147 FERC ¶ 61,228

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Cheryl A. LaFleur, Acting Chairman;

 Philip D. Moeller, John R. Norris,

and Tony Clark.

Communication of Operational Information Between 

Natural Gas Pipelines and Transmission Operators

Docket No. RM13-17-001

ORDER NO. 787-A 

ORDER ON REHEARING

(Issued June 19, 2014)

1. In this Order on Rehearing, the Commission addresses pending requests to 

reconsider or clarify the Final Rule issued on November 15, 2013 in Order No. 787.1

Order No. 787 amended the Commission’s regulations to provide explicit authority to 

interstate natural gas pipelines and public utilities that own, operate, or control facilities 

used for the transmission of electric energy in interstate commerce to share non-public, 

operational information with each other for the purpose of promoting reliable service or 

operational planning on either the public utility’s or pipeline’s system. We deny 

rehearing.

I. Background

2. On November 15, 2013, the Commission issued Order No. 787, which revised the 

Commission’s regulations to provide explicit authority to interstate natural gas pipelines 

and public utilities that own, operate, or control facilities used for the transmission of 

electric energy in interstate commerce to share non-public, operational information with 

each other for the purpose of promoting reliable service or operational planning on either 

the public utilities’ or pipelines’ system.2

 The Commission found that the revised 

regulations will help maintain the reliability of pipeline and public utility transmission 

 1 Communication of Operational Information Between Natural Gas Pipelines and 

Transmission Operators, Order No. 787, 78 Fed. Reg. 70163 (Nov. 22, 2013), FERC 

Stats. & Regs. ¶ 31,350 (cross-referenced at 145 FERC ¶ 61,134 (2013)).

2 See 18 C.F.R. §§ 38.2 and 284.12(b)(4).
Docket No. RM13-17-001 - 2 -

service by permitting transmission operators to share information with each other that 

they deem necessary to promote the reliability and integrity of their systems.3

 As a 

protection against the disclosure of non-public, operational information not covered by 

the Commission’s Standards of Conduct,4 Order No. 787 also adopted a No-Conduit Rule 

that prohibits subsequent disclosure of information received under the rule to a third party 

or the transmission operator’s marketing function employees. 

3. On December 16, 2013, requests for rehearing of Order No. 787 concerning two 

issues were filed. Enable Gas Transmission, LLC and Enable Mississippi River 

Transmission, LLC (collectively, Enable Pipelines) filed a request for rehearing of Order 

No. 787 related to the No-Conduit Rule and Natural Gas Supply Association (NGSA), 

Process Gas Consumers Group (PGC) and Northwest Industrial Gas Users (NWIGU) 

(collectively, NGSA et al.) together filed a request for clarification or, in the alternative, 

rehearing of Order No. 787 arguing that the Commission should hold a technical 

conference after an interim period to assess the effectiveness of the new communications 

standards in Order No. 787. The rehearing requests are discussed below. 

II. Discussion

A. Request for Rehearing of Enable Pipelines

1. Order No. 787

4. In Order No. 787, the Commission included additional protections to ensure that 

any non-public, operational information shared under the proposed regulations remain 

confidential and that information is shared among transmission operators in a manner that 

is consistent with the prohibition on undue discrimination. Sections 38.3(b) and 

284.12(b)(4)(ii) adopt a No-Conduit Rule that prohibits all public utilities and pipelines, 

as well as their employees, contractors, consultants, or agents, from disclosing, or using 

anyone as a conduit for the disclosure of, non-public, operational information received 

under the rule to a third party. Sections 38.3(b) and 284.12(b)(4)(ii) similarly prohibit the 

disclosure of such non-public, operational information to the transmission operator’s 

marketing function employees, as that term is defined in § 358.3 of the Commission’s 

regulations. Order No. 787 held that the No-Conduit Rule applies to employees an 

interstate pipeline shares with affiliated gathering facilities or intrastate pipelines. But, 

Order No. 787 stated that interstate pipelines could seek a waiver of the No Conduit Rule, 

 3 In the Final Rule and in this order, the Commission refers to interstate natural gas 

pipelines and public utilities that own, operate, or control facilities used for the 

transmission of electric energy in interstate commerce collectively as “transmission 

operators.” 

4 18 C.F.R. pt. 358 (2013).
Docket No. RM13-17-001 - 3 -

if the fact they share operational employees with local distribution companies (LDCs) or 

other affiliates makes compliance with the rule difficult.5

2. Request for Rehearing

5. Enable Pipelines raises on rehearing generally the same arguments it raised in its 

comments on the Commission’s Notice of Proposed Rulemaking. Enable Pipelines 

state that they presently share employees with their intrastate and gathering affiliates. 

Enable Pipelines state that the No-Conduit Rule would make such employee sharing 

administratively burdensome and difficult to administer from a compliance perspective 

because any shared employee that would receive protected non-public, operational 

information under the rule would by definition be deemed to be a conduit of information 

to a non-jurisdictional entity.6 Enable Pipelines state that the Commission provided no 

rational basis for creating this shared-employee issue and failed to adduce substantial 

record evidence that this shared-employee restriction is justified.

6. Enable Pipelines argue that instead of addressing the issue in Order No. 787, the 

Commission only remarked that a waiver will be available for employees who are shared 

with LDCs and other affiliates.7

 Enable Pipelines state that under the pre-Order No. 787 

rules, such employees were already being exposed to sensitive non-public, operational 

information as a part of their regular activities without ill-effect to the industry or to the 

sources of the confidential information. Enable Pipelines state that information was 

appropriately protected by existing regulations. Enable Pipelines state that, if the 

Commission had met its obligations under Section 706 of the Administrative Procedure 

Act (APA), the Commission would have presented a logical examination of the evidence 

and arguments before it and explained the rationale and evidence behind the need for 

operational non-marketing function employees to be restricted from access to this 

information under the rule, including why existing rules were inadequate to protect the 

confidential information.8 Without these showings, Enable Pipelines argue, the 

Commission has no reasonable basis for determining that the No-Conduit Rule is 

warranted. Enable Pipelines argue that it is entirely likely that the Commission’s new, 

overly-broad No-Conduit Rule will impede rather than promote the Commission’s policy 

goals of encouraging sharing of information helpful to system reliability. 

 5 Order No. 787, FERC Stats. & Regs. ¶ 31,350 at P 99.

6 Enable Pipelines Rehearing Request at 3.

7 On February 6, 2014, in Docket No. RP14-453-000, Enable Pipelines filed a 

request for a limited waiver of the No-Conduit Rule. 

8 Enable Pipelines Rehearing Request at 5 (citing 5 U.S.C. § 706 (2012)). 
Docket No. RM13-17-001 - 4 -

7. Enable Pipelines also argue that the Commission failed to engage in reasoned 

decision making when it chose to split non-public, operational information into two 

distinct, differently regulated classes: (a) regular, non-public operational information that 

it has not received from electric utilities, and therefore, not subject to these rules; and 

(b) this new category of confidential, highly protected, operational information received 

from electric utilities that is now subject to the Commission’s heightened No-Conduit 

limitations under Order No. 787.9 Enable Pipelines state that before Order No. 787,

interstate pipelines received non-public, operational information from a variety of 

different sources and shared that information for reliability and operational planning 

purposes with upstream and downstream entities. Enable Pipelines argue that now, for 

no reason that has been clearly articulated and supported, the Commission has created a 

sub-category of information that cannot be a part of such system-wide planning due to the 

No-Conduit Rule. Enable Pipelines state that interstate pipelines already share nonpublic, operational information with interconnected non-jurisdictional third parties and 

affiliates with no ill effects, which the Commission even recognizes in Order No. 787 as 

being appropriate.10

8. Enable Pipelines state that the support for the Commission’s implementation of a 

separate standard was solely that some commenters to the Notice of Proposed 

Rulemaking had theoretical, unsubstantiated concerns about possible abuse of the 

information. Enable Pipelines state that, as the D.C. Circuit Court of Appeals in 

National Fuel held, “[i]n the absence of factual evidence that satisfies Tenneco, FERC 

may try to support the [revised Standards of Conduct] by setting out its best case for 

relying solely on a theoretical threat of abuse.”11 There, Enable Pipelines state, the Court 

found that where the Commission relies solely on a theoretical threat “unsupported by a 

record of abuse” to justify “costly prophylactic rules,” the Commission must at least 

explain why existing rules and procedures would not be effective to prevent the 

theoretical abuse.12 Enable Pipelines state that Order No. 787 suffers from the same 

infirmity, which is that the Commission has neither developed nor considered sufficient 

record evidence to meet the Commission’s burden or to reasonably draw the conclusion 

that the separate standard is necessary. 

 9 Enable Pipelines Rehearing Request at 6-7.

10 Id. at 8 (citing Order No. 787, FERC Stats. & Regs. ¶ 31,350 at P 9)

11 Id. (citing National Fuel Gas Supply Corp. v. FERC, 468 F.3d 831, at 844 

(referencing Tenneco Gas v. FERC, 969 F.2d 1187 (D.C. Cir. 1992))).

12 Id.
Docket No. RM13-17-001 - 5 -

9. Enable Pipelines also assert that the No-Conduit Rule creates new administrative 

and compliance burdens for interstate pipeline companies, which the Commission failed 

to address. Enable Pipelines state that the Commission neglected to adduce evidence or 

provide argument as to the balancing of the benefits of the new No-Conduit Rule with the 

actual costs of the implementation and maintenance by interstate pipeline companies. 

Enable Pipelines state that ignoring these highly relevant factors is not reasoned decision 

making and fails the substantial evidence test.13

10. Enable Pipelines again propose that the No-Conduit Rule be revised to allow 

interstate pipelines to share the non-public, operational information with third parties 

(other than marketing function employees) for the purpose of promoting reliable service 

and operational planning in order to allow, among other things, an interstate pipeline 

company to share the non-public, operational information with its own personnel who 

also play an operational role in their affiliated intrastate pipeline or gathering pipeline 

operations. Enable Pipelines state that the Commission provided no guidance as to why 

the suggested modifications are inadequate to serve the purpose behind the new 

No-Conduit Rule while also limiting its negative effects. 

3. Commission Determination

11. As discussed below, the Commission denies Enable Pipelines’ request to revise 

the No-Conduit Rule to allow disclosures to third parties (other than marketing function 

employees) for the purpose of promoting reliable service and operational planning. The 

Commission continues to find that Enable Pipelines’ concern regarding shared operating 

employees is better addressed through a waiver request than an overly broad exception to 

the No-Conduit Rule adopted in Order No. 787. 

12. The Commission reaffirms its position that that the broad scope of non-public, 

operational information permitted to be shared under this Final Rule, and the potential 

competitive harm from its disclosure, justifies the No-Conduit Rule. The Commission 

intentionally made the scope of this information sharing very broad:

The Commission is intentionally permitting the 

communication of a broad range of non-public, operational 

information to provide flexibility to individual transmission 

operators, who have the most insight and knowledge of their 

 13 Id. at 10 (citing Walter O. Boswell Memorial Hosp. v. Heckler, 749 F.2d 788, 

797 (D.C. Cir. 1984) (“Finally, an agency must consider ‘reasonably obvious alternative . 

. . rules and explain its reasons for rejecting alternatives in sufficient detail to permit 

judicial review.”) (internal quotations and citations omitted)). 
Docket No. RM13-17-001 - 6 -

systems, to share that information which they deem necessary 

to promote reliable service on their system.14

13. The Commission’s current Standards of Conduct do not apply to the sharing of 

information permitted under the Final Rule. The Standards of Conduct govern the 

preferential sharing of transmission function information from a transmission provider to 

its marketing function employee. “Transmission function” is defined as the planning, 

directing, organizing or carrying out of day-to-day transmission operations, including the 

granting and denying of transmission service requests,15 and transmission function 

information is any information related to transmission functions.16 However, the scope 

of information that may permissibly be shared under the Final Rule is not limited to 

“transmission function information” covered under the Standards of Conduct.17 Rather, 

the scope of information that transmission operators may permissibly share under this 

rule is far broader than transmission function information. For example, confidential, 

customer-specific information about natural gas-fired generators, such as anticipated run 

times and gas purchases and scheduling decisions may be exchanged under the rule. 

Numerous parties raised concerns about the potential competitive effects of such 

disclosure, 18 and the Commission adopted the No-Conduit Rule to allay these legitimate 

concerns.

14. The general presumption of the Standards of Conduct is that the interstate pipeline 

must function on a non-discriminatory basis and that all pipeline transmission function 

information must be publicly disclosed.

19 As explained above, however, the information 

 14 Order No. 787, FERC Stats. & Regs. ¶ 31,350 at P 41.

15 18 C.F.R. § 358.3(h) (2013).

16 18 C.F.R. § 358.3(j) (2013).

17 Order No. 787, 145 FERC ¶ 61,134 at P 97. The Commission also pointed out 

that the Standards of Conduct, and therefore, the No-Conduit Rule under the Standards of 

Conduct, do not apply to RTOs and ISOs. Further, the definition of “marketing function 

employee” in the Standards of Conduct is narrow and linked to the relationship between 

the transmission provider and its marketing function employee. As a result, various 

entities, including certain LDCs, intrastate pipelines, and gatherers will not have 

marketing function employees as that term is defined in the Standards of Conduct. See, 

e.g., PJM Interconnection, L.L.C., 147 FERC ¶ 61,105 (2014).

18 See, e.g., Order No. 787, FERC Stats. & Regs. ¶ 31,350 at PP 16, 28 

(summarizing comments).

19 18 C.F.R. §§ 358.4, 358.7 (2013).
Docket No. RM13-17-001 - 7 -

provided by electric transmission operators to the interstate pipeline under the Final Rule 

goes beyond transmission function information that should be publicly disclosed, 

including confidential and competitively sensitive customer information. The provision 

of such information could provide third-parties, including pipeline affiliates, with 

competitive advantages over other participants in the natural gas and electricity markets. 

Enable Pipelines have not shown that provision of such information to third parties or 

their affiliates is necessary to achieve the goals of the rule, nor has it shown that it does 

not raise competitive concerns. As the Commission explained, the public disclosure of 

such information, as required by the Standards of Conduct with respect to transmission 

function information, is not a remedy that can be applied to much of the confidential 

information received from electric transmission operators.20

15. Under the Standards of Conduct, in the event interstate pipelines improperly 

disclose customer-specific information, the pipeline is required, at a minimum, to post the 

fact that the information was exchanged.21 With respect to confidential electric 

generation information, Enable Pipelines have failed to show that mere posting of the fact 

of disclosure is sufficient to mitigate the potential harm of disclosure. Because the scope 

of permitted information under this rule is so much broader, and more competitively 

sensitive, than the disclosure of transmission function information, the Commission 

determined that more stringent requirements are necessary. 

16. Nor has Enable Pipelines shown that their proposed limitation permitting 

disclosure only to non-marketing function employees of third-parties is adequate 

protection. In the case of regulated interstate pipelines, the Commission’s regulations 

and enforcement process can help ensure that such information is not disclosed to 

marketing function or other employees that may obtain unfair competitive advantage 

from the information. In contrast, the Commission does not have jurisdiction over 

intrastate pipelines and LDCs and therefore cannot as effectively regulate disclosure of 

such competitively sensitive and confidential information.

17. Enable Pipelines contend that pipeline operators routinely exchange nomination 

and scheduling information with other pipeline operators and with non-jurisdictional 

upstream and downstream entities with no ill effects. They maintain that such exchanges 

justify disclosure to third parties. While the exchange of nomination information is a 

long-standing practice in the natural gas industry, such exchange is limited and is 

necessary for pipelines to confirm their schedules with interconnecting parties. The same 

 20 Order No. 787, 145 FERC ¶ 61,134 at P 125 (explaining that the information 

could not be publicly disclosed).

21 18 C.F.R. §358.7 (a)(2) (2013).
Docket No. RM13-17-001 - 8 -

cannot be said for the broad scope of information that may be disclosed under this rule.22 

Enable Pipelines has not shown that allowing such disclosure to unregulated third-parties 

is necessary to maintain the on-going operations of its interstate pipeline, and given the 

competitive risks of such disclosure to unregulated parties, the Commission finds no 

basis for authorizing such blanket disclosure. 

18. Enable Pipelines maintain on rehearing that the No-Conduit Rule creates a new 

compliance issue for pipeline companies that have operational personnel who are 

involved in operational planning for an interstate pipeline and affiliated gathering 

facilities or intrastate pipelines. In Order No. 787, the Commission did, however, 

recognize the potential need for operating employees shared between interstate pipelines 

and their affiliates to receive such information. The Commission found that the situations 

warranting such disclosure would depend on the individual circumstances of each case. 

Given the relatively few pipelines that are in this position, the Commission determined 

that, rather than attempting to craft a generic regulation, the best course would be to 

proceed on an individual case-by-case basis through waivers. We cannot find that the 

limited extra burden on a pipeline to seek a waiver to permit such sharing outweighs the 

benefits of being able to review the individual circumstances of such cases. For example, 

the Commission to date has received only three waivers requests, and in two separate 

orders issued contemporaneously with this order,23 the Commission is granting partial 

waivers to Enable Pipelines as well as to National Fuel Gas Supply Corporation 

(NFGSC) and Empire Pipeline, Inc. (Empire) (collectively, National Fuel Pipelines). As 

demonstrated by these orders, we find that the waiver process is a reasonable means for 

Enable Pipelines, as well as other interstate natural gas pipelines, to address compliance 

issues involving shared employees resulting from Order No. 787.

B. Request for Clarification or, in the Alternative, Rehearing of NGSA 

et al.

19. On December 16, 2013, NGSA et al. filed a request for clarification or, in the 

alternative, rehearing of Order No. 787 arguing that the Commission should hold a 

technical conference after an interim period to assess the effectiveness of the new 

communications standards in Order No. 787. NGSA et al. state that they support the 

Commission’s efforts to improve coordination between the gas and power sectors and 

agree that increased communication between gas and electric transmission operators, as a 

 22 Under the rule, the Commission does permit Enable Pipelines to exchange 

information about electric transmission or generator-specific information with other 

interstate pipelines.

23 Enable Gas Transmission, LLC and Enable Mississippi River Transmission, 

LLC, 147 FERC ¶ 61,229 (2014); National Fuel Gas Supply Corporation and Empire 

Pipeline, Inc., 147 FERC ¶ 61,214 (2014).
Docket No. RM13-17-001 - 9 -

part of a larger effort to address a host of gas and electric coordination issues, is 

necessary.

24 But, they believe that the Commission, the two industry sectors, and all 

market participants would greatly benefit from an assessment of Order No. 787’s 

effectiveness, as well as a review of the scope of information being shared pursuant to 

Order No. 787.

25 They state that the technical conference should take place after an 

interim period, such as one year from the date the Final Rule was issued.26

20. NGSA et al. state that, in NGSA’s comments to the Notice of Proposed 

Rulemaking, NGSA proposed that the Commission should hold a technical conference 

after a period of one year to determine what information was shared under the new rule 

and how this shared information was used to promote reliable service or operational 

planning, but the Commission did not provide for this after-the-fact assessment or any 

post Order No. 787 implementation review. 27 NGSA et al. urge the Commission to 

reconsider this decision, stating that Order No. 787’s relaxed restrictions on sharing 

otherwise non-public information remains a new and un-tested practice with which many 

market participants are not yet comfortable. They state that a technical conference would 

allow the Commission, pipelines, and electric transmission operators to report on the 

types of information being shared and either allay any concerns that Order No. 787 may 

subject market participants' commercially sensitive information to inappropriate 

disclosure or point out infirmities in the communication protocols that require 

modification.28 

21. The Commission denies NGSA et al.’s request for clarification and rehearing. 

The Commission sees no need at this point to commit to a technical conference or any 

specific process for evaluating the regulations. As the Commission stated in the 

Final Rule, it expects market participants in both industries, as they experience the 

communications contemplated by rule, to keep the Commission informed about progress, 

issues, and areas of possible improvement.29 Following recent cold weather events, 

multiple electric transmission operators apprised the Commission of their enhanced 

communications with pipeline transmission operators to maintain system reliability. For 

 24 NGSA et al. Rehearing Request at 3.

25 Id. at 3.

26 Id. at 4.

27 Id. at 3-4 (citing Comments of the Natural Gas Supply Association, Docket 

No. RM13-17-000, at 9-11 (filed Aug. 26, 2013)).

28 Id. at 5.

29 Order No. 787, FERC Stats. & Regs. ¶ 31,350 at P 144.
Docket No. RM13-17-001 - 10 -

example, PJM Interconnection, L.L.C. (PJM) informed the Commission about Order 

No. 787’s effectiveness during the Polar Vortex, stating that Order No. 787 facilitated 

more detailed discussions with the interstate pipelines thereby allowing PJM to manage 

the bulk power grid reliably.30 On April 1, 2014 the Commission also convened a public 

technical conference on Winter 2013-2014 Operations and Market Performance in RTOs 

and ISOs at which parties discussed communications during the cold weather events, as 

well as other experiences and lessons learned.

31 The Commission expects to continue to 

monitor the coordination of the electric and natural gas industries and will schedule 

conferences or other reports as it deems necessary. Accordingly, the Commission finds 

no need to specify any specific process at this time.

Commission Orders:

The requests for rehearing are denied as discussed in the order.

By the Commission.

( S E A L ) 

Kimberly D. Bose,

Secretary.

 30 See PJM, Response to FERC Data Request for January 2014 Weather Events 

(Jan. 10, 2014); FERC, Recent Weather Impacts on the Bulk Power System at 3 (Jan. 16, 

2014). See also PJM, 147 FERC ¶ 61,105 at P 4.

31 Winter 2013-2014 Operations and Market Performance in Regional 

Transmission Organizations and Independent System Operators, Docket No. AD14-8-

000 (Feb. 21, 2014) (Notice of Technical Conference).