119 FERC ¶ 61,068 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Parts 260 and 284 

Docket Nos. RM07-10-000 and AD06-11-000 

Transparency Provisions of Section 23 of the Natural Gas Act; 

Transparency Provisions of the Energy Policy Act 

(April 19, 2007) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: In order to implement its authority under section 23 of the Natural Gas 

Act, which was added by section 316 of the Energy Policy Act of 2005 (EPAct 2005), the 

Commission proposes to revise its regulations to: require that intrastate pipelines post 

daily the capacities of, and volumes flowing through, their major receipt and delivery 

points and mainline segments in order to make available the information needed to track 

daily flows of natural gas throughout the United States; and require that buyers and 

sellers of more than a de minimis volume of natural gas report annual numbers and 

volumes of relevant transactions to the Commission in order to make possible an estimate 

of the size of the physical U.S. natural gas market, assess the importance of the use of 

index pricing in that market, and determine the size of the fixed-price trading market that 

produces the information. These revisions would facilitate price transparency in markets 

for the sale or transportation of physical natural gas in interstate commerce. 

DATES: Comments are due [45 days after publication in the FEDERAL REGISTER]. 

Reply comments are due [75 days after publication in the FEDERAL REGISTER]. 
Docket Nos. RM07-10-000 and AD06-11-000 - 2 - 

ADDRESSES: You may submit comments identified by Docket No. RM07-10-000, by 

one of the following methods: 

• Agency Web Site: http://ferc.gov. Follow the instructions for submitting 

comments via the eFiling link found in the Comment Procedures Section of the 

preamble. 

• Mail: Commenters unable to file comments electronically must mail or hand 

deliver an original and 14 copies of their comments to the Federal Energy 

Regulatory Commission, Secretary of the Commission, 888 First Street, N.E., 

Washington, D.C. 20426. Please refer to the Comment Procedures Section of 

the preamble for additional information on how to file paper comments. 

FOR FURTHER INFORMATION CONTACT: 

Stephen J. Harvey (Technical) 

888 First Street NE 

Washington, D.C. 20426 

(202)502-6372 

Stephen.Harvey@ferc.gov 

Eric Ciccoretti (Legal) 

888 First Street NE 

Washington, D.C. 20426 

(202)502-8493 

Eric.Ciccoretti@ferc.gov 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Transparency Provisions of Section 23 of 

the Natural Gas Act 

 Docket Nos. RM07-10-000 

Transparency Provisions of the Energy 

Policy Act of 2005 

 Docket No. AD06-11-0000 

NOTICE OF PROPOSED RULEMAKING 

(April 19, 2007) 

I. Introduction

1. The Federal Energy Regulatory Commission (Commission), in order to facilitate 

market transparency in natural gas markets, proposes to revise its regulations to: 

(a) require daily posting of some natural gas flow information by intrastate pipelines; and 

(b) require annual filings by buyers and sellers of natural gas in U.S. wholesale markets 

(that transact more than de minimis volumes) of aggregate annual purchase and sales 

information. These proposals exercise expanded Commission authority under section 23 

of the Natural Gas Act,1

 which was added by the Energy Policy Act of 2005 (EPAct 

2005) to require reporting from entities not under the Commission’s traditional 

jurisdiction.2

 At this time, as discussed infra, due to other market-related Commission 

 

1

 To be codified at 15 U.S.C. 717t-2. 

2

 Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005). 
Docket Nos. RM07-10-000 and AD06-11-000 - 2 - 

initiatives, we do not propose additional regulations for transparency in electricity 

markets. 

2. The first proposal, designed to make available the information needed to track 

daily flows of natural gas throughout the United States, would create a requirement that 

intrastate pipelines post daily to the Internet the capacities of, and volumes flowing 

through, their major receipt and delivery points and mainline segments. Postings would 

be required within 24 hours from the close of the gas day on which gas flows, i.e., on or 

before 9:00 a.m. central clock time for flows occurring on the gas day that ended 24 

hours before. 

3. The second proposal, designed to permit the annual estimate of (a) the size of the 

physical domestic natural gas market, (b) the use of index pricing in that market, (c) the 

size of the fixed-price trading market that produces price indices from the subset reported 

to index publishers, and (d) the relative size of major traders, would create an annual 

requirement that buyers and sellers of more than a de minimis volume of natural gas 

report numbers and volumes of relevant transactions to the Commission. As part of this 

proposal, the Commission would require each holder of blanket marketing certificate 

authority or blanket unbundled sales services certificate authority to notify the 

Commission as to whether it reports its transactions to publishers of electricity or natural 

gas price indices and whether any such reporting complies with certain standards. 

Currently, a holder of a blanket marketing certificate or a blanket unbundled sales service 

certificate is required to notify the Commission only when it changes its practice 
Docket Nos. RM07-10-000 and AD06-11-000 - 3 - 

regarding such reporting. This part of the proposal would make notifications of reporting 

status more reliable. 

II. Background

4. The Commission’s market-oriented policies for the wholesale electric and natural 

gas industries require that interested persons have broad confidence that reported market 

prices accurately reflect the interplay of legitimate market forces. Without confidence in 

the basic processes of price formation, market participants cannot have faith in the value 

of their transactions, the public cannot believe that the prices they see are fair, and it is 

more difficult for the Commission to ensure that jurisdictional prices are “just and 

reasonable”3

. 

5. The performance of Western electric and natural gas markets early in the decade 

shook confidence in posted market prices for energy. In examining these markets, the 

Commission’s staff found, inter alia, that some companies submitted false information to 

the publishers of natural gas price indices, so that the resulting reported prices were 

inaccurate and untrustworthy.4

 As a result, questions arose about the legitimacy of 

published price indices, remaining even after the immediate crisis passed. Moreover, 

market participants feared that the indices might have become even more unreliable, 

 3

 See sections 4 and 5 of the Natural Gas Act, 15 U.S.C. 717c, 717d (2000); 

sections 205 and 206 of the Federal Power Act, 16 U.S.C. 824d, 824e (2000). 

4

 See Initial Report on Company-Specific Separate Proceedings and Generic 

Reevaluations; Published Natural Gas Price Data; and Enron Trading Strategies – Fact 

Finding Investigation of Potential Manipulation of Electric and Natural Gas Prices, 

Docket No. PA02-2-000 (August 2003). 
Docket Nos. RM07-10-000 and AD06-11-000 - 4 - 

since reporting (which has always been voluntary) declined to historically low levels in 

late 2002. 

6. The Commission recognized staff concerns about price discovery in electric and 

natural gas markets as early as January 2003, when, prior to passage of EPAct 2005, the 

Commission made use of its existing authority under the Natural Gas Act and the Federal 

Power Act to restore confidence in natural gas and electricity price indices. The 

Commission expected that, over time, improved price discovery processes would 

naturally increase confidence in market performance. On July 24, 2003, the Commission 

issued a Policy Statement on Electric and Natural Gas Price Indices (Policy Statement) 

that explained its expectations of natural gas and electricity price index developers and 

the companies that report transaction data to them.5

 On November 17, 2003, the 

Commission adopted behavior rules for certain electric market participants in its Order

Amending Market-Based Rate Tariffs and Authorizations relying on section 206 of the 

 

5

 Price Discovery in Natural Gas and Electric Markets, Policy Statement on 

Natural Gas and Electric Price Indices, 104 FERC ¶ 61,121 (Policy Statement). 

Subsequently, in the same proceeding, the Commission issued an Order on Clarification 

of Policy Statement on Natural Gas and Electric Price Indices, 105 FERC ¶ 61,282 

(Dec. 12, 2003) (Order on Clarification of Policy Statement) and an Order on Further 

Clarification of Policy Statement on Natural Gas and Electric Price Indices, 112 FERC 

¶ 61,040 (July 6, 2005) (Order on Further Clarification of Policy Statement). 
Docket Nos. RM07-10-000 and AD06-11-000 - 5 - 

Federal Power Act to condition market-based rate authorizations,6

 and for certain natural 

gas market participants in Amendments to Blanket Sales Certificates, relying on section 7 

of the Natural Gas Act to condition blanket marketing certificates.7

 The behavior rules 

bar false statements and require certain market participants, if they report transaction 

data, to report such data in accordance with the Policy Statement. These participants 

must also notify the Commission whether or not they report prices to price index 

developers in accordance with the Policy Statement.8

 On November 19, 2004, the 

Commission issued an order that addressed issues concerning prices indices in natural gas 

and electricity markets and adopted specific standards for the use of price indices in 

jurisdictional tariffs.9

 

 6

 Investigation of Terms and Conditions of Public Utility Market-Based Rate 

Authorizations,105 FERC ¶ 61,218, at P 1, superseded in part by Compliance for Public 

Utility market-Based Rate Authorization Holders, Order No. 674, 71 FR 9695 (Feb. 27, 

2006), FERC Stats. and Regs. ¶31,208 (2006). 

7 Amendments to Blanket Sales Certificates, Order No. 644, 68 FR 66,323 

(Nov. 26, 2003), FERC Stats. and Regs. ¶ 31,153, at P 1 (2003) (citing 15 U.S.C. 717f 

(2000)), reh’g denied, 107 FERC ¶ 61,174 (2003) (Order No. 644-A).

8

 Certain portions of the behavior rules were rescinded in Amendments to Codes 

of Conduct for Unbundled Sales Service and for Persons Holding Blanket Marketing 

Certificates, Order No. 673, 71 FR 9709 (Feb. 27, 2006), FERC Stats. and Regs. ¶ 31,207 

(2006). The requirement to report transaction data in accordance with the Policy 

Statement and to notify the Commission of reporting status were retained in renumbered 

sections. 18 CFR 284.288(a), 284.403(a). 

9

 Price Discovery in Natural Gas and Electric Markets, 109 FERC ¶ 61,184, at 

P 73 (2004). 
Docket Nos. RM07-10-000 and AD06-11-000 - 6 - 

7. In the Policy Statement, among other things, the Commission directed staff to 

continue to monitor price formation in wholesale markets, including the level of reporting 

to index developers and the amount of adherence to the Policy Statement standards by 

price index developers and by those who provide data to them.10 In adhering to this 

directive, Commission staff documented improvements in the number of companies 

reporting prices from back offices, adopting codes of conduct, and auditing their price 

reporting practices.11 These efforts resulted in significant progress in the amount and 

quality of both price reporting and the information provided to market participants by 

price indices.12 Further, in conformance with this directive, Commission staff recently 

concluded audits of three natural gas market participants with blanket certificate authority 

that were data providers subject to § 284.403 of the Commission’s regulations. 13

 10 Policy Statement at P 43. 

11 FEDERAL ENERGY REGULATORY COMMISSION, REPORT ON NATURAL GAS AND 

ELECTRICITY PRICE INDICES, at 2, Docket Nos. PL03-3-004 et al. (2004). 

12 See, e.g., GENERAL ACCOUNTING OFFICE, NATURAL GAS AND ELECTRICITY 

MARKETS: FEDERAL GOVERNMENT ACTIONS TO IMPROVE PRIVATE PRICE INDICES AND 

STAKEHOLDER REACTION (December 2005). 

13 See April 5, 2007 letter issued to Anadarko Energy Services Co. in Docket 

No. PA06-11-000 by Susan J. Court, Director, Office of Enforcement. and attached Audit 

of Price Index Reporting Compliance; April 5, 2007 letter issued to BG Energy 

Merchants, LLC. in Docket No. PA06-12-000 by Susan J. Court and attached Audit of 

Price Index Reporting Compliance; April 5, 2007 letter issued to Marathon Oil Co. in 

Docket No. PA06-13-000 by Susan J. Court, and attached Audit of Price Index Reporting 

Compliance. 
Docket Nos. RM07-10-000 and AD06-11-000 - 7 - 

8. Congress recognized that the Commission might need expanded authority to 

mandate additional reporting to improve market confidence through greater price 

transparency and included in the Energy Policy Act of 2005 (EPAct 2005)14 authority for 

the Commission to obtain information on wholesale electric and natural gas prices and 

availability. Under the Federal Power Act15 and the Natural Gas Act16, the Commission 

has long borne a responsibility to protect wholesale electric and natural gas consumers. 

EPAct 2005 emphasized the Commission’s responsibility for protecting the integrity of 

the markets themselves as a way of protecting consumers in an active market 

environment. In particular, Congress directed the Commission to facilitate price 

transparency “having due regard for the public interest, the integrity of [interstate energy] 

markets, [and] fair competition.”17 In the new transparency provisions of section 23 of 

the Natural Gas Act and section 220 of the Federal Power Act, Congress provided that 

the Commission may, but is not obligated to, prescribe rules for the collection and 

dissemination of information regarding the wholesale, interstate markets for natural gas 

 14 Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005). 

15 16 U.S.C. 824 et seq.

16 15 U.S.C. 717 et seq.

17 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 717t2(a)(1); see also section 220 of the Federal Power Act, to be codified at 16 U.S.C. 824t 

(identical language). Section 316 of EPAct 2005 added section 23 to the Natural Gas Act 

(natural gas transparency provisions); section 1281 of EPAct 2005 added section 220 to 

the Federal Power Act (electric transparency provisions) (together, the transparency 

provisions). 
Docket Nos. RM07-10-000 and AD06-11-000 - 8 - 

and electricity, and authorized the Commission to adopt rules to assure the timely 

dissemination of information about the availability and prices of natural gas and natural 

gas transportation and electric energy and transmission service in such markets. 

9. Consistent with the directive to facilitate price transparency in natural gas and 

electric markets as well as to explore options for action under EPAct 2005’s expansion of 

the Commission’s authority, Commission staff met with interested entities in the summer 

of 2006. On September 26, 2006, staff conducted a workshop to review sources of 

energy market information with interested persons and to lay the groundwork for a 

technical conference held on October 13, 2006. In that conference, ideas for potential 

policy actions by the Commission were identified.18 

10. Based on those efforts, in this Notice of Proposed Rulemaking (NOPR), the 

Commission sets out two proposals regarding collection and dissemination of information 

about natural gas wholesale markets. The Commission does not propose action with 

respect to electric markets at this time. The Commission has recently addressed and is 

currently addressing electric market transparency in other proceedings. For example, in 

 18 At the conference, the Commission convened two panels: (a) a panel of seven 

market participants to discuss price transparency in markets for the sale or transportation 

of physical natural gas in interstate commerce; and, (b) a panel of four market 

participants regarding price transparency in markets for the sale and transmission of 

electric energy in interstate commerce. See Transparency Provisions of the Energy 

Policy Act of 2005, Program for the Technical Conference, Docket No. AD06-11-000 

(Oct. 6, 2006). In addition, for each panel, about ten representatives of information 

providers, such as price index publishers, attended to provide comment and answer 

questions. 
Docket Nos. RM07-10-000 and AD06-11-000 - 9 - 

its final rule reforming the Open Access Transmission Tariff, the Commission referred to 

its authority under the electric transparency provisions to “promote greater transparency 

in the provision of transmission service ....”19 In that order, the Commission increased 

the transparency of a transmission provider’s transmission planning,20 the transparency of 

its calculations of Available Transfer Capability,21 and the transparency of its business 

rules and practices.22 These reforms are consistent with the electric transparency 

provisions because they will “provide information about the availability and prices of 

wholesale... transmission service” to “users of transmission services” among others, as 

contemplated in the electric transparency provisions.23 Furthermore, in the recentlyinitiated wholesale competition review, the Commission is reviewing a variety of marketrelated electricity issues in a series of public conferences evaluating the state of 

 19 Preventing Undue Discrimination and Preference in Transmission Service, 

Order No. 890, 72 FR 12266 (March 15, 2007), FERC Stats. and Regs. ¶ 31,241 (2007), 

at P 80.

20 Id. at P 69, 83. 

21 Id. at P 84. 

22 Id. at P 88. 

23 Section 220(a)(2) of the Federal Power Act, to be codified at 16 U.S.C. 

824t(a)(2).
Docket Nos. RM07-10-000 and AD06-11-000 - 10 - 

competition in wholesale power markets.24 In the first conference, held February 27, 

2007, among other issues, the Commission and panelists considered price transparency in 

the context of competition in the wholesale markets.25 As a separate matter, we note that 

wholesale electric transactions under market-based rates are submitted to the Commission 

and made publicly available through the Electric Quarterly Reports.26 Further, in 

organized electricity markets, Regional Transmission Organizations (RTOs) and 

Independent System Operators (ISOs) provide transparency by publishing the results of 

auction markets and by posting spot market and day-ahead prices at pre-established 

intervals. The RTOs also provide additional information concerning the electric system 

capacity markets and financial transmission rights that provide further transparency 

concerning the RTO/ISO-administered markets.27 For these reasons, we do not believe 

 24 See, e.g., Conference on Competition In Wholesale Power Markets, Docket 

No. AD07-7-000. 

25 See, e.g., Transcript of Feb. 27, 2007 Conference, Conference on Competition in 

Wholesale Power Markets, Docket No. AD07-7-000, at 123, 153-154, 244-249. 

26 Revised Public Utility Filing Requirements, Order No. 2001, 67 FR 31043 

(May 8, 2002), FERC Stats. & Regs. ¶ 31,127 (2002), reh’g denied, Order No. 2001-A, 

100 FERC ¶ 61,074, reh’g denied, Order No. 2001-B, 100 FERC ¶ 61,342, order

directing filing, Order No. 2001-C, 101 FERC ¶ 61,314 (2002), order directing filing, 

Order No. 2001-D, 102 FERC ¶ 61,334 (2003). 

27 Comments of ISO/RTO Council, Docket No. AD06-11-000 (filed Oct. 5, 2006) 

(describing information provided by ISOs and RTOs). 
Docket Nos. RM07-10-000 and AD06-11-000 - 11 - 

that additional action is needed at this time to implement the new electric transparency 

provisions of section 220 of the Federal Power Act. 

III. Legal Context

11. With the passage of EPAct 2005, Congress affirmed a commitment to competition 

in wholesale natural gas and electricity markets as national policy, the fifth major federal 

law in the last 30 years to do so.28 As part of this commitment to competition, in the 

transparency provisions, Congress charged the Commission with assuring the integrity of 

the wholesale markets and assuring fair competition by facilitating price transparency in 

those markets. It also significantly strengthened the Commission’s regulatory tools in the 

transparency provisions, specifically, in new section 220 of the Federal Power Act and 

new section 23 of the Natural Gas Act. 

12. In new section 23(a)(1) of the Natural Gas Act, Congress provided the 

Commission’s mandate: 

The Commission is directed to facilitate price transparency in 

markets for the sale or transportation of physical natural gas 

in interstate commerce, having due regard for the public 

interest, the integrity of those markets, fair competition, and 

the protection of consumers.29

 28 See Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776 (1992), 

codified as amended in scattered sections of 16 U.S.C.; Natural Gas Wellhead Decontrol 

Act of 1989, Pub. L. No. 101-60, 103 Stat. 157 (1989), codified in scattered section of 15 

U.S.C.; Public Utility Regulatory Policies Act of 1978, 16 U.S.C. 2601-2645 (2000); 

Natural Gas Policy Act of 1978, 15 U.S.C. 3301-3442 (2000).

29 To be codified at 15 U.S.C. 717(v)(a)(1). The electric transparency provisions of 

the Federal Power Act are nearly identical as to the electric wholesale markets. Section 

(continued...) 
Docket Nos. RM07-10-000 and AD06-11-000 - 12 - 

In new section 23(a)(2) of the Natural Gas Act, Congress left to the Commission’s 

discretion whether to enact rules to carry out this mandate and provided that any rules 

implementing the transparency provisions provide for public dissemination of the 

information gathered: 

The Commission may prescribe such rules as the Commission 

determines necessary and appropriate to carry out the 

purposes of this section. The rules shall provide for the 

dissemination, on a timely basis, of information about the 

availability and prices of natural gas sold at wholesale and in 

interstate commerce to the Commission, State commissions, 

buyers and sellers of wholesale natural gas, and the public.30

13. In new section 23(a)(3) of the Natural Gas Act, Congress contemplated that the 

transparency provisions would differ from other provisions in the Natural Gas Act, both 

as to the entities covered by the Commission’s jurisdiction and the possible involvement 

of third parties in implementing the rules. That section reads, with emphasis added: 

The Commission may – 

(A) obtain the information described in paragraph (2) [i.e., 

information about the availability and prices of natural gas 

sold at wholesale and interstate commerce] from any market 

participant; and 

 

220 of the Federal Power Act, to be codified at 16 U.S.C. 824t. Because our proposals 

herein address natural gas transparency, we do not analyze the electric transparency 

provisions, although we expect that analysis of electric transparency provisions would be 

substantially similar. 

30 To be codified at 15 U.S.C. 717t-2(a). 
Docket Nos. RM07-10-000 and AD06-11-000 - 13 - 

(B) rely on entities other than the Commission to receive and 

make public the information, subject to the disclosure rules in 

subsection (b).31

By using the term “any market participant,” Congress deliberately expanded the universe 

subject to the Commission’s transparency authority beyond the entities subject to the 

Commission’s rate and certificate jurisdiction under other parts of the Natural Gas Act. 

The term “market participant” is not defined in the Natural Gas Act and is not on its face 

limited to otherwise jurisdictional entities. 

14. Congress could have limited the scope of entities subject to the Commission’s 

transparency authority by referring to “natural gas company” as defined in the Natural 

Gas Act32 or by referring to section 1, 3, or 7 of the Natural Gas Act33. The former 

approach would have excluded intrastate pipelines from the Commission’s transparency 

authority. The latter approach would have entailed the jurisdictional limitations of those 

sections, which exclude from the Commission’s jurisdiction first sales, sales of imported 

natural gas, sales of imported liquefied natural gas, and sales and transportation by 

entities engaged in production and gathering, local distribution, “Hinshaw” pipelines, or 

 31 To be codified at 15 U.S.C. 717t-2(a)(3). 

32 Section 2(6) of the Natural Gas Act, 15 U.S.C. 717a(6). 

33 15 U.S.C. 717, 717b, 717f. 
Docket Nos. RM07-10-000 and AD06-11-000 - 14 - 

vehicular natural gas.34 These limitations do not apply to the Commission’s transparency 

authority. Given Congress’ use of the term “market participant,” the Commission’s 

transparency authority includes any person or form of organization, including, for 

instance, natural gas producers, processors and users. 

15. The Commission’s authority to obtain information from “any market participant” 

is not plenary. In the natural gas transparency provisions, Congress limited that authority 

in two respects: the scope of the markets at issue and the type of information to obtain 

and disseminate. First, Congress directed the Commission to “facilitate price 

transparency in markets for the sale or transportation of physical natural gas in interstate 

 34 Section 1(b)-(d) of the Natural Gas Act, 15 U.S.C. 717(b)-(d); section 3 of the 

Natural Gas Act, 15 U.S.C. 717b; section 7(f) of the Natural Gas Act, 15 U.S.C. 717f(f); 

see, also, section 601(a) of the Natural Gas Policy Act, 15 U.S.C. 3431(a). The 

Commission has previously explained that the Natural Gas Policy Act of 1978 (NGPA or 

Natural Gas Policy Act) and the Natural Gas Wellhead Decontrol Act of 1989 narrowed 

its jurisdiction under the Natural Gas Act: 

Under the NGPA, first sales of natural gas are defined as any sale to an interstate or 

intrastate pipeline, LDC [Local Distribution Company] or retail customer, or any sale in 

the chain of transactions prior to a sale to an interstate or intrastate pipeline or LDC or 

retail customer. NGPA Section 2(21)(A) sets forth a general rule stating that all sales in 

the chain from the producer to the ultimate consumer are first sales until the gas is 

purchased by an interstate pipeline, intrastate pipeline, or LDC. Once such a sale is 

executed and the gas is in the possession of a pipeline, LDC, or retail customer, the chain 

is broken, and no subsequent sale, whether the sale is by the pipeline, or LDC, or by a 

subsequent purchaser of gas that has passed through the hands of a pipeline or LDC, can 

qualify under the general rule as a first sale on natural gas. In addition to the general rule, 

NGPA Section 2(21)(B) expressly excludes from first sale status any sale of natural gas 

by a pipeline, LDC, or their affiliates, except when the pipeline, LDC, or affiliate is 

selling its own production. 

Order No. 644 at P 14.
Docket Nos. RM07-10-000 and AD06-11-000 - 15 - 

commerce....”35 Thus, any information collected and disseminated must be for the 

purpose of price transparency in those markets. We do not interpret this language to limit 

the Commission to obtaining information only about physical natural gas sales or 

transportation in those markets, provided that the information obtained and disseminated 

pertains to price transparency in those markets. Second, Congress provided that any rules 

“provide for the dissemination, on a timely basis, of information about the availability 

and prices of natural gas sold at wholesale and in interstate commerce....”36 Thus, the 

Commission’s authority is limited to “information about the availability and prices of 

natural gas sold at wholesale and in interstate commerce.”37 Again, this language does 

not limit the type of information the Commission could collect to implement its mandate, 

provided that such information is “about” (i.e., pertains to) the “availability and prices of 

natural gas sold at wholesale and in interstate commerce.” For instance, some 

transportation or sales of natural gas is not in interstate commerce, but, nonetheless, 

would affect the availability and prices of natural gas at wholesale and in interstate 

commerce. 

 

35 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(1). 

36 Section 23(a)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(2). 

37 Id.
Docket Nos. RM07-10-000 and AD06-11-000 - 16 - 

16. The natural gas transparency provisions further provide that the Commission shall 

“rely on existing price publishers and providers of trade processing services to the 

maximum extent possible.”38 Thus, Congress authorized the Commission to rely on third 

parties to collect and disseminate transparency information. The Commission does not 

herein authorize or empower third parties to collect or disseminate information. 

Nonetheless, we expect that third parties may use the information collected pursuant to 

the proposals in this NOPR and repackage it, if sufficient demand for such services arises 

in the information marketplace.39

17. Also, in the transparency provisions, Congress cautioned the Commission in 

providing for any dissemination of information pursuant to the transparency provisions to 

ensure that “consumers and competitive markets are protected from the adverse effects of 

potential collusion or other anticompetitive behaviors by untimely disclosure of 

transaction-specific information.”40 

 38 Section 23(a)(4) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(4). 

39 We reiterate here our comments made previously regarding price index 

publishers, data hubs, and other trade processing services: we do not “endors[e] any 

particular entity or approach, but continue to encourage industry participants to find 

optimal solutions to better wholesale price formation.” Order on Further Clarification of 

the Policy Statement at P 11. 

40 Section 23(b)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(b)(2). 
Docket Nos. RM07-10-000 and AD06-11-000 - 17 - 

18. Finally, new section 23(d)(2) of the natural gas transparency provisions mandates 

an exemption from any reporting for “natural gas producers, processors, or users who 

have a de minimis market presence....”41 This paragraph does not exempt all producers 

and all processors from reporting, but exempts only producers that have a de minimis

market presence and only processors that have a de minimis market presence. 

IV. Reporting of Flow Volume and Capacity By Intrastate Pipelines

A. Proposal

19. The Commission proposes that in order to make available the information needed 

to track daily flows of natural gas throughout the United States, each intrastate pipeline 

would be required to post daily to the Internet the capacities of, and volumes flowing 

through, their major receipt and delivery points and mainline segments. Postings would 

be required within 24 hours from the close of the gas day on which gas flowed, i.e., at or 

before 9:00 a.m. central clock time for flow that occurred on the gas day that ended 24 

hours before. To illustrate, the volume of gas that flowed through a receipt point from 

9:00 a.m. central clock time on Monday through 9:00 a.m. central clock time on Tuesday 

would be reported as a daily flow volume for that gas day and must be reported by 9:00 

a.m. Wednesday central clock time. The Commission would implement this proposal by 

adding a new § 284.14 to its regulations. 

 41 Section 23(d)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(d)(2). 
Docket Nos. RM07-10-000 and AD06-11-000 - 18 - 

20. As explained in greater detail below, by adding information on intrastate pipeline 

flows to the information already available from interstate pipelines, the Commission, 

market participants, and the public could develop a better understanding of daily supply 

and demand conditions that directly affect U.S. wholesale natural gas markets. While 

distinctions between intrastate and interstate natural gas markets may be meaningful from 

a legal perspective, they are not meaningful from the perspective of market price 

formation. The U.S. natural gas market produces geographically diverse prices through 

the direct influence of supply, demand and transportation availability, but without ever 

differentiating interstate from intrastate commerce. Consequently, this proposal to 

increase information from intrastate pipelines would directly “facilitate price 

transparency for the sale... of physical natural gas in interstate commerce” as authorized 

in the natural gas transparency provisions.42

B. Legal Considerations

21. As discussed above, the natural gas transparency provisions provide the authority 

for the Commission to obtain information from otherwise non-jurisdictional entities, 

including intrastate pipelines. The proposal to require intrastate pipelines to post flow 

information raises the additional issue whether such information qualifies as “information 

 42 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(1). 
Docket Nos. RM07-10-000 and AD06-11-000 - 19 - 

about the availability and prices of natural gas sold at wholesale in interstate 

commerce.”43 If not, the Commission would be foreclosed from requiring the posting. 

22. The Commission believes that the information covered by the instant proposal 

qualifies as “information about the availability and prices of natural gas sold at wholesale 

and in interstate commerce.” Notwithstanding their intrastate status, most major 

intrastate pipelines today transport or buy and sell wholesale natural gas that eventually 

enters or at least impacts the interstate natural gas market. Further, supply and demand in 

intrastate markets have a direct effect on prices of gas destined for interstate markets 

because both intrastate and interstate consumers draw on the same sources of supply. 

This is the case because of the statutory, regulatory and market changes that have taken 

place in the last three decades. 

23. In 1978, in the Natural Gas Policy Act, Congress allowed an intrastate pipeline to 

transport natural gas in interstate commerce on behalf of any interstate pipeline or local 

distribution company served by an interstate pipeline, without losing its intrastate 

status.44 Congress likewise permitted an intrastate pipeline to sell natural gas to any 

interstate pipeline or any local distribution company served by any interstate pipeline, 

 43 Section 23(a)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(2). 

44 See section 311(a)(2) of the Natural Gas Policy Act, 15 U.S.C. 3371(a)(2); see

also 18 CFR part 284, subpart C (Certain Transportation by Intrastate Pipelines). 
Docket Nos. RM07-10-000 and AD06-11-000 - 20 - 

without losing its intrastate status.45 In addition, at the same time that the Commission 

issued Order No. 636 in 1992, it promulgated a new subpart of Part 284 (revised several 

times in the past 15 years) that provides blanket authority to any person who is not an 

interstate pipeline (including intrastate pipelines) to make sales for resale of natural gas in 

interstate commerce.46 This authorization is a limited jurisdiction certificate, which 

means that the holder does not become subject to the panoply of Natural Gas Act 

regulation by exercising its rights under the certificate.47

24. The market understandably reacted to these statutory and regulatory changes since 

1978. As relevant here, and explained in greater detail below, natural gas sold at or 

destined to be sold at wholesale in the interstate market is frequently exchanged or the 

transactions consummated at market hubs where interstate and intrastate pipelines are 

interconnected (e.g., Waha, Katy, Houston Ship Channel, and Carthage in Texas and at 

 45 See section 311(b) of the Natural Gas Policy Act, 15 U.S.C. 3371(b); see also

18 CFR part 284, subpart D (Certain Sales by Intrastate Pipelines). 

46 Pipeline Service Obligations and Revisions to Regulations Governing SelfImplementing Transportation and Regulation of Natural Gas Pipelines After Partial 

Wellhead Decontrol, Order No. 636, 57 FR 13267 (Apr. 16, 1992), FERC Stats. & Regs. 

¶ 30,939 (1992), order on reh’g, Order No. 636-A, 57 FR 36128 (Aug. 12, 1992), FERC 

Stats & Regs. ¶ 30,950 (1992), order on reh’g, Order No. 636-B, 61 FERC ¶ 61,272 

(1992), order on reh’g, 62 FERC ¶ 61,007 (1993), aff’d in part and remanded in part sub

nom United Distribution Cos. v. FERC, 88 F.3d 1104 (D.C. Cir. 1996), order on remand, 

Order No. 636-C, 78 FERC ¶ 61,186 (1997). 

47 See 18 CFR part 284, subpart L (Certain Sales for Resale by Non-interstate 

Pipelines). 
Docket Nos. RM07-10-000 and AD06-11-000 - 21 - 

Henry Hub in Louisiana). Prices formed at these hubs are, in effect, prices for wholesale 

transactions in interstate commerce, even if a portion of the gas priced at each market hub 

is consumed intrastate. In addition, transfer of natural gas can take place directly 

between parties who ship gas on both intrastate and interstate pipelines at any pipeline 

interconnection. 

C. Discussion

25. Currently, through the availability of information regarding daily scheduled flows 

of natural gas through interstate pipelines, market participants have an increased, daily 

understanding of natural gas markets, including regional conditions and the pipeline 

capacity available to resolve different geographic supply/demand balances. This is due in 

part to Order No. 637, where the Commission required posting of capacity and scheduled 

volume information on interstate pipelines with the direct intention of allowing shippers 

to monitor capacity availability.48 Accordingly, interstate pipelines must post available 

capacity information, specifically: 

the availability of capacity at receipt points, on the mainline, at delivery 

points, and in storage fields, whether the capacity is available directly 

from the pipeline or through capacity release, the total design capacity of 

 48 Regulation of Short-Term Natural Gas Transportation Services and Regulation 

of Interstate Natural Gas Transportation Services, Order No. 637, 65 FR 10156, at 10204-

10205, (Feb. 25, 2000), FERC Stats. & Regs. ¶ 31,091, at 31,320-31,321 (2000); order

on reh’g, Order No. 637-A, 65 FR 35706 (June 5, 2000), FERC Stats. & Regs. ¶ 31,099 

(2000); order on reh’g, Order No. 637-B, 65 FR 47284 (Aug. 2, 2000), affirmed in

relevant part, Interstate Natural Gas Ass’n of America v. FERC, 285 F.3d 18 (D.C. Cir. 

2002), order on remand, 101 FERC ¶ 61,127, order on reh’g, 106 FERC ¶ 61,088, aff’d

sub nom. American Gas Ass’n v. FERC, 428 F.3d 255 (D.C. Cir. 2005) (Order No. 637).
Docket Nos. RM07-10-000 and AD06-11-000 - 22 - 

each point or segment on the system; the amount scheduled at each point 

or segment whenever capacity is scheduled, and all planned and actual 

service outages or reductions in service capacity.49

In Order No. 637, the Commission anticipated that such postings would provide useful 

information regarding supply and demand fundamentals: 

The changes to the Commission’s reporting requirements will enhance 

the reliability of information about capacity availability and price that 

shippers need to make informed decisions in a competitive market as 

well as improve shippers’ and the Commission’s ability to monitor 

marketplace behavior to detect, and remedy anticompetitive behavior.50

26. Today, interested market participants as well as commercial vendors retrieve this 

information from the websites of interstate pipelines to obtain schedule information that 

is then used to estimate a variety of supply and demand conditions including geographic 

and industrial sector consumption, storage injections and withdrawals and regional 

production in almost real-time.51 Market participants have come to rely on this 

information to help price transactions. Commission staff has also come to rely on this 

information to perform its oversight and enforcement functions. In fact, observers believe 

 49 18 CFR 284.13(d). 

50 Order No. 637, 65 FR at 10169. 

51 See, e.g., Comments of Bentek Energy, LLC., Docket No. AD06-11-000 (filed 

Oct. 10, 2006). 
Docket Nos. RM07-10-000 and AD06-11-000 - 23 - 

that this information posting has contributed to market transparency by revealing the 

underlying volumetric (or availability) drivers behind price movements.52

27. Notwithstanding the contribution of posted interstate schedule information to the 

transparency of price and availability of natural gas, this information cannot provide a 

complete picture of natural gas flows in the United States – or even those flows directly 

relevant to the pricing of natural gas flowing in interstate commerce. Several major U.S. 

natural gas pricing points sit at the confluence of multiple interstate and intrastate 

pipelines. A recent study by the Department of Energy’s Energy Information 

Administration (EIA) identified 28 national market centers or pricing hubs, of which 

13 are served by a combination of interstate and intrastate pipelines.53 The table below 

shows the capacity of interstate and intrastate pipelines connected to each of these 

13 hubs. 

 52 See, e.g., Comments of Platt’s, at p. 11-13, Docket No. AD06-11-000 

(information regarding the supply and demand of natural gas explains prices and such 

information is available from interstate pipelines, but not intrastate pipelines). 

53 DEPARTMENT OF ENERGY, ENERGY INFORMATION ADMINISTRATION, NATURAL 

GAS MARKET CENTERS AND HUBS: A 2003 UPDATE, Oct. 2003, 

http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2003/market_hubs/mkth

ubs03.pdf 
Docket Nos. RM07-10-000 and AD06-11-000 - 24 - 

Table 1 

Inter- and Intrastate Pipeline Delivery Capacity at 

Selected U.S. Natural Gas Pricing Points 

 Receipt and Delivery 

Capacity

Hub Name State

Interstate 

Pipelines 

(MMcfd)

Intrastate 

Pipelines 

(MMcfd)

Carthage TX 1,120 1,355 

Henry Hub LA 2,770 1,215 

Katy – Enstore TX 1,370 3,815 

Katy – DEFS TX 260 2,360 

Mid Continent KS 1,112 627 

Moss Bluff TX 1,050 1,800 

Nautilus LA 1,200 1,350 

Perryville LA 3,652 350 

Aqua Dulce TX 855 835 

Waha - Lone Star TX 810 1,140 

Waha – Encina TX 525 800 

Waha - El Paso TX 1,165 1,660 

Waha – DEFS TX 300 1,850 

Source: Unpublished Energy Information Administration update to March 2005 of 

information presented in Natural Gas Market Centers and Hubs: A 2003 Update, 

October 2003.

 
Docket Nos. RM07-10-000 and AD06-11-000 - 25 - 

28. Many of these pricing points are closely connected to other regions of the United 

States, influencing prices across the country. The figure below shows the location and 

flow patterns of natural gas moving between intrastate and interstate markets through 

several of these pricing points. 

Figure 1 

Texas and Louisiana Market Hubs and Their Connection to Other Regions in the 

United States 

29. One pricing point directly connected to both interstate and intrastate pipelines is 

Henry Hub, Louisiana, the location for delivery of natural gas under the New York 

Mercantile Exchange’s (NYMEX) futures contract. Monthly settlement of NYMEX’s 
Docket Nos. RM07-10-000 and AD06-11-000 - 26 - 

Henry Hub natural gas future contract has become important in determining a variety of 

monthly index prices used to set natural gas prices in a variety of transactions, some in 

interstate commerce, particularly along the East Coast and Gulf Coast of the United 

States. The nature of this influence is detailed in Commission staff’s 2006 State of the 

Markets Report.

54

30. Purchasers of natural gas in interstate commerce draw on the same sources of 

supply as users and buyers of natural gas in intrastate commerce. For example, much of 

the recent Barnett Shale development in the Fort Worth basin flows into intrastate 

systems before moving into interstate markets. In total, slightly more than 40 percent of 

total on-shore production in Texas is connected to interstate pipelines, less than 60 

percent in Louisiana and less than 80 percent in Oklahoma.55 Though daily volume 

flowing from intrastate into interstate pipelines can be estimated, the supply dynamics 

that make these volumes available cannot. 

31. Send-out from current liquefied natural gas (LNG) terminals – Cove Point, Elba 

Island, Everett and Lake Charles – is observable through interstate receipt point flow 

 54 FEDERAL ENERGY REGULATORY COMMISSION, 2006 STATE OF THE MARKETS 

REPORT, at 48-50 (Jan. 2007), , www.ferc.gov/market-oversight/market-oversight.asp, 

(follow link to the State of the Markets Full Report). 

55 BENTEK Energy, LLC analysis of supply scheduled into interstate pipelines 

compared with EIA data from its table Natural Gas Gross Withdrawals and Production 

for Texas and Oklahoma available at 

http://tonto.eia.doe.gov/dnav/ng/ng_prod_sum_dcu_NUS_m.htm. 
Docket Nos. RM07-10-000 and AD06-11-000 - 27 - 

postings. Of seven approved, but not yet operational, terminals in Texas and Louisiana, 

all would discharge in whole or in part to intrastate pipelines.56 

32. The Commission proposes to require posting of actual flow information from 

intrastate pipelines rather than scheduled volumes, as it does for interstate pipelines. 

Intrastate pipelines operate in different regulatory and business contexts from interstate 

pipelines, making scheduled volumes less helpful in estimating movement of natural gas. 

For example, interstate pipelines primarily operate as open access transporters, not as 

sellers of natural gas. Scheduled volumes represent the communication that must occur 

between the shipper and the pipeline to conduct most of their business. As a 

consequence, interstate receipt, transportation and delivery schedules, as updated before 

and through the delivery day, reflect actual flows on their systems as well.57 In contrast, 

intrastate pipelines often sell gas directly to customers under a variety of regulatory 

regimes. Much of such gas can flow without being scheduled, especially for customers’ 

variable requirements. Similarly, many direct pipeline purchases from the wellhead and 

from smaller gathering systems need not be scheduled. Given the different business 

models, and the likelihood that scheduling information on intrastate pipelines would be 

 56 TEXAS RAILROAD COMMISSION, ONSHORE LNG SUPPLY TERMINAL PROJECTS 

PROPOSED FOR TEXAS (June 28, 2006), 

http://www.rrc.state.tx.us/commissioners/carrillo/press/LNGprojects.html. 

57 In the case of “no-notice” service, see 18 CFR 284.7(a)(4), interstate pipeline 

schedules do not reflect flows. Consequently, information about interstate flows in areas 

using no-notice service is less useful. 
Docket Nos. RM07-10-000 and AD06-11-000 - 28 - 

unhelpful, we conclude that actual flow information, posted after-the-fact, would be 

needed to develop an understanding of these flows. 

33. The daily posting of flow information by intrastate pipelines would provide 

several benefits to the functioning of natural gas markets in ways that would protect the 

integrity of physical, interstate natural gas markets, protect fair competition in those 

markets and consequently serve the public interest by better protecting consumers. First, 

by providing a more complete picture of supply and demand fundamentals, these postings 

would improve market participants’ ability to assess supply and demand and to price 

physical natural gas transactions. Second, during periods when the U.S. natural gas 

delivery system is disturbed, for instance due to hurricane damage to facilities in the Gulf 

of Mexico, these postings would provide market participants a clearer view of the effects 

on infrastructure, the industry, and the economy as a whole. Finally, these postings 

would allow the Commission and other market observers to identify and remedy 

potentially manipulative activity. We discuss each of these points in turn. 

34. First, the proposed daily intrastate pipeline capacity and volume postings would 

improve market participants’ ability to assess supply and demand and price physical 

natural gas transactions by providing a more complete picture of supply and demand 

fundamentals.58 As discussed above and noted in comments filed in these proceedings, 

 

58 See, e.g., Comments of Platt’s, at p. 11, Docket No. AD06-11-000 (filed Nov. 1, 

2006) (explaining that, to understand prices, “the marketplace must look to... information 

on [the] availability of and demand for natural gas....”). 
Docket Nos. RM07-10-000 and AD06-11-000 - 29 - 

interstate pipeline information does not provide a complete picture of the supply and 

demand fundamentals that apply to interstate commerce because much of the natural gas 

in the U.S. is moved through the intrastate pipeline system.59

35. Second, the proposed daily intrastate pipeline capacity and volume postings would 

provide market participants – and the Commission in its market oversight efforts – a 

clearer view of the effects on infrastructure, the industry, and the economy as a whole 

during periods when the U.S. natural gas delivery system is disturbed. For example, after 

landfall of hurricanes Katrina and Rita in late 2005, even the most interested of 

governmental and commercial market observers were not able to obtain complete 

information regarding the extent of the damage at production facilities. 60 By monitoring 

receipt and delivery points for production facilities on interstate pipelines, market 

participants were able to obtain only a limited sense of production facility output.61 

Similarly, market participants, State commissions and others were unable to assess 

effects on natural gas consumption in the Gulf Coast, including consumption by the 

 59 See Comments of Platt’s, at p. 13, Docket No. AD06-11-000 (filed Nov. 1, 

2006) (stating that much of the fundamental supply and demand data is missing from 

natural gas markets and advocating for reporting by intrastate pipelines). 

60 See, e.g., Transcript of the Oct. 13, 2006 Technical Conference (Tr.), at 25, 

Transparency Provisions of the Energy Policy Act of 2005, Docket No. AD06-11-000 

(Comments of Sheila Rappazzo, Chief of Policy Section of the Office of Gas and Water 

of the New York State Department of Public Service). 

61 Tr. at 25 (Comments of Sheila Rappazzo) (describing how after the 2005 

hurricanes data availability differed widely). 
Docket Nos. RM07-10-000 and AD06-11-000 - 30 - 

petrochemical industry, for some period. The significance and duration of these effects 

on this industry – vulnerable to energy price and availability disruptions – remain 

unclear. This proposal would allow interested governmental and private parties to gain a 

much better picture of disruptions in natural gas flows in the case of future hurricanes in 

the Gulf region.62

36. Third, the proposed daily intrastate pipeline capacity and volume postings would 

allow the Commission and other market observers to identify and remedy potentially 

manipulative activity more actively by tracking price movement in the context of natural 

gas flows.63 In particular, information regarding availability on intrastate pipelines could 

be used to track manipulative or unduly discriminatory behavior intended to cause harm 

 62 Along these lines, this proposal is consistent with a recent Commission final 

rule and a proposed survey by EIA. On August 23, 2006, the Commission revised its 

reporting regulations to require jurisdictional natural gas companies to report damage to 

facilities due to a natural disaster or terrorist activity that results in a reduction in pipeline 

throughput or storage deliverability. Revision of Regulations to Require Reporting of 

Damage to Natural Gas Pipeline Facilities, Order No. 682, 71 FR 51098 (Aug. 29, 2006), 

FERC Stats. and Regs. ¶ 31,227 (2006), order on reh’g, 118 FERC ¶ 61,--- (2007). On 

January 30, 2007, EIA proposed to survey natural gas processing plants “to monitor their 

operational status and assess operations of processing plants during a period when natural 

gas supplies are disrupted.” Agency Information Collection Activities, 72 FR 4248 

(Jan. 30, 2007). The purpose of the survey would be to “inform the public, industry, and 

the government about the status of supply and delivery activities in the area affected by 

the disruption.” Id.

63 See Prohibition of Energy Market Manipulation, Order No. 670, 71 FR 4244 

(Jan. 26, 2006), FERC Stats. & Regs. ¶ 31,202 (2006) (implementing section 4A of the 

Natural Gas Act, to be codified at 15 U.S.C. 717c-1, which prohibits natural gas market 

manipulation), reh’g denied, 114 FERC ¶ 61,300 (2006). 
Docket Nos. RM07-10-000 and AD06-11-000 - 31 - 

to consumers by distorting market prices in interstate commerce. For example, 

Commission staff overseeing markets routinely check for unused interstate pipeline 

capacity between geographically distinct markets with substantially different prices as a 

sign that flows may be managed to manipulate prices. Given the importance of intrastate 

pipeline connections to 13 major pricing hubs, including Henry Hub, as discussed above, 

the lack of flow information on intrastate pipelines hinders the Commission’s market 

oversight and enforcement efforts. 

37. This benefit comports with EPAct 2005, in which Congress directed the 

Commission to facilitate price transparency in physical, interstate natural gas markets 

“with due regard for the public interest, the integrity of those markets, fair competition, 

and the protection of consumers.”64 By this language, Congress intended that the 

improvement of Commission market oversight activities is a legitimate justification for 

proposing rules under the natural gas transparency provisions. Monitoring and 

preventing manipulative or unduly discriminatory activity would meet the Commission’s 

responsibility for ensuring the integrity of the physical interstate natural gas markets. 

The proposal to make intrastate pipeline information available to the public would assist 

the Commission in fulfilling that responsibility. 

 64 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(1). 
Docket Nos. RM07-10-000 and AD06-11-000 - 32 - 

D. Solicitation of Comments

38. The Commission seeks comments on its proposal to be codified in subpart A of 

Part 284 of the Commission’s regulations that intrastate pipelines be required to post 

daily to the Internet the capacities of, and volumes flowing through their major receipt 

and delivery points and mainline segments.65 In particular, the Commission seeks 

comment on whether market participants believe that the posting of flow information on 

intrastate pipelines would provide valuable additional information on supply and demand 

fundamentals for interstate markets and whether such information would be sufficient. 

The Commission also seeks comment on the burden this proposal would impose on 

intrastate pipelines. Those providing burden estimates should provide support for their 

estimate and compare that estimate to the burden currently borne by interstate pipelines 

that report capacity availability pursuant to § 284.13(d) of the Commission’s regulations. 

39. The Commission seeks comment on how to define “major” receipt and delivery 

points and mainline segments on intrastate systems. The Commission does not wish to 

include extremely small points connected to one or a few customers, which it would 

consider burdensome and possibly even anti-competitive in certain cases. 

 65 The Commission is not proposing to amend subparts C and D of part 284, 

because those subparts govern interstate transactions by intrastate pipelines under the 

authority of the Natural Gas Policy Act. The instant proposal is based on the 

Commission’s Natural Gas Act jurisdiction as amended by EPAct 2005. 
Docket Nos. RM07-10-000 and AD06-11-000 - 33 - 

40. The proposal does not make an exception for intrastate pipelines transporting de

minimis volumes. Although the natural gas transparency provisions mandate that the 

Commission create an exception from reporting requirements for “natural gas producers, 

processors, or users who have a de minimis market presence,” they do not mandate a de

minimis exception for natural gas pipelines.66 The Commission seeks comment on 

whether the Commission should create a de minimis threshold under which certain 

intrastate pipelines should not be required to report or should create a method for certain 

intrastate pipelines to seek waiver of these requirements. How would such a de minimis

threshold be measured, for instance, by throughput volume? The Commission also seeks 

comment on whether the proposed flow posting requirements should apply to all 

intrastate pipelines, or whether it should be limited to intrastate pipelines in states where 

a significant percentage of supply and demand information is not observable through 

current interstate pipeline posting requirements. 

41. The Commission seeks comment on the difference in approach applied to 

intrastate and interstate pipelines by requiring intrastate pipelines to post actual natural 

gas flows instead of scheduled flows. Should the Commission require intrastate pipelines 

to post information about capacity availability at major points on a daily basis, similar, or 

identical, to the information that interstate pipelines are required to post under 

 66 Section 23(d)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(d)(2). 
Docket Nos. RM07-10-000 and AD06-11-000 - 34 - 

§ 284.13(c)? Is it possible to determine major intrastate pipeline flows using schedule 

information? 

42. Regarding the method of posting, the Commission seeks comment on the format 

for posting flow information by intrastate pipelines, including whether intrastate pipelines 

should follow the standards of the North American Energy Standards Board. If not, what 

additional accommodations would need to be made for their different operations? 

Further, how would § 284.12, which outlines formatting requirements for interstate 

pipeline postings be modified to accommodate intrastate pipelines and to accommodate 

posting of flow information as opposed to scheduling information? Also, the timing in 

the proposal requires the posting of flow information within 24 hours from the close of 

the gas day on which gas flows (i.e., on or before 9:00 a.m. central clock time for flows 

occurring on the gas day that ended 24 hours before). Does this timing create an undue 

burden? Is it sufficiently timely? 

43. Finally, the Commission seeks comment on whether it should revise the posting 

requirements applicable to interstate pipelines provided in § 284.13(d)(1) of the 

Commission’s regulations.67 Since those posting requirements were mandated, have 

there been changes in technology or the marketplace that justify changing the posting 

requirements for interstate pipelines? In addition to current posting requirements, should 

interstate pipelines be required to post actual flow information as we propose to require 

 67 18 CFR 284.13(d)(1). 
Docket Nos. RM07-10-000 and AD06-11-000 - 35 - 

intrastate pipelines to do? Would posting of actual flow information provide useful 

information regarding actual capacity use, for instance, by providing information 

regarding no-notice service? 

V. Annual Reporting of Natural Gas Transactions

A. Proposal

44. The Commission proposes that buyers and sellers of more than a de minimis

volume of natural gas be required to report aggregate numbers and volumes of relevant 

transactions in an annual filing using an electronic form to be provided by the 

Commission on its Internet web page. This proposal would be codified at § 260.401 of 

the Commission’s regulations. This information would provide regularly an estimate of 

(a) the size of the physical domestic natural gas market, (b) the use of index pricing in 

that market, (c) the size of the fixed-price trading market that produces price indices, and 

(d) the relative size of major traders. Although the natural gas transparency provisions 

authorize the Commission to require reporting of detailed transaction-by-transaction 

information, the Commission proposes obtaining this more limited set of information 

designed to assess the market. The requirement would be applied to companies both 

traditionally jurisdictional to the Commission and others. This form would also serve to 

identify users of blanket certificates and document their reporting status as required under 
Docket Nos. RM07-10-000 and AD06-11-000 - 36 - 

§ 284.403(c) and § 284.288(a), discussed further below. A proposed form for the report 

is set forth in Appendix A.68

45. Under the proposed reporting requirement, certain natural gas buyers and sellers 

would identify themselves to the Commission and report summary information about 

physical natural gas transactions for the previous calendar year including: (a) their total 

amount of physical69 natural gas transactions by number and volume; (b) the breakdown 

of their transactions by purchases and sales; (c) the number and volume breakdown of 

their purchases and sales by whether they were conducted in monthly or daily spot 

markets; and, (d) the number and volume breakdown of their purchases and sales by type 

of pricing, in particular whether that pricing was fixed or indexed. 

46. In addition, a natural gas seller would be required to state whether it operates 

under blanket certificate authority under § 284.402 of the Commission’s regulations, and 

 68 Pursuant to § 375.314(f) and (g), the Director of the Office of Enforcement or 

the Director’s designee, could deny or grant waivers of the requirements of this form and 

could act on requests for extensions of time to file the form. 18 CFR 375.314(f) and (g). 

The Commission anticipates directing staff to make changes to the format of the form. 

Cf. Revised Public Utility Filing Requirements, 106 FERC ¶ 61,281 (2004) (directing 

staff to make future changes to the Electric Quarterly Reports). 

69 Although the standard contract for the most significant natural gas futures 

market traded on the New York Mercantile Exchange (NYMEX) requires physical 

delivery, the vast majority of those transactions do not go to delivery. For the purposes 

of this proposal, and despite the particulars of the futures contract language, we intend to 

explicitly exclude volumes of futures transactions from consideration. Indeed, 

information about volumes of futures transactions is already publicly available through a 

variety of commercial means or directly through NYMEX at www.nymex.com, so 

collection of the information would be redundant and unnecessary. 
Docket Nos. RM07-10-000 and AD06-11-000 - 37 - 

whether it reports transactions to price index publishers and whether any such reporting 

complies with the standards provided in § 284.403(a). Similarly, an interstate pipeline 

would be required to state whether it operates under blanket certificate authority under 

§ 284.284 of the Commission’s regulations, and whether it reports transactions to price 

index publishers and whether any such reporting complies with the standards provided in 

§ 284.288(a).70

B. Legal Considerations

47. The Commission intends “physical natural gas transaction” to mean a sale or 

purchase of natural gas with an obligation to deliver or receive physically, even if the 

natural gas is not physically transferred due to some offsetting or countervailing trade. 

Thus, with one explicit exception, even if the transaction does not go to physical delivery, 

it would still be included as a physical transaction. The exception is physically-settled 

futures contracts. The Commission would require such a contract to be reported only if it 

actually goes to delivery. Although the language of the natural gas transparency 

provisions address sales of natural gas, it does not limit the Commission from seeking 

information about natural gas purchases as well as sales. They are simply different sides 

of the same transaction. Congress directed the Commission to “facilitate price 

 70 The Commission recognizes that few if any interstate natural gas pipelines still 

make wholesale sales. Nevertheless, if they were to sell gas at wholesale in interstate 

commerce, they would be subject to the proposed rule. More relevant, of course, is the 

fact that all of their affiliates making wholesale sales in interstate commerce would be 

subject to the proposed rule. 
Docket Nos. RM07-10-000 and AD06-11-000 - 38 - 

transparency in markets for the sale... of physical natural gas in interstate commerce,” 

but that language does not limit the Commission to seeking information regarding only 

sales.71 Purchases of physical natural gas are also a part of such markets; there is no 

market for the sale of natural gas that does not include purchases. Nor does the natural 

gas transparency provision language that provides for the “dissemination... of 

information about the availability and prices of natural gas sold at wholesale and 

interstate commerce” restrict the Commission.72 As a practical matter, information 

regarding purchases of natural gas is necessary to evaluate the reliability of information 

regarding sales of natural gas. Both types of information are necessary to obtain a useful 

gauge of price transparency in natural gas markets. 

48. Further, in its Policy Statement, the Commission states that data providers should 

provide both sale and purchase information to price index developers.73 As the Policy 

Statement and related Commission initiatives were major Commission proceedings 

regarding this topic, we can presume that Congress was aware of this Policy Statement 

when it wrote the transparency provisions and, thus, contemplated that the Commission 

 71 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(1). 

72 Section 23(a)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 717t-2(a)(2) 

(emphasis added). 

73 Policy Statement on Price Indices at P 34.
Docket Nos. RM07-10-000 and AD06-11-000 - 39 - 

would continue its practice of seeking both sale and purchase information in facilitating 

price transparency. 

49. The proposed public nature of the filings would comport with the transparency 

provisions which require that any such rules “provide for the dissemination, on a timely 

basis, of information... to the public.”74 The transparency provisions further direct the 

Commission to “rely on [existing price publishers and providers of trade processing 

services] to the maximum extent possible.”75 By requiring public filings by market 

participants, the Commission would provide an opportunity for trade publications and 

commercial vendors to aggregate the information and provide any analysis should a 

desire for such services arise in the energy information marketplace. 

C. Discussion

50. Because of the way transactions currently take place in the natural gas industry, 

there is no way to estimate in even the broadest terms the overall size of the natural gas 

market or its breakdown by types of contract provision, including pricing and term (e.g., 

spot or longer term forwards).76 More particularly, there is no way to determine 

 74 Section 23(a)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(2). 

75 Section 23(a)(4) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(4). 

76 In its supplemental comments, Platt’s provided information regarding its use of 

physical basis transactions in compiling monthly indices. Supplemental Comments of 

Platt’s, Transparency Provisions of the Energy Policy Act, Docket No. AD06-11-000 

(filed Feb. 23, 2007). 
Docket Nos. RM07-10-000 and AD06-11-000 - 40 - 

important volumetric relationships between the fixed-price day- or month-ahead 

transactions that form price indices or to determine the use of price indices themselves. 

As noted by the price index developer Platt’s, the question of what is the total size of the 

traded market has “hung over the gas market for years.”77 Without the most basic of 

volumetric information, the Commission has been hampered in its oversight and its 

ability to assess the adequacy of price-forming transactions. Market participants are 

likewise unable to evaluate their use of indexed transactions. Typically, market 

participants rely on index-price transactions as a way to reference market prices without 

taking on the risks of active trading. These market participants rely on index prices, often 

whether or not those prices are derived from a robust market of fixed-price transactions. 

51. Price formation in natural gas markets makes no distinction between transactions 

that are jurisdictional to the Commission under the Natural Gas Act absent new section 

23 of that statute and those that are not. As discussed above, generally, while the 

Commission’s traditional jurisdiction arising from sections 3 through 10 of the Natural 

Gas Act is limited to “natural gas compan[ies],”78 this limitation is not applicable to the 

Commission’s jurisdiction under new section 23 of the Natural Gas Act,79 the natural gas 

 77 Comments of Platt’s, at 6, Transparency Provisions of the Energy Policy Act, 

Docket No. AD06-11-000, (filed Nov. 1, 2006). 

78 See, 15 U.S.C. 717b-717i (2000). 

79 To be codified at 15 U.S.C. 717t-2. 
Docket Nos. RM07-10-000 and AD06-11-000 - 41 - 

transparency provisions. As a consequence, in order to assess the size and structure of 

U.S. natural gas markets, information is required from transacting companies whether or 

not they fall under the Commission’s traditional jurisdiction. 

52. Notwithstanding Congress’s broadening of the scope of the Commission’s 

jurisdiction in new section 23 of the Natural Gas Act with respect to transparency, 

Congress also mandated that the Commission exempt “natural gas producers, processors 

or users who have a de minimis market presence [from compliance] with the reporting 

requirements of this section.”80 In establishing a de minimis threshold for reporting, 

which would apply to all market participants, the Commission seeks to require reporting 

from only those market participants whose transactions could have an effect on the price 

for the sale of physical natural gas in interstate commerce and to obtain reporting from a 

sufficient number of market participants to ensure, in the aggregate, an accurate picture 

of the physical natural gas market as a whole. To this end, we propose to define such a 

de minimis market participant as a market participant that engages in physical natural gas 

transactions that amount by volume to less than 2,200,000 MMBtus annually. 81 This 

figure is based on the rather simple calculation of one-ten thousandth (1/10,000th) of the 

 80 Section 23(d)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(d)(2). 

81 Proposed 18 CFR 284.401 (defining de minimis market participant). The 

Commission proposes to define a market participant as “any buyer or seller that engaged 

in physical natural gas transactions for the previous calendar year.” Proposed 18 CFR 

284.401.
Docket Nos. RM07-10-000 and AD06-11-000 - 42 - 

annual physical volumes consumed in the United States, which is approximately 22 

trillion cubic feet (Tcf) (or roughly 22,000,000,000 MMBtus).82 Consequently, a de

minimis market participant would trade the equivalent of less than one standard NYMEX 

futures contract per day. Although a market participant that contracts for 1/10,000th of 

the nation’s annual physical volume may appear to have little effect on natural gas prices, 

that participant may be transacting only at one location and, thus, have a much greater 

pricing effect there. Although we do not expect annual physical volumes consumed in 

the United States to remain constant, the figure of 22 Tcf is a useful snapshot of 

consumption and a useful starting-point for setting the de minimis exemption. 

53. The proposed reporting requirement would also shift the notification regarding the 

index reporting practices of companies selling under blanket certificates to this annual 

form and away from the prior practice of a letter notification upon a change in company 

policy. Consequently, if a market participant makes use of its blanket certificate 

authority, even if its sales are de minimis, it would still be required to report, but only its 

identification information, whether it reports transaction information to price index 

publishers, and whether any such reporting complies with the regulations governing 

reporting to price index publishers. This proposal would be codified at § 284.403(a) for 

blanket marketing certificate holders and at § 284.288(a) for interstate pipelines with 

 82 DEPARTMENT OF ENERGY, ENERGY INFORMATION ADMINISTRATION, NATURAL 

GAS SUMMARY, DATA SERIES: TOTAL CONSUMPTION, 2006, 

http://tonto.eia.doe.gov/dnav/ng/ng_sum_lsum_dcu_nus_a.htm. 
Docket Nos. RM07-10-000 and AD06-11-000 - 43 - 

unbundled sales service certificates. The Commission would impose these requirements 

on all blanket certificate holders regardless of size.83

54. In Order No. 644, the Commission required each holder of blanket marketing 

certificate authority to notify the Commission whether it engages in reporting of its 

transactions to publishers of electricity or natural gas price indices according to the 

standards set out in the Commission’s Policy Statement on Price Indices.84 Pursuant to 

§ 284.403(a) of the Commission’s regulations, if a holder of a blanket marketing 

certificate changes its reporting standards, it is required to report that change to the 

Commission.

85 Pursuant to § 284.288(a) of the Commission’s regulations, if an 

interstate pipeline that holds blanket unbundled sales service certificate, it is similarly 

required to report that change to the Commission. 

55. Several data providers asked for clarification as to whether they may report certain 

classes of products traded, but not others. In one instance, related to electricity, the data 

 83 The Commission makes this proposal under section 4, 5 and 7 of the Natural 

Gas Act, 15 U.S.C. 717c, 717d, and 717f (2000), and, thus, is not required to create a 

de minimis exception for holders of blanket marketing certificates or for interstate 

pipelines that have blanket unbundled sales services certificates. 

84 Order No. 644 at P 70-72. 

85 18 CFR 284.403(a). 
Docket Nos. RM07-10-000 and AD06-11-000 - 44 - 

provider was reporting all transactions other than next-hour electric transactions.86 We 

clarify that a data provider remains eligible for the safe harbor provisions if it reports 

certain products but not others, provided that it provides all of the same type of 

transactions and that it notifies the Commission which products it will report in its annual 

filing or other notification. A data provider would be required to notify the commission 

of any change in the types of products it reports within 15 days of any such change. We 

intend to reiterate this clarification in the preamble of any final rule issued in these 

proceedings. 

56. At the October 13, 2006 technical conference, several participants called for 

mandatory reporting of all fixed-price transactions.87 Mandatory reporting would appear 

to provide additional benefits in that it could assist in determining whether the price 

indices are an accurate reflection of underlying fixed-price trading. Market participants, 

State commissions, and this Commission could gain a clearer sense of the volume and 

number of natural gas transactions that form prices by location and duration. For the 

 86 See, Pinnacle West Capital Corporation and Pinnacle West Marketing and 

Trading Co., LLC, Investigation of Terms and Conditions of Market-Based Rate Tariffs 

and Authorizations, Docket No. EL01-118-000 (filed Feb. 12, 2007). 

87 Tr. at 13-14 (Ms. Lewis-Raymond on behalf of the American Gas Association) 

(calling for mandatory reporting of fixed-price trades); Tr. at 18-19 (Mr. Les Fyock on 

behalf of the American Public Gas Association (APGA)) (calling for mandatory price 

reporting); Comments of the APGA, Transparency Provisions of the Energy Policy Act, 

Docket No. AD06-11-000 (filed Nov. 1, 2006) (same). 
Docket Nos. RM07-10-000 and AD06-11-000 - 45 - 

following reasons, however, we believe that mandatory reporting is not appropriate at this 

time. 

57. First, mandatory reporting of certain transactions would create an incentive for 

wholesale buyers and sellers to consider structuring transactions based on avoiding 

reporting requirements rather than simply on the economics of the transaction. Even very 

subtle shifts in the form of transactions could easily make them non-reportable in any 

pre-defined system. For instance, if the Commission required reporting of fixed-price, 

day-ahead transactions, market participants could create two-day transactions, achieve 

substantially the same economic result and avoid reporting. 

58. Second, buyers and sellers might shift away from fixed-price transactions to 

indexed-price transactions. Fixed-price transactions could easily decrease to the point 

that indices that rely on them would no longer represent reliable indicators of the market. 

Such indices would likely become more volatile as they moved more in response to fewer 

transactions. At the October 13, 2006 technical conference, several panelists raised 

similar concerns and advocated against mandatory price reporting.88 

 88 See, e.g., Tr. at 12-13 (Mr. Christopher Conway on behalf of Conoco-Phillips 

Gas and Power, the Natural Gas Supply Association, and the Independent Producers 

Association of America) (asserting that mandatory price reporting could drive market 

participants away from reportable transactions, thereby, possibly reducing liquidity); 

Tr. at 35-36, 38-39 (Mr. Alex Strawn on behalf of the Process Gas Consumers Group) 

(asserting that mandatory reporting of fixed price transactions would drive market 

participants to use index-price transactions, thereby, reducing liquidity); Comments of 

Independent Petroleum Association of America, at p. 3, Transparency Provisions of the 

Energy Policy Act, Docket No. AD06-11-000 (filed Nov. 1, 2006) (mandatory reporting 

(continued...) 
Docket Nos. RM07-10-000 and AD06-11-000 - 46 - 

59. Third, broad availability of detailed transaction data might prove to be 

anticompetitive. By contrast, our proposal herein is intended to adhere to the requirement 

provided in section 23 of the Natural Gas Act that the Commission “shall seek to ensure 

that consumers and competitive markets are protected from the adverse effects of 

potential collusion or other anticompetitive behaviors that can be facilitated by untimely 

public disclosure of transaction-specific information.”89 In its comments in these 

proceedings, the Department of Justice echoed this caution, stating that the Commission 

“may be able to achieve the benefits of transparency while limiting its potential 

harm by aggregating, masking, and lagging the release of such information.”90 

The Commission’s proposal would not provide for the collection and disclosure of 

“transaction-specific information.” The proposal is intended to avoid facilitating 

anti-competitive behavior in several ways: (i) reported information would not 

include specific price information; (ii) reported information would be aggregated 

 

would push market participants away from reportable transactions and cause them to do 

more index-price transactions); Comments of Natural Gas Supply Association, 

Transparency Provisions of the Energy Policy Act, Docket No. AD06-11-000 (filed 

Nov. 1, 2006) (similar). 

89 Section 23(b)(2) of the Natural Gas Act, to be codified at 15 U.S.C. 

 717t-2(b)(2). 

90 Comments of the Department of Justice, Antitrust Division, Transparency

Provisions of the Energy Policy Act, Docket No. AD06-11-000 (filed Jan. 25, 2007). 

The Department of Justice’s comments focused on the electricity markets, 

although it did note that the same general considerations that applied to 

electricity markets also applied to natural gas markets.
Docket Nos. RM07-10-000 and AD06-11-000 - 47 - 

information over a period of one year and not transaction-specific information; 

and (iii) reported information would be made on an aggregated, national level, and not 

by point or even region. 

60. The Commission also does not propose that market participants report information 

regarding their financially-settled transactions nor regarding their physically-settled 

futures contracts that do not go to delivery.91 The Commission has noted significant 

interactions among financial, futures and physical natural gas markets.92 The most direct 

and important influence of this type on physical markets is from the futures market, 

which is regulated by the Commodities Futures Trading Commission (CFTC). The 

CFTC actively monitors that market, and communicates regularly with the Commission 

regarding market matters.93 

 91 See, e.g., Tr. at 22-24, Comments of Industrial Energy Consumers of America, 

(arguing that because that physical and financial natural gas markets are linked, the 

Commission and the Commodity Futures Trading Commission should make Over-theCounter markets more transparent.) 

92 FEDERAL ENERGY REGULATORY COMMISSION, 2006 STATE OF THE MARKETS 

REPORT, at 48-50 (Jan. 2007), www.ferc.gov/market-oversight/market-oversight.asp, 

(follow link to the State of the Markets Full Report). 

93 In the transparency provisions, Congress mandated that this Commission and 

the CFTC conclude a memorandum of understanding relating to information sharing to 

include “provisions ensuring that information requests to markets within the respective 

jurisdiction of each agency are properly coordinated to minimize duplicative information 

requests, and provisions regarding the treatment of proprietary trading information.” 

Section 23(c)(1) of the Natural Gas Act, 15 U.S.C. 717t-2(c)(1); see also section 

220(c)(1) of the Federal Power Act, 16 U.S.C. 824t(c)(1) (identical language). The 

Commission and the CFTC entered into the memorandum of understanding on 

October 12, 2005. Memorandum Of Understanding Between FERC and the CFTC 

(continued...) 
Docket Nos. RM07-10-000 and AD06-11-000 - 48 - 

61. By obtaining the number and volume of transactions conducted for each market 

participant, the Commission, market participants and others would be able to determine 

the overall level of activity of market participants in the physical natural gas market. In 

particular, the information would provide regularly an estimate of (a) the size of the 

physical U.S. domestic natural gas market, (b) the use of index pricing in that market, 

(c) the size of the fixed-price trading market that produces price indices, and (d) the 

relative sizes of major traders. 

62. The information provided through the Commission’s proposal would improve the 

understanding of index pricing by interested entities, including the market participants 

and State energy regulators who use them. The number and volume break-down of 

transactions by price type, fixed-price or index-price, should permit an overall assessment 

of the ratio of index-using transactions to price-forming transactions, i.e., fixed-price 

transactions. At present, we do not know how much fixed-price transactions are a part of 

the universe of natural gas transactions, although they may be the minority of natural gas 

transactions.94 

 

Regarding Information Sharing And Treatment Of Proprietary Trading And Other 

Information, available at http://www.ferc.gov/legal/maj-ord-reg/fed-sta/ene-pol-act.asp 

(follow “Interagency/Tribal,” then, “MOU”). 

94 Tr. at 32 (Comments of Ms. Jane Lewis-Raymond, American Gas Association) 

(surmising that we currently cannot know the amount of fixed-price transactions and the 

amount of fixed-price trades that make up an index). 
Docket Nos. RM07-10-000 and AD06-11-000 - 49 - 

63. As noted in the introduction, the Commission has taken several steps to restore 

confidence in natural gas index prices and their formation.95 By obtaining information 

regarding the extent that market participants make fixed-price transactions, market 

participants would be able to evaluate their confidence in the index prices that are formed 

by those fixed-price transactions. By collecting sales and purchases information, results 

could also be cross-checked to ensure that information was accurate. In effect, total sales 

should roughly equal total purchases, with some allowance for de minimis buyers and 

sellers. 

64. The Commission also proposes to require a holder of blanket market certificates or 

an interstate pipeline with an unbundled sales service certificate to notify the Commission 

annually about its reporting of transaction information to price index publishers and 

whether any such reporting conforms to the Policy Statement. After the Policy 

Statement’s notification requirement took effect, we observed that blanket marketing 

certificate holders may have overlooked this requirement and we provided the 

opportunity for blanket marketing certificate holders to notify the Commission by August 

1, 2005 of their reporting status.96 Based on Commission staff’s experience monitoring 

price indices and adherence to the Policy Statement, as discussed in the introduction, the 

Commission believes that notification on an annual basis would make the information 

 95 See supra, notes 5-11. 

96 Order on Further Clarification of Policy Statement at P 21. 
Docket Nos. RM07-10-000 and AD06-11-000 - 50 - 

more reliable. As a further benefit, notifying companies would have the opportunity to 

review their practices in coordination with their response to the data collection proposal 

described above. 

D. Solicitation of Comments

65. The Commission seeks comment on this proposal, including whether market 

participant responses to the questions would provide useful information to market 

participants, State commissions, this Commission and the public in understanding the 

natural gas market, the price formation process, and the use of price indices. 

66. In particular, the Commission encourages market participants to review the 

questions (in draft form at Appendix A) and determine whether they would result in 

useful information for understanding the prices and availability of physical natural gas in 

interstate commerce. What adjustments might improve these questions? What 

alternative or additional questions might add sufficient information to justify additional 

burden on filers? Does the format for responses ensure consistency for aggregation and 

analysis? The Commission anticipates holding meetings, if needed, to consider the 

details of this annual filing requirement. 

67. The Commission seeks comment on its proposed definition of a de minimis

market participant. Is this threshold sufficiently low to permit a comprehensive picture 

of the U.S. wholesale natural gas market? Is it sufficiently high so that persons or 

municipalities not able to prices of natural gas in interstate commerce are not required to 

report? Is there another, more effective bright-line measure that allows market 
Docket Nos. RM07-10-000 and AD06-11-000 - 51 - 

participants to determine easily whether they are exempt? Further, the Commission seeks 

comment on the burden this proposal would impose on market participants. For instance, 

is it unduly burdensome for market participants to file the information by February 15 of 

each year? 

68. The Commission seeks comments on its proposal that buyers and sellers of more 

than a de minimis volume of natural gas be required to report aggregate numbers and 

volumes of relevant transactions in an annual filing with the Commission. Does 

information regarding purchases of natural gas at wholesale “facilitate price transparency 

in markets for the sale and transportation of physical natural gas in interstate commerce,” 

as provided in the natural gas transparency provisions?97 

69. The Commission seeks comment on whether reporting information aggregated by 

calendar year is adequate. Would a monthly breakdown create an undue burden 

compared to providing the information by calendar year? Would it provide a better 

understanding of the physical natural gas market given the seasonal nature of the market? 

70. The Commission seeks comment on the proposed modifications to the notification 

requirements regarding reporting of transactions to publishers of price indices imposed 

on those entities who hold blanket marketing certificates in proposed § 284.403(a) and 

imposed on intrastate pipelines with blanket unbundled sales service certificates in 

 97 Section 23(a)(1) of the Natural Gas Act, to be codified at 15 U.S.C. 

717t-2(a)(1). 
Docket Nos. RM07-10-000 and AD06-11-000 - 52 - 

proposed § 284.288(a). Also, as currently codified, those sections refer to the procedural 

requirements for reporting to publishers of price indices “set forth in the Policy Statement 

on Electric and Natural Gas Price Indices, issued by the Commission in PL03-3-000 and 

any clarifications thereto.”98 Instead of referring to policy statements in that proceeding 

for the procedural requirements, should the Commission codify in the regulations the 

procedural requirements that such reporting entities must follow in reporting transactions 

to publishers of electric and natural gas price indices? 

71. The Commission seeks comment on making public participant responses to these 

questions through public filing requirements. Commenters who suggest an alternate 

method, such as aggregating data received before disseminating it to the public, should 

address whether such an approach meets the objectives of the statute sufficiently. 

72. The Commission seeks comment on whether, in lieu of this proposal, to require 

mandatory, detailed transaction reporting by market participants. Commenters should 

address the burdens and benefits of such an approach. Commenters supporting 

mandatory reporting of transactions should address the cautions set forth in the natural 

gas transparency provisions and echoed by the Department of Justice in the discussion 

above. If detailed transaction reporting were mandatory, could these concerns be 

addressed by making the reporting non-public, aggregating the reported information, and 

disseminating publicly only the aggregated information (either by the Commission or, as 

 98 18 CFR 284.403(a); see, also, 18 CFR 284.288(a) (identical language). 
Docket Nos. RM07-10-000 and AD06-11-000 - 53 - 

contemplated in the natural gas transparency provisions, by other entities) subject to 

sufficient disclosure rules?99 

VI. Information Collection Statement

73. The Office of Management and Budget (OMB) regulations require it to approve 

certain reporting and recordkeeping (information collection) requirements imposed by an 

agency.100 In this NOPR, the Commission makes two proposals that would require the 

posting or collection of information.101 The Commission is submitting notification of 

these proposed information collection requirements to OMB for its review and approval 

under section 3507(d) of the Paperwork Reduction Act of 1995.102

74. The proposal to require intrastate pipelines to post flow information would impose 

an information collection burden on intrastate pipelines. We presume that intrastate 

pipelines already collect flow information for receipt and delivery points and, thus, the 

burden that would be imposed by this proposed requirement is only for the posting of this 

information in the required format.103 The proposal to require market participants to file 

 99 Section 23(a)(3)(B) and (b) of the Natural Gas Act, to be codified at 15 

U.S.C. 717t-2(a)(3)(B) and (b). 

100 5 CFR 1320.11. 

101 The OMB regulations cover both the collection of information and the posting 

of information. 5 CFR 1320.3(c). Thus, the proposal to post information would create an 

information collection burden. 

102 44 U.S.C. 3507(d). 

103 See 5 CFR 1320.3(b)(2) (“The time, effort, and financial resources necessary to 

comply with a collection of information that would be incurred by persons in the normal 

(continued...) 
Docket Nos. RM07-10-000 and AD06-11-000 - 54 - 

annually a form regarding their physical natural gas transactions would impose an 

information collection burden on market participants. Again, we presume that market 

participants already collect transaction information and, thus, the burden imposed by this 

proposed requirement is only for completing and submitting the form. 

75. OMB regulations require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting notification of this 

proposed rule to OMB. 

Public Reporting Burden: 

The start-up and annual burden estimates for complying with this proposed rule are as 

follows: 

Data 

Collection 

No. Of 

Respondents 

No. of 

Responses 

per 

Respondent 

Estimated 

Annual 

Burden 

Hours per 

Respondent 

Total 

Annual 

Hours For 

All 

Respondents 

Estimated 

Start-Up 

Burden Per 

Respondent 

Part 284 

FERC-xxx 

 

Intrastate 

Pipeline 

Postings 

179 365 per year 183 hours 32,757 160 hours 

 

course of their activities (e.g., in compiling and maintaining business records) will be 

excluded from the “burden” if the agency demonstrates that the reporting, recordkeeping, 

or disclosure activities needed to comply are usual and customary.”) 
Docket Nos. RM07-10-000 and AD06-11-000 - 55 - 

Data 

Collection 

No. Of 

Respondents 

No. of 

Responses 

per 

Respondent 

Estimated 

Annual 

Burden 

Hours per 

Respondent 

Total 

Annual 

Hours For 

All 

Respondents 

Estimated 

Start-Up 

Burden Per 

Respondent 

Annual 

Reporting 

Requirement 

 1,500 1 per year 4 hours 6,000 40 hours 

Total 38,757 

 The total annual hours for collection (including recordkeeping) for all respondents is 

estimated to be 38,757. 

Information Collection Costs: The average annualized cost for each respondent is 

projected to be the following (savings in parenthesis): 

 Annualized 

Capital/Startup 

Costs (10 year 

amortization) 

Annual Costs Annualized Costs 

Total 

FERC-xxx 

Intrastate Pipeline 

Postings 

$1,600 $18,300 $19,900 

Transaction 

Reporting 

Requirement 

$400 $400 $800 

Title: FERC- xxx 

Action: Proposed Information Posting and Information Filing 

OMB Control No:

Respondents: Business or other for profit. 
Docket Nos. RM07-10-000 and AD06-11-000 - 56 - 

Frequency of Responses: Daily posting requirements and annual filing requirements. 

Necessity of the Information: The daily posting of flow information by intrastate 

pipelines is necessary to provide information regarding the price and availability of 

natural gas to market participants, State commissions, the FERC and the public. The 

annual filing of transaction information by market participants is necessary to provide 

information regarding the size of the physical natural gas market, the use of the natural 

gas spot markets and the use of fixed and index price transactions. 

Internal Review: The Commission has reviewed the requirements pertaining to natural 

gas pipelines and natural gas market participants and determined they are necessary to 

provide price and availability information regarding the sale of natural gas in interstate 

markets. 

76. These requirements conform to the Commission's plan for efficient information 

collection, communication, and management within the natural gas industry. The 

Commission has assured itself, by means of internal review, that there is specific, 

objective support for the burden estimates associated with the information posting 

requirements. The Commission seeks comment on these estimates. 

77. Interested persons may obtain information on the reporting requirements by 

contacting: Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, 

D.C. 20426, [Attention: Michael Miller, Office of the Chief Information Officer], phone: 

(202) 502-8415, fax: (202) 208-2425, e-mail: Michael.Miller@ferc.gov. Comments on 

the requirements of the proposed rule also may be sent to the Office of Information and 
Docket Nos. RM07-10-000 and AD06-11-000 - 57 - 

Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 

78. Comments on the requirements of the proposed rule may also be sent to the Office 

of Information and Regulatory Affairs, Office of Management and Budget, Washington, 

D.C. 20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission] 

(202)395-4650 or oira_submission@omb.eop.gov. 

VII. Environmental Analysis

79. 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.104 The actions taken here fall within categorical exclusions 

in the Commission’s regulations for information gathering, analysis, and dissemination, 

and for sales, exchange, and transportation of natural gas that requires no construction of 

facilities.105 Therefore, an environmental assessment is unnecessary and has not been 

prepared in this rulemaking. 

VIII. Regulatory Flexibility Act Analysis

80. The Regulatory Flexibility Act of 1980 (RFA) generally requires a description and 

analysis of final rules that will have significant economic impact on a substantial number 

 

104 Order No. 486, Regulations Implementing the National Environmental Policy 

Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 

(1987). 

105 18 CFR 380.4(a)(5) and (a)(27). 
Docket Nos. RM07-10-000 and AD06-11-000 - 58 - 

of small entities.106 The two proposals in this NOPR will not have a significant economic 

impact on a substantial number of small entities. 

81. The proposal to require daily postings by intrastate pipelines will not impact small 

entities. Natural gas pipelines are classified under NAICS code, 486210, Pipeline 

Transportation of Natural Gas.107 A natural gas pipeline is considered a small entity for 

the purposes of the Regulatory Flexibility Act if its average annual receipts are less than 

$6.5 million.108 The Commission does not believe that any intrastate pipeline has 

receipts less than $6.5 million. Thus, the daily posting proposal will not impact small 

entities. 

82. The proposal to require annual reporting of physical natural gas transactions will 

have minimal impact on small entities.109 By incorporating a de minimis exemption into 

 106 5 U.S.C. 601-612 

107 This industry comprises establishments primarily engaged in the pipeline 

transportation of natural gas from processing plants to local distribution systems. 2002 

North American Industry Classification System (NAICS) Definitions, 

http://www.census.gov/epcd/naics02/def/ND486210.HTM. 

108 See Table of Small Business Size Standards, U.S. Small Business 

Administration (effective July 31, 2006), available at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 

109 For the purposes of analyzing the impact of the proposed filing requirement on 

small entities, the Commission classifies market participants under the NAICS category 

of “Natural Gas Distribution,” Code 221210, which includes gas marketers, and 

establishments engaged in gas distribution. Under that classification, a small entity is any 

entity with less than 500 employees. See Table of Small Business Size Standards, U.S. 

Small Business Administration (effective July 31, 2006), available at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 
Docket Nos. RM07-10-000 and AD06-11-000 - 59 - 

the regulations, the Commission has reduced the number of small entities subject to the 

requirements; de minimis entities without blanket certificates will not be required to 

report. This reporting proposal will affect small entities but the burden on them will be 

minimal. For each entity, small or otherwise, that is required to comply with the annual 

reporting requirement, the Commission estimates that the compliance would require a 

one-time cost of approximately $4,000 and an annual cost thereafter of $400. Although 

some costs would increase for market participants with a greater number of transactions, 

we expect that that increase would be likely offset because such entities would have 

already compiled information regarding their transactions in the aggregate. The 

Commission bases its one-time cost estimate on an assumption that it would take 

approximately one person one week to set up the reporting and file the report initially and 

that their time costs $100 per hour. The Commission bases its annual estimate on an 

assumption that it would take one person four hours to compile the information and that 

his or her time costs $100 per hour. On an annualized basis, costs would amount to 

approximately $1,200 per entity. This amount is not a significant burden on small 

entities. The Commission seeks comment on its Regulatory Flexibility Act analysis and 

the assumptions on which it is based. 

IX. Comment Procedures

83. 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 [Insert_Date 45 
Docket Nos. RM07-10-000 and AD06-11-000 - 60 - 

days from publication in the FEDERAL REGISTER]. Reply comments are due 

[Insert_Date 75 days from publication in the FEDERAL REGISTER]. Comments 

must refer to Docket No. RM07-10-000, and must include the commenter's name, the 

organization they represent, if applicable, and their address in their comments. 

Comments may be filed either in electronic or paper format. 

84. Comments may 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 and requests commenters to submit comments in a text-searchable 

format rather than a scanned image format. Commenters filing electronically do not need 

to make a paper filing. Commenters that are not able to file comments electronically 

must send an original and 14 copies of their comments to: Federal Energy Regulatory 

Commission, Secretary of the Commission, 888 First Street N.E., Washington, DC, 

20426. 

85. 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. 

X. Document Availability

86. 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 
Docket Nos. RM07-10-000 and AD06-11-000 - 61 - 

(http://www.ferc.gov) and in FERC's Public Reference Room during normal business 

hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C. 20426. 

87. 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. 

88. User assistance is available for eLibrary and the FERC's website during normal 

business hours from our Help line at (202)502-8222 or the Public Reference Room at 

(202) 502-8371 Press 0, TTY (202)502-8659. E-Mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

List of subjects in 18 CFR Part 260

Natural gas; Reporting and recordkeeping requirements. 

List of subjects in 18 CFR Part 284 

Continental Shelf; Incorporation by reference; Natural gas; Reporting and recordkeeping 

requirements. 

By direction of the Commission. 

( S E A L ) 

Philis J. Posey, 

Deputy Secretary. 
Docket Nos. RM07-10-000 and AD06-11-000 - 62 - 

In consideration of the foregoing, the Commission proposes to revise parts 260 and 284 

Chapter I, Title 18, Code of Federal Regulations, to read as follows. 

PART 260 – STATEMENTS AND REPORTS (SCHEDULES) 

1. The authority citation for part 260 continues to read as follows: 

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

2. Section 260.401 is added to read as follows: 

§ 260.401 FERC Form No. [X], Annual Reporting of Natural Gas Transactions 

and Blanket Certificate Authorities. 

Unless otherwise exempted or granted a waiver by Commission rule or order, each 

natural gas market participant that is not a de minimis market participant as defined in 

§ 284.401 and each de minimis market participant that holds a blanket marketing 

certificate under § 284.402 or a blanket unbundled sales service certificate under 

§ 284.284 must file with the Commission by February 15, 2008, and by February 15 of 

each year thereafter, a report, FERC Form No. [X], for the prior calendar year. Every 

such report must be prepared in conformance with the Commission’s software and 

guidance posted and available for downloading from the FERC Web site 

(http://www.ferc.gov). 

* * * * * 
Docket Nos. RM07-10-000 and AD06-11-000 - 63 - 

PART 284 – CERTAIN SALES AND TRANSPORATION OF NATURAL GAS 

UNDER THE NATURAL GAS POLICY ACT OF 1978 AND RELATED 

AUTHORITIES 

3. 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. 

4. Section 284.14 is added to read as follows: 

§ 284.14. Intrastate Pipeline Flow Information

An intrastate pipeline must provide on a daily basis on an Internet web site and in 

downloadable file formats, in conformity with § 284.12 of this chapter, access to 

information on flowing volumes and capacities at each major receipt point, mainline 

segment, and delivery point on its pipeline. This information must be posted within 24 

hours from the close of the gas day on which gas flows, i.e., on or before 9:00 a.m. 

central clock time for flows occurring on the gas day that ended 24 hours before. 

5. In § 284.288, paragraph (a) is revised to read as follows: 

§ 284.288 Code of Conduct for Unbundled Sales Service

(a) To the extent Seller engages in reporting of transactions to publishers of 

electricity or natural gas indices, Seller shall provide accurate and factual information, 

and not knowingly submit false or misleading information or omit material information to 

any such publisher, by reporting its transactions in a manner consistent with the 

procedures set forth in the Policy Statement on Natural Gas and Electric Price Indices, 
Docket Nos. RM07-10-000 and AD06-11-000 - 64 - 

issued by the Commission in Docket No. PL03–3–000 and any clarifications thereto. 

Seller shall notify the Commission as part of its annual reporting requirement in 

§ 260.401 whether it reports its transactions to publishers of electricity and natural gas 

indices. Seller shall notify the Commission within 15 days of any subsequent change to 

its transaction reporting status. In addition, Seller shall adhere to such other standards 

and requirements for price reporting as the Commission may order. 

* * * * * 

6. In § 284.401, definitions of “de minimis market participant” and “market participant” 

are added in alphabetical order to read as follows: 

§ 284.401 Definitions.

* * * * * 

De minimis market participant. For purposes of this subpart, a de minimis market 

participant is a market participant that engaged in physical natural gas transactions that 

by volume amounted to less than 2,200,000 MMBtus for the previous calendar year. 

Market participant. For purposes of this subpart, a market participant is any buyer 

or seller that engaged in physical natural gas transactions the previous calendar year. 

7. In § 284.403, paragraph (a) is revised to read as follows: 

§ 284.403 Code of Conduct for persons holding blanket marketing certificates

(a) To the extent Seller engages in reporting of transactions to publishers of 

electricity or natural gas indices, Seller shall provide accurate and factual information, 

and not knowingly submit false or misleading information or omit material information to 

any such publisher, by reporting its transactions in a manner consistent with the 
Docket Nos. RM07-10-000 and AD06-11-000 - 65 - 

procedures set forth in the Policy Statement on Natural Gas and Electric Price Indices, 

issued by the Commission in Docket No. PL03–3–000 and any clarifications thereto. 

Seller shall notify the Commission as part of its annual reporting requirement in 

§ 260.401 whether it reports its transactions to publishers of electricity and natural gas 

indices. Seller shall notify the Commission within 15 days of any subsequent change to 

its transaction reporting status. In addition, Seller shall adhere to such other standards 

and requirements for price reporting as the Commission may order. 

* * * * *
Note: The following Appendix will not be published in the Code of Federal Regulations. 

Appendix A to Notice of Proposed Rulemaking 

Transparency Provisions of Section 23 of the Natural Gas Act; 

Transparency Provisions of the Energy Policy Act of 2005, 

Docket Nos. RM07-10-000 and AD06-11-000: 

Proposed FERC Form No. [X] 

Provide accurate and complete responses to the following questions. 

 Purchases 

by 

Number 

Purchases 

by Volume 

(TBtu/~Bcf)

Sales by 

Number 

Sales by 

Volume 

(TBtu/~Bcf)

A. How much physical gas*/, did you 

transact in the prior calendar year? ______ ______ ______ ______ 

B. Of the amount reported in Row A, 

what number and volume are transacted 

for next-day delivery? 

______ ______ ______ ______ 

C. Of these next-day transactions, what 

number and volume are priced at a fixed 

price? 

______ ______ ______ ______ 

D. Of these next-day transactions, what 

number and volume are priced at an 

index price? 

______ ______ ______ ______ 

E. Of the amount reported in Row A, 

what number and volume are transacted 

for delivery in the next month? 

______ ______ ______ ______ 

F. Of your transactions for delivery in 

the next month, what number and 

volume are priced at a fixed price 

during bid week**/? 

______ ______ ______ ______ 

G. Of your transactions for delivery in 

the next month, what number and 

volume are priced at an index price? 

______ ______ ______ ______ 
Docket Nos. RM07-10-000 and AD06-11-000 - 2 - 

H. Of your transactions for delivery 

beyond next-day or month, what 

number and volume are priced using 

next-day or next-month index prices? 

______ ______ ______ ______ 

*/ Notwithstanding its physical delivery provisions, for the purposes of this form, 

exclude NYMEX futures contracts or any other physically-settled futures contract unless 

the contract actually goes to delivery. 

**/ Bid week is defined as the last 5 working days prior to the delivery month. Please 

include those transactions in this row.