[Federal Register Volume 59, Number 202 (Thursday, October 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25994]
[[Page Unknown]]
[Federal Register: October 20, 1994]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 161 and 250
[Docket No. RM94-6-001; Order No. 566-A]
Standards of Conduct and Reporting Requirements for
Transportation and Affiliate Transactions
Issued October 14, 1994.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule; Order on rehearing.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
issuing an order on the requests for rehearing of Order No. 566, the
final rule establishing revised standards of conduct and reporting
requirements for transportation and affiliate transactions. The order
grants rehearing on Standards H and K and makes a non-substantive
revision to the definition of marketing to reflect the elimination of
cross-referenced section of the regulations.
DATES: The revised regulations will become effective November 21, 1994.
ADDRESSES: Federal Energy Regulatory Commission, 825 North Capitol
Street, N.E., Washington, D.C. 20426.
FOR FURTHER INFORMATION CONTACT: Michael Goldenberg, Federal Energy
Regulatory Commission, 825 North Capitol Street, N.E., Washington, D.C.
20426. (202) 208-2294.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 3104, 941 North
Capitol Street N.E., Washington D.C. 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397. To access CIPS, set your communications
software to use 300, 1200 or 2400 bps, full duplex, no parity, 8 data
bits, and 1 stop bit. CIPS can also be accessed at 9600 bps by dialing
(202) 208-1781. The full text of this notice will be available on CIPS
for 30 days from the date of issuance. The complete text on diskette in
WordPerfect format may also be purchased from the Commission's copy
contractor, La Dorn Systems Corporation, also located in Room 3104, 941
North Capitol Street, N.E. , Washington D.C. 20426.
Table of Contents
I. Introduction
II. Background and Summary of Order No. 566
III. Consideration of the Affiliate Regulations taken as a Whole
IV. Standard F
V. Standard H
A. Revisions To The Standard
B. Specific Issues
1. Affiliate's Role in a Transportation Transaction
2. Posting Period
3. Posting of the Transportation Path
4. Posting of Discounts on Firm Transportation
VI. Capacity Allocation Log
VII. Requirement to Maintain Affiliate and Non-Affiliate Discount
Information
VIII. Tariff Waivers and Complaints
IX. Coordination of the Affiliate Requirements with Part 284
Requirements
X. Applicability of the Regulations
XI. Effective Date
Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A.
Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa,
Jr.
Order on Rehearing
I. Introduction
In Order No. 566,\1\ the Commission adopted a final rule amending
its regulations governing the Standards of Conduct applicable to
pipeline interactions with their marketing affiliates and the reporting
requirements for transportation and affiliate transactions. The final
rule retained the existing Standards of Conduct, with one exception.
The rule made significant changes in the reporting requirements to
reduce or consolidate maintenance and reporting burdens based on the
changes in the way pipelines are allocating capacity under Order No.
636\2\ and the requirement of Order No. 636 that pipelines develop
Electronic Bulletin Boards (EBBs) to provide customers with access to
important information. Thirteen parties, most of whom are pipelines,
have sought rehearing or clarification of the proposed rule.\3\
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\1\Standards of Conduct and Reporting Requirements for
Transportation and Affiliate Transactions, Order No. 566, 59 FR
32885 (June 27, 1994), III FERC Stats. & Regs. Preambles 30,997
(June 17, 1994).
\2\Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of
Natural Gas Pipelines After Partial Wellhead Decontrol, 57 FR 13267
(Apr. 16, 1992), III FERC Stats. & Regs. Preambles 30,939 (Apr. 8,
1992), order on reh'g, Order No. 636-A, 57 FR 36128 (Aug. 12, 1992),
III FERC Stats. & Regs. Preambles 30,950 (Aug. 3, 1992), order on
reh'g, Order No. 636-B, 57 FR 57911 (Dec. 8, 1992), 61 FERC 61,272
(1992), appeal re-docketed sub nom., Atlanta Gas Light Company and
Chattanooga Gas Company, et al. v. FERC, No. 94-1171 (D.C. Cir. May
27, 1994).
\3\The parties seeking rehearing and clarification are listed on
Appendix A.
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One of the principal issues raised in the rehearing petitions is
the timing of the requirement for posting affiliate discount
information on the pipelines' EBBs. Current Standard H requires posting
when a discount offer is made. After considering all the interests
involved, the Commission is revising Standard H to require posting
within 24 hours of the time at which gas flows under the discount. The
Commission is leaving undisturbed the requirement of Standard H that a
pipeline making a discount offer to an affiliate must make a comparable
offer contemporaneously available to similarly situated non-
affiliates.\4\
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\4\The Commission also is changing the posting period from 90 to
30 days and is making other minor changes to make the posting more
informative and easier to use.
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The other substantive change the Commission is making is to revise
Standard K to ensure that shippers have reasonable access to tariff
waivers. The revised Standard will require pipelines to provide their
log of tariff waivers within 24 hours of a request.
In addition, the Commission is making some non-substantive
revisions. The definition of marketing in Sec. 161.2(c) has been
revised, because the definition cross-referenced a section of the
Commission's producer regulations that recently was removed by the
Commission in an order that eliminated all of the producer regulations
at Part 270.\5\ The Commission is revising other regulations to clarify
that they apply only to marketing affiliates and not other affiliates
of pipelines.
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\5\Removal of Outdated Regulations Pertaining To The Sales of
Natural Gas Production, 59 FR 40240 (Aug. 8, 1994), III FERC Stats.
& Regs. Preambles 30,909 (July 28, 1994).
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II. Background and Summary of Order No. 566
The Commission, in Order No. 497,\6\ issued a rule intended to
prevent pipelines from providing preferential treatment to their
marketing or brokering affiliates. The rule adopted Standards of
Conduct (codified at Part 161 of the Commission's regulations)\7\ and
tariff and reporting requirements (codified in Sec. 250.16).\8\ The
Standards of Conduct established the principles applicable to
relationships between pipelines and their affiliates. In general, the
Standards sought to prevent pipelines from favoring affiliates with
information or transportation discounts not available to non-
affiliates. The tariff provisions required pipelines to include a
variety of information in their tariffs, such as a list of operating
personnel shared with affiliates, the information required in
transportation service requests, and the procedures used for complaint
resolution and for informing shippers about the availability and
pricing of transportation services. The reporting requirements required
pipelines to file information relating to transportation transactions
with affiliates and to maintain the same information for non-affiliated
shippers.
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\6\Inquiry Into Alleged Anticompetitive Practices Related to
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR
22139 (June 14, 1988), FERC Stats. & Regs. [Regulations Preambles
1986-1990] 30,820 (1988), order on rehearing, Order No. 497-A, 54
FR 52781 (Dec. 22, 1989), FERC Stats. & Regs. [Regulations Preambles
1986-1990] 30,868 (1989), order extending sunset date, Order No.
497-B, 55 FR 53291 (Dec. 28, 1990), FERC Stats. & Regs. [Regulations
Preambles 1986-1990] 30,908 (1990), order extending sunset date and
amending final rule, Order No. 497-C, 57 FR 9 (Jan. 2, 1992), III
FERC Stats. & Regs 30,934 (1991), reh'g denied, 57 FR 5815, 58 FERC
61,139 (1992), aff'd in part and remanded in part, Tenneco Gas v.
Federal Energy Regulatory Commission, 969 F.2d 1187 (D.C. Cir.
1992), order on remand, Order No. 497-D, 57 FR 58978 (Dec. 14,
1992), III FERC Stats. & Regs. 30,958 (1992), order on reh'g and
extending sunset date, Order No. 497-E, 59 FR 243 (Jan. 4, 1994),
III FERC Stats. & Regs. 30,987 (Dec. 23, 1994), order on reh'g,
Order No. 497-F, 59 FR 15336 (Apr. 1, 1994), 66 FERC 61,347 (1994),
order extending sunset date, Order No. 497-G, 59 FR 32884 (June 27,
1994), III FERC Stats. & Regs. Preambles 30,996 (June 17, 1994).
\7\18 CFR Part 161.
\8\18 CFR 250.16.
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In Order No. 636, the Commission created a new operating
environment for interstate pipelines and shippers by requiring
pipelines to unbundle their sale of gas from their transportation
service and by implementing changes in the terms and conditions for
providing transportation service. For example, the Commission required
that pipelines establish EBBs to provide information about available
firm and interruptible capacity on the pipeline, including the firm
capacity available through the newly established capacity release
mechanism.\9\
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\9\Sections 284.8(b)(4); 284.9(b)(4). The Commission also has
issued Order No. 563 promulgating standards governing the methods by
which pipelines will provide information about available capacity
through their EBBs. Standards For Electronic Bulletin Boards
Required Under Part 284 of the Commission's Regulations, Order No.
563, 59 FR 516 (Jan. 5, 1994), III FERC Stats. & Regs. Preambles
30,988 (Dec. 23, 1993), order on reh'g, Order No. 563-A, 59 FR
23624 (May 6, 1994), III FERC Stats. & Regs. Preambles 30,994 (May
2, 1994), reh'g denied, 68 FERC 61,002 (1994).
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In light of the changes effected by Order No. 636 and by the
Commission's review of its existing Order No. 497 requirements, the
Commission in Order No. 566 made significant changes in the Standards
of Conduct and the tariff and reporting requirements. The Commission
eliminated the Standard of Conduct dealing with gas subject to take-or-
pay relief, because the Commission had established procedures in Order
No. 636 for dealing with gas supply realignment costs. The Commission
revised its Standard of Conduct H (prior Standard of Conduct I) to
coordinate its posting requirements relating to affiliate discounts and
thereby eliminate duplicative EBB postings. Former Standard I required
pipelines offering discounts to affiliates to make comparable discounts
contemporaneously available to similarly situated shippers. The
Commission retained this requirement, but modified the regulation to
codify its policy that pipelines use their EBBs to provide non-
affiliates with the contemporaneous notice required by the Standard.
This modification further enabled the Commission to eliminate a
duplicative reporting requirement, in Sec. 250.16, under which
pipelines had to post similar discount information on their EBBs. The
Commission eliminated a number of the tariff requirements, retaining
only the requirements that tariffs must include a list of operating
personnel and facilities shared by the pipeline and its marketing
affiliates and a provision establishing the procedures used to address
complaints.
The major change to the reporting requirements was to reduce the
pipelines' reporting burden by eliminating maintenance and posting
requirements relating to requests for transportation service and
replacing them with more limited requirements that better comport with
pipeline operations under Order No. 636. The revised regulations were
designed to better capture the information used by pipelines to
allocate capacity among shippers when available capacity is not
sufficient for the pipelines to honor all requests for service. For
those pipelines whose tariffs rely upon contract information or other
data to allocate capacity, the pipelines will be required to maintain a
log (for both affiliates and non-affiliates) of contract dates or other
relevant information used to allocate capacity. The affiliate log must
be posted on the pipelines' EBBs, while the full log (for both
affiliates and non-affiliates) must be provided to the Commission,
within a reasonable time, upon request. However, pipelines that
allocate capacity on a pro rata basis will not have to maintain the
log.
Because Standard H was modified to codify Commission policy
requiring EBB posting of discount offers, the Commission eliminated the
provision, under Sec. 250.16, requiring pipelines to post information
relating to affiliate discounts on their EBBs. Under the revised
regulations, pipelines must only maintain the relevant discount
information for both affiliates and non-affiliates and provide that
information to the Commission upon request.
Several of the rehearing requests challenge the Commission's
decision not to rescind the Standards of Conduct and reporting
requirements in their entirety. They then focus on the Commission's
decisions on individual requirements. The Commission will first address
the considerations relating to the affiliate requirements as a whole
and will then address the contentions made with respect to specific
items.
III. Consideration of the Affiliate Regulations Taken as a Whole
In the Notice of Proposed Rulemaking (NOPR),10 the Commission
stated that, as part of its continuing assessment of the Order No. 497
regulations, it would consider comments on the need to retain these
requirements as a whole. Many pipeline commenters contended that all
the Order No. 497 requirements should be removed, because they were
duplicative of existing prohibitions on undue discrimination and
because the changes created by Order No. 636 made these requirements
unnecessary. In Order No. 566, the Commission determined that the
changes effected by Order No. 636 had not reduced the pipelines'
incentive or ability to favor affiliates significantly enough to
warrant complete rescission of the regulations at this point. The
Commission, however, committed to reviewing these requirements as the
industry obtains more experience operating in the restructured
environment brought about by Order No. 636.
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\1\0Standards of Conduct and Reporting Requirements for
Transportation and Affiliate Transactions, Notice of Proposed
Rulemaking, 59 FR 268 (Jan. 4, 1994), IV FERC Stats. & Regs.
Proposed Regulations 32,504 (Dec. 23, 1993).
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Several pipelines contend the Commission erred in not rescinding
all of the Order No. 497 regulations.11 They make five arguments.
First, they contend that the requirements cannot be substantiated
because during the six years they have been in effect, the evidence
does not show that pipelines have acted to favor affiliates.
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\1\1Enron, INGAA, MGS/Natural, Panhandle Pipelines.
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Second, they argue that Order No. 636 has introduced added
competition to the marketplace by unbundling the sale of gas from the
transportation of gas and by permitting firm shippers to release their
capacity. They assert this added competition has eviscerated the
pipelines' monopoly over transportation and hence their ability to
discriminate unfairly in favor of their marketing affiliates.
Third, they maintain that the conduct sought to be prevented by the
affiliate regulations is already covered by the regulations under Part
284 that prohibit pipelines from engaging in undue discrimination.
Fourth, they maintain that whatever benefits may be derived from
the regulations do not warrant the reduction in competition the
regulations create. For example, INGAA maintains that pipeline
affiliates are placed at a competitive disadvantage because affiliate
discounts are posted, while non-affiliates can conduct their business
without such disclosure.
Fifth, they maintain that given the limited benefits from the
requirements, the burdens and costs on the pipelines of complying with
the posting and record maintenance requirements are not justified. The
Panhandle Pipelines, for instance, maintain that few in the industry
are interested in the information posted on EBBs, stating that shippers
have accessed the affiliate EBBs on their four pipelines only a limited
number of times.
If the regulations are maintained, many pipelines12 contend
the Commission should include a sunset date on which the regulations
will expire. They point out a sunset date had been a feature of the
prior Order No. 497 reporting requirements and the Commission
acknowledged in Order No. 566 that developments in the industry may
well make continued enforcement of the rules unnecessary. They point
out that the Commission has committed to reviewing these requirements
and argue that a sunset date will make that commitment tangible.13
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\1\2Enron, INGAA K N Energy, MGS/Natural, Panhandle Pipelines,
Tenneco.
\1\3If the Commission does not have sufficient evidence within
the sunset period to make its determination, they assert the
Commission can extend the requirements as it has in the past.
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In contrast, Hadson contends that the rules have not had a
significant adverse effect on the ability of marketing affiliates to
compete given the phenomenal success that affiliate marketers have
enjoyed. Hadson maintains that the success of the regulations is shown
by the reduced number of complaints from state governments, producers,
and competing marketers, and it argues that this success is sufficient
grounds to make the Order No. 497 rules a part of the permanent
regulatory framework.
The Commission denies the requests for rehearing. Even with the
changes created by Order No. 636, the pipelines still retain an
economic incentive to favor their affiliates, since such preferences
may increase the overall profitability of the parent corporation.
Although the unbundling of pipeline gas sales from transportation
service has created a more competitive gas market, this competition has
not eliminated the pipelines' incentives to favor their affiliates.
Pipelines can still provide their affiliates with competitive
advantages by giving them preferential access to transportation
information or to discounts or other transportation benefits.
Similarly, while the capacity release mechanism has created competition
between released capacity and the pipelines' firm and interruptible
capacity, the industry has not even had a year's experience with
capacity release, so evidence of how it will affect the pipeline's
control over transportation service is still unknown.
The pipelines assert that the regulations are unnecessary because
the Commission's Part 284 regulations already prohibit undue
discrimination and that the Standards of Conduct and reporting
requirements are therefore duplicative. Although the Part 284
regulations do prohibit undue discrimination, these regulations do not
establish the mechanisms, included in the affiliate regulations, to
help ensure that non-affiliates are treated equally with affiliates and
to provide for public and Commission monitoring of affiliate
transactions. Given the special relationship between pipelines and
their marketing affiliates and the pipelines' incentive to favor
affiliates, the additional protection provided by the affiliate
regulations is necessary.
In addition, the pipelines claim that the regulations should be
removed since there has been little evidence of favoritism to
affiliates so the regulations place unnecessary burdens on the ability
of affiliates to compete and create needless reporting burdens. Even
with the current regulations, the Commission has received complaints of
affiliates abuses. Using the number of complaints is an uncertain
indicator of whether the regulations need to be continued, since the
presence of the Standards of Conduct and the public scrutiny created by
the reporting requirements may have had the desired prophylactic effect
and decreased the extent of potential problems which otherwise might
have occurred.
In the final rule, the Commission significantly reduced the burdens
created by the tariff and reporting requirements. The regulations that
remain do not create such undue burdens on the pipelines or their
affiliates that rescission is warranted, given the pipelines'
continuing incentives to favor affiliates. These regulations strike a
reasonable balance between prevention of pipeline favoritism towards
affiliates and the competitive and reporting burdens claimed by the
pipelines and affiliates. For example, the Standards of Conduct do
nothing more than require the pipelines to provide to non-affiliates
the same information and discounts the pipelines provide to affiliates
by posting such information on EBBs. Such disclosure does not prevent
the affiliates from competing; it merely ensures that all relevant
transportation information is provided in a public forum so competition
between affiliates and non-affiliates can take place on an even basis.
Moreover, since pipelines are required to operate EBBs by Sec. 284.8
(b)(4) and (5), the additional burden of posting affiliate information
is not great.
The Commission will not impose a sunset date for the reporting
requirements. The Commission's review of the Order No. 497 requirements
in this rule resulted in a significant reduction in the reporting
requirements: pipelines now are required to post and maintain a simple
log of contract data used to allocate capacity only if they use such
data, and to maintain a limited amount of information concerning
transportation discounts provided to affiliates and non-affiliates.
Given this reduction in burden, the Commission does not find that the
administrative burdens created by establishment of a sunset date are
now appropriate, especially since the Commission is unable to determine
when it will have sufficient information to reevaluate its reporting
requirements. The Commission, however, is committed to undertaking such
a reevaluation when the industry has obtained sufficient experience
operating in the restructured environment.
IV. Standard F
Standard F requires the pipelines to disclose contemporaneously to
all shippers transportation information provided to affiliates. The
Panhandle Pipelines argue that this Standard is no longer needed,
because, due to the capacity release and flexible receipt and delivery
point authority created by Order No. 636, customers control access to
capacity, not the pipelines. The Commission, however, fails to discern
how the ability of customers to exercise greater control over the use
of their capacity would lessen the effect of a pipeline providing
important transportation information to an affiliate, but withholding
the information from the rest of the market. As an example, a
pipeline's advance notice of curtailment plans could permit an
affiliate to make alternate transportation arrangements so that it can
continue to provide uninterrupted service, while shippers without
advance notice may be at a disadvantage in attempting to make such
alternate plans.14
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\1\4The affiliate, for instance, could lock-up alternate receipt
or delivery points before other shippers are aware of the need to
change points.
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V. Standard H
The predecessor to Standard H required pipelines offering a
transportation discount to an affiliate to make a comparable discount
contemporaneously available to all similarly situated non-affiliates.
In Order No. 566, the Commission retained this requirement. It modified
the Standard, however, to codify the interpretation developed through
case-by-case decision-making that pipelines were required to post
certain information about affiliate discounts on the pipelines'
EBBs.15 Under Standard H, pipelines are required to post, for a 90
day period, notice of each offer to an affiliate, providing the date of
the offer, the discount rate, the quantity of gas scheduled to be moved
at the discount rate, the delivery points in the offer, any conditions
applicable to the offer, and the procedures by which a non-affiliated
shipper can request a comparable offer. The Commission found that this
modification of the Standard did not add a new posting requirement,
because the Commission eliminated the comparable requirement under
Sec. 250.16 that pipelines post affiliate discount information on their
EBBs.
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\1\5See Colorado Interstate Gas Company, 64 FERC 61,277 at
62,960 (1993) (citing Sunrise Energy v. FERC, 62 FERC 61,087 at
61,622-23 (1993)), reh'g denied, 65 FERC 61,264 at 62,224-25
(1993).
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A. Revisions to the Standard
Pipelines16 challenge the Commission's modification of the
Standard first by contending that the Commission failed to abide by the
Administrative Procedure Act (APA), because the proposal to require
posting of affiliate offers on EBBs was not included in the NOPR in
this proceeding.17 They assert that the addition of the posting
requirement to Standard H, without proper notice, violated the APA,
because it was not in character with the prior regulations or the
original scheme proposed in the NOPR and was not a logical outgrowth of
the NOPR. In particular, they assert that the modification to Standard
H was not in character with the previous regulations, because, under
prior Sec. 250.16, pipelines were required to post affiliate discount
information after the discount was provided, while the revision to
Standard H requires such posting when the discount offer is made.
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\1\6ANR/CIG, Enron, INGAA, MGS/Natural, Panhandle Pipelines.
\1\75 U.S.C. 553(a).
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The pipelines also make a number of substantive challenges to the
Standard. They contend Standard H in its entirety is unnecessary
because no evidence demonstrates that pipelines engage in abusive
discounting practices.18 They further maintain that any potential
problems are adequately covered by Commission regulations under Part
284 which prevent undue discrimination and require, under
Sec. 284.7(d)(5)(iv), that the pipelines provide notice of
discounts.19
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\1\8Enron, MGS/Natural.
\1\9Enron, INGAA.
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The pipelines further contend that the required posting of discount
information when offers are made will disclose confidential competitive
information and will permit non-affiliates to steal deals being
negotiated by affiliates.20 Enron argues that contemporaneous
posting of the discounted rate, volume, and delivery points will enable
competitors to discern the identity of the affiliate's customer and
determine the type of offer that will enable the non-affiliate to
undercut the affiliate's deal.21 Enron requests that if the
Commission retains the posting requirement, it eliminate the disclosure
of competitively sensitive information, requiring only the posting of a
notice of a discount. MGS/Natural contend that the revision to the
regulation is based on the incorrect premise that non-affiliated
shippers will request discounts only if they are made aware of the
discount offered to the affiliate. They maintain that all shippers know
how to request and bargain for discounts so that after-the-fact posting
of discounts is all that is necessary to ensure that discrimination has
not occurred.
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\2\0ANR/CIG, Enron, MGS/Natural, Panhandle Pipelines.
\2\1TGPL requests deletion of the requirement to post the volume
of gas scheduled since the pipeline will not know this information
when offering the discount.
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Along the same lines, K N Energy and Panhandle Pipelines request
clarification of when pipelines are obligated to post offers under the
regulation. They argue that pipelines should not be required to post
affiliate discount information during negotiations, but should post
only the final offer on the day it is offered to the affiliate. K N
Energy states that affiliates will be unduly disadvantaged by posting
of offers during the negotiation process and cites to the Commission's
decision in Sunrise Energy Company v. Transwestern Pipeline
Company,22 in support of this interpretation. In contrast,
Indicated Companies contend that the Commission should require the
posting of all offers made during negotiations in addition to posting
the final offer, citing to the Commission's decision in Colorado
Interstate Gas Company.23
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\2\262 FERC 61,087 at 61,623 (1993), aff'd, 66 FERC 61,170
(1994).
\2\365 FERC 61,264 at 62,224-25 (1993).
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The Commission rejects the pipelines' contention that Standard H in
its entirety is unnecessary due to an absence of complaints about
abusive discounting practices and the existing requirements of Part
284. As discussed earlier, the Commission has received complaints of
affiliate abuses, and the need to prevent preferential discounting is a
fundamental premise of the regulations. Given the pipelines' incentive
to favor marketing affiliates, a separate requirement that pipelines
contemporaneously make the same discounts available to non-affiliates
as to affiliates is necessary and not unduly burdensome. Public
disclosure of affiliate discount information also is still necessary to
inform non-affiliates of available discounts and to permit the market
to monitor affiliate transactions. As discussed below, the Commission
rejects the pipelines' contention that the current Part 284 discount
reports are sufficient to replace the posting requirements under
Standard H.
The Commission, however, is persuaded by the rehearing petitions
that its posting requirements under Standard H did not strike the
proper balance between the interests at issue here. The Commission,
therefore, will grant rehearing and revise the posting requirement so
that the information about affiliate discount transactions will not
have to be posted until 24 hours after gas flows under the discount
transaction.24 The change to the posting requirement will not
affect the pipelines' obligation contemporaneously to provide non-
affiliates with the same discounts provided to affiliates. Any pipeline
offering a discount to an affiliate will be required to make a
comparable discount contemporaneously available to all similarly
situated non-affiliated shippers.
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\2\4The Commission also is making some minor changes to make the
posting easier for shippers to use. The Commission is requiring
posting of the time period for which the discount applies and the
maximum rate applicable to the transaction. These two data elements
previously had been included in the posting requirement under former
Sec. 250.16.
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As the parties point out, the Commission's prior orders were not
clear as to when posting should be required. In Sunrise Energy, the
Commission interpreted the prior regulations as not requiring pipelines
to provide notice of discount negotiations with affiliates. On the
other hand, in Colorado Interstate, the Commission held that to comply
with the prior regulations, pipelines had to post offers made during
negotiations on their EBBs in addition to posting the final offer. In
Order No. 566, the Commission followed Colorado Interstate and required
posting of discount information when an offer to an affiliate was made.
The Commission has decided that this requirement does not strike
the appropriate balance between the need to provide information about
affiliate discounts and the need to ensure that affiliates can compete
on a relatively equal basis with non-affiliates. Pipeline marketing
affiliates should be able to compete in the market on the same terms as
non-affiliates to the maximum extent possible. The Commission is
concerned that if information about affiliate discounts is provided
during the negotiating process, such information could provide non-
affiliates with a competitive advantage over affiliates. As the
pipelines contend, non-affiliates could use the posted affiliate
information to try to interfere with an affiliate's negotiations with a
customer. Non-affiliates are not subject to a similar risk, because
they are not required to disclose information about the deals they
negotiate.
On the other hand, the Commission is not persuaded by the
pipelines' contention that posting is adequate if it is delayed until
the month after the affiliate has transported gas under the discount
transaction, as is the case under the current Part 284 reporting
requirements.25 Posting the month after the transaction is too
late to permit the market to monitor current affiliate transactions or
to enable non-affiliates to obtain discounts during the same time
period as affiliates.
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\2\5Section 284.7(d)(5)(iv) (filing required 15 days after close
of the next billing period). In addition to finding that the Part
284 reports are not filed timely enough, the Commission finds other
reasons for concluding that these reports cannot substitute for the
Standard H EBB postings. The Part 284 reports do not provide some of
the data required by Standard H, such as delivery points and terms
and conditions of the discount, information which is needed for non-
affiliated shippers to determine whether potential discrimination
has occurred. And, the Part 284 reports are not posted on pipeline
EBBs so shippers cannot obtain easy access to this information.
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The time that gas flows appears to establish an appropriate posting
trigger. It ensures that affiliates will not be competitively
disadvantaged during the period when deals are being negotiated. At the
same time, it permits the market to actively monitor current affiliate
transactions to quickly ensure that undue discrimination has not
occurred. And, the posting is early enough so a similarly situated non-
affiliate still has the time to request and obtain a discount for its
transportation during essentially the same time period as the
affiliate. While alternative posting times also might achieve these
goals, the point at which gas flows is a reasonable choice because it
is a concrete event that can be easily verified.
The Commission recognizes that posting when gas flows means that
non-affiliates will be negotiating deals with potential customers
without knowledge of discount offers to affiliates for which the non-
affiliates may be eligible. But the Commission finds that this result
is necessary to strike the proper balance between providing for
disclosure of affiliate discount information and the preservation of
competition between affiliates and non-affiliates. The primary purpose
for requiring posting of affiliate information is not to provide non-
affiliates with information that may be competitively useful, but to
protect against undue discrimination against non-affiliates. Posting at
the time gas flows achieves that purpose without the potential for
providing non-affiliates with competitive advantages over affiliates.
Moreover, non-affiliates will not be without protection in the
period prior to the posting. Pipelines still will be under an
obligation to make discounts offered to affiliates contemporaneously
available to similarly situated non-affiliates. The non-affiliates also
will know the level of discounts provided to affiliates during the
prior month, and they can use this information, along with other market
information, to negotiate discounts with the pipelines. If a pipeline
fails to provide a non-affiliate with a discount, the posting
requirement will enable the non-affiliate to examine almost immediately
whether a denial of a discount amounts to discrimination.
The grant of rehearing makes resolution of the pipelines' arguments
concerning the APA's notice and comment provisions unnecessary. Posting
will be required only after the discount transaction is consummated,
which is the posting time the pipelines contend was the requirement
under the previous regulations and the NOPR.
B. Specific Issues
1. Affiliate's Role in a Transportation Transaction
In the final rule, the Commission required pipelines to post
discount offers when affiliates are involved in a transaction, even if
they are not the shipper. The Commission reasoned that if a pipeline
knows of an affiliate's involvement in a deal, it may offer a discount
to the actual shipper to benefit the affiliate. The offer of a discount
in this situation would be no different than providing the discount
directly to the affiliate.
MGS/Natural and Tenneco contend this provision is anticompetitive
because shippers will be loathe to deal with affiliates if the details
of their deals are disclosed. They contend that maintenance of the
discount information under Sec. 250.16 is all that should be required.
TGPL requests clarification that posting is required only if the
pipeline knows of the affiliate's involvement when granting the
discount; it asserts subsequently acquired knowledge of involvement
should not trigger a posting requirement or an obligation to make the
discount available to other shippers. Panhandle Pipelines request
clarification that knowledge of the discount refers only to knowledge
by those granting the discount and does not apply to general corporate
knowledge held by others in the company, but not communicated to those
negotiating discounts.
The Commission will retain the obligation to post discounts when an
affiliate is involved in the transaction, but is not the shipper. Such
disclosure should have no different effect than disclosure of the same
deal when the affiliate is acting as the shipper, and MGS/Natural and
Tenneco do not explain why the effect should be any different. The
Commission, however, will clarify that in posting such offers, the
pipelines need not disclose the name of the actual shipper. They must
only report that a discount has been offered in an affiliate
transaction.
The Commission grants TGPL's request that discounts need to be
posted only when the pipeline knows of the affiliate's involvement at
the time the discount is made. Only if the pipeline has current
knowledge of the affiliate's involvement could the role of the
affiliate be a basis for offering the discount. With respect to
Panhandle Pipelines' request, the Commission agrees in principle that
discounts need to be disclosed only when the officials involved in
granting the discount are aware of the affiliate involvement.
Pipelines, however, are responsible for establishing organizational
procedures in order to dispel questions about whether the responsible
officials have learned of information about affiliate involvement that
may be held by others in the organization.
2. Posting Period
The final rule required affiliate discounts to be posted for a 90
day period. Several pipelines contend that the 90 day period is longer
than necessary to effectuate the purposes of the rule, because
discounts are often available only for a short time and become stale.
They further contend that posting for 90 days will clutter EBBs with
unnecessary information. The range of alternatives they propose extends
from 7 to 30 days.
The Commission will modify the posting requirement to require that
the discount information be posted for 30 days from the date of first
posting. 30 days of posting is sufficient time for shippers to monitor
affiliate discounts. Since many discounts last for only a month, a 30
day posting requirement will help ensure that the posted information is
current.
3. Posting of the Transportation Path
The National Registry requests clarification that if discount
offers are dependent on the use of more than one receipt point, all
such points must be disclosed. Indicated Companies contend that
Standard H should be amended to require disclosure of the full
transportation path of the affiliate discount.
The Commission will clarify that Standard H requires the posting of
all conditions of an affiliate discount. Thus, if the discount is based
on the use of a particular transportation path or one or more receipt
points, that information must be posted.
The Commission is not sure whether Indicated Companies is
requesting that the pipeline post the full transportation path even
when the path is not a condition of the discount. If that is the
request, it is denied. Pipelines must post the delivery points for
every affiliate transaction. Requiring the posting of receipt points
could be voluminous and is unnecessary unless the use of certain
receipt points is a condition of the discount, in which case the
information would need to be posted.
4. Posting of Discounts on Firm Transportation
Indicated Companies request clarification that the posting
requirement applies to firm, as well as interruptible discounts. The
regulation refers to transportation discounts, which includes both firm
and interruptible discounts.
VI. Capacity Allocation Log
In Order No. 566, the Commission eliminated a number of
requirements for pipelines to post information about requests for
transportation service. The Commission replaced these requirements with
a more limited requirement that was better tailored to the methods used
by pipelines to allocate capacity under Order No. 636 during periods
when demand exceeds supply. Those pipelines relying on contract data or
other data for allocating capacity must maintain a log showing for each
shipper, the applicable contract dates or other data used to allocate
capacity. The log for pipeline affiliates must be posted on the
pipelines' EBBs, while the log for both affiliates and non-affiliates
must be maintained by the pipelines and provided to the Commission upon
request.
MGS/Natural contend that the capacity allocation log should be
removed because the industry has no need for or interest in the data.
ANR/CIG maintain that if the primary basis for capacity allocation is
rate paid, the capacity allocation log is not needed. They maintain
undue discrimination cannot take place when contract data is only the
secondary basis for allocation and that the burden of maintaining the
log, therefore, is not warranted. Columbia/Columbia Gulf request a
waiver of the allocation log requirement, contending that on their
system, the only information other than the rate used to allocate
capacity is the date nominations for interruptible transportation are
received.
The Commission finds that the capacity allocation log is necessary.
When demand for interruptible service exceeds available supply,
Commission policy and pipeline tariffs require that the interruptible
capacity first be allocated on the basis of the rate bid. However, if
the rate bid is not sufficient, some pipelines assign priority based on
contract data, such as contract execution date, the date service is
requested, or the date gas is first shipped under a contract. Even
though contract data are the secondary basis for allocating capacity,
such information can be very important during a constraint situation
when many shippers are willing to bid the highest rate necessary to
retain capacity. The capacity allocation log provides a reasonable
means for non-affiliated shippers and the Commission to ensure that
pipelines do not unfairly favor their affiliates during periods when
capacity is at a premium. The allocation log provides this important
information with only minimal burdens on the pipelines. It consists of
only five data elements and will not have to be updated frequently,
because the contract data used for allocating capacity generally remain
the same.
Implicit in Columbia/Columbia Gulf's waiver request is an
assumption that the rule requires posting of the dates on which
nominations are received. The rule generally was designed to reduce the
burden on pipelines and, therefore, the Commission did not intend for
pipelines to have to maintain and post data that varies every day, such
as nomination dates and times. The capacity log is designed to capture
information that remains stable over time, such as the date a contract
is executed or the service request date, or other similar data relating
to service under a contract.
This rehearing order is not the appropriate forum for acting on
Columbia/Columbia Gulf's waiver request. Columbia/Columbia Gulf should
file a separate waiver request setting forth the burden imposed by the
rule and suggesting means for reducing the compliance burden.
VII. Requirement To Maintain Affiliate and Non-Affiliate Discount
Information
In Order No. 566, the Commission amended Sec. 250.16 to require
pipelines to maintain certain information about both affiliate and non-
affiliate discounts.26 The regulations required pipelines to
provide this information to the Commission upon request and also
provided that it would be made available through the Commission's
discovery procedures.27 Indicated Companies contend that the
information also should be made available to the public upon request.
The Commission denies the request for rehearing.
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\2\6This information includes the name of the shipper being
provided the discount, the affiliate relationship between the
pipeline and the shipper, the affiliate's role in the transportation
transaction (i.e., shipper, marketer, supplier, seller), the
duration of the discount, the maximum rate or fee, the rate or fee
actually charged during the billing period, and the quantity of gas
scheduled at the discounted rate during the billing period for each
delivery point.
\2\718 CFR Part 385, Subpart D.
---------------------------------------------------------------------------
Prior to Order No. 566, the Commission required pipelines to post
affiliate discount information on their EBBs and to maintain the same
information for non-affiliate transactions. The non-affiliate
information was available only to the Commission and to others pursuant
to the Commission's discovery provisions. The non-affiliate information
was not made generally available to the public because it might be
competitively sensitive and non-affiliate information was not needed to
detect discrimination in favor of affiliates.28
---------------------------------------------------------------------------
\2\8Order No. 497, FERC Stats. & Regs. [Regulations Preambles
1986-1990] at 31,148.
---------------------------------------------------------------------------
In Order No. 566, the Commission eliminated the previous
requirement, under Sec. 250.16, to post affiliate discount information
because the relevant discount information was posted under Standard H.
The Commission concluded that the discount information posted under
Standard H is sufficient for non-affiliated shippers to monitor
affiliate discounts to determine whether discrimination has occurred
and thus found that a duplicative posting requirement under Sec. 250.16
was not needed.
The Commission, however, maintained the requirement that disclosure
of the affiliated and non-affiliated data would be limited to the
Commission and to parties demonstrating a need for such information in
discovery. Indicated Companies has not provided any justification for
now requiring general public disclosure of the detailed non-affiliate
information. Moreover, Indicated Companies already has access to less
detailed information about both affiliate and non-affiliate discounts
through the Part 284 requirement that pipelines file discount reports
with the Commission showing the name of the shipper receiving a
discount, the maximum rate or fee, the rate or fee charged, and any
affiliation between the pipeline and the shipper.29
---------------------------------------------------------------------------
\2\918 CFR 284.7(d)(5)(iv).
---------------------------------------------------------------------------
VIII. Tariff Waivers and Complaints
In Order No. 566, the Commission eliminated the requirements that
pipelines post tariff waivers and complaints related to affiliate
transactions on the pipelines' EBBs. The Commission concluded that if
shippers had questions about tariff waivers, they could obtain such
information under Standard K, which requires pipelines to maintain and
make available for copying a log of tariff waivers. The Commission
found that complaints are matters between the complainant and the
pipeline and that the complainant, if it is dissatisfied with the
pipeline's response, can bring the matter to the Commission's attention
either through the Commission's Enforcement Task Force hotline or the
Commission's formal complaint procedure.
Indicated Companies and Hadson contend that posting of tariff
waivers should be continued. They argue that tariff waivers can provide
competitive benefits to affiliates as significant as discounts and that
viewing such waivers at the pipelines' offices is unduly burdensome.
Hadson contends that requiring shippers to travel to pipeline offices
to view waivers is an anachronism in an age when computer technology
can provide such data instantaneously. Hadson contends that complaints
should continue to be posted because they may help shippers detect
patterns of abuse.
The Commission will not reinstate the requirements to post tariff
waivers and complaints on EBBs. Complaints are individual concerns
between the pipeline and their customers and complaints that are
resolved amicably would not generally provide indications of abuse.
Complaints which are not resolved can be referred to the Commission,
and the Commission will be able to discern any patterns of abuse.
With respect to tariff waivers, the potential benefits from EBB
postings may be outweighed by the programming and other computer and
administrative costs of placing such waivers on pipeline EBBs. The
Commission, however, agrees that shippers should have reasonable access
to such waiver information without having to travel to pipeline offices
to copy the waivers. The Commission, therefore, will amend Standard K
to require pipelines to provide a copy of the log of tariff waivers to
anyone requesting it within 24 hours of the request. The pipelines can
then choose the most expedient method of complying, whether that may be
posting the tariff waivers on their EBBs or providing them using
facsimile machines.
IX. Coordination of the Affiliate Requirements With Part 284
Requirements
Pipelines have requested that the Commission coordinate its
affiliate regulations with some of its Part 284 regulations to
eliminate duplicative requirements and make these requirements
consistent. ANR/CIG contends that the Commission should eliminate the
requirement to include in the initial reports required by
Sec. 284.106(a)(3) the points between which natural gas is to be
transported and the state of the source of gas, because the Commission,
in Order No. 566, removed similar maintenance requirements relating to
source and destination of gas. Columbia/Columbia Gulf and Tenneco
contend that the requirements for pipelines to file discount
information under Sec. 284.7(d)(5)(iv) is unnecessary since pipelines
must maintain even more extensive discount information under
Sec. 250.16(d). Tenneco further argues that the semi-annual storage
reports required by Secs. 284.106(g) and 284.126(g) require information
also required by the affiliate regulations and only one requirement
should be retained.
The Commission will not make piecemeal changes in its Part 284
requirements in this proceeding. For example, the Part 284 discount
reporting requirements are not identical with the requirements of
Sec. 250.16(d): the Part 284 reports are publicly available while the
more extensive Sec. 250.16 information is not. Similarly, in the EBB
proceedings in Docket No. RM93-4-000, the Commission has been
considering industry proposals to replace the initial reports with an
electronic Index of Purchasers.30 The Commission already is
examining its regulations in light of the changes caused by Order No.
636 and revisions to these requirements will be made at the appropriate
time when all the regulations can be considered as a whole.
---------------------------------------------------------------------------
\3\0Order No. 563-A, III FERC Stats. & Regs. Preambles, at
31,047-49.
---------------------------------------------------------------------------
X. Applicability of the Regulations
The Commission is revising the definition of marketing in
Sec. 161.2(c) as a result of the Commission's recent order31
eliminating all of its producer regulations at Part 270 due to the
passage of the Natural Gas Wellhead Decontrol Act (Decontrol
Act).32 Section 161.2(c) currently defines marketing, in relevant
part, as ``a first sale of natural gas as that term is defined in
Sec. 270.203 of this chapter, or a sale of natural gas in interstate
commerce for resale* * *.'' Since Sec. 270.203 has been removed, the
Commission is revising the definition so as to maintain the same
coverage as the previous definition.
---------------------------------------------------------------------------
\3\1Removal of Outdated Regulations Pertaining To The Sales of
Natural Gas Production, 59 FR 40240 (Aug. 8, 1994), III FERC Stats.
& Regs. Preambles 30,909 (July 28, 1994).
\32\Pub. L. No. 101-60; 103 Stat. 157.
---------------------------------------------------------------------------
Section 270.203(c) used the Commission's authority under the
Natural Gas Policy Act (NGPA) to define any sale by an affiliate of an
interstate pipeline as that affiliate's first sale of natural
gas.33 Under the NGPA, first sales include sales to interstate and
intrastate pipelines, sales to local distribution companies, sales to
any person for use by that person, as well as any sale preceding the
enumerated sales.34 If first sale status for marketing affiliates
were removed (without the revision made here) a substantive change in
coverage would occur, because the definition would not apply to certain
direct sales by pipeline marketing affiliates that were previously
covered by the definition of marketing. Accordingly, the definition of
marketing will be revised to ensure that no substantive change occurs.
The revised regulation will read as follows:
\3\3Under the NGPA, sales by pipeline marketing affiliates
generally would not be first sales. The Commission used its
authority to define pipeline affiliates as making first sales to
prevent possible circumvention by pipeline affiliates of the maximum
lawful price provisions of the NGPA. 15 U.S.C. 3301(21)(A)(v).
\3\415 U.S.C. 3301(21)(A)(i)-(iv). Thus, the prior definition of
marketing in Sec. 161.2 applied both to sales for resale and direct
sales made by pipeline marketing affiliates.
---------------------------------------------------------------------------
Marketing or brokering as used in this part and Sec. 250.16 of
this chapter means a sale of natural gas to any person or entity by
a seller that is not an interstate pipeline, except when:
(1) the seller is selling gas solely from its own production;
(2) the seller is selling gas solely from its own gathering or
processing facilities; or
(3) the seller is an intrastate natural gas pipeline or a local
distribution company making an on-system sale.
This definition effects no change in substantive coverage under the
regulations. The regulations continue to apply only to pipeline
affiliates that are engaging in gas sales activities that would compete
with independent marketers. The definition does not apply to producers,
gatherers, and processors, acting in their traditional roles of selling
gas from their own production, gathering, or processing facilities, or
to intrastate pipelines and local distribution companies acting in
their traditional roles of making on-system sales of gas.35 These
entities will be included as marketers only to the extent that their
activities go beyond their traditional roles and they make sales for
which an independent marketer could compete. Because the revision has
no substantive effect on the rights of any party, the Commission
determines that good cause exists under the APA for finding that notice
and public comment on these revisions is unnecessary and contrary to
the public interest.36
---------------------------------------------------------------------------
\3\5Order No. 497-A, 54 FR 52781 (Dec. 22, 1989), FERC Stats. &
Regs. [Regulations Preambles 1986-1990] 30,868, at 31,592 (1989).
\3\65 U.S.C. 553(b). See National Helium Corporation v. Federal
Energy Administration, 569 F.2d 1137, 1145-46 (Emer. Ct. App. 1978).
---------------------------------------------------------------------------
Columbia/Columbia Gulf, INGAA, and Enron point out that the
applicability sections of Sec. 161.1 and Sec. 250.16 and Standards E
and H refer to affiliates rather than marketing affiliates. They assert
that the regulations have only applied to marketing affiliates in the
past and request the Commission to revise these regulations to make
this clear. The Commission will revise the regulations to make clear
that they apply only to marketing affiliates.
XI. Effective Date
The amendments to the Commission's regulations adopted in this
order will become effective November 21, 1994.
List of Subjects
18 CFR Part 161
Natural gas, Reporting and recordkeeping requirements.
18 CFR Part 250
Natural gas, Reporting and recordkeeping requirements.
By the Commission. Commissioner Hoecker concurred in part and
dissented in part with a separate statement attached.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission amends Parts 161
and 250, Chapter I, Title 18, Code of Federal Regulations, as set forth
below.
PART 161--STANDARDS OF CONDUCT FOR INTERSTATE PIPELINES WITH
MARKETING AFFILIATES
1. The authority citation for Part 161 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
2. Section 161.1 is revised to read as follows:
Sec. 161.1 Applicability.
This part applies to any interstate natural gas pipeline that
transports gas for others pursuant to subpart A of part 157, and
subparts B or G of part 284 and is affiliated in any way with a natural
gas marketing or brokering entity and conducts transportation
transactions with its marketing or brokering affiliate. The
requirements of this part also apply to pipeline sales operating units
to the extent provided in Sec. 284.286 of this chapter.
3. In Sec. 161.2, paragraph (c) is revised to read as follows:
Sec. 161.2 Definitions.
* * * * *
(c) Marketing or brokering as used in this part and Sec. 250.16 of
this chapter means a sale of natural gas to any person or entity by a
seller that is not an interstate pipeline, except when:
(1) The seller is selling gas solely from its own production;
(2) The seller is selling gas solely from its own gathering or
processing facilities; or
(3) The seller is an intrastate natural gas pipeline or a local
distribution company making an on-system sale.
* * * * *
4. In Sec. 161.3, paragraphs (e), (h), and (k) are revised to read
as follows:
Sec. 161.3 Standards of conduct.
* * * * *
(e) It may not disclose to its marketing affiliate any information
the pipeline receives from a nonaffiliated shipper or potential
nonaffiliated shipper.
* * * * *
(h)(1) If a pipeline offers a transportation discount to an
affiliated marketer, or offers a transportation discount for a
transaction in which an affiliated marketer is involved, the pipeline
must make a comparable discount contemporaneously available to all
similarly situated non-affiliated shippers.
(2) Within 24 hours of the time at which gas first flows under a
transportation transaction in which an affiliated marketer receives a
discounted rate or a transportation transaction at a discounted rate in
which an affiliated marketer is involved, the pipeline must post a
notice on its Electronic Bulletin Board, operated pursuant to
Sec. 284.8(b)(4) of this chapter, providing the name of the affiliate
involved in the discounted transportation transaction, the rate
charged, the maximum rate, the time period for which the discount
applies, the quantity of gas scheduled to be moved, the delivery points
under the transaction, any conditions or requirements applicable to the
discount, and the procedures by which a non-affiliated shipper can
request a comparable offer. The posting must remain on the EBB for 30
days from the date of posting. The posting must conform with the
requirements of Sec. 284.8(b)(4) of this chapter and the pipeline's
tariff requirements relating to Electronic Bulletin Boards. Access to
the information must be provided using the same protocols and
procedures used for the pipeline's Electronic Bulletin Board.
* * * * *
(k) A pipeline must maintain a written log of waivers that the
pipeline grants with respect to tariff provisions that provide for such
discretionary waivers and provide the log to any person requesting it
within 24 hours of the request.
PART 250--FORMS
1. The authority citation for Part 250 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
2. In Sec. 250.16, paragraph (a) is revised to read as follows:
Sec. 250.16 Format of compliance plan for transportation services and
affiliate transactions.
(a) Who must comply. An interstate natural gas pipeline that
transports natural gas for others pursuant to Subparts B or G of Part
284 of this chapter and is affiliated, as that term is defined in
Sec. 161.2 of this chapter, in any way with a natural gas marketing or
brokering entity and conducts transportation transactions with its
marketing or brokering affiliate must comply with the requirements of
this section. The requirements of this section also apply to pipeline
sales operating units to the extent provided in Sec. 284.286 of this
chapter.
* * * * *
Note.--The following appendix will not appear in the Code of
Federal Regulations.
Appendix A.--Parties Filing Rehearing Requests
[Docket No. RM94-6-001]
----------------------------------------------------------------------------------------------------------------
Commenter Abbreviation
----------------------------------------------------------------------------------------------------------------
ANR Pipeline Company and Colorado Interstate Gas Company........... ANR/CIG.
Columbia Gas Transmission Corporation and Columbia Gulf Columbia/Columbia Gulf.
Transmission Company.
Northern Natural Gas Company, Transwestern Pipeline Company, Enron.
Florida Gas Transmission Company, Black Marlin Pipeline Company,
and Enron Gas Services, Inc.
Hadson Gas Systems, Inc............................................ Hadson.
Indicated Companies37.............................................. Indicated Companies.
Interstate Natural Gas Association of America...................... INGAA.
K N Energy, Inc.................................................... K N Energy.
MidCon Gas Services, Corporation and Natural Gas Pipeline Company MGS/Natural.
of America.
National Registry of Capacity Rights............................... National Registry.
NorAm Gas Transmission Company and Mississippi River Transmission NGT/MRT.
Corporation.
Algonquin Gas Transmission Company, Panhandle Eastern Pipe Line Panhandle Pipelines.
Company, Texas Eastern Transmission Corporation, and Trunkline Gas
Company.
Tenneco Gas........................................................ Tenneco.
Transcontinental Gas Pipe Line Corporation......................... TGPL.
----------------------------------------------------------------------------------------------------------------
\37\Conoco, Inc., Amoco Production Company, Anadarko Petroleum Corporation, GPM Gas Corporation, Marathon Oil
Company, Meridian Oil, Inc., Mobil Natural Gas, Inc., Natural Gas Clearinghouse, Pennzoil Exploration and
Production Company, Pennzoil Petroleum Company, Pennzoil Gas Marketing Company, Phillips Petroleum Company,
Shell Gas Trading Company, Union Pacific Fuels, Inc., Vastar Resources, Inc., and Vastar Gas Marketing, Inc.
Standards of Conduct and Reporting Requirements for Transportation
and Affiliate Transactions
[Docket No. RM94-6-001]
Issued October 14, 1994.
Hoecker, Commissioner, concurring in part and dissenting in part:
I concur with the additional modifications and clarifications to
the Commission's rules that are made in this order. However, for the
reasons stated in my prior dissent in this proceeding, I believe
retention of the reporting and records maintenance requirements for
affiliated natural gas marketers is excessive and unnecessary,
especially given the detailed standards of conduct to which they are
subject.\1\
---------------------------------------------------------------------------
\1\III FERC Stats. and Regs. 30,997 (1994) at pp. 31,082-83.
---------------------------------------------------------------------------
In particular, I previously expressed the concern I now see
reflected in a number of the rehearing requests that elimination of
a date to ``sunset'' these requirements ensures that they will
continue in effect by sheer regulatory inertia. The original sunset
date was a codification of a prior Commission's skepticism about the
need for extensive regulation in this area. Elimination of that
provision evinces a degree of comfort about the need to police
affiliated gas marketers that I do not share.\2\
---------------------------------------------------------------------------
\2\The range of regulatory burdens retained in this docket
appears doubly peculiar when compared to the less onerous reporting
requirements the Commission has employed for the power marketing
affiliates despite the absence of the kind of organizational
separation or mandatory information-sharing requirements that we
impose on gas pipeline marketing affiliates. See, e.g., Enron Power
Marketing, Inc., 65 FERC 61,305 (1993), order on clarification and
reh'g, 66 FERC 61,244 (1994), Heartland Energy Services, Inc., et
al., 68 FERC 61,223 (1994) and Intercoast Power Marketing Company,
68 FERC 61,248 (1994). In addition, whereas power marketers are
still in an early stage in their development where the potential for
affiliate abuse is not generally understood, there have been few
demonstrable problems with affiliated gas marketers over a
significant period of time.
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I, therefore, continue to dissent in part.
James J. Hoecker,
Commissioner.
[FR Doc. 94-25994 Filed 10-19-94; 8:45 am]
BILLING CODE 6717-01-P
