79 FERC ] 61,297 (1997), order on reh'g, 82 FERC ]
61,008 (1998), remanded sub nom. Process Gas Consumers Group v.
FERC, 177 F.3d 995 (DC Cir. 1999), order on compliance, 91 FERC ]
61,333 (2000), order on remand, 91 FERC ] 61,053 (2000), reh'g
denied, 94 FERC ] 61,097 (2001), petitions for review denied sub
nom. Process Gas Consumers Group v. FERC, 292 F.3d 831, 837 (DC Cir.
2002).
---------------------------------------------------------------------------

    5. In the event that there is not sufficient capacity to meet all
equal maximum bids, pipelines apply a tiebreaker mechanism. One such
mechanism is the pro rata allocation methodology. Under a pro rata
allocation tiebreaker mechanism, in the event that there is not
sufficient capacity to meet all qualifying bids, the capacity is
allocated pro rata, i.e., based on the ratio of each shipper's
respective nomination to all qualifying nominations, applied to the
total available capacity.\8\
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    \8\ An alternative tiebreaker mechanism for multiple maximum
bids is to award the capacity to the earliest applicant. The
Commission has stated that ``no single tiebreaker method is
definitely better than other methods; each system has advantages and
disadvantages * * *. So long as its method is reasonable [a
pipeline] may choose any method it wishes for inclusion as the
default tiebreaker in its tariff.'' Trailblazer Pipeline Co., 103
FERC ] 61,225, at 61,869 (2003), order on reh'g and compliance
filing, 108 FERC ] 61,049, at 61,305 (2004).
---------------------------------------------------------------------------

B. Multiple Affiliate Bidding

    6. It has come to the attention of the Commission that some
entities have developed and applied a strategy of bidding with multiple
affiliates in open seasons for available capacity in order to defeat
the pro rata allocation tiebreaker mechanism and obtain a greater share
of the available capacity than a single bidder could have acquired by
itself. Under conditions where the available capacity is limited and
the value of the

capacity is high, shippers are strongly motivated to obtain as much of
that valuable capacity as possible in order to take advantage of the
opportunity for profit. Where the available capacity is finite, the
price is capped by the pipeline's maximum tariff rate, and the
tiebreaker is a pro rata allocation, shippers can obtain more capacity
than they would be able to obtain themselves by bidding multiple
affiliates to defeat the pro rata allocation mechanism.
    7. Since the pro rata allocation mechanism will result in
proportional shares of the capacity being distributed to the qualifying
bidders, each affiliate with a maximum NPV bid could then release the
capacity to a single affiliate or otherwise allow its affiliate
effectively to obtain the use of the allocated capacity, resulting in
an entity receiving a larger share than it would have been able to
acquire by itself. Such gaming of the pro rata allocation mechanism has
a chilling effect on competition and permits entities that apply a
multiple affiliate bidding strategy inappropriately to gain a
disproportionate share of available capacity by denying a fair
distribution to all maximum bidders. This has the effect of harming
entities that submit only one bid and, by extension, harming their
customers.
    8. The foregoing discussion is based upon recent Commission
experience with multiple affiliate bidding.\9\ Based on that
experience, the Commission now proposes to revise its regulations to
make explicit that, unless independent business reasons exist, as
discussed further below, such bidding is inappropriate and, therefore,
prohibited.
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    \9\ Tenaska Marketing Ventures, et al., 126 FERC ] 61,040 (2009)
(order approving stipulations and agreements). See also Trailblazer
Pipeline Co., 101 FERC ] 61,405 (2002), order on technical
conference and denying reh'g, 103 FERC ] 61,225 (2003), order on
reh'g and compliance filing, 108 FERC ]61,049 (2004). The Commission
notes that the conduct on Trailblazer predated section 4A of the
NGA, 15 U.S.C. 717c-1 (2006), the anti-manipulation authority
granted to the Commission in the Energy Policy Act of 2005, Public
Law 109-58, 119 Stat. 594 (2005).
---------------------------------------------------------------------------

II. Prohibition on Multiple Affiliate Bidding in Open Seasons for
Pipeline Capacity

    9. The Commission is of the view that multiple affiliate bidding as
described above lessens competition because other bidders not engaging
in similar conduct will necessarily receive less capacity--not because
such bidders value the capacity any less, but because they bid only
through the unit of the company intending to use the capacity or
because they did not have multiple affiliates. Those who submit bids by
multiple affiliates receive a disproportionate share of the available
capacity, placing bidders that did not submit bids by multiple
affiliates at a competitive disadvantage. In theory, a company could
employ this strategy to the extreme by bidding hundreds or even
thousands of affiliates in a single open season to squeeze out
competitors and give that company a dominant share of the capacity. The
affiliates bidding would not need to have any direct customers or
employees to confer the competitive advantage to the affiliate designed
to benefit from the multiple affiliate bidding--in fact, a company
could create affiliate corporations merely for the sake of bidding in
open seasons to obtain the benefit of multiple affiliate bidding.
Regardless of the degree to which multiple affiliate bidding is used to
obtain a competitive advantage, ultimately bidders that do not submit
bids by multiple affiliates will be harmed, and by extension their
customers will be harmed, by losing valuable capacity to bidders that
employ a multiple affiliate bidding strategy.
    10. Furthermore, this multiple bidding behavior frustrates the
Commission's policy of allocating capacity to the shipper that values
it the most. By bidding multiple affiliates under a pro rata
tiebreaker, an entity can gain a greater share of valuable capacity not
because it values the capacity more than other bidders, but merely
because it arranges to submit more maximum NPV bids through the use of
affiliates.
    11. The Commission, however, recognizes that not all multiple
affiliate bidding is used to defeat a pro rata allocation mechanism. In
some cases, affiliates may have independent business reasons for
submitting their bids. For example, a marketing arm of an energy
company may bid to secure capacity for its wholesale customers and a
retail operation of the same company may bid to secure capacity to
serve its retail customers, and each would have an independent business
reason for its bid. Or a marketing company may have two or more
affiliates operating in different geographic areas, thus serving
distinct markets all of which may be served by transportation on the
same pipeline. When affiliates bid in such cases, other bidders are not
unduly harmed, undue discrimination is not practiced, and Commission
policy is not violated.
    12. Although there may be instances where affiliates have an
independent business reason for bidding for given capacity, in the
Commission's view amendments to our existing regulations are necessary
to prevent entities without such independent reasons from defeating a
pro rata allocation mechanism by using multiple affiliate bidding to
lessen competition and obtain more capacity than they could
independently. Therefore, the Commission proposes to add a new section
284.15 to its regulations, prohibiting multiple affiliates of the same
entity from participating in an open season for pipeline capacity
conducted by any interstate pipeline providing service under subparts B
and G of part 284 of the Commission's regulations in which the pipeline
may allocate capacity on a pro rata basis, unless each affiliate has an
independent business reason for submitting a bid. The Commission
proposes that, for purposes of the new regulation, the term
``affiliate'' be defined as provided in section 358.3(a)(1) and (3) of
the Commission's existing regulations.\10\
---------------------------------------------------------------------------

    \10\ 18 CFR 358.3(a)(1) and (3) (2010). Section 358.3(a)(1)
provides that an affiliate of a specified entity is ``another person
that controls, is controlled by or is under common control with, the
specified entity. An affiliate includes a division of the specified
entity that operates as a functional unit.'' Section 358.3(a)(3)
defines the term ``control.''
---------------------------------------------------------------------------

    13. It is impossible to describe in advance every situation that
demonstrates an independent business reason. This phrase is intended to
assure companies bidding for capacity that our rule will not prohibit
transactions with economic substance, in which the bidding affiliate is
providing service of value to its customers that is facilitated or
enhanced by the capacity being acquired, such as the scenarios
described in P 11. Those scenarios are illustrative of situations in
which a business unit uses awarded capacity to serve its own customers
or otherwise acts consistently with its business plan, interests, and
obligations. Indications that a company is not acting independently
would be if the business unit is used by its parent or affiliate in a
way that differs from its usual business operations, is used to perform
transactions that an affiliate or parent could not, or is acting as an
``alter ego'' of an affiliate or parent. The independent business
reason criterion ensures that bidders for pipeline capacity act in a
market-driven, pro-competitive manner, not in an effort to gain an
unfair competitive advantage in acquiring capacity. The general
guidance provided here reflects the fact that we oversee a dynamic and
evolving market where addressing yesterday's concerns may not address
tomorrow's concerns. Over time, however, experience in applying this
rule should be instructive to both the Commission and capacity market
participants. As we

apply the rule, we will be mindful of the fact that we are not only
taking steps to assure non-discriminatory access to capacity but also
providing guidance to market participants in general.\11\
---------------------------------------------------------------------------

    \11\ The approach taken here is similar to that taken in Order
No. 644, which adopted market behavior rules for sellers of natural
gas. Amendments to Blanket Sales Certificates, Order No. 644, FERC
Stats. & Regs. ] 31,153 (2003), reh'g denied 107 FERC ] 61,174
(2004). Order No. 644 adopted rules that prohibited transactions
without a ``legitimate business purpose'' and that were ``intended
to or foreseeably could manipulate market prices, market conditions,
or market rules for natural gas.'' In that case the rule prohibited
certain transactions (such as wash trades and collusion), but the
Commission specifically declined to limit the rule to pre-determined
circumstances. Order No. 644, FERC Stats. & Regs. ] 31,153 at P 32-
36. Similarly, here we recognize scenarios in which the independent
business reason standard can be met, and decline to limit the rule
to pre-determined circumstances. The relevant market behavior rules
adopted in Order No. 644 were rescinded after the Commission adopted
section 1c.1 of the Regulations. Amendments to Codes of Conduct for
Unbundled Sales Service and for Persons Holding Blanket Marketing
Certificates, Order No. 673, FERC Stats. & Regs. ] 31,207 (2006).
---------------------------------------------------------------------------

    14. This proposed rule is designed to ensure that an entity cannot
use multiple affiliates solely to secure a larger allocation of
capacity than it could acquire by itself. The proposed rule would also
provide clear notice to parties participating in open seasons for
interstate pipeline capacity that multiple affiliate bidding and
subsequent release of acquired capacity to one affiliate, or other
devices to confer the value of the capacity on one affiliate, are
prohibited.

III. Prohibition on Release of Capacity

    15. The Commission adopted its capacity release program as part of
the restructuring of interstate natural gas pipelines required by Order
No. 636.\12\ The capacity release program permits firm shippers to
release their capacity to others when they are not using it.\13\ The
Commission notes that some companies bidding with multiple affiliates
have used capacity release as the final step in consolidating multiple
shares of capacity for use by one of the company's units.\14\ By
releasing the capacity acquired in the open season, affiliates are able
to transfer the capacity each acquires to a single company that
benefits by obtaining more capacity than it could have obtained by
itself.
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    \12\ Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation and Regulation of Natural
Gas Pipelines After Partial Wellhead Decontrol, Order No. 636, 57 FR
13267 (April 16, 1992), FERC Stats. & Regs., Regulations Preambles
January 1991-June 1996 ] 30,939 (1992), order on reh'g, Order No.
636-A., 57 FR 36128 (August 12, 1002), FERC Stats. & Regs.,
Regulations Preambles January 1991-June 1996 ] 30,950 (1992); order
on reh'g, Order No. 636-B, 57 FR 57911 (Dec. 8, 1992), 61 FERC ]
61,272 (1992), order on reh'g, 62 FERC ] 61,007 (1993), aff'd in
part, vacated and remanded in part, United Dist. Cos. v. FERC, 88
F.3d 1105 (DC Cir. 1996), order on remand, Order No. 636-C, 78 FERC
] 61,186 (1997).
    \13\ In brief, under the Commission's capacity release program,
a firm shipper (releasing shipper) sells its capacity by returning
its capacity to the pipeline for reassignment to the buyer
(replacement shipper). The pipeline contracts with, and receives
payment from, the replacement shipper and then issues a credit to
the releasing shipper. The replacement shipper on a long term, year
or more release, may pay less than the pipeline's maximum tariff
rate, but not more. 18 CFR 284.8(e) (2010). The results of all
releases are posted by the pipeline on its Internet Web site and
made available through standardized, downloadable files.
    \14\ Tenaska Marketing Ventures, et al., 126 FERC ] 61,040 at P
13, 18.
---------------------------------------------------------------------------

    16. In order to prevent the use of capacity release or other
mechanisms as part of a scheme to game a pro rata allocation by
transferring the benefit of the capacity to the affiliate that has a
business use for the capacity, the Commission proposes to prohibit
affiliates from releasing any capacity obtained in an open season
pursuant to a pro rata allocation to any affiliate or otherwise from
allowing any affiliate effectively to obtain the use of the allocated
capacity. This will not inhibit two or more affiliates from obtaining
and using valuable pro rated capacity where they each have an
independent business reason for their bids. If the affiliate has an
independent business reason for initially bidding on the capacity, it
presumably has a need for the capacity once it has been awarded it.
Therefore, requiring the capacity-winning affiliate to retain the
capacity in such a circumstance should present little, if any, hardship
to such affiliate. If a company believes that retaining capacity in a
certain case would in fact create a hardship to an affiliate, the
company can seek a waiver of the prohibition.\15\
---------------------------------------------------------------------------

    \15\ If multiple affiliate bidding occurs in open seasons for
relatively short term capacity, hardship is unlikely. If multiple
affiliates acquire longer-term capacity, later changes in markets or
corporate structure could create a hardship for an affiliate to keep
the capacity it had been awarded. For example, a successful bidder
might lose the market for which the capacity had been obtained and
wish to release the capacity to an affiliate for other use, or a
company may reorganize to merge the successful bidder with another
affiliate or to reassign the successful bidder's functions to
another affiliate. In such cases, the affected entity should seek a
waiver of the prohibition and present the facts that support a
release of the capacity to an affiliate.
---------------------------------------------------------------------------

    17. This prohibition against capacity release reinforces the
prohibition against multiple affiliate bidding unless each affiliate
has an independent business reason for submitting a bid by further
deterring affiliates from bidding for capacity for which they have no
independent use. Should an affiliate violate the prohibition against
multiple affiliate bidding, that affiliate would incur an additional
violation with resulting penalties for transferring the advantage of
the multiple affiliate bidding to the affiliated entity that would
benefit from it. This complementary prohibition provides an additional
deterrent to violation of the first prohibition, helping to ensure that
the only instances of multiple affiliate bidding are those with
independent business reasons for each bid. In the Commission's view,
this prohibition, in combination with the provision prohibiting
multiple affiliate bidding unless each affiliate has an independent
business reason for submitting a bid, will fairly ensure that both
steps of the gaming process are prohibited.

IV. Regulatory Requirements

A. Information Collection Statement

    18. Office of Management and Budget (OMB) regulations require OMB
to approve certain information collection requirements imposed by
agency rule.\16\ The proposed regulations discussed above do not impose
reporting or recordkeeping requirements on applicable entities as
defined by the Paperwork Reduction Act.\17\ As a result, the Commission
is not submitting this NOPR to OMB for review and approval.
---------------------------------------------------------------------------

    \16\ 5 CFR 1320.11 (2010).
    \17\ 44 U.S.C. 3502(2)-(3) (2006).
---------------------------------------------------------------------------

B. Environmental Analysis

    19. 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.\18\ The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.\19\ The actions proposed to be taken here fall within
categorical exclusions in the Commission's regulations for rules that
are corrective, clarifying or procedural, for information gathering,
analysis, and dissemination, and for sales, exchange, and
transportation of natural gas that requires no construction of
facilities.\20\ Therefore an environmental review is unnecessary and
has not been prepared in this rulemaking.
---------------------------------------------------------------------------

    \18\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs., Regulation Preambles 1986-1990 ] 30,783 (1987).
    \19\ 18 CFR 380.4 (2010).
    \20\ 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), and
380.4(a)(27)(2010).

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

C. Regulatory Flexibility Act

    20. The Regulatory Flexibility Act of 1980 (RFA) \21\ 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 an analysis if proposed
regulations would not have such an effect.\22\ Most companies regulated
by the Commission do not fall within the RFA's definition of a small
entity.\23\
---------------------------------------------------------------------------

    \21\ 5 U.S.C. 601-612 (2006).
    \22\ 5 U.S.C. 605(b) (2006).
    \23\ 5 U.S.C. 601(3) (citing section 3 of the Small Business
Act, 15 U.S.C. 623 (2006)). Section 3 defines a ``small-business
concern'' as a business which is independently owned and operated
and which is not dominant in its field of operation.
---------------------------------------------------------------------------

    21. The rule proposed herein should have no significant negative
impact on those entities, be they large or small, subject to the
Commission's regulatory jurisdiction under the NGA. Most companies to
which the rules proposed herein, if finalized, would apply, do not fall
within the RFA's definition of small entities. In addition, the
proposed rule is only triggered if more than one affiliate of the same
entity participates in an open season for pipeline capacity in which
the pipeline may allocate capacity on a pro rata basis, and each
affiliate does not have an independent business reason for submitting a
bid. Therefore, the rule would only affect a limited number of small
entities. The rules proposed herein, if finalized, will not have a
significant economic effect on these small entities because the rule
does not impose any reporting or recordkeeping requirements. Therefore,
the Commission certifies that the proposed rules will not have a
significant economic effect on a substantial number of small entities.

D. Comment Procedures

    22. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due 45 days from publication in the Federal
Register. Comments must refer to Docket No. RM11-15-000, and must
include the commenter's name, the organization they represent, if
applicable, and their address in their comments.
    23. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
    24. Commenters that are not able to file comments electronically
must mail or hand deliver an original copy of their comments to:
Federal Energy Regulatory Commission, Secretary of the Commission, 888
First Street, NE., Washington, DC 20426.
    25. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

E. Document Availability

    26. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    27. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
    28. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. E-mail the Public Reference Room at
<EMAIL_ADDRESS>
List of Subjects in 18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping
requirements.

    By direction of the Commission.
Kimberly D. Bose,
Secretary.

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

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

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

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

    2. Section 284.15 is added to read as follows.

Sec.  284.15  Bidding by affiliates in open seasons for pipeline
capacity.

    (a) Multiple affiliates of the same entity may not participate in
an open season for pipeline capacity conducted by any interstate
pipeline providing service under subparts B and G of this part, in
which the pipeline may allocate capacity on a pro rata basis, unless
each affiliate has an independent business reason for submitting a bid.
    (b) If more than one affiliate of the same entity participates in
an open season subject to paragraph (a) of this section, none of those
affiliates may release any capacity obtained in that open season to any
affiliate, or otherwise allow any affiliate effectively to obtain the
use of the allocated capacity.
    (c) For purposes of this section, an affiliate is any person that
satisfies the definition of affiliate in Sec. Sec.  358.3(a)(1) and (3)
of this chapter with respect to another entity participating in an open
season subject to paragraph (a) of this section.

[FR Doc. 2011-8915 Filed 4-12-11; 8:45 am]
BILLING CODE 6717-01-P