Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Proposed Rules 20571 

approved low-visibility departures. The 

reopening of the comment period will 

allow time for affected airports to 

receive notice from the FAA, review this 

NPRM, and adequately assess, prepare, 

and submit comments on the possible 

impact of this NPRM. 

Reopening of Comment Period 

In accordance with § 11.47(c) of title 

14, Code of Federal Regulations, the 

FAA has determined that re-opening of 

the comment period is consistent with 

the public interest, and that good cause 

exists for taking this action. To 

accomplish the strategies for providing 

additional information to the public, the 

FAA has determined that re-opening the 

comment period is consistent with the 

public interest, and that good cause 

exists for this action. Absent unusual 

circumstances, the FAA does not 

anticipate any further extension of the 

comment period for this rulemaking. 

Accordingly, the comment period for 

Notice No. 11–01 is reopened until May 

13, 2011. 

Additional Information 

A. Comments Invited 

The FAA invites interested persons to 

participate in this rulemaking by 

submitting written comments, data, or 

views. The agency also invites 

comments relating to the economic, 

environmental, energy, or federalism 

impacts that might result from adopting 

the proposals in this document. The 

most helpful comments reference a 

specific portion of the proposal, explain 

the reason for any recommended 

change, and include supporting data. To 

ensure the docket does not contain 

duplicate comments, commenters 

should send only one copy of written 

comments, or if comments are filed 

electronically, commenters should 

submit only one time. 

The FAA will file in the docket all 

comments it receives, as well as a report 

summarizing each substantive public 

contact with FAA personnel concerning 

this proposed rulemaking. Before acting 

on this proposal, the FAA will consider 

all comments it receives on or before the 

closing date for comments. The FAA 

will consider comments filed after the 

comment period has closed if it is 

possible to do so without incurring 

expense or delay. The agency may 

change this proposal in light of the 

comments it receives. 

Proprietary or Confidential Business 

Information: Do not file proprietary or 

confidential business information in the 

docket. Such information must be sent 

or delivered directly to the person 

identified in the FOR FURTHER

INFORMATION CONTACT section of this 

document, and marked as proprietary or 

confidential. If submitting information 

on a disk or CD–ROM, mark the outside 

of the disk or CD–ROM, and identify 

electronically within the disk or CD– 

ROM the specific information that is 

proprietary or confidential. 

Under 14 CFR 11.35(b), if the FAA is 

aware of proprietary information filed 

with a comment, the agency does not 

place it in the docket. It is held in a 

separate file to which the public does 

not have access, and the FAA places a 

note in the docket that it has received 

it. If the FAA receives a request to 

examine or copy this information, it 

treats it as any other request under the 

Freedom of Information Act (5 U.S.C. 

552). The FAA processes such a request 

under Department of Transportation 

procedures found in 49 CFR part 7. 

B. Availability of Rulemaking 

Documents 

An electronic copy of rulemaking 

documents may be obtained from the 

Internet by— 

1. Searching the Federal eRulemaking 

Portal (http://www.regulations.gov); 

2. Visiting the FAA’s Regulations and 

Policies web page at http://

www.faa.gov/regulations_policies or 

3. Accessing the Government Printing 

Office’s Web page at http:// 

www.gpoaccess.gov/fr/index.html. 

Copies may also be obtained by 

sending a request to the Federal 

Aviation Administration, Office of 

Rulemaking, ARM–1, 800 Independence 

Avenue, SW., Washington, DC 20591, or 

by calling (202) 267–9680. Commenters 

must identify the docket or notice 

number of this rulemaking. 

All documents the FAA considered in 

developing this proposed rule, 

including economic analyses and 

technical reports, may be accessed from 

the Internet through the Federal 

eRulemaking Portal referenced in item 

(1) above. 

Issued in Washington, DC, on April 7, 

2011. 

James R. White, 

Deputy Director of Airport Safety and 

Standards. 

[FR Doc. 2011–8838 Filed 4–12–11; 8:45 am] 

BILLING CODE 4910–13–P 

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. 

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 

(202) 502–6652 or toll-free at 1–866– 

208–3676. 

Instructions: For detailed instructions 

on submitting comments and additional 

information on the rulemaking process, 


srobinson on DSKHWCL6B1PROD with PROPOSALS
20572 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Proposed Rules 

1 15 U.S.C. 717 et al. (2006). 

2N. 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). 

3Texican II, 132 FERC ¶ 61,167 at P 26. 

4Promotion 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)). 

5NPV 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. 

6Saltville Gas Storage Co., L.L.C., 128 FERC 

¶ 61,257, at P 2 n.3 (2009). 

7Tenn. 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). 

8An 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). 

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. 

Jennifer.Kunz@ferc.gov. (202) 502– 

6102. 

Robert McLean, Office of the General 

Counsel, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426. 

Robert.McLean@ferc.gov. (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 Seasons for Pipeline Capacity ...................................................................... 9 

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

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

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. 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

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 


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Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Proposed Rules 20573 

9Tenaska 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 antimanipulation authority granted to the Commission 

in the Energy Policy Act of 2005, Public Law 109– 

58, 119 Stat. 594 (2005). 

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.’’ 

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. 

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

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, procompetitive 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 


srobinson on DSKHWCL6B1PROD with PROPOSALS
20574 Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Proposed Rules 

11The 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 predetermined 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). 

12Pipeline 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. 

14Tenaska Marketing Ventures, et al., 126 FERC 

¶ 61,040 at P 13, 18. 

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. 

16 5 CFR 1320.11 (2010). 

17 44 U.S.C. 3502(2)–(3) (2006). 

18Regulations 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). 

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

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. 

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 capacitywinning 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

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. 

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. 


srobinson on DSKHWCL6B1PROD with PROPOSALS
Federal Register / Vol. 76, No. 71 / Wednesday, April 13, 2011 / Proposed Rules 20575 

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. 

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. 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 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202)502–8659. E-mail the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

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. 

§ 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 §§ 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 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Parts 16, 312, 511, and 812 

[Docket No. FDA–2011–N–0079] 

RIN 0910–AG49 

Disqualification of a Clinical 

Investigator 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Proposed rule. 

SUMMARY: The Food and Drug 

Administration (FDA) is proposing to 

amend the regulations to expand the 

scope of clinical investigator 

disqualification. Under this proposal, 

when the Commissioner of Food and 

Drugs determines that an investigator is 


srobinson on DSKHWCL6B1PROD with PROPOSALS