Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 52253 

1Revisions to Forms, Statements, and Reporting 

Requirements for Natural Gas Pipelines, Order No. 

710–B, 76 FR 4516 (Jan. 26, 2011), 134 FERC 

¶ 61,033 (2011) (Order No. 710–B or Final Rule). 

made by a person or entity other than 

the reporter shall be available at the 

same rates, or no more than the actual 

cost of duplication, whichever is higher. 

* * * * * 

■ 7. Amend § 3.45, by revising the 

second and seventh full sentences of 

paragraph (e) and the second and third 

full sentences of paragraph (f) to read as 

follows: 

§ 3.45 In camera orders. 

* * * * * 

(e) * * * A complete version shall be 

marked ‘‘In Camera’’ or ‘‘Subject to 

Protective Order,’’ as appropriate, on 

every page and shall be filed with the 

Secretary and served by the party on the 

other parties in accordance with the 

rules in this part. * * * An expurgated 

version of the document, marked 

‘‘Public Record’’ on every page and 

omitting the in camera and confidential 

information and attachment that appear 

in the complete version, shall be filed 

with the Secretary within 5 days after 

the filing of the complete version, 

unless the Administrative Law Judge or 

the Commission directs otherwise, and 

shall be served by the party on the other 

parties in accordance with the rules in 

this part. * * * 

(f) * * * A complete version shall be 

marked ‘‘In Camera’’ or ‘‘Subject to 

Protective Order,’’ as appropriate, on 

every page and shall be served upon the 

parties. The complete version will be 

placed in the in camera record of the 

proceeding. An expurgated version, to 

be filed within 5 days after the filing of 

the complete version, shall omit the in 

camera and confidential information 

that appears in the complete version, 

shall be marked ‘‘Public Record’’ on 

every page, shall be served upon the 

parties, and shall be included in the 

public record of the proceeding.*** 

* * * * * 

■ 8. Amend § 3.52, by revising the 

fourth sentence of paragraph (a)(1), the 

first sentence of paragraph (a)(2), and 

the fourth sentence of paragraph (b)(2) 

to read as follows: 

§ 3.52 Appeal from initial decision. 

(a) * * * 

(1) * * * Unless the Commission 

orders that there shall be no oral 

argument, it will hold oral argument 

within 10 days after the deadline for the 

filing of any reply briefs. * * * 

(2) If no objections to the initial 

decision are filed, the Commission may 

in its discretion hold oral argument 

within 10 days after the deadline for the 

filing of objection, * * * 

(b) * * * 

(2) * * * Unless the Commission 

orders that there shall be no oral 

argument, it will hold oral argument 

within 15 days after the deadline for the 

filing of any reply briefs. * * * 

* * * * * 

■ 9. Amend § 3.83, by revising 

paragraph (i) to read as follows: 

§ 3.83 Procedures for considering 

applicants. 

* * * * * 

(i) Judicial review. Judicial review of 

final Commission decisions on awards 

may be sought as provided in 5 U.S.C. 

504(c)(2). 

* * * * * 

PART 4—MISCELLANEOUS RULES 

■ 1. The authority for part 4 remains: 

Authority: 15 U.S.C. 46, unless otherwise 

noted. 

■ 2. Amend § 4.2(b), by revising the last 

sentence, to read as follows: 

§ 4.2 Requirements as to form, and filing 

of documents other than correspondence. 

* * * * * 

(b) * * * Every page of each such 

document shall be clearly and 

accurately labeled ‘‘Public’’, ‘‘In 

Camera’’ or ‘‘Confidential’’. 

* * * * * 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

[FR Doc. 2011–21019 Filed 8–19–11; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 260 

[Docket No. RM07–9–004; Order No. 710– 

C] 

Revisions to Forms, Statements, and 

Reporting Requirements for Natural 

Gas Pipelines 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Order on Rehearing. 

SUMMARY: In this Order, the Federal 

Energy Regulatory Commission 

(Commission) generally denies 

rehearing and reaffirms the findings 

made in Order No. 710–B. The 

Commission does, however, revise the 

burden estimate to more accurately 

account for initial start-up costs, grant 

rehearing on the issue of whether to 

include page 521d, and grant additional 

time to comply with Order No. 710–B. 

FOR FURTHER INFORMATION CONTACT: 

Brian Holmes (Technical Information), 

Office of Enforcement, Federal Energy 

Regulatory Commission, 888 First 

Street, NE., Washington, DC 20426. 

Telephone: (202) 502–6008, e-mail: 

brian.holmes@ferc.gov. 

Robert Sheldon (Technical Information), 

Office of Energy Market Regulation, 

Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426. Telephone: 

(202) 502–8672, e-mail: robert.

sheldon@ferc.gov. 

Gary D. Cohen (Legal Information), 

Office of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426. Telephone: (202) 502–8321, email: gary.cohen@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Jon Wellinghoff, 

Chairman; Marc Spitzer, Philip D. 

Moeller, John R. Norris, and Cheryl A. 

LaFleur. 

Order on Rehearing 

Issued August 16, 2011 

1. Earlier in this proceeding, the 

Commission issued a Final Rule (Order 

No. 710–B) revising its financial forms, 

statements, and reports for natural gas 

companies, contained in FERC Form 

Nos. 2, 2–A, and 3–Q, to provide greater 

transparency on fuel data by requiring 

the reporting of functionalized fuel data 

on pages 521a through 521c of those 

forms, and to include on those forms the 

amount of fuel waived, discounted or 

reduced as part of a negotiated rate 

agreement.1

2. In response to the Final Rule, the 

Interstate Natural Gas Association of 

America (INGAA) filed a request for 

rehearing raising eleven separate 

objections to the Final Rule. In this 

order on rehearing, we generally deny 

rehearing and reaffirm the findings we 

made in Order No. 710–B. We do, 

however, revise the burden estimate to 

more accurately account for initial startup costs, grant rehearing on the issue of 

whether to include page 521d and we 

grant filers additional time before they 

must begin filing Form Nos. 2, 2–A, and 

3–Q in accordance with the 

requirements established in Order No. 

710–B and this rehearing order. 

I. Background 

3. This matter began in 2008, when 

the Commission issued a Final Rule 

(Order No. 710) revising its financial 

forms, statements, and reports for 

natural gas companies, contained in 

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52254 Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 

2Revisions to Forms, Statements, and Reporting 

Requirements for Natural Gas Pipelines, final rule, 

Order No. 710, FERC Stats. & Regs. ¶ 31,267 (2008) 

(Order No. 710). 

3Revisions to Forms, Statements, and Reporting 

Requirements for Natural Gas Pipelines, order on 

reh’g and clarification, Order No. 710–A, 123 FERC 

¶ 61,278 (2008). 

4Revisions to Forms, Statements, and Reporting 

Requirements for Natural Gas Pipelines, Notice of 

Proposed Rulemaking, 75 FR 35700 (June 23, 2010), 

FERC Stats. & Regs. ¶ 32,659 (June 17, 2010) (June 

2010 NOPR). 

5Order No. 710–B, 134 FERC ¶ 61,033, at P 1, 7, 

37. The Final Rule has a more complete discussion 

of the procedural history of this case. We will not 

reiterate that complete history here. 

6 In this proceeding, we are referring to Northern 

Natural Gas Company and Kern River Gas 

Transmission Company, collectively, as 

MidAmerican. 

FERC Form Nos. 2, 2–A, and 3–Q, to 

make the information reported in these 

forms more useful by updating them to 

reflect current market and cost 

information relevant to interstate 

natural gas pipelines and their 

customers.2 The information provided 

in these forms included data on fuel 

use, but did not require these data to be 

functionally disaggregated. 

4. On rehearing, the American Gas 

Association (AGA) argued that the fuel 

data would be more useful if such data 

were broken out by different pipeline 

functions, including transportation, 

storage, gathering, and exploration/ 

production, and should include, by 

function, the amount of fuel waived, 

discounted or reduced as part of a 

negotiated rate agreement. This 

argument was rejected in Order No. 

710–A,3 but was reconsidered in a 

Notice of Proposed Rulemaking issued 

on June 17, 2010.4 AGA supported the 

Commission’s proposal while INGAA 

opposed it. After considering all the 

comments and reply comments, the 

Commission issued a Final Rule adding 

additional transparency to the reporting 

of fuel data. Specifically, the Final Rule 

revised FERC Form Nos. 2, 2–A, and 3– 

Q, revising pages 521a, 521b, and page 

520, and adding page 521c to FERC 

Form Nos. 2, 2–A, and 3–Q to include 

functionalized fuel data, including the 

amount of fuel waived, discounted or 

reduced as part of a negotiated rate 

agreement.5

5. In response to the Final Rule, 

INGAA filed a request for rehearing 

reiterating many of the concerns that it 

raised earlier in the proceeding (in its 

comments and reply comments on the 

June 2010 NOPR). 

II. Discussion 

A. Overview 

6. INGAA raises eleven separate 

objections to the Final Rule. First, 

INGAA argues that Order No. 710–B 

erred by finding that reporting of 

functionalized fuel data by contract rate 

category does not require tracking of 

fuel by individual contracts. Second, 

INGAA argues that adding this level of 

detail increases the reporting burden. 

Third, INGAA argues that the 

Commission erred by not adopting its 

alternative proposal which it maintains 

would have met the Commission’s 

needs with a lesser burden to filers. 

Fourth, INGAA claims that the 

requirement to allocate lost and 

unaccounted for gas (LAUF) among 

negotiated, discounted and recourse 

transportation customers ignores 

fundamental nature of LAUF, forcing an 

allocation that is meaningless. Fifth, 

INGAA argues that the requirement to 

disclose the disposition of excess gas or 

gas acquired to meet deficiencies by 

contract rate category also is 

meaningless. Sixth, INGAA reiterates its 

objection to reporting discounted rates 

as a separate category, claiming that 

disclosing this information does not 

serve any regulatory purpose because 

pipelines are prohibited from 

discounting. Seventh, INGAA argues 

that the Commission erred by not 

granting the clarification requested by 

MidAmerican 6 (that the rule should 

only cover (1) contracts with discounted 

and negotiated fuel rates and (2) 

headings should be changed to be 

‘‘discounted fuel rate’’ and ‘‘negotiated 

fuel rate’’). INGAA argues this would be 

less burdensome but would accomplish 

the Commission’s stated goals. Eighth, 

INGAA argues that the Commission 

erred by assuming that MidAmerican’s 

proposal would have excluded many 

contracts that otherwise would be 

reported. Ninth, INGAA argues that the 

Final Rule orders the collection of data 

too soon and that data under the new 

categories should not be required to be 

collected until calendar year 2012. 

Tenth, INGAA requests clarification that 

‘‘backhaul service offered under tariff’’ 

means that, if tariff does not include a 

‘‘backhaul’’ rate schedule, then nothing 

need be reported for this. Finally, 

INGAA argues that the Commission 

should keep blank page 521d, which 

was included in the June 2010 NOPR 

and omitted in the Final Rule. We will 

now examine each of these arguments. 

B. Does the Final Rule Require the 

Tracking of Individual Contracts? 

7. INGAA argues that Order No. 710– 

B erred by finding that reporting of 

functionalized fuel data by contract rate 

category does not require the tracking of 

fuel by individual contracts. 

8. INGAA states that, in Order No. 

710–B, the Commission found that the 

reporting of functionalized fuel data by 

contract rate category does not require 

the tracking of fuel by individual 

contracts. INGAA disputes this finding 

and argues that such tracking would be 

necessitated, despite the Commission’s 

finding to the contrary. We reject this 

interpretation. As we stated in Order 

No. 710–B, at paragraph 74: 

In this Final Rule, the Commission is not 

imposing any additional reporting 

requirements that change how those 

pipelines track fuel. Pipeline billings are 

provided on an integrated basis, accounting 

for sales based on whether the volumes are 

negotiated, recourse, or discounted. 

Moreover, contrary to INGAA’s assertions, 

the Commission is not requiring pipelines to 

track fuel by individual contracts, but merely 

continuing the current practice of requiring 

the assignment of fuel based on an allocation 

of throughput or stated fuel rate. The 

revisions to page 521a through 521c require 

the same accounting mechanism for fuel, 

enabling parties to better understand how 

fuel use costs are assigned. 

9. Thus, it can be seen that, if a 

pipeline has twelve gas service 

contracts, the Final Rule is not requiring 

the pipeline to report the details of each 

of those contracts. Instead, the Final 

Rule is requiring the pipeline to report 

the totals for fuel (for all twelve 

contracts) by function which can be 

determined on an allocation of 

throughput or stated fuel rate. To 

accomplish this, however, the pipelines 

would need to continue their current 

practice of assessing shippers for 

services provided to each customer. 

C. Reporting Burden 

10. INGAA argues that adding the 

level of detail required by the Final Rule 

increases the reporting burden. In light 

of INGAA’s concerns, we have further 

reviewed the burden estimate contained 

in the Final Rule and have determined 

that we can improve the accuracy of our 

burden estimate if we distinguish 

between the initial start-up costs, which 

include all of the work needed to 

identify and create a mechanism to 

report the information required to be 

reported under the Final Rule, as 

compared to the ongoing costs of 

reporting the information required to be 

reported under the Final Rule once the 

reporting mechanism is in place. This 

revised burden estimate is shown below 

in the Information Collection Statement 

that begins at paragraph 28 of this order. 

D. INGAA’s Alternative Proposal 

11. INGAA argues that the 

Commission erred by not adopting its 

alternative proposal which it maintains 

would have met the Commission’s 

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Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 52255 

7Order No. 710–B, 134 FERC ¶ 61,033 at P 37. 

8 Id. P 38. 

9 Id. P 39. 

10 INGAA states that ‘‘[p]ipelines do track or 

allocate fuel consumed separately for incremental 

rate services in which the Commission in its orders 

has required the pipeline to keep the incremental 

rate customers’ fuel costs and revenues separate. 

Other than for such very limited incremental rate 

purposes, however, pipelines are not required to 

allocate or track fuel used by individual contract 

even in general section 4 rate proceedings. In its 

orders approving pipelines’ negotiated rate 

contracts, the Commission requires pipelines to 

separately account for the negotiated rate 

transaction’s volumes, revenues, billing 

determinants, rate components and surcharges. But, 

the Commission does not require that fuel used, or 

any other cost for that matter, associated with 

negotiated rate transactions be separately accounted 

for.’’ INGAA Rehearing at n.1. As discussed further 

in paragraph 21 below, this contention is incorrect 

because fuel use is a rate component. 

11The Commission does not expect pipelines to 

develop and administer a process by which the fuel 

in each compressor, as it is burned, is assigned in 

some manner among individual shipper contracts. 

12 INGAA Rehearing at 3 & 8–9. 

13 INGAA Rehearing at 8. 

needs with a lesser burden to filers. The 

Commission addressed this issue in 

Order No. 710–B, where we stated: 

We find that requiring the reporting of fuel 

costs and revenues by rate structure broken 

down by function will increase the ability of 

the Commission and interested parties to 

assess whether a pipeline’s existing shippers 

are subsidizing the pipeline’s negotiated rate 

program. Thus, we find that INGAA’s 

proposal would effectively delete much of 

the valuable information sought in the June 

2010 NOPR.7

The revised forms also will now allow the 

user to better determine where on the 

pipeline system fuel costs are being incurred 

and how they are being allocated. This added 

transparency, which is supported by the 

majority of the commenters, will ensure that 

the Commission and pipeline customers have 

sufficient information to be able to assess the 

justness and reasonableness of pipeline rates. 

The collection and public availability of this 

information is consistent with our goal of 

having sufficient information to allow the 

Commission and pipeline customers to assess 

the impact on pipeline rates of changing fuel 

costs.8

By contrast, if we adopted INGAA’s 

suggestion to limit the revisions to FERC 

Form No. 2 to those originally proposed by 

AGA, then the benefits of increased 

transparency of rates, particularly within the 

negotiated rate program, which are described 

in the two preceding paragraphs, would not 

be fully realized.9

12. INGAA’s rehearing reiterates 

arguments it advanced earlier in this 

proceeding that, for the reasons quoted 

above, the Commission rejected in 

Order No. 710–B. We reaffirm those 

findings and reject INGAA’s proposal. 

E. Allocations of Fuel Used in 

Compressor Stations, LAUF, and Fuel 

Used in Operations 

13. INGAA argues that Order No. 710– 

B suggests that fuel consumed in 

compressor stations, LAUF and fuel 

used in operations, which are all drawn 

from a commingled and fungible gas 

stream, can be traced back to individual 

shipper contracts. INGAA further argues 

that the requirement to allocate LAUF 

among negotiated, discounted and 

recourse transportation customers 

ignores fundamental nature of LAUF, 

forcing an allocation that is 

meaningless. INGAA also argues that, 

except in some limited and unique 

circumstances, such tracing is 

impractical, if not impossible.10

14. The reporting requirements 

established in the Final Rule do not 

require fuel use to be traced back to 

individual shipper contracts.11 The 

information reported on pages 521a and 

521b—even before issuance of the Final 

Rule—already included a requirement 

for pipelines to report monthly fuel use 

by Dth. The Final Rule added the 

requirement for pipelines (on lines 1–65 

on pages 521a and 521b) to allocate 

these totals among discounted rates, 

negotiated rates, and recourse rates. The 

Final Rule did not impose a requirement 

that these allocations be made based on 

a review of individual contracts. One 

reasonable approach would be to take 

the total volume of throughput and 

allocate it among the three contract 

categories (i.e., contracts with 

discounted rates, contracts with 

negotiated rates, and contracts with 

recourse rates) based on the percentage 

of gas transported for each contract type, 

which is already known and available to 

a pipeline for invoicing shippers on a 

monthly basis. For example, if, 

hypothetically, a pipeline has a monthly 

transportation volume of 1000 Dth and 

5 percent of its volume is associated 

with contracts with discounted rates, 

10 percent is associated with negotiated 

rates contracts, and 85 percent 

associated with recourse rate contracts, 

then the pipeline could develop an 

allocation of fuel used at compressor 

stations, LAUF, and gas used in 

operations based on a ratio of the 

throughput. Such an allocation could be 

used for all the various allocations 

needed to complete pages 521a and 

521b. Thus, it is evident that we are not 

requiring pipelines to assess individual 

contracts to make this allocation. 

15. In addition, while admittedly 

imperfect, allocating costs by function is 

a standard practice for pipelines for 

numerous cost categories. The 

allocation of fuel consumed in 

compressor stations, LAUF and fuel 

used in operations, and among 

negotiated, discounted and recourse 

transportation customers are a few, 

among many, of such cost allocations. 

The allocation of costs is a standard 

practice for pipeline companies to bill 

their customers for services rendered. 

The fact that such allocations are not 

100 percent precise does not negate the 

necessity for such allocations being 

made. Pipelines collect fuel (including 

LAUF) from customers and the Final 

Rule requires the reporting of how that 

fuel is assigned. 

16. INGAA’s position is that the 

allocation of fuel costs required by this 

rule is ‘‘meaningless’’ given the nature 

of LAUF as gas that is lost and 

unaccounted for.12 We disagree. In our 

view, allowing customers to see exactly 

how fuel costs are assigned to various 

customers groups is important because 

it allows customers to assure themselves 

that the fuel costs being assigned to 

them are reasonable and do not crosssubsidize other customer groups. Thus, 

we find that making such allocations 

transparent is extremely meaningful. 

F. Disclosure of Disposition of Excess 

Gas or Gas Acquired To Meet Deficiency 

by Contract Rate Category 

17. INGAA raises the same objections 

to the reporting of the disposition of 

excess gas or the reporting of gas 

acquired to meet deficiencies that it 

raised regarding the reporting of the 

allocation of fuel used in compressor 

stations, LAUF, and fuel used in 

operations. Specifically, INGAA argues 

that, 

[t]he reporting of disposition of excess gas 

or the reporting of gas acquired to meet 

deficiencies on pages 521b and 521c (lines 

38–65) by contract rate category would 

provide little benefit. A pipeline does not 

track disposition or acquisition of gas by 

categories of transportation contracts. 

Assignment to contract rate categories could 

be accomplished by utilizing an arbitrary 

allocation methodology. However, the 

allocation of a pipeline’s system gas 

dispositions or acquisitions would not yield 

any meaningful information. Only the 

reporting of total dispositions or total 

acquisitions of system gas would produce a 

cogent result. Accordingly, INGAA requests 

rehearing and asks the Commission to allow 

pipelines to report total disposition or total 

acquisitions of system gas on pages 521b and 

521c.13

18. As discussed above in paragraph 

14, the allocations required by the Final 

Rule do not require an analysis of 

individual contracts. Moreover, while 

the allocations required by this rule may 

not be precise, few allocations are, and 

these allocations are routinely made for 

customer billing purposes. 

19. The information reported in lines 

38–65 would be useful in determining 

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52256 Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 

14For example, in Transwestern Pipeline 

Company, 54 FERC ¶ 61,319, at 62,007 (1991), the 

Commission approved Transwestern’s proposal to 

provide fuel discounts, provided that the minimum 

rate would not be lower than actual fuel costs, if 

any. 

15See, e.g., NorAm Gas Transmission Company, 

75 FERC ¶ 61,322, at 62,029 (1996); Texas Eastern 

Transmission, LP, 133 FERC ¶ 61,220, at P 19 

(2010); Gulf Crossing Pipeline Company LLC, 123 

FERC ¶ 61,100, at P 87 (2008). 

16Order No. 710–B, 134 FERC ¶ 61,033 at P 55. 

17 Id. P 56. 

18 Id. P 53. 

19 Id. P 55. 

among which classes of shippers over 

and under recoveries of fuel are 

occurring (i.e., recourse, negotiated, or 

discounted customers). For example, 

recourse rate shippers could provide 

more fuel than necessary and negotiated 

rate shippers could have a capped fuel 

rate such that recourse shippers may be 

subsidizing negotiated rate shippers. 

The recourse rate shippers should be in 

a position to fully understand whether 

over recovered fuel for recourse rate 

contracts is being used to make up a 

deficiency of fuel for negotiated rate 

contracts. Similarly, shippers should be 

aware to the extent a pipeline is 

purchasing gas associated with a fuel 

deficiency attributable to negotiated rate 

contracts. Additionally, while generally 

more applicable to pipelines with stated 

fuel rates, shippers should be in a 

position to know whether the 

disposition of excess fuel is being sold 

or if the gas is used for imbalances such 

that pipelines are recovering the cost 

through periodic imbalance cashout 

reports. We find that reporting this 

information provides useful 

transparency regarding the amount of 

fuel used to operate compressor 

stations, the disposition of excess gas 

and how the deficiency was acquired, 

and how fuel costs and LAUF are 

allocated among customers. 

Consequently, we deny rehearing of this 

issue. 

G. Discounted Rates as a Separate 

Category and Negotiated Rates as a 

Separate Category 

20. INGAA reiterates its objection to 

reporting fuel assigned to discounted 

rates as a separate category, claiming 

that disclosing this information does not 

serve any regulatory purpose, because 

pipelines are prohibited from 

discounting fuel. Fuel expenses 

constitute a significant portion of the 

total expenses recovered by natural gas 

rates. Obscuring this information makes 

it harder for entities to track the 

reasonableness of these expenses. 

Contrary to INGAA’s arguments, 

pipelines are not prohibited from 

discounting fuel under all 

circumstances.14 In addition, the 

additional transparency provided by 

this Final Rule serves the important 

regulatory objective of assuring that 

rates are just and reasonable. If a 

pipeline is not discounting fuel then it 

should simply report zero in Column 

(K), Volume (in Dth) Not Collected. This 

approach provides an affirmative 

confirmation that fuel is not being 

discounted. Combining the discount 

rate category with negotiated rates 

would eliminate this confirmation. 

Consequently, we will retain the 

separate discount rate category. 

21. Additionally, based on its 

contention that there is no cross-subsidy 

in instances where a negotiated rate 

customer pays the same fuel rate as a 

recourse rate customer, INGAA argues 

that there is no need to separate the 

reporting of recourse and negotiated rate 

contracts. The Commission has long 

required pipelines to separately account 

for rate components associated with 

negotiated rates.15 We are not persuaded 

to modify that policy in this rule. 

Moreover, while INGAA points to 

certain circumstances where it argues 

that no cross-subsidy would occur, the 

reporting requirements of this rule 

apply to all negotiated rate contracts 

and thus INGAA’s example does not 

suffice to contradict the need for this 

provision. 

H. MidAmerican’s Requested 

Clarification 

22. INGAA argues that the 

Commission erred by not granting the 

clarification requested by MidAmerican 

(that the rule should only cover (1) 

Contracts with discounted and 

negotiated fuel rates and (2) headings 

should be changed to be ‘‘discounted 

fuel rate’’ and ‘‘negotiated fuel rate’’). 

INGAA argues this approach would be 

less burdensome but would accomplish 

the Commission’s stated goals. 

23. As we stated in Order No. 710– 

B,16 the proposal to limit the scope of 

the rule to only require the reporting of 

fuel costs in contracts that include a 

specific provision for discounted or 

negotiated fuel would elevate form over 

substance and would omit contracts 

with negotiated and discounted rates, 

unless they include a specific provision 

covering discounted or negotiated fuel. 

This is contrary to the objective of the 

Final Rule of enhancing the 

transparency of fuel costs and we deny 

rehearing. Also, given our finding on the 

required reporting of gas contracts with 

discounted or negotiated fuel, we affirm 

our finding on the appropriate headings 

to be used.17

I. Excluded Contracts 

24. INGAA argues that the 

Commission erred by assuming that 

MidAmerican’s proposal would have 

excluded many contracts that otherwise 

would be reported. As we stated in 

Order No. 710–B, MidAmerican 

commented that, to its knowledge, very 

few discounted and negotiated rate 

agreements include a provision for 

discounted and negotiated fuel.18 We 

concluded that, if this were true or if 

future contracts are written to make it 

true, then excluding the reporting of 

contracts not including a specific 

provision identifying discounted and 

negotiated fuel would be problematic.19

INGAA argues that we erred in relying 

on MidAmerican’s statement, but in no 

way rebuts it. Moreover, we were 

concerned that, even if contracts are not 

currently drafted in this fashion, future 

contracts could be rewritten to achieve 

this end and we do not wish to open 

this possibility. Accordingly, we deny 

INGAA’s request for rehearing on this 

issue. 

J. Start Date for New Data Collections 

25. INGAA argues that the Final Rule 

orders the collection of data to begin too 

soon and that data under the new 

categories should not be required to be 

collected until calendar year 2012. We 

agree with INGAA that pipelines may 

not have the accounting systems in 

place to make the allocations of 

functionalized fuel by contract rate type 

required by the Final Rule and they may 

need to develop systems for making 

such allocations. We recognize some 

pipelines may not currently have in 

place the required accounting systems 

necessary to allocate fuel costs to 

negotiated, discounted and recourse 

transportation customers. In light of 

these considerations, we will grant 

rehearing and further delay the 

commencement of implementation of 

the filing requirements of the Final Rule 

until the fourth quarter period (‘‘Q4’’) of 

2011. Thus, the data must be reported 

in the new format starting with the 

quarterly period October 1 through 

December 31, 2011 in Annual Report 

Forms 2 and 2–A with a due date of 

April 18, 2012. This should allow 

sufficient time for filers to develop the 

necessary data and perform the needed 

allocations. Individual pipeline 

companies may apply to the 

Commission for further extensions, 

based on their individual 

circumstances. Even if an extension is 

granted, the information will still be 

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Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 52257 

20 In Order No. 710–B, the Commission added 

lines 66–68 to page 521. The lines request a 

separation of forwardhaul and backhaul throughput 

volumes in Dths for the quarter. 

21See Trailblazer Pipeline Co., 39 FERC ¶ 61,103, 

at 61,324 (1987), where we stated that, as backhaul 

volumes are included within the definition of 

transportation in section 284.1(a) of the 

Commission’s regulations (18 CFR 284.1(a)), 

Trailblazer may perform backhaul service pursuant 

to its firm and interruptible rate schedules and we 

did not require Trailblazer to adopt a separate 

backhaul rate in that proceeding. We also note that, 

for example, the Iroquois Gas Transmission System, 

L.P., FERC Gas Tariff, at Section 13 of the General 

Terms and Conditions, Second Revised Sheet No. 

76, provides for backhaul transportation service to 

be provided pursuant to the firm transportation 

service rate schedule and not under a separate 

backhaul rate schedule. 

22This page is shown as an attachment to this 

order. 

23 5 CFR 1320.11. 

24OMB approved the information collections 

prescribed in Order No. 710–B on May 16, 2011 for 

FERC Form No. 2 (OMB Control No. 1902–0028, 

ICR# 201101–1902–001), FERC Form No. 2–A 

(OMB Control No. 1902–0030, ICR# 201101–1902– 

003) and FERC Form No. 3–Q (OMB Control No. 

1902–0205, ICR# 201101–1902–004). 

25 44 U.S.C. 3507(d). 

required to be reported for the Q4 

period of 2011 but, if an extension is 

granted, the due date for the filing of 

this information may be extended past 

the April 18, 2012 filing deadline. 

Pipeline companies seeking an 

extension must provide a detailed 

explanation of why (for example, an 

additional analysis of data is needed, or 

allocation factors are still being 

developed) they cannot meet the filing 

deadline. The Commission will evaluate 

these requests on a case-by-case basis, 

based on the facts presented. 

K. Requested Clarification of Reported 

Backhaul Service 

26. INGAA requests clarification that 

‘‘backhaul service offered under tariff’’ 

means that, if the tariff does not include 

a ‘‘backhaul’’ rate schedule, then 

nothing need be reported for this.20 A 

review of gas tariffs shows that many 

tariffs recover a charge for backhaul 

service, but do not necessarily provide 

for a separate backhaul rate schedule for 

that service. In many instances, the 

forwardhaul tariff permits backhaul 

service at or below the forwardhaul rate, 

with no separate backhaul rate 

schedule.21 If we exclude these 

backhaul volumes, then total backhaul 

volumes would be understated for these 

transactions. Thus, we reject the 

argument that information on backhauls 

should be limited to those instances 

when the tariff includes a separate 

backhaul rate schedule. INGAA’s 

requested clarification would keep 

needed information hidden and could 

encourage tariffs to be drafted in a 

manner to avoid the reporting of this 

information. We note that the 

discussion in Order No. 710–B at 

paragraph 52 was addressing the narrow 

instances, such as with reticulated gas 

systems, where it is not possible to 

clearly determine what is a backhaul 

and what is a forwardhaul. We did not 

intend this to restrict the reporting of 

backhauls in systems where the gas flow 

path can be determined. Put differently, 

if the pipeline is unable to determine 

whether the volume is forwardhaul or 

backhaul, then the volume can be 

reported entirely as forwardhaul. 

Accordingly, we affirm the findings we 

made on this subject at paragraphs 50– 

52 of Order No. 710–B and deny the 

requested clarification. 

L. Need for Page 521d 

27. Finally, INGAA argues that the 

Commission should retain the blank 

page 521d that we proposed in the June 

2010 NOPR but omitted in Order No. 

710–B. This omission was an oversight 

and we agree with INGAA that a filer 

would need this page to properly 

complete the Forms. Thus, we will 

correct this oversight and will include 

page 521d on the various forms.22 We, 

likewise, are including pages 521a–d in 

the FERC Form Nos. 2/2–A/3–Q 

Submission Software System. 

III. Information Collection Statement 

28. The Office of Management and 

Budget’s (OMB) regulations require 

approval of certain information 

collection requirements imposed by 

agency rules.23 Previously, the 

Commission submitted to OMB the 

information collection requirements 

arising from Order No. 710–B and OMB 

approved those requirements.24 In this 

order, the Commission is making no 

substantive changes to the content of the 

forms and the information that is 

required to be submitted. However, by 

adding in blank page 521d and reestimating the reporting burden arising 

from Order No. 710–B, the Commission 

finds it necessary to make a formal 

submission to OMB for review and 

approval under section 3507(d) of the 

Paperwork Reduction Act of 1995.25

29. This order affects the following 

existing data collections: 

Title: FERC Form No. 2, ‘‘Annual 

Report for Major Natural Gas 

Companies’’; FERC Form No. 2–A, 

‘‘Annual Report for Nonmajor Natural 

Gas Companies. 

Action: Proposed information 

collection. 

OMB Control Nos. 1902–0028 (FERC 

Form No. 2); 1902–0030 (FERC Form 

No. 2–A). 

Respondents: Businesses or other for 

profit. 

Frequency of responses: Annually 

(FERC Form Nos. 2 and 2–A). 

Necessity of the information: The 

information maintained and collected 

under the requirements of 18 CFR 260.1 

and 18 CFR 260.2 is essential to the 

Commission’s oversight duties. The data 

previously reported in the forms did not 

provide sufficient information to the 

Commission and the public to permit an 

evaluation of the filers’ jurisdictional 

rates. Since the triennial restatement of 

rates requirement was abolished and 

pipelines are no longer required to 

submit this information, the need for 

current and relevant data is greater than 

in the past. 

30. Without the information required 

in Order No. 710–B, it is difficult for the 

Commission and the public to perform 

an assessment of pipeline costs, and 

thereby help to ensure that rates are just 

and reasonable. Order No. 710–B 

accounts for the possibility that 

multiple pipelines may be required to 

develop and implement new procedures 

in order to provide the data in the 

revised forms. In any event, we believe 

the additional information required in 

Order No. 710–B will allow the 

Commission and form users to better 

analyze pipeline fuel costs, an 

important component in assessing the 

justness and reasonableness of 

pipelines’ rates. 

Burden Statement: As indicated in the 

above discussion, INGAA contends that 

the Commission underestimated the 

burden associated with implementing 

the changes mandated in Order No. 

710–B. In light of INGAA’s arguments, 

the Commission acknowledges that 

some filers may have to modify existing 

systems in order to collect the necessary 

data. To account for this, the 

Commission estimates a one-time 

burden of 80 hours per filer. This will 

increase the burden as follows: 

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52258 Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 

26The FERC Form No. 3–Q (OMB Control No. 

1902–0205) is not directly affected by the one-time 

burden increase because the filers will be making 

this one-time change in preparation for filing the 

FERC Form Nos. 2 and 2A in April 2012. It is 

expected that well before the date of the next FERC 

Form No. 3Q filing the one-time burden will have 

already been expended. However, the Commission 

intends to submit the FERC Form No. 3–Q to OMB 

for informational purposes. 27 5 U.S.C. 601–612. 28The RFA definition of ‘‘small entity’’ refers to 

the definition provided in the Small Business Act, 

which defines a ‘‘small business concern’’ as a 

business that is independently owned and operated 

and that is not dominant in its field of operation. 

15 U.S.C. 632. The Small Business Size Standards 

component of the North American Industry 

Classification System defines a small natural gas 

pipeline company as one whose total annual 

revenues, including its affiliates, are $6.5 million or 

less. 13 CFR parts 121, 201. 

29Order No. 710–B, 134 FERC ¶ 61,033 at P 89– 

91. 

Data collection form26 Number of 

respondents 

One-time filing 

per 

respondent 

Filings per 

year 

One-time 

additional 

hours for 

this form 

FERC Form No. 2 ............................................................................................ 84 80 1 6,720 

FERC Form No. 2–A ....................................................................................... 44 80 1 3,520 

Totals ........................................................................................................ ........................ ........................ ........................ 10,240 

Information Collection Costs: 10,240 

hours at $120/hour= $1,228,800. 

31. Internal Review: The Commission 

has reviewed the proposed changes and 

has determined that the changes are 

necessary. These requirements conform 

to the Commission’s need for efficient 

information collection, communication, 

and management within the energy 

industry. The Commission has assured 

itself, by means of internal review, that 

there is specific, objective support 

associated with the information 

requirements. 

32. Interested persons may obtain 

information on the reporting 

requirements by contacting: Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 20426 

[Attention: Ellen Brown, Office of the 

Executive Director, e-mail: 

DataClearance@ferc.gov, phone (202) 

502–8663, fax: (202) 273–0873]. For 

submitting comments concerning the 

collections of information and the 

associated burden estimates, please 

submit comments to FERC in this 

Docket No. and to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 725 

17th Street, NW., Washington, DC 20503 

[Attention: Desk Officer for the Federal 

Energy Regulatory Commission, phone: 

(202) 395–4638, fax: (202) 395–7285]. 

Due to security concerns, comments 

should be sent electronically to the 

following e-mail address: 

oira_submission@omb.eop.gov. Please 

refer to OMB Control Nos. 1902–0028 

(FERC Form No. 2), and 1902–0030 

(FERC Form No. 2–A), and the docket 

number of this Final Rule in your 

submission. 

IV. Regulatory Flexibility Act 

33. The Regulatory Flexibility Act of 

1980 (RFA)27 generally requires a 

description and analysis of final rules 

that will have significant economic 

impact on a substantial number of small 

entities.28 However, the RFA does not 

define ‘‘significant’’ or ‘‘substantial.’’ 

Instead, the RFA leaves it up to an 

agency to determine the effect of its 

regulations on small entities. 

34. In Order No. 710–B the 

Commission certified that the additional 

reporting requirements would not have 

a significant economic impact on a 

substantial number of small entities.29

With the understanding that a one-time 

burden has now been added, the 

Commission affirms that the 

certification provided in Order No. 710– 

B remains accurate and no further 

justification is needed under the RFA. 

The Commission orders: 

(A) INGAA’s request for rehearing is 

hereby denied in part and granted in 

part, as discussed in the body of this 

order. 

(B) This order shall be published in 

the Federal Register. 

By the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

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Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Rules and Regulations 52259 

[FR Doc. 2011–21353 Filed 8–19–11; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 301 

[TD 9545] 

RIN 1545–BG75 

Interest and Penalty Suspension 

Provisions Under Section 6404(g) of 

the Internal Revenue Code 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations and removal of 

temporary regulations. 

SUMMARY: This document contains final 

regulations regarding the suspension of 

interest, penalties, additions to tax, or 

additional amounts under section 

6404(g) of the Internal Revenue Code. 

The final regulations explain the general 

rules for suspension and exceptions to 

those general rules, and incorporate a 

special rule from Notice 2007–93, 2007– 

48 IRB 1072, regarding the effective date 

of the changes to section 6404(g) made 

by the Small Business and Work 

Opportunity Tax Act of 2007. The final 


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