130 FERC ¶ 61,040

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Part 284

(Docket No. RM08-2-001; Order No. 720-A)

Pipeline Posting Requirements under Section 23 of the Natural Gas Act

(Issued January 21, 2010)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Order on Rehearing and Clarification.

SUMMARY: The Federal Energy Regulatory Commission modifies its regulations

requiring major non-interstate pipelines to post daily scheduled volume information and

other data for certain points. These modifications include a requirement that major noninterstate pipelines post information for receipt and delivery points at which design

capacity is unknown. The Commission denies requests to revise its regulations requiring

interstate natural gas pipelines to post information regarding the provision of no-notice

service. The posting requirements will facilitate price transparency in markets for the

sale or transportation of physical natural gas in interstate commerce to implement section

23 of the Natural Gas Act, 15 U.S.C. 717t-2 (2000 & Supp. V 2005).

EFFECTIVE DATE: This rule will become effective [insert date 30 days after

publication in the FEDERAL REGISTER].

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 2

FOR FURTHER INFORMATION CONTACT:

Steven Reich (Technical)

Office of Enforcement

Federal Energy Regulatory Commission

888 First Street NE

Washington, DC 20426

(202) 502-6446

Steven.Reich@ferc.gov

Gabe S. Sterling (Legal)

Office of Enforcement

Federal Energy Regulatory Commission

888 First Street NE

Washington, DC 20426

(202) 502-8891

Gabriel.Sterling@ferc.gov

SUPPLEMENTARY INFORMATION:

20100121-3044 FERC PDF (Unofficial) 01/21/2010
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Pipeline Posting Requirements under Section 23 of the

Natural Gas Act

Docket No. RM08-2-001

Order No. 720-A 

Table of Contents

(Issued January 21, 2010)

Paragraph Numbers

I. Introduction ................................................................................................................. 1

II. Discussion.................................................................................................................... 6

A. Authority for the Rule ............................................................................................. 6

1. Requests for Rehearing and Clarification............................................................. 8

2. Commission Determination ................................................................................ 16

B. Need for the Rule................................................................................................... 20

1. Requests for Rehearing and Clarification........................................................... 21

2. Supplemental Comments.................................................................................... 23

3. Commission Determination ................................................................................ 24

C. Definition of Major Non-Interstate Pipeline ......................................................... 37

1. Delivery Threshold ............................................................................................. 37

2. Treatment of Non-Contiguous Pipeline Systems ............................................... 41

D. Posting Requirements for Major Non-Interstate Pipelines.................................... 44

1. Posting Requirements at Points Where Design Capacity is Unknown or Does

Not Exist ............................................................................................................. 44

2. Posting Requirements at Points Where Design Capacity is Known .................. 52

3. Timing of Posting of Eligible Points.................................................................. 61

4. Clarifications Regarding the Major Non-Interstate Posting Requirements........ 63

E. Exemptions............................................................................................................ 74

1. Pipelines Upstream of Processing Plants............................................................ 74

2. Pipelines that Deliver Primarily to End Users.................................................... 80

3. Storage Facilities................................................................................................. 87

F. Safe Harbor............................................................................................................ 89

G. Interstate Pipeline Posting of No-Notice Service.................................................. 94

H. Additional Exemptions........................................................................................ 101

1. Natural Gas Companies with Service Area Determinations under NGA Section

7(f) .................................................................................................................... 101

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 ii

2. Pipelines Owned or Operated by End Users..................................................... 103

III. Cost of Compliance ............................................................................................. 104

A. Requests for Rehearing and Clarification............................................................ 104

B. Commission Determination................................................................................. 105

IV. Information Collection Statement ....................................................................... 108

V. Regulatory Flexibility Act....................................................................................... 111

VI. Document Availability ........................................................................................ 113

VII. Effective Date and Compliance Deadlines.......................................................... 114

1. Requests for Rehearing and Clarification......................................................... 115

2. Commission Determination .............................................................................. 115

20100121-3044 FERC PDF (Unofficial) 01/21/2010
UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Jon Wellinghoff, Chairman;

Marc Spitzer, Philip D. Moeller,

and John R. Norris.

Pipeline Posting Requirements under

Section 23 of the Natural Gas Act

Docket No. RM08-2-001

ORDER NO. 720-A 

ORDER ON REHEARING AND CLARIFICATION

(Issued January 21, 2010)

I. Introduction

1. On November 20, 2008, the Federal Energy Regulatory Commission

(Commission) issued Order No. 720,

1

requiring interstate and certain major noninterstate natural gas pipelines to post limited information on publicly accessible

Internet websites regarding their operations. In this order, the Commission grants

and denies requests for rehearing and clarification of Order No. 720.

2. The Commission issued Order No. 720 and promulgated related regulations

consistent with the Energy Policy Act of 2005 (EPAct 2005).

2 In EPAct 2005,

Congress added section 23 to the Natural Gas Act (NGA), 15 U.S.C. 717t-2 (2000

1 Pipeline Posting Requirements under section 23 of the Natural Gas Act,

73 FR 73494 (Dec. 2, 2008), FERC Stats. & Regs. 31,283 (2008) (Order No. 720).

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

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 2

& Supp. V 2005) authorizing the Commission “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

. . . and the protection of consumers.”

3 Section 23 further provides that the

Commission may issue such rules as it deems necessary and appropriate to

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

availability and prices of natural gas sold at wholesale and interstate commerce to

the Commission, State commissions, buyers and sellers of wholesale natural gas,

and the public.”

4

3. On December 21, 2007, the Commission issued a Notice of Proposed

Rulemaking (NOPR), proposing to require both interstate and certain major noninterstate natural gas pipelines to post daily information regarding their capacity,

scheduled flow volumes, and actual flow volumes at major points and mainline

segments.

5 The Commission proposed regulations that would make available the

information needed to track daily flows of natural gas adequately throughout the

United States.

6 The posting proposal would facilitate price transparency in

3 NGA § 23, 15 U.S.C. 717t-2(a)(1) (2000 & Supp. V 2005).

4 15 U.S.C. 717t-2(a)(2).

5 Pipeline Posting Requirements under section 23 of the Natural Gas Act,

73 FR 1116 (Jan. 7, 2008), FERC Stats. & Regs., Proposed Regulations 2004-

2007 ¶ 32,626, at P 3 (2007).

6 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 3

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

commerce to implement section 23 of the Natural Gas Act.

7

4. Order No. 720 required major non-interstate pipelines, defined as those

natural gas pipelines that are not natural gas companies under the NGA and

deliver more than 50 million MMBtu per year, to post scheduled flow and other

information for each receipt or delivery point with a design capacity greater than

15,000 MMBtu per day.

8 While Order No. 720 required major non-interstate

pipelines to comply with the new rules within 150 days of the Final Rule’s

publication,

9 a subsequent order in this docket extended the compliance deadline

for major non-interstate pipelines until 150 days following the issuance of an order

on rehearing.

10

5. Regarding interstate natural gas pipelines, Order No. 720 expanded the

Commission’s existing posting requirements under 18 CFR 284 to include nonotice service. Interstate natural gas pipelines were required to comply with this

posting requirement no later than 60 days following Order No. 720’s publication,

11

and should therefore be currently complying with the regulations.

7 Id. P 5.

8 Order No. 720 at P 1.

9 Id. P 168.

10 Pipeline Posting Requirements under section 23 of the Natural Gas Act,

126 FERC ¶ 61,047, at P 4 (2009).

11 Order No. 720 at P 167.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 4

6. Twenty-six requests for rehearing or clarification of Order No. 720 were

submitted.

12 On January 16, 2009, the Commission issued an order granting

rehearing for the purpose of providing additional time to respond to the requests

for rehearing.

13

7. A staff technical conference was held on March 18, 2009, to gather

additional information on three issues raised in the requests for rehearing.

14 The

technical conference addressed: (1) the definition of major non-interstate

pipelines; (2) what constitutes “scheduling” for a receipt or delivery point; and (3)

how a 15,000 MMBtu per day design capacity threshold would be applied.

15

Panelists making presentations at the conference and commenters from the

12 A list of petitioners requesting rehearing and/or clarification is provided

at Appendix A. All requests for rehearing, clarification, or both are referred to

herein as “Requests for Rehearing and Clarification.”

13 Pipeline Posting Requirements under section 23 of the Natural Gas Act,

Docket No. RM08-2-001, at 1 (Jan. 16, 2009).

14 Pipeline Posting Requirements under section 23 of the Natural Gas Act ,

Notice of Technical Conference, Docket No. RM08-2-001 (issued Feb. 24, 2009);

Pipeline Posting Requirements under section 23 of the Natural Gas Act, Notice of

Agenda for Technical Conference, Docket No. RM08-2-001 (issued March 11,

2009).

15 Notice of Agenda for Technical Conference, at P 1.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 5

audience represented a broad cross-section of the U.S. natural gas industry

16 and

the conference was widely attended.

17

8. On July 16, 2009, the Commission issued an order requesting supplemental

comments in response to limited issues raised in requests for rehearing of Order

No. 720 and at the technical conference, with comments due within 30 days.

18

Eight supplemental comments were filed.

19

9. As discussed below, the Commission affirms Order No. 720, granting a

number of requests for rehearing and clarification and adopting regulations

consistent with our findings. As a whole, the modifications that are adopted

substantially reduce the number of major non-interstate pipelines that must comply

with the proposed transparency regulations.

16 In the Matter of Pipeline Posting Requirements under section 23 of the

Natural Gas Act Docket No. RM08-2-001, at 2-3 (Mar. 18, 2009) (Transcript of

Technical Conference).

17 A transcript of this conference is available on the Commission’s

e-Library system.

18 Pipeline Posting Requirements under section 23 of the Natural Gas Act,

128 FERC ¶ 61,030, at P 1 (2009) (Order Requesting Supplemental Comments).

19 A list of persons submitting supplemental comments is provided at

Appendix B. These comments are referred herein as “Supplemental Comments.”

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 6

10. Major non-interstate pipelines must comply with the revised regulations

within 150 days following publication in the Federal Register. Interstate pipelines

must continue their current compliance with our transparency regulations.

II. Discussion

A. Authority for the Rule

11. Order No. 720 implemented the Commission’s authority under section 23

of the NGA,

20 as added by EPAct 2005,21 to facilitate transparency in markets for

the sale or transportation of natural gas in interstate commerce by requiring major

non-interstate pipelines and interstate pipelines to post certain data on publiclyaccessible Internet websites. Congress granted the Commission this statutory

authority to ensure transparency of natural gas prices, natural gas availability, and

the price formation in the interstate natural gas market.

22

12. The Commission held in Order No. 720 that NGA section 23 authorizes the

Commission to obtain and disseminate information, including information

regarding non-interstate natural gas markets that affect the interstate natural gas

market. The Commission’s decision substantially relied on the language of NGA

section 23(a)(3)(A), which allows the Commission to “obtain the information...

20 15 U.S.C. 717t-2.

21 Energy Policy Act of 2005, Pub. L. No. 109-58, sections 1261 et seq.,

119 Stat. 594 (2005).

22 Id. P 8.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 7

from any market participant.”

23 The Commission identified Congress’ use of the

term “any market participant” as an intentional expansion of “the universe of

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

subject to the Commission’s traditional rates, terms, and conditions jurisdiction

under other sections of the NGA.”

24 Order No. 720 took particular note of

Congress’ use of “any” in section 23 as a descriptor, attaching jurisdiction to

market participants independently of the limitations prescribed elsewhere in the

NGA.

25

13. The NGA limits the scope of the Commission’s traditional regulatory

authority to “natural gas companies” as the term is utilized in the NGA.

26 The

Commission held in Order No. 720 that Congress contemplated different

jurisdictional parameters for its transparency authority.

27 Additionally, the

Commission found that the scope of section 23 is not limited by section 1(b) of the

NGA.

14. The Commission emphasized that the regulations promulgated by Order

No. 720 reflect the limitations that Congress placed on the Commission’s authority

23 15 U.S.C. 717t-2(a)(3)(A) (emphasis added).

24 Order No. 720 at P 17.

25 Id. P 18.

26 Id. P 19 citing 15 U.S.C. 717.

27 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 8

in section 23. Order No. 720 explained that section 23 extends the Commission’s

authority only to the collection and dissemination of information for the purposes

of promoting price transparency in the natural gas market.

28 The Commission’s

traditional regulatory authority remains limited to “natural gas companies” under

section 1(b) of the Act.

29

1. Requests for Rehearing and Clarification

15. Some petitioners support the Commission’s assertion of jurisdiction, with at

least one petitioner supporting Order No. 720’s requirement that certain major

non-interstate pipelines post daily scheduled volume information and design

capacity for certain receipt and delivery points “pursuant to [the Commission’s]

authority under section 32 [sic] of the NGA.”

30 Yates and Agave particularly

commend the Commission’s new regulations and assertion of jurisdiction, stating

that “the major non-interstate pipeline posting requirements adopted in Order No.

720 are a good first step towards the Commission’s stated goal of facilitating

28 Id. P 22.

29 Natural gas producers, processors, or users who have a de minimis

market presence are explicitly exempted from the reporting requirements. Id. at

P 23.

30 Yates and Agave Request for Rehearing and Clarification at 1; Williston

Basin Request for Rehearing and Clarification at 1 (acknowledging that the

Commission has the authority to promulgate Order No. 720’s new regulations

pursuant to its authority under section 23 of the NGA).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 9

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

interstate commerce.”

31

16. Several petitioners requesting rehearing argue that the Commission

unlawfully expanded its statutory authority by imposing posting requirements on

major non-interstate pipelines, including natural gas gathering lines.

32 They claim

that the Commission does not have jurisdiction to impose posting requirements on

intrastate pipelines, and that its transparency jurisdiction does not extend to

intrastate activities at receipt and delivery points that are not involved in the

Commission’s jurisdictional activities.

33

17. Many petitioners reiterated arguments, made in comments to the NOPR,

that the reference in NGA section 23 to “any market participant” is restricted to

participants in the interstate market.

34 Gas Processors suggests that the

Commission has derived its expanded jurisdictional powers from an ambiguous

31 Yates and Agave Request for Rehearing and Clarification at 3-4.

32 Enogex Request for Rehearing and Clarification at 5-10; Gas Processors

Request for Rehearing and Clarification at 3-7; LOC Request for Rehearing and

Clarification at 3-10; California LDCs Request for Rehearing and Clarification at

13-15; Railroad Commission of Texas Request for Rehearing and Clarification at

5-10; Southwest Gas Request for Rehearing and Clarification at 3-5, 13-14; Targa

Request for Rehearing and Clarification at 8-9; TPA Request for Rehearing and

Clarification at 8-24.

33 See, e.g., TPA Request for Rehearing and Clarification at 31-32.

34 California LDCs Request for Rehearing and/or Clarification at 14-15;

Gas Processors Request for Rehearing at 3-4; LOC Request for Rehearing at 8-9;

Railroad Commission of Texas Request for Rehearing at 5-8; Southwest Gas

(continued...)

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 10

term without sufficient support, and that Congressional intent over that term “must

not be read in a vacuum.”

35 It also argues that the term “market participant” was

not intended to extend the Commission’s jurisdiction to intrastate pipelines

because: (1) section 23 was not intended to cover intrastate pipelines; (2) the

Commission has never had jurisdiction over intrastate pipelines; and (3) Congress

did not “expressly or implicitly” provide such jurisdiction in section 23.

36

Quoting section 23, Gas Processors points out the repeated use of the term

“interstate” throughout the section, emphasizing that if Congress intended an

expansion into the intrastate pipelines, they would have selected different

language.

37 RRC agrees, stating that “[n]othing in the plain language of Section

23 of the NGA or the legislative history of [EPAct 2005] evinces Congressional

intent to expand the FERC’s authority over intrastate pipelines.”

38

Request for Clarification and Rehearing at 13-14; Targa Request for Rehearing at

8-9; TPA Request for Rehearing and Clarification at 9-11.

35 Gas Processors Request for Rehearing and Clarification at 3-4.

36 Id. at 4.

37 Id.; see also RRC Request for Rehearing and Clarification at 6-8; TPA

Request for Rehearing and Clarification at 8-12; LOC Request for Rehearing and

Clarification at 10.

38 RRC Request for Rehearing and Clarification at 6; see also LOC Request

for Rehearing and Clarification at 9.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 11

18. TPA opines that the plain language of section 23 provides that “market

participant” be limited to the interstate natural gas market.

39 It further argues that

Congress had no need to exclude intrastate pipelines from the Commission’s

transparency jurisdiction because those entities are not subject to the

Commission’s jurisdiction “in the first place.”

40

19. TPA repeats arguments made in its NOPR comments, and seeks rehearing

of the Commission’s determination that it has authority to issue the posting

regulations. TPA argues that expansion of the jurisdiction of the Commission

usually occurs through amendment of NGA section 1(b) by Congress.

41 TPA

asserts that Order No. 720 expands the Commission’s jurisdiction using a process

that is not supported by the Commission’s own precedent.

42 TPA cites Order No.

670,

43 discussing the procedures used to process market manipulation allegations,

in support of its claim that the Commission should wait until Congress explicitly

expands its jurisdiction to assert such authority over traditionally non39 TPA Request for Rehearing and Clarification at 9-11.

40 Id. at 11.

41 TPA Request for Rehearing and Clarification at 12; Gas Processors

Request for Rehearing and Clarification at 4-5; LOC Request for Rehearing and

Clarification at 6; RRC Request for Rehearing and Clarification at 7-8.

42 TPA Request for Rehearing and Clarification at 12.

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

(Jan. 26, 2006), FERC Stats. & Regs. ¶ 31,202 (2006).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 12

jurisdictional entities.

44 TPA further argues that the Natural Gas Policy Act of

1978 (NGPA) section 311 shows a clear distinction between intrastate and

interstate jurisdiction, and concludes that, if Congress had intended to expand the

Commission’s jurisdiction, it would have amended NGA section 1(b) in a similar

fashion.

45

20. Several petitioners, echoing comments that the Commission addressed in

Order No. 720, argue that the regulations exceed the Commission’s jurisdiction

under section 1(b) of the NGA.

46 Petitioners argue that NGA section 23 is not “a

stand alone provision,” but is subject to the jurisdictional limits established in

section 1(b).47 Thus, they contend that the fact that Congress did not amend the

language in section 1(b) demonstrates that Congress did not intend to modify the

Commission’s jurisdiction with section 23.

48 Petitioners state that section 1(b) is

44 TPA Request for Rehearing and Clarification at 12.

45 Id. at 21 (citing 15 U.S.C. 3371(a)(2)).

46 Enogex Request for Rehearing and Clarification at 6-7; LOC Request for

Rehearing and Clarification at 3-4; Railroad Commission of Texas Request for

Rehearing and Clarification at 8-9; TPA Request for Rehearing and Clarification

at 8, 16-19.

47 LOC Request for Rehearing and Clarification at 3; Enogex Request for

Rehearing and Clarification at 7; Railroad Commission of Texas Request for

Rehearing and Clarification at 8-9; TPA Request for Rehearing and Clarification

at 22-23.

48 LOC Request for Rehearing and Clarification at 9; RRC Request for

Rehearing and Clarification at 8.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 13

“unequivocally clear” regarding the entities to which section 23 applies.

49 The

petitioners argue that because section 1(b) expressly bars the Commission from

jurisdiction over intrastate pipelines, section 23 does as well.

50

21. Several petitioners also state that section 311 of the NGPA51 limits the

Commission’s transparency jurisdiction to only interstate activities.

52 These

petitioners claim that, although section 311 “vests the Commission with the power

to authorize an intrastate pipeline to transport natural gas on behalf of interstate

pipelines,” section 311 did not expand the Commission’s jurisdiction under the

NGA.

53 In fact, the NGPA explicitly defines “intrastate pipeline” as one “not

subject to the jurisdiction of the Commission under the NGA.”

54 LOC states, for

example, that the Commission cannot “destroy” this jurisdictional distinction

placing intrastate pipelines beyond its NGA authority without express amendment

49 RRC Request for Rehearing and Clarification at 8.

50 RRC Request for Rehearing and Clarification at 8, LOC Request for

Rehearing and Clarification at 8-9; Enogex Request for Rehearing and

Clarification at 6-7; TPA Request for Rehearing and Clarification at 28-29.

51 15 U.S.C. 3371(a)(2).

52 Enogex Request for Rehearing and Clarification at 9; LOC Request for

Rehearing and Clarification at 5-8; Railroad Commission of Texas Request for

Rehearing at 9; TPA Request for Rehearing and Clarification at 18-22.

53 LOC Request for Rehearing and Clarification at 5-6; RRC Request for

Rehearing and Clarification at 9; TPA Request for Rehearing and Clarification at

18-22.

54 LOC Request for Rehearing and Clarification at 5-6; RRC Supplemental

Comments at 9; TPA Request for Rehearing and Clarification at 18-22.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 14

from Congress.

55 Moreover, TPA cites to Associated Gas Distributors v. FERC,56

where the court held that it was unreasonable for the Commission to presume that

“obscure” language in section 311 authorized an expansion of its jurisdiction

without legislative history to support an expansion.

57 TPA, LOC, and RRC also

focus on previous case-law limiting the Commission’s traditional rates, terms, and

conditions jurisdiction under section 311.

58

22. Other petitioners focus on NGA section 23(d)(2) which provides that the

Commission shall not require natural gas producers, processors, or users who have

a de minimis market presence to comply with the reporting requirements of

section 23.

59 On rehearing, RRC renews arguments made in response to the

NOPR regarding the de minimis exception. Contrary to the Commission’s

interpretation, RRC believes that, had Congress intended to give the Commission

even limited jurisdiction over intrastate pipelines, it would have listed them in

55 LOC Request for Rehearing and Clarification at 6.

56 Assoc. Gas Distrib. v. FERC, 899 F.2d 1250 (D.C. Cir. 1990).

57 TPA Request for Rehearing and Clarification at 19-20.

58 TPA Request for Rehearing and Clarification at 21-22; LOC Request for

Rehearing and Clarification at 6-10; RRC Request for Rehearing and Clarification

at 16. TPA and LOC also raise arguments linking section 311 to section 601 of

the NGPA. LOC Request for Rehearing and Clarification at 5-8; TPA Request for

Rehearing and Clarification at 18-21.

59 15 U.S.C. 717t-2(d)(2).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 15

section 23(d)(2).

60 Because section 23(d)(2) makes no such reference, RRC

contends that the Commission’s findings are contrary to the plain language of

section 23.

61

23. Some petitioners assert that the Commission is seeking information on gas

flows that are outside of the Commission’s jurisdiction, regardless of the facilities

at issue.

62 TPA argues that the collection of design capacity and gas flow data

does not relate to the availability and prices of natural gas, thereby exceeding the

Commission’s transparency jurisdiction.

63 Enogex argues that the new regulations

make it impossible to discern the Commission’s jurisdiction from state jurisdiction

because the intrastate and interstate volumes of gas that move on the Enogex

system are so commingled that they cannot be distinguished for capacity posting

purposes.

64

60 RRC Request for Rehearing and Clarification at 7; see also TPA Request

for Rehearing and Clarification at 23-24.

61 RRC Request for Rehearing and Clarification at 7-8.

62 Enogex Request for Rehearing at 9-10; TPA Request for Rehearing and

Clarification at 13-15.

63 TPA Request for Rehearing and Clarification at 13-15.

64 Enogex Request for Rehearing and Clarification at 9-10.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 16

24. Targa, California LDCs, RRC, and TPA all contend that Order No. 720 is

an improper regulation of intrastate operations and rates.

65 These petitioners argue

that the Final Rule may adversely interfere with state regulation of non-interstate

pipelines.

66 California LDCs challenge the Commission’s claim that it is not

regulating intrastate operations of non-interstate pipelines. The petitioner alleges

that compliance with Order No. 720 entails daily postings of customer-specific

and facility-specific information, effectively regulating intrastate operations.

67

2. Commission Determination

25. After consideration, the Commission rejects the requests for rehearing and

reaffirms its holding that it has jurisdiction over the matters addressed in Order

No. 720. NGA section 23 provides the Commission limited jurisdiction over major

non-interstate pipelines for the purpose of requiring public disclosure of

information to enhance market transparency.

26. Most petitions for rehearing reiterate arguments the Commission

considered and addressed at length in Order No. 720. For example, petitioners

take issue with the Commission’s interpretation of the expansive language used in

65 Targa Request for Rehearing and Clarification at 9; California LDCs

Request for Rehearing and Clarification at 14-15; RRC Request for Rehearing and

Clarification at 9-11; TPA Request for Rehearing and Clarification at 25-28.

66 California LDCs Request for Rehearing and Clarification at 14-15; RRC

Request for Rehearing and Clarification at 9-11; TPA Request for Rehearing and

Clarification at 3, 25-28.

67 California LDCs Request for Rehearing and Clarification at 14-15.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 17

NGA section 23. In Order No. 720, the Commission held that Congress

deliberately chose the term “any market participant” in section 23 to expand the

Commission’s jurisdiction beyond the universe of natural gas companies to which

it would otherwise be limited, recognizing that the public needs information from

a wide variety of entities in order to facilitate transparency.

68 Section 1 is not

referenced in section 23 and the term “natural gas company” is not used in section

23. Petitioners have not raised any new arguments regarding the meaning of “any

market participant” in section 23. The Commission continues to believe that

Congress did not intend to limit the Commission’s transparency jurisdiction to

entities it traditionally regulates.69

27. As stated in Order No. 720, section 23(d)(2) would be unnecessary

surplusage if Congress did not intend to give the Commission authority over

entities otherwise excluded by section 1(b) of the NGA.

70 Petitioners raise no new

arguments regarding this issue. Likewise, no new arguments were presented

regarding the Commission’s authority to enact rules under sections 23(a)(1) and

23(a)(2). These subsections grant discretion to the Commission to achieve

68 Order No. 720 at P 18.

69 Id. P 19.

70 Id. P 23.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 18

interstate price transparency and to provide for public dissemination of

information.

71

28. The Commission also finds no merit in arguments raised by petitioners

related to section 311 of the NGPA. While section 311 limits the Commission’s

jurisdiction regarding some intrastate natural gas pipeline activities, section 23 of

the NGA provides a different jurisdictional basis promoting different

Congressional goals. Section 23 grants the Commission authority to ensure that

the information necessary for interstate market transparency is available to the

public. The term any market participant includes non-interstate pipelines, thus the

Commission has the authority to require those participants to post certain

information to facilitate market transparency.

29. Petitioners also reiterated arguments, addressed in Order No. 720, that

previous case law limits the Commission’s transparency jurisdiction.

72 The

Commission affirms its conclusion that the cases cited by commenters apply only

to the jurisdictional limits set forth in section 1 of the NGA prior to the enactment

of EPAct 2005.

73 Such case law is not applicable to regulations adopted by the

Commission pursuant to section 23 of the NGA.

71 Id. P 16.

72 Railroad Commission of Texas Request for Rehearing and Clarification

at 15-16; LOC Request for Rehearing and Clarification at 6-7; Enogex Request for

Rehearing and Clarification at 6-7.

73 Order No. 720 at P 20.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 19

30. In response to Enogex, it is immaterial for purposes of our transparency

jurisdiction whether non-interstate and interstate volumes of gas are commingled.

Under section 23, if natural gas volumes have a greater than de minimis effect on

the interstate natural gas market, and the other requirements of section 23 are met,

the Commission has the authority to require posting of such volumes regardless of

whether flowing natural gas is characterized as “interstate” or “non-interstate.” 

31. The Commission emphasizes that its transparency jurisdiction is limited to

the dissemination of information that will aid in market transparency. Section 23

gives the Commission no jurisdiction related to, and our regulations do not govern

the rates, terms, and conditions of service of major non-interstate pipeline

operations. The Commission is requiring only the posting of essential

information to ensure market transparency and is not engaging in traditional

regulation of rates, terms, and conditions of service.

32. The Commission finds that Order No. 720 accurately implemented its

authority under the limited jurisdiction Congress conferred in NGA section 23.

74

Therefore, we deny rehearing.

74 The Commission’s conclusion here is consistent with its findings in

Order No. 704 regarding the annual reporting requirement for market participants

adopted pursuant to our NGA section 23 authority. See Transparency Provisions

of section 23 of the Natural Gas Act, Order No. 704, 73 FR 1014 (Jan. 4, 2008),

FERC Stats. and Regs. ¶ 31,260 (2007), order on reh’g, Order No. 704-A, 73 FR

55726 (Sept. 26, 2008), FERC Stats. & Regs. ¶ 31,275 (2008), order on reh’g,

Order No. 704-B, 125 FERC ¶ 61,302 (2008).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 20

B. Need for the Rule

33. Order No. 720 found that a broad cross-section of the natural gas industry

supports the transparency goals of the pipeline posting requirements.

75 In Order

No. 720, the Commission exercised the authority conferred by Congress following

consideration of comments on the NOPR, and based on its experience regulating

the interstate natural gas market. Order No. 720 discussed interstate pipeline

postings as well as other sources of market information, determining that

additional information by non-interstate pipelines would enhance transparency

further.

76

34. Order No. 720 found that information regarding wholesale natural gas price

fundamentals was incomplete given the lack of access to scheduled flow

information from major non-interstate pipelines.

77 This informational gap exists

because, while interstate pipelines must post daily scheduled flow information

under our current regulations, no similar information is available regarding

scheduled flows prior to or following transportation on interstate pipelines. Order

No. 720 attempted to fill this informational gap with supply-related information

from large non-interstate pipelines upstream of interstate pipelines and demand75 Order No. 720 at P 29.

76 Id. P 39-50. Additionally, the Commission determined that increased

transparency regarding no-notice natural gas flows was needed on interstate

pipelines. Id. P 161.

77 Id. P 40.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 21

related information from large non-interstate pipelines downstream of interstate

pipelines. Supply and demand fundamentals for the interstate natural gas market

can be more fully understood utilizing information from non-interstate pipelines.

1. Requests for Rehearing and Clarification

35. On rehearing, a limited number of petitioners object to Order No. 720’s

findings that transparency needs to be increased in the interstate natural gas

market, and question whether the regulations adopted in Order No. 720 actually

increase transparency.

36. For example, LOC states that Order No. 720 “failed to support its finding

that there exists any necessity for the enactment of the proposed rules.”

78 RRC

argues that our pipeline posting regulation is “a solution in search of a problem,”

adding that recent Commission initiatives have improved market transparency and

that there has been no showing that additional transparency is required.

79

37. TPA requests rehearing on the grounds that the Commission has not

demonstrated that interstate market transparency is enhanced by major noninterstate pipeline information. It alleges that the Commission has “consistently

disregarded the consensus among market participants” on this point.

80

78 LOC Request for Rehearing and Clarification at 11. See also TRC

Request for Rehearing and Clarification at 14-15.

79 RRC Request for Rehearing and Clarification at 11-15.

80 TPA Request for Rehearing and Clarification at 33.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 22

38. TPA takes Order No. 720 to task for focusing on comments “of a handful

of intervenors expressing general support for the [NOPR]” rather than

acknowledging the substantial number of intrastate pipelines and other participants

that see no need for increased transparency.

81 TPA argues, citing National Fuel

Gas Supply Corporation v. FERC,

82 that the Commission must cite evidence of an

industry problem prior to rulemaking action.

83 TPA particularly objects to Order

No. 720’s finding that the transparency rule assists market participants to

understand the impact of hurricanes and other natural disasters on natural gas

supply. Further, TPA argues that “nowhere in this proceeding has the

Commission or any market participant provided an adequate explanation of how

the proposed rule would detect market manipulation.”

84

39. Southwest Gas argues that the transparency rule did not specifically

demonstrate a need for information from LDCs related to daily capacity and

scheduled retail transportation.

85 Southwest Gas complains that Order No. 720 did

81 Id. at 35-37.

82 468 F.3d 831, 843 (D.C. Cir. 2006).

83 TPA Request for Rehearing and Clarification at 37.

84 Id. at 39.

85 Southwest Gas Request for Rehearing and Clarification at 12.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 23

not adequately explain the nexus between data provided by state-regulated LDCs

and price formation for natural gas sold at wholesale and in interstate commerce.

86

40. Additionally, some petitioners request rehearing on the grounds that Order

No. 720 failed to fully consider the existing sources of data regarding noninterstate natural gas flows as required by section 23.

87

2. Supplemental Comments

41. In its supplemental comments, AGA makes arguments similar to Southwest

Gas.

88 AGA states that LDCs are fundamentally distributors of natural gas and

that LDC scheduled flow postings would not further the Commission’s

transparency goals.

89 AGA notes that no wholesale natural gas price formation

86 Id. at 13-14.

87 LOC Request for Rehearing and Clarification at 11; RRC Request for

Rehearing and Clarification at 11-15; TPA Request for Rehearing and

Clarification at 30-31.

88 The Order Requesting Supplemental Comments requested additional

comments on discrete issues raised by commenters in requests for rehearing and

clarification. Order Requesting Supplemental Comments at P 7-10. Some

commenters submitted supplemental comments on subjects outside the requested

scope. While the Commission did not request such extraneous supplemental

comments, such as AGA’s supplemental comments regarding need for the rule, we

nevertheless address such comments in this order to ensure that the record is

complete.

89 AGA Supplemental Comments at 10.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 24

occurs on an LDC’s system90 and argues that available capacity calculations for

LDCs may be misleading.

91

3. Commission Determination

42. The Commission continues to believe that the major non-interstate pipeline

posting requirements are needed and denies the requests for rehearing.

43. The Commission notes, as an initial matter, that some of the requests for

rehearing appear to argue that the Commission has substantially increased

transparency in interstate markets in recent years, but that such transparency is

sufficient and more need not be done. However, these petitioners misconstrue

section 23 of the NGA and Congress’ transparency objectives. As discussed in

Order No. 720, the Commission has been directed by Congress to facilitate price

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

interstate commerce 92

and given the authority to prescribe such rules as may be

necessary to effectuate the Congressional goal.

93 As the Congressional mandate

implicitly acknowledges, lack of transparency is not a “problem” readily

susceptible to a single regulatory solution. Transparency enhances the ability of

market participants to make informed, efficient decisions based upon public

90 Id. at 13.

91 Id. at 16-17. See also California LDCs Supplemental Comments at 8.

92 15 U.S.C. 717f-2(a)(1).

93 15 U.S.C. 717f-2(a)(2).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 25

information. In other words, enhanced transparency is typically beneficial to

markets, even markets, such as the U.S. wholesale natural gas market, that are

already competitive. It is not a necessary prerequisite to adoption of our

regulations to find, as some petitioners appear to demand, that the interstate

natural gas market cannot function without the rule. As petitioners acknowledge,

the Commission has improved market transparency in several different ways in

recent years and the interstate natural gas market is competitive and robust. These

successes, however, do not preclude other means of further enhancing

transparency. This is particularly true where the Commission has identified a

“gap” in relevant market information available to market participants.

44. Many of the petitions for rehearing repeat arguments made in response to

the NOPR and addressed in Order No. 720. As the Commission found in Order

No. 720, there presently exists a gap in information available to interstate market

participants necessary to more fully understand supply and demand fundamentals

and therefore price formation.

94 A significant amount of natural gas flows from

producing basins to interstate markets on non-interstate pipelines. These

scheduled flows impact supply considerations in interstate markets. Similarly,

flows on non-interstate pipelines at the end of the delivery chain impact demand

94 Order No. 720 at P 39.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 26

considerations in the interstate market.

95 These considerations are fundamental to

Order No. 720’s determination that information about scheduled non-interstate

pipeline natural gas flows would enhance transparency in the interstate natural gas

market. Without access to information about supply and demand, interstate

natural gas market participants are left with incomplete information to understand

interstate wholesale prices. Incomplete information leads to market inefficiencies

because wholesale buyers and sellers of natural gas have inconsistent levels of

market knowledge and are less able to understand price outcomes.

96

45. Existing interstate pipeline posting data is used extensively by the public to

understand daily market conditions and price formation. The public can access an

interstate pipeline’s Internet website to ascertain capacity availability and

operational conditions. Also, data aggregators scour these websites and sell

analysis and services based on this data, with many market participants, including

producers, pipelines, end users, marketers, traders, and financial firms paying

subscription fees to these data aggregators to evaluate the interstate natural gas

market. The demand for such data by market participants is a persuasive factor

95 Of course, non-interstate pipelines that deliver natural gas to end-users

may also deliver gas to other pipelines for subsequent transportation similar to

transportation provided by interstate pipelines.

96 Transparency plays a fundamental role in the fairness, efficiency, and

functioning of orderly markets. Greater transparency results in greater market

efficiency because price signals to market participants more accurately reflect

underlying supply and demand fundamentals.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 27

regarding its transparency value. Based upon the comments in this rulemaking

and our natural gas market experience, the Commission believes that there is

robust interest by the public regarding similar scheduled flow data from noninterstate pipelines to form a more complete picture of the U.S. wholesale natural

gas market. We therefore disagree with commenters arguing that such data is not

valued by the public.

46. As discussed below, data provided by major non-interstate pipelines will

help interstate natural gas market participants understand both supply and demand

and, thus, price formation.

Understanding of supply fundamentals will be enhanced

47. Some petitioners, including TPA, argue that information from noninterstate pipelines that provide natural gas supplies would not enhance interstate

market transparency. Order No. 720 notes the substantial impact that noninterstate pipelines have on the establishment of national wholesale natural gas

prices. Non-interstate pipelines, particularly those in the south-central United

States, connect large production areas with interstate pipelines.

97

48. Despite TPA’s protestations, obtaining data from TPA’s members is

particularly important for interstate market transparency. Onshore Texas locations

account for thirty percent (approximately 5.7 Tcf in 2007) of U.S. natural gas

97 Order No. 720 at P 45.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 28

production.

98 Texas has more non-interstate pipelines than any other state --

45,000 of the 58,600 miles of natural gas pipelines in the state are intrastate

pipelines and account for almost 16 Bcf/d of pipeline capacity.

99 The pipeline

network in Texas has experienced significant growth over the past several years as

a result of increased demand for pipeline capacity caused by the rapid

development and expansion of natural gas production in the Barnett Shale

Formation.

100 New pipelines have been built, and expansions to existing ones

undertaken, to meet increased demand. The importance of Texas non-interstate

transportation to understanding interstate price fundamentals is growing as

production shifts from old depleting gas basins to new gas basins.

98 U.S. Energy Information Administration, Natural Gas Annual 2007,

Gross Withdrawals and Marketed Production of Natural Gas by State and the Gulf

of Mexico 2003-2007 (2007), p. 8 (available at

http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_an

nual/current/pdf/table_003.pdf).

99 Energy Information Administration, Intrastate Natural Gas Segment

(available at

http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/i

ntrastate.html). The size and importance of non-interstate transportation in Texas

is manifest. Sixteen Bcf/d is enough gas to serve all the industrial or power load

in the U.S.

100 U.S. Energy Information Administration, Expansion of the U.S. Natural

Gas Pipeline Network: Additions in 2008 and Projects through 2011, (Sept. 2009)

(available at

http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2009/pipelinenet

work/pipelinenetwork.pdf) (“About 10 percent of all newly added natural gas

pipeline capacity for 2008, or 4.6 Bcf per day, was attributable to new intrastate

pipelines built to transport expanding Barnett shale production specifically”).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 29

49. The value of non-interstate pipeline supply flows is not confined to Texas.

In Colorado, Wyoming, and Utah, development of new, large-diameter intrastate

pipelines is proceeding at a fast pace, as proved reserves of coalbed methane, tight

sands, and conventional natural gas supplies are identified.

101 During the past

several years, at least eight large-capacity pipeline header systems have been built

in Wyoming to transport natural gas from local gathering systems.

102 In the

Piceance Basin in western Colorado and the Uinta Basin in eastern Utah, several

new large gathering systems have been developed to feed expanding natural gas

production into the interstate pipeline network.

103 These supply sources have a

significant effect on interstate price formation because new supply can reduce

regional and national gas prices. The faster the implications of new supply are

assessed, the better the market can integrate those implications into pricing

decisions.

50. In these states and elsewhere, capacity could be limited at key points,

impacting regional, interstate wholesale prices. Supply or demand driven events

on non-interstate pipelines that impact regional wholesale prices cannot be fully

understood by market participants without access to receipt and delivery point

information.

101 U.S. Energy Information Administration, supra note 97.

102 Id.

103 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 30

51. Existing data sources on gas supply flows are insufficient for participants to

adequately evaluate physical daily market activity. As the Commission discussed

in Order No. 720, the Energy Information Administration (EIA) publishes data on

monthly production by state based on a survey and with a three month lag.

104

Similarly, monthly consumption data is published by state with a four month

lag.

105

Understanding of demand fundamentals will be enhanced

52. Petitioners not only question the value of increased transparency of the

operations of non-interstate pipelines at the beginning of the delivery chain, but

also at the end of the delivery chain. For example, Southwest Gas and AGA argue

that the Commission has not articulated an adequate nexus between data provided

by LDCs (oftentimes companies that primarily deliver natural gas to end-users)

and interstate natural gas price formation. The Commission disagrees and

continues to believe that the pipeline posting regulations will enhance

understanding of demand fundamentals.

104 Energy Information Administration, Natural Gas Deliveries to All

Consumers by State 2007-2009 (Nov. 2009) (available at

http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthl

y/ngm/current/pdf/table_16.pdf).

105 Energy Information Administration, Marketed Production of Natural

Gas in Selected States and the Federal Gulf of Mexico (Nov. 2009) (available at

http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/natural_gas_monthl

y/current/pdf/table_05.pdf).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 31

53. Order No. 720 not only identified the information gap now present, but also

provided data explaining the possible scope of the transparency problem regarding

demand for natural gas. For example, we noted that up to 90 percent of daily

consumption of natural gas in Texas is not captured through the Commission’s

current interstate pipeline posting requirements.

106 Instead, such consumption data

is available only from EIA in aggregated format several months following actual

delivery.

107 Such stale data is unhelpful for interstate market participants seeking

to understand price formation in today’s rapidly-changing energy markets.

54. Demand clarity is a persistent problem in U.S. interstate natural gas

markets. For example, California accounts for 10 percent of U.S. natural gas

consumption, of which one-third is utilized for electric power generation.

108

About 13 percent of California’s consumption is met by in-state production with

the rest met by imports from surrounding states.

109 Interstate pipelines serving

California, with four exceptions, terminate at the state border.

110 Market

106 Order No. 720 at P 44.

107 Id.

108 U.S. Energy Information Administration, Natural Gas Annual 2007:

Consumption of Natural Gas 2003-2007 by State, 2007 (2007) at 41 (available at

http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/natural_gas_an

nual/current/pdf/table_015.pdf).

109 Id.

110 Interstate pipelines currently serving California include El Paso Natural

Gas Company (El Paso), Kern River Transmission Company, Mojave Pipeline

Company, Gas Transmission-Northwest, Transwestern Pipeline Company

(continued...)

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 32

participants can currently “see” imports into California, flows between PG&E and

Southern California Gas Company (SoCal Gas), and flows into SoCal Gas

producing zones by virtue of the Commission’s existing interstate pipeline posting

regulations and using PG&E’s and SoCal Gas’ Pipe Ranger and Envoy systems.

111

However, market participants have limited information regarding gas receipts and

deliveries once gas is delivered to PG&E’s and SoCal Gas’ systems. Noninterstate transportation and distribution are dominated by: PG&E, with 6,136

miles of transportation pipelines); SoCal Gas, with 2,890 miles of transmission

and storage pipelines; and SDG&E, with 168 miles of transmission pipelines.

112

(Transwestern), Questar Southern Trails Pipeline, Tuscarora Pipeline and the

Bajanorte/North Baja Pipeline. Kern River, Mojave, Tuscarora, and North Baja

pipeline have significant capacity in California, while all other pipelines terminate

at the California border. See California Public Utilities Commission, Natural Gas

Market Study (Feb. 2006) at 28 (available at

http://www.docs.cpuc.ca.gov/WORD_PDF/REPORT/54256.pdf).

111 Sempra’s Envoy system posts daily information at SoCal Gas’

interconnection with interstate pipelines, PG&E, and five “producer zones.”

PG&E’s Pipe Ranger system posts daily information only at interconnects with

interstate pipelines and SoCal Gas’ system. Most of the gas flow information

posted on Envoy and Pipe Ranger is readily available from interstate pipeline

postings and provides little additional market information useful for understanding

the intrastate flow of gas. Envoy Interactive Map (available at

https://www.envoyproj.sempra.com/help/help_pipeline_map.html).

112 Pacific Gas and Electric Co., Fast Facts (available at

http://www.pge.com/about/company/profile/); Securities and Exchange

Commission, Sempra Energy Form 10-K Annual Report at 25 (Feb. 24, 2009)

(available at

http://www.investor.shareholder.com/sre/secfiling.cfm?filingID=86521-09-

10&CIK=1032208).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 33

55. SoCal Gas and PG&E are two of the largest distribution companies in the

U.S. When major natural gas transportation interruptions occur on these systems

inside California, market participants are unable to accurately assess interstate

market implications.

113 For example, the western energy crisis of 2000-2001

resulted in high power and natural gas prices in California which were

compounded by restricted flows of gas into California due to an explosion on the

El Paso pipeline that connects west Texas production to California earlier in 2000.

The ability to observe flows on the PG&E and SoCal systems would have enabled

market participants, the California Public Utility Commission, and the public to

better understand the severity of local gas shortages and their impact on prices and

gas supply.

56. The frequent price differences observed between PG&E and SoCal Gas city

gate prices provide a further example of the need for greater transparency in the

California intrastate market. Intrastate pipeline constraints within California likely

cause these price divergences, but the nature and extent of these constraints is

unobservable to the public. The public has access to flow data at the interconnects

of PG&E with two interstate pipelines in southern California (with El Paso at the

Topock receipt point and Transwestern at the Needles receipt point). Capacity at

the Topock receipt point is not fully utilized and cheaper gas should theoretically

113 Since most information is only posted at major interconnections with

interstate pipelines and between PG&E and SoCal Gas, conditions in-state are not

readily discernible.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 34

flow north on PG&E’s system to equalize prices between PG&E and SoCal Gas.

In order to effectively understand constraints on intrastate pipelines (and the

effects on interstate market prices), it is imperative that the public have access to

better, more timely information on intrastate scheduled gas flows in California.

57. Lack of demand transparency in California markets is detrimental to well

functioning and competitive interstate markets in a number of ways. For example,

a holder of pipeline capacity on PG&E’s non-interstate pipeline system could

potentially hoard capacity at key points, driving up gas prices in California, while

depressing interstate prices at the California border. Such non-interstate activity

not only would have an immediate impact on interstate wholesale prices at the

border, but would have a ripple effect outward, perhaps affecting prices

throughout the southwest. In another example, the regional impact of a surge in

California gas demand by power generators, perhaps due to hot weather or a

nuclear outage, could be more easily understood and assessed if the location of

such surges could be identified at individual delivery points. Again, obtaining

information only at the California border would be insufficient to understand

interstate market prices since the price-affecting constraints may be occurring

within the state.

58. Based upon the foregoing examples and the Commission’s discussion in

Order No. 720, the Commission believes that there is sufficient nexus between

demand-side non-interstate flow information and interstate price formation to

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 35

sustain the Commission’s regulations, contrary to the position of AGA and

Southwest Gas.

Non-Interstate pipeline scheduled flow postings during times of natural

disaster would benefit interstate market participants

59. TPA objects to Order No. 720’s conclusion that information regarding

supply flowing through non-interstate pipelines is particularly important during

times of natural disaster or when pipelines are unexpectedly shut down. TPA

contends that most non-interstate pipelines will not be able to post scheduled flow

data during an emergency.

114 The Commission disagrees and continues to believe

that non-interstate pipeline postings are crucial to ameliorate market

misunderstandings during hurricanes and other situations that occasion pipeline

outages.

60. Even if, as TPA suggests without support, major non-interstate pipelines

would be unable to meet their posting obligations during hurricanes, the fact that

an emergency is so severe as to preclude postings would provide an important

signal to the market regarding the emergency’s impact on natural gas supply.

Further, posting information up to and following an emergency would give crucial

insight regarding staged shutdown of supply before an emergency event and

renewed operation of supply infrastructure following an emergency event.

114 TPA Request for Rehearing and Clarification at 38.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 36

61. For example, in September 2005, hurricanes Katrina and Rita forced the

shut down of Henry Hub for 11 days.

115 Henry Hub is the location for

interconnection of four non-interstate and nine interstate pipelines. Because of

these interconnections, the location is of vital importance for transportation of

natural gas from the producing region in the Gulf to the consuming markets in the

Northeast and the Midwest.

116 It is also a crucial pricing point for interstate

natural gas. Although no interstate pipeline flows were scheduled or prices

reported for this fourteen day period, the lack of postings reflected the outage

status of Henry Hub. Resumption of scheduled flow postings by interstate

pipelines sent an important signal to market participants that markets were

beginning to normalize.

Scheduled flow information posted by major non-interstate pipelines

could be utilized to detect manipulation and discriminatory behavior

62. We also reject TPA’s assertion that non-interstate scheduled flow

information could not be utilized to detect market manipulation and discriminatory

behavior. As we discussed in Order No. 720, the Commission and other market

participants regularly review supply and demand fundamentals to determine if

115 2008 State of Markets Report, Federal Energy Regulatory Commission,

Division of Energy Market Oversight at 6 (available at

http://www.ferc.gov/market-oversight/st-mkt-ovr/2008-som-final.pdf). 

116 Henry Hub is the interconnecting location of twelve pipelines and

transportation capacity at the Hub is more than 1.8 Bcf per day.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 37

prices are the result of such market forces.

117 Understanding supply in large noninterstate pipelines leading into the interstate market and demand in large noninterstate pipelines downstream of the interstate market will enable market

observers to better understand prices and, therefore, identify potential cases of

market manipulation.

63. The Commission has utilized interstate scheduled flow postings in its

investigations of market manipulation and unduly discriminatory behavior. The

Commission will now include relevant non-interstate posting data in its

evaluations of such allegations.

C. Definition of Major Non-Interstate Pipeline

1. Delivery Threshold

64. Consistent with the need for greater transparency in the interstate natural

gas market and Congress’ directive in section 23 of the NGA, Order No. 720

required major non-interstate pipelines to post daily information regarding

scheduled volumes at specified points of receipt and delivery. The Commission

adopted a definition of “major non-interstate pipeline” as a pipeline that: (1) is not

a “natural gas pipeline” under section 1 of the NGA; and (2) delivers annually

more than 50 million MMBtu of natural gas measured in average deliveries over

117 Order No. 720 at P 50.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 38

the past three years.

118 The Commission found that a delivery threshold of 50

million MMBtu would capture large non-interstate pipelines with operations that

have a substantial impact on interstate natural gas prices. Further, the 50 million

MMBtu threshold is consistent with the threshold that the Commission has

adopted for interstate pipelines to file FERC Form No. 2.

119 The Commission also

held that such a threshold would eliminate compliance burdens for smaller noninterstate pipelines.

120

a. Requests for Rehearing and Clarification

65. Encana requests that the Commission clarify that new pipelines will not be

required to post information until at least three years following initial operation as

they will not have average deliveries for the three previous calendar years upon

which to determine if they exceed the threshold.

121 TPA supports Encana’s

requested clarification.

122 Shell requests clarification that a major non-interstate

pipeline is one that delivered annually more than 50 million MMBtus for each of

the preceding three years.

123

118 See 18 CFR 284.1(d). Fifty million MMBtu of natural gas deliveries per

year is roughly equivalent to 136 MMcf of deliveries per day.

119 Order No. 720 at P 66.

120 Id. P 67.

121 Encana Request for Clarification and Clarification at 3.

122 TPA Request for Rehearing and Clarification at 51-52.

123 Shell Request for Rehearing and Clarification at 6-8. 

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 39

b. Commission Determination

66. Section 284.1(d)(2) of the Commission’s regulations provides that major

non-interstate pipelines are pipelines that deliver “annually more than fifty (50)

million MMBtus (million British thermal units) of natural gas measured in average

deliveries for the previous three calendar years.”

124 We believe this language to be

unambiguous, requiring the aggregation of pipeline deliveries over the previous

three calendar years and division by three. Shell’s request for clarification is

therefore denied.

67. As Encana argues,

125 the Commission did not explicitly state how the

threshold calculation would apply to pipelines with less than three years of

operational data. The Commission finds that the appropriate threshold to

determine if a new pipeline qualifies as major non-interstate pipeline is whether

the pipeline has the capability to deliver more than 50 million MMBtu of natural

gas annually. That is, until a non-interstate pipeline has experienced three years of

operational flow, it must utilize its maximum delivery capacity to determine

whether it is a major non-interstate pipeline subject to this transparency rule.

Section 284.1(d), defining “major non-interstate pipeline,” is amended

accordingly.

124 18 CFR 284.1(d)(2).

125 Encana Request for Rehearing and Clarification at 3.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 40

68. The Commission disagrees with Encana and TPA that new pipelines,

including large non-interstate pipelines with possible natural gas flows that could

have significant effects on the interstate markets, should be wholly exempt from

the posting requirements of this rule for the first three years of their existence.

New major non-interstate pipelines have more than a de minimis impact on

interstate markets and, as such, the Commission’s posting requirements shall

apply.

69. Further, the Commission will not adopt a threshold for new pipelines that

utilizes projected three-year natural gas deliveries as a proxy for actual deliveries.

The Commission agrees with Encana that a non-interstate pipeline that gathers

production may “have difficulty in projecting the volume of natural gas that it will

deliver.”

126 Thus, the Commission will not require new non-interstate pipelines to

develop natural gas delivery projections simply to determine whether they are a

major non-interstate pipeline subject to our transparency rules.

70. Instead, the Commission determines that, until a new pipeline develops

three years of operational flow data, it must utilize design capacity to determine

whether the pipeline is a major non-interstate pipeline subject to the rule. As

discussed in Order No. 720, the Commission believes that design capacity data

typically will be readily accessible to pipelines, especially newly constructed

pipelines. As such, the Commission expects that a design capacity threshold will

126 Encana Request for Rehearing and Clarification at 4.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 41

be the least burdensome method for most new pipelines to determine if they are

subject to our transparency regulations. Further, in the absence of scheduled flow

data, capacity is the best measure of the potential impact of a new pipeline on the

interstate natural gas markets.

71. Accordingly, the Commission denies Encana’s and TPA’s requested

clarification. However, the Commission requires pipelines without three years’

operational data to utilize design capacity to determine whether they are major

non-interstate pipelines. Section 284.1(d) of our regulations is modified to include

this requirement.

2. Treatment of Non-Contiguous Pipeline Systems

72. In Order No. 720, the Commission defined major non-interstate pipelines

utilizing a 50 million MMBtu annual delivery threshold.

127 The order clarified

that the threshold would be applied on a “facility-by-facility” basis.

128

a. Requests for Rehearing and Clarification

73. AGA, Southwest Gas, and Bear Paw/ONEOK Gathering Companies

request either clarification, rehearing, or both regarding the meaning of “facilityby-facility.” Particularly, petitioners request clarification as to how the delivery

threshold for major non-interstate pipelines applies to pipeline systems that are

non-contiguous (i.e., pipelines that are not directly interconnected with each

127 This threshold is included in the definition of “major non-interstate

pipeline” in 18 CFR 284.1(d).

128 Order No. 720 at P 64.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 42

other).129 AGA argues that non-contiguous pipeline systems should be viewed

separately to determine whether each pipeline system is a major non-interstate

pipeline or is eligible for the exceptions for posting in section 284.14(b)(2).

130

74. Southwest Gas requests that the Commission clarify that separate facilities

should be based, at least for an LDC, upon the LDC’s own “operational grouping

of lines and facilities within an operational area.”

131 Southwest Gas also requests

clarification that its separate operating systems need not comply with the posting

regulations based upon factual representations made in its comments.

132

75. Bear Paw/ONEOK supports the Commission’s determination that major

non-interstate pipelines be determined on a facility-by-facility basis. However,

they request clarification that “facility-by-facility” analysis is appropriate where

“physically separate facilities are not operated on an integrated basis.”

133 Bear

Paw/ONEOK claims that such a clarification would eliminate incentives for non129 AGA Request for Rehearing and Clarification at 27-28; SWG Request

for Rehearing and Clarification at 7; Bear Paw/ONEOK Request for Rehearing

and Clarification at 10-11.

130 AGA Request for Rehearing and Clarification at 27-28.

131 Southwest Gas Request for Rehearing and Clarification at 7.

132 Id. at 7-9.

133 Bear Paw/ONEOK Request for Rehearing and Clarification at10-11.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 43

interstate pipelines to splinter their facilities into individual companies to avoid

posting obligations.

134

b. Commission Determination

76. The Commission clarifies that the phrase “facility-by-facility” as used in

Order No. 720 applies both to determine whether a pipeline is a major noninterstate pipeline under 18 CFR 284.1(d) and also whether a major non-interstate

pipeline is nevertheless exempted from the posting requirements as provided in 18

CFR 284.14(b). The phrase “facility-by-facility” was intended by the Commission

to indicate that major non-interstate pipelines would be defined by a common

sense grouping of related facilities.

77. Identifying all of the facilities within a major non-interstate pipeline

requires consideration of both physical interconnection and operational

integration. Put differently, a major non-interstate pipeline is composed of a set of

facilities that is both physically interconnected and operationally integrated. We

believe that this clarification captures the impact that major non-interstate

pipelines have on price formation. If a set of facilities is physically interconnected

and operationally integrated, then the facilities, as a whole, impact the natural gas

market as one entity rather than as multiple entities.

78. By “operationally integrated,” the Commission means transportation of

natural gas through a centralized scheduling process. It is at this level of

134 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 44

integration that the facilities can be coordinated to such an extent that they may

have the effect of a single entity in the natural gas market. Whether pipelines are

organized into separate corporate divisions or formal operating systems is not

relevant to this analysis. For example, if two interconnected sets of facilities are

operated jointly from a central dispatch center, then the facilities together

constitute a single pipeline for purposes of evaluation under the rule, even if the

facilities are separately owned. On the other hand, even if two interconnected sets

of facilities are owned by a single entity, they are nevertheless separate pipelines

for purposes of the rule if they do not schedule natural gas through a joint

scheduling process.

79. Finally, the Commission will not address Southwest Gas’s requested

clarification regarding whether 18 CFR 284.14 applies to Southwest Gas’s

operating systems in Arizona, Nevada, and California. Southwest Gas did not

provide sufficient information for the Commission to make such a determination.

Southwest Gas should review its pipeline system based upon the clarifications

granted herein.

D. Posting Requirements for Major Non-Interstate Pipelines

1. Posting Requirements at Points Where Design Capacity is

Unknown or Does Not Exist

80. In Order No. 720, the Commission required all major non-interstate

pipelines subject to our posting regulations to post scheduled natural gas flow and

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 45

design capacity information for each receipt and delivery point with a design

capacity equal to or greater than 15,000 MMBtu/day.

81. In the Commission’s request for supplemental comments, it sought

additional input on proposals submitted at the March 18, 2009 technical

conference and subsequent post-conference comments regarding application of our

posting regulations to receipt and delivery points at virtual or pooling points.

135

Specifically, the Commission requested comment on requirements to post at such

points with a maximum flow equal to or greater than 15,000 MMBtu per day.

136

The request for supplemental comments included possible revisions to our

regulations, including revisions that would require posting by major non-interstate

pipelines at eligible virtual and pooling points.

137 Further, the order requesting

supplemental comments proposed exempting from posting receipt points where

actual flows were less than 5,000 MMBtu each day for the prior three years.

138

a. Requests for Rehearing and Clarification

82. Many petitioners requested rehearing or clarification regarding how Order

No. 720’s major non-interstate pipeline posting regulations apply to points where

design capacity is unknown or does not exist. Such points may include, but are

135 Order Requesting Supplemental Comments at P 7.

136 Id. P 10.

137 Id. P 7.

138 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 46

not limited to, virtual points, pooling points, points that are not operated by the

pipeline, and other physical points for which the pipeline cannot reasonably

determine the design capacity.

83. AGA states that many LDCs schedule volumes to paper pooling points

without reference to individual physical points.

139 AGA suggests that the

Commission consider requiring posting scheduled volumes at paper pooling points

where the scheduled volumes exceed 15,000 MMBtu per day.

140

84. Both ONEOK Gathering and Nicor request that the Commission clarify

whether scheduled volumes to virtual points should be posted.

141 TPA also

requests clarification that historical data utilized for planning purposes is not

required to be posted.

142

b. Supplemental Comments

85. Atmos generally supports the regulatory language proposed in the

Commission’s order requesting supplemental comments stating that the proposal

"represents a good compromise between the expensive and extensive reporting

required under [the NOPR] and the very limited reporting requirements proposed

139 AGA Request for Rehearing and Clarification at 25.

140 Id. at 26.

141 Nicor Request for Rehearing and Clarification at 5-7; ONEOK

Gathering Request for Rehearing and Clarification at 10-11.

142 TPA Request for Rehearing and Clarification at 48-49.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 47

by others."

143 Atmos suggests, however, that the Commission allow major noninterstate pipelines to utilize historical data rather than actual flow data to

determine posting eligibility for each point.

144

86. ONEOK Gathering likewise supports the regulations proposed in the order

requesting supplemental comments with “minor clarifications.”

145 It requests

clarification that the three-year review of receipt point flows to determine whether

the point is exempted from posting is three calendar years rather than a rolling

three year period.

146

87. Occidental supports the Order Requesting Supplemental Comments'

proposal to limit posting only to scheduled points, and requests modification of the

regulatory language to further clarify this subject, including a definition of virtual

and pooling points.

147 Occidental suggests utilizing an average of multiple days'

actual flow rather than peak day actual flow to determine posting eligibility for

143 Atmos Supplemental Comments at 2.

144 Id. at 3.

145 ONEOK Gathering Supplemental Comments at 4.

146 Id. at 5.

147 Occidental Supplemental Comments at 3.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 48

each point.

148 Occidental states that it is inappropriate to require posting based

upon a single-day anomaly in gas flow.

149

88. TPA requests that the Commission extend the proposed exemption for

receipt points with less than 5,000 MMBtu of flow each day both to delivery

points and to points for which a design capacity is known.

150 TPA argues that

points “flowing less than 15,000 MMBtu every day for three years have no

significant impact on pricing.”

151 TPA also suggests utilizing an average

throughput as a threshold to determine whether a point with no known design

capacity must be posted.

152 KM Intrastate Pipelines support TPA’s supplemental

comments.

153 Atmos likewise suggests that the proposed exemption be extended

to delivery points.

154

89. AGA’s supplemental comments request clarification as to how posted

capacity is determined for non-physical points where volumes are scheduled.

155

148 Id. at 4-5.

149 Id. at p. 5.

150 TPA Supplemental Comments at 5.

151 Id.

152 Id. at 4.

153 KM Supplemental Comments at 1.

154 Atmos Supplemental Comments at 5.

155 AGA Supplemental Comments at 25.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 49

AGA also suggests that the Commission clarify the manner in which volumes are

calculated for non-physical receipt and delivery points.

156 AGA suggests that the

Commission adopt a threshold based upon scheduled volumes for posting of

points with no known design capacity.

c. Commission Determination

90. The Commission grants the requests for rehearing and clarification. As

petitioners note, Order No. 720 did not address the posting of virtual, pooling, or

other points to which natural gas volumes are scheduled and yet where design

capacity is unknown or does not exist. Based on the additional information

received, the Commission finds that major non-interstate pipelines must post

scheduled flow data for points where design capacity is unknown or does not exist

with scheduled maximum natural gas volumes equal to or greater than 15,000

MMBtu on any day within the prior three calendar years. The Commission

amends 18 CFR 284.14(a)(1) to implement this requirement.

91. As petitioners and commenters have stated, some major non-interstate

pipelines schedule natural gas flows to virtual or pooling points where there is no

physically-measurable design capacity.

157 Further, there exist a small number of

156 Id. at 26.

157 The Commission will not amend its regulations to define “virtual points”

or “pooling points” as suggested by some petitioners. These terms are not utilized

in the regulations. Instead, the posting regulations distinguish between points at

which design capacity is known, on the one hand, or is unknown or does not exist.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 50

physical receipt and delivery points where major non-interstate pipelines cannot

reasonably determine a physical design capacity. Nevertheless, transportation to

these points may be substantial and have a significant effect on interstate natural

gas price formation. Petitioners have presented no arguments that scheduled

volumes to such points have only de minimis effects on interstate price formation.

92. For purposes of determining whether a point with no known design

capacity must be posted, major non-interstate pipelines shall use the largest

scheduled natural gas flow over the past three calendar years.

158 If the largest

daily scheduled flow is equal to or greater than 15,000 MMBtu, then the point is

subject to posting. The potential impact on the natural gas market of a physically

metered point is best understood through reference to its design capacity. The

greater the capacity of the point, the greater the natural gas flows that could occur

at the point and the greater the market impact. For this reason, the Commission

adopted in Order No. 720 a design capacity threshold for posting at points where

design capacity is known. For a point with no known design capacity, the closest

approximation for design capacity is the maximum flow scheduled to the point.

Additionally, maximum scheduled daily flow will not be burdensome for major

non-interstate pipelines to calculate for points with no known design capacity.

158 We discuss, infra, the timing of postings for all newly-eligible receipt

and delivery points, including both points for which design capacity is known and

unknown.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 51

93. The Commission clarifies that, as with posting related to points with a

known design capacity, postings at points with no known design capacity are

required only for scheduled volumes. The Commission is not requiring the

posting of unscheduled natural gas volumes or actual flow. Nor is it requiring

posting regarding points to which no volumes are scheduled. As discussed in

Order No. 720, the posting of unscheduled volumes would be unduly

burdensome.

159

94. The Commission’s regulations further reduce the burden on posting

pipelines with virtual points by requiring posting based upon calendar year data.

Thus, major non-interstate pipelines need only review scheduled volume data

annually to determine whether points where no design capacity is known must be

posted. Points with scheduled natural gas flows equal to or greater than 15,000

MMBtu per day become eligible for posting on January 1 of the following year.

95. The Commission will not adopt alternative proposals regarding the

appropriate posting threshold for points with no known design capacity. Atmos

suggests that the Commission adopt a threshold utilizing historical metered flows.

TPA suggests utilizing an average of maximum scheduled flows at each point.

Neither of these suggestions more closely approximates design capacity than a

single-day maximum scheduled flow. Further, identifying multiple maximum

159 Order No. 720 at P 57.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 52

scheduled flow days or appropriate historical actual metered flow would be more

burdensome than identifying a single-day maximum scheduled flow.

160

96. The Commission also finds that the appropriate timeframe for the

scheduled flow threshold that we adopt is three years. A three calendar year

review is sufficient to identify reportable points on major non-interstate pipelines

while allowing pipelines to remove points that are no longer significant.

161 We

also clarify, as TPA requests, that historical data need not be posted for points at

which no design capacity is known.

2. Posting Requirements at Points Where Design Capacity is

Known

97. In Order No. 720, the Commission required major non-interstate pipelines

to post information for receipt and delivery points with design capacity equal to or

greater than 15,000 MMBtu per day.

162 The Commission found that market

participants could utilize design capacity and scheduled volume information to

help determine available capacity at a particular point and, therefore, required

160 Consistent with TPA’s suggestion, we have clarified section

284.14(a)(4) of our regulations to reflect that the “Method of Determining Posted

Capacity” includes “Maximum Volume” rather than “Maximum Average

Volume.”

161 We note, as we did in Order No. 720, that our regulations do not require

that pipelines remove any points from points that are posted. Indeed, we welcome

the greater transparency afforded by postings at receipt and delivery points even

where the Commission’s regulations permit posting to terminate.

162 Order No. 720 at P 82; see 18 CFR 284.14(a).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 53

posting of both design capacity and scheduled volumes.

163 Order No. 720 clarified

that, where the design capacity of a receipt or delivery point could vary according

to operational or usage conditions, major non-interstate pipelines must post the

design capacity for the most common usage conditions of its system during peak

periods.

164

98. In the Order Requesting Supplemental Comments, the Commission sought

comment on a proposal to exempt from posting all receipt points at which design

capacity was known that experienced actual flow of less than 5,000 MMBtu per

day on every day within the prior three years.

165 The Commission explained that

this proposal was based upon its understanding, from the record in this proceeding,

that many major non-interstate pipelines have receipt points with design capacities

greater than 15,000 MMBtu per day and yet consistently flow far less natural gas

than this design capacity.

166 The proposal balanced the transparency goal of the

rule with the costs associated with posting at such receipt points.

163 Order No. 720 at P 82, 84.

164 Id. at P 92.

165 Order Requesting Supplemental Comments at P 10.

166 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 54

a. Requests for Rehearing and Clarification

99. ONEOK Gathering, Nicor, Atmos, Shell, and TPA request clarification

regarding whether posting is required for a physical point if natural gas flows are

not scheduled to the point.

167

100. Enogex argues that the Commission erred in concluding that the posting of

scheduled volumes and design capacity at a given point will allow shippers to

determine how much capacity is available at the point.

168 Enogex states, without

further explanation, that “capacity constraints and other conditions on a pipeline’s

system affect the amount of capacity that can be made available on a daily

basis.”

169

101. ONEOK Gathering requests clarification regarding the calculation of

design capacity for points with meters for which the major non-interstate pipeline

does not have control.

170 In such circumstances, ONEOK Gathering suggests that

the Commission permit major non-interstate pipelines to rely upon representations

made by the entity controlling the point or to make reasonable estimates of design

capacity. ONEOK Gathering also requests clarification regarding design capacity

167 Nicor Request for Rehearing and Clarification at 7-8; ONEOK

Gathering Request for Rehearing and Clarification at 11; Atmos Request for

Rehearing and Clarification at 2-3; Shell Request for Rehearing and Clarification

at 8-9; TPA Request for Rehearing and Clarification at 48-50.

168 Enogex Request for Rehearing and Clarification at 11.

169 Id. at 11.

170 ONEOK Gathering Request for Rehearing and Clarification at 9-10.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 55

postings for receipt and delivery points on major non-interstate pipelines with

greater capacity than interconnected interstate pipelines.

171 Further, ONEOK

Gathering requests clarification regarding how pipeline design capacity should be

calculated as a general matter or, in the alternative, establishment of a safe harbor

for calculations regarding design capacity.

172

b. Supplemental Comments

102. In its supplemental comments, Atmos requests that the Commission extend

the proposed exemption for receipt points with less than 5,000 MMBtu of flow

each day both to points for which design capacity is unknown.

173 Atmos argues

that extension of the exemption to points for which design capacity is unknown

would provide regulatory consistency in that points with a known design capacity

would be treated similarly to points with an unknown design capacity.

174 TPA

echoes these comments, urging also that the exemption threshold be raised to

15,000 MMBtu per day for all points, including points where design capacity is

known or not known.

175 TPA argues that points flowing less than 15,000 MMBtu

171 Id.

172 Id.

173 Atmos Supplemental Comments at 5.

174 Id. at 6.

175 TPA Supplemental Comments at 4-5.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 56

per day every day for three years have no significant impact on pricing in the

U.S.

176

103. NGSA also urges that the proposed exemption should be adopted and

extended to points at which design capacity is known. NGSA claims that the

proposed exemption “exposes a problem inherent in using design capacity as a

threshold – it may capture points that are not truly significant.”

177 NGSA requests

that the Commission modify its regulations to provide that points with physicallymetered design capacity are eligible for the exemption and also that the exemption

threshold be increased to 12,000 MMBtu per day.

178

c. Commission Determination

104. The Commission denies the requests for rehearing and clarification.

Regarding Enogex’s comments, the Commission continues to believe, as stated in

Order No. 720, that, as a general matter, “[m]arket observers may estimate

availability by subtracting scheduled volumes from design capacity.”

179 The

Commission understands that day-to-day operational factors can sometimes affect

available capacity in ways that are not readily apparent. However, just as we have

observed regarding similar postings made by interstate pipelines, market

176 Id. at 5.

177 NGSA Supplemental Comments at 5.

178 Id.

179 Order No. 720 at P 84.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 57

participants will very often be able to ascertain available capacity from the data to

be posted by major non-interstate pipelines.

105. Additionally, the Commission’s regulations do not prohibit major noninterstate pipelines from posting additional information, including, for example,

operational considerations that could affect available capacity.

106. Regarding the calculation of design capacity, the Commission confirms the

statement in Order No. 720: “[i]n the circumstance where the design capacity of a

receipt or delivery point could vary according to operational or usage conditions, a

major non-interstate pipeline must post the design capacity for the most common

operating conditions of its system during peak periods.”

180 This guidance is

consistent with the guidance that we have provided to interstate pipelines subject

to our long-standing posting requirements.

181 Regarding ONEOK Gathering’s

specific request for guidance regarding major non-interstate points with greater

capacity than an interconnected interstate pipeline, the Commission clarifies that

the obligation to post design capacity relates to the major non-interstate pipeline’s

facilities. As such, major non-interstate pipelines must post design capacity of

their facilities even if an interconnecting facility’s capacity is less than the major

non-interstate pipeline’s.

180 Id. P 92.

181 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 58

107. Major non-interstate pipelines must use reasonable efforts to determine

design capacity at physical receipt and delivery points. To the extent that a major

non-interstate pipeline is uncertain as to how to calculate design capacity at a

point, they are free to contact the Commission’s compliance help desk for

informal guidance.

182 Therefore, the Commission will not adopt a safe harbor for

the posting of design capacity.

108. No commenter objected to the proposal, contained in the Commission’s

order requesting supplemental comments, to adopt an exemption from posting for

receipt points with actual flow of less than 5,000 MMBtu per day on each day

within the prior three years. With two minor modifications, the Commission

adopts this exemption. Namely, the exemption shall apply to receipt points with

scheduled natural gas volumes of less than 5,000 MMBtu per day on each day

within the prior three calendar years. These modifications are consistent with the

Commission’s determination to post scheduled volumes rather than actual flow

and should be less burdensome for major non-interstate pipelines to implement

than a rolling exemption based upon actual flow.

183

182 As we reminded major non-interstate pipelines in Order No. 720, the

Commission’s help desk can facilitate responses to questions regarding

compliance with our regulations. See Obtaining Guidance on Regulatory

Requirements, 123 FERC ¶ 61,157 (2008).

183 TPA Supplemental Comments at 5; NGSA Supplemental Comments at

4-6; Atmos Supplemental Comments at 5.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 59

109. The Commission will not further extend this exemption as requested by

some commenters. The Commission clarifies that the exemption applies to only

receipt points, not delivery points or points that operate both as receipt and

delivery points. The exemption is intended primarily to apply to pipelines that

receive gas from declining production areas.

184 These pipelines may have receipt

points that were designed to accommodate natural gas flows of 15,000 MMBtu per

day, but, because of declining production over time, flows into these points have

dwindled to consistently de minimis levels. In such circumstances, it is unlikely

that excess capacity at the point could become utilized in the future and the burden

of posting at the point may exceed the transparency value.

110. As Order No. 720 explained, one of the chief goals of our posting

regulations for major non-interstate pipelines is to assist the public’s estimates of

available capacity on large non-interstate pipelines, and the potential impacts

on interstate price formation. Delivery points with excess capacity may often be

utilized to provide additional service. As just one example, a delivery point that

supplies several industrial consumers of natural gas may encounter reduced

scheduled flows during economic downturns caused by reduction of output from

the industrial consumers. Capacity is available, however, and use of the point may

184 While the exemption could be utilized to exempt receipt points under

other circumstances, we decline to further restrict the exemption. Such restrictions

would complicate application of the exemption, increasing the burden on major

non-interstate pipelines.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 60

increase as economic conditions improve. This data would be useful for market

participants to review as they consider the effect of increased demand on interstate

natural gas prices.

185

111. Additionally, the Commission clarifies that the exemption applies only to

points with a stated design capacity – we decline to extend the exemption to points

for which no design capacity is known.

186 As discussed above, the exemption is

intended to apply to receipt points that were designed to accommodate natural gas

flows of 15,000 MMBtu per day, but, because of declining production over time,

flows into these points have dwindled to de minimis levels. Extending this

exemption to points for which design capacity is unknown would be inconsistent

with our determination that such points should be subject to posting if scheduled

flows exceed 15,000 MMBtu per day on any day within the prior three years.

112. Lastly, the Commission clarifies that the posting exemption for receipt

points with scheduled natural gas volumes of less than 5,000 MMBtu per day on

185 Further, given the determination to require updating of posted points

only on a bi-annual basis, a delivery point that was “dropped” from posting could

experience resurgent flow for over seven months before posting resumed. Such a

result is contrary to the transparency goals expressed in NGA section 23.

186 18 CFR 284.14(a)(2) of the regulations adopted herein by its terms

applies to the entirety of section 284.14(a)(1), including both points for which a

design capacity is posted and those that are not. Section 284.14(a)(2) applies only

to receipt points with scheduled volumes of less than 5,000 MMBtu per day for

each day within the prior three years. Points where no design capacity is posted,

by definition, have experienced scheduled flows equal to or greater than 15,000

MMBtu per day and are thus not eligible for the exemption.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 61

each day within the prior three calendar years does not require that pipelines

remove points that have been subject to posting. We emphasize, as we did in

Order No. 720, that our posting regulations are minimum posting requirements.

Major non-interstate pipelines may elect to post additional data regarding their

operations.

3. Timing of Posting of Eligible Points

113. In the Order Requesting Supplemental Comments, the Commission sought

additional comment on the appropriate time for posting to begin for newly eligible

points. The order sought comments on one proposal that would require posting for

each receipt and delivery point to begin within 45 days of the point's eligibility for

posting.

187

a. Supplemental Comments

114. TPA’s supplemental comments claim that 45 days is insufficient time for

review of flow data to determine if posting is required, even if such determinations

utilize monthly billing data.

188 AGA urges the Commission to require new receipt

and delivery points to be added annually rather than on a rolling 45-day basis.

AGA claims that such a modification would reduce compliance burdens for major

non-interstate pipelines.

189 TPA requests that the Commission require major non187 Order Requesting Supplemental Comments at P 9.

188 TPA Supplemental Comments at 3.

189 AGA Supplemental Comments at 27.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 62

interstate pipelines to determine, on a semi-annual basis, whether points with no

known design capacity must be posted. ONEOK Gathering supports TPA’s

request that eligible points be determined on a bi-annual basis.

190

b. Commission Determination

115. The Commission grants rehearing and revises section 284.14(a)(3) of its

regulations to require major non-interstate pipelines to begin Internet postings for

newly-eligible receipt and delivery points within 45 days of the point’s eligibility

for posting.

116. The Commission understands commenters’ arguments that posting new

points on a rolling basis would be burdensome for major non-interstate pipelines,

but believes that these burdens are overstated and substantially outweighed by the

transparency benefit of timely posting of newly eligible points.

191 Major noninterstate pipelines have access to, and utilize on a daily basis, all of the

information necessary to determine whether a receipt or delivery point must be

posted under our regulations. The posting of newly eligible points is of substantial

value to market participants as new receipt and delivery points or increased

scheduled flow to points could have immediate, substantial effect on market

prices. Balancing the transparency benefits of timely posting for newly eligible

190 ONEOK Gathering Supplemental Comments at 4.

191 The Commission notes that newly eligible points may be newly

constructed receipt and delivery points or existing points that have become eligible

for posting due to an increase in scheduled natural gas volumes.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 63

points with this burden, we believe that a 45-day requirement for the posting of

newly eligible points is appropriate. Such a requirement would allow major noninterstate pipelines to utilize monthly billing and report data to determine the

eligibility of new points.

192

117. We decline to require only an annual or semi-annual review of new points

as AGA and others suggest. Volumes at points that are large enough to require

posting may have a significant impact on wholesale natural gas price formation.

Delaying posting for a full year at such points would be contrary to the

Commission’s transparency goals.

4. Clarifications Regarding the Major Non-Interstate

Posting Requirements

a. Confidentiality of Data to be Posted

118. In Order No. 720, the Commission rejected requests to abandon this rule on

the grounds that posted information would competitively disadvantage noninterstate pipelines or non-interstate pipeline transportation customers.

193 This

determination was based upon the Commission’s substantial experience with

interstate posting requirements and the general, aggregated nature of the

information to be posted by non-interstate pipelines.

192 To the extent that a major non-interstate pipeline does not believe that it

can, using reasonable efforts, determine the eligibility of new points and begin

posting within 45 days of their eligibility, it may request waiver from the

Commission of this requirement.

193 Order No. 720 at P 88-89.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 64

119. AGA argues on rehearing that posting at delivery points with one or few

transportation customers could have anti-competitive effects in certain

situations.

194 Additionally, AGA believes that, in certain circumstances, the

Commission's posting requirements could require LDCs to violate other regulatory

requirements regarding the posting of customer-specific data.

195

120. California LDCs make similar arguments in their request for rehearing of

Order No. 720, echoing arguments previously made in response to the NOPR.

They request that the Commission clarify that major non-interstate pipelines are

not required to post confidential customer information.

196 Enogex argues that the

posting of certain information could disclose the identity of end-users on an LDCs

system.

197

121. California LDCs' supplemental comments provide additional detail

regarding their position. California LDCs’ supplemental comments argue that

posting scheduled flow information may violate the California Public Utility

Commission’s (CPUC’s) confidentiality regulations. Specifically, according to

these commenters, posting information required by Order No. 720 may cause the

194 AGA Request for Rehearing and Clarification at 24.

195 Id.

196 California LDCs Request for Clarification and Rehearing at 17-18.

197 Enogex Request for Rehearing and Clarification at 10.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 65

California LDCs to violate the CPUC’s directives to preserve customer privacy.

198

Further, the comments repeat arguments made in their request for rehearing and

comments in response to the NOPR that disclosure of scheduled flows could

competitively disadvantage generators that receive natural gas at a delivery

point.

199 Additionally, the California LDCs expand on prior comments that

disclosure of location names or location information could disclose critical energy

infrastructure information or information about military installations with national

security implications.

200

122. In supplemental comments, NGSA requests clarification that posting is

required only for aggregated scheduled volumes, not specific delivery accounts.

201

NGSA also requests that the Commission permit market participants to seek

exemptions for posting at certain points to protect commercially sensitive

information.

202

123. Most of the arguments raised by petitioners and commenters were

discussed and rejected in Order No. 720.

203 The regulations therein adopted

198 PG&E and SoCal Gas Supplemental Comments at 6.

199 Id. at 5-6.

200 Id. at 5.

201 NGSA Supplemental Comments at 6.

202 Id.

203 Order No. 720 at P 88-89.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 66

required only posting of aggregated, not account-specific, scheduled flow data.

204

The Commission noted that its interstate pipeline posting regulations require

posting at receipt and delivery points even if the points are customer-specific and

the industry has benefitted from the transparency afforded by such postings.

205

Congress clearly expressed an intent in NGA section 23 to ensure that relevant

market data is made available to the public.

206 For these reasons, we reject

petitioners’ requests to limit the posting of information.

124. Additionally, the Commission does not believe its regulations require the

disclosure of potentially sensitive information regarding the physical location of

receipt and delivery points or actual natural gas flows that would implicate

national security. Our major non-interstate posting requirements do not mandate

disclosure of the physical location or composition of receipt and delivery point

facilities.

125. Lastly, the Commission does not believe that its regulations are in conflict

with state public utility commissions’ general prohibitions regarding disclosure of

private customer data. We note that the CPUC itself has not raised this issue in

this proceeding – nor have any other non-interstate pipelines within California

204 While our major non-interstate pipeline posting regulations do not

require the posting of account-specific data, they do not prohibit such postings.

205 Order No. 720 at P 88-89.

206 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 67

other than the California LDCs. The California LDCs’ claim that our posting

regulations “likely” would identify particular customers on their systems and

customer’s usage.

207 Such concerns are speculative and commenters fail to

identify any specific points where application of our posting requirements would

be inconsistent with the CPUC’s privacy guidelines. The Commission therefore

denies rehearing and declines to modify its regulations as requested by the

petitioners.

b. Duplicate Postings

126. AGA and National Grid request clarification regarding posting of

information by major non-interstate pipelines at points of interconnection with

interstate pipelines.

208 They argue that such postings are duplicative of postings

made by interstate pipelines. Additionally, Bear Paw/ONEOK argues that

postings should not be required by major non-interstate pipelines at locations

downstream of processing facilities if such postings would be duplicative of

postings made by interstate pipelines.

209

127. In response to AGA’s, National Grid’s, and Bear Paw/ONEOK’s requests,

the Commission clarifies that major non-interstate pipelines must post at eligible

points at interconnections with interstate pipelines and denies the requests for

207 PG&E and SoCal Gas Supplemental Comments at p. 6.

208 AGA Request for Rehearing and Clarification at 22-24; National Grid

Request for Rehearing and Clarification at 9-10.

209 Bear Paw/ONEOK Supplemental Comments at 9-10.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 68

rehearing. Postings at interconnections with interstate pipelines are not

necessarily duplicative as the Commission's posting requirements for interstate

pipelines differ from the requirements for major non-interstate pipelines. Further,

available capacity at points of interconnection may differ between interstate and

major non-interstate pipelines and this information would be unavailable if only

interstate pipelines posted data. Even if posted information is, on occasion,

duplicative, market participants can utilize posted information from one pipeline

to better evaluate the accuracy of information posted by the interconnected

pipeline. It has been the Commission’s experience administering our interstate

posting requirements that “duplicative” postings at interconnections between

interstate pipelines are very helpful to market participants.

c. Monthly and Weekly Scheduling

128. In Order No. 720, the Commission concluded that major non-interstate

natural gas pipelines should post data on a daily basis.

210 Less frequent postings

would not provide sufficient transparency for market observers to understand price

fluctuations in a timely manner.

129. On rehearing, Targa claims that the requirement to post scheduled data on

a daily basis “likely would require [Targa] to redefine the nature of its

210 This requirement is contained in section 284.14(a)(4) of the

Commission’s regulations.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 69

relationships with current and future customers.”

211 Targa explains that it does not

utilize daily scheduling or nominations, but that it reads its system meters on a

monthly basis.

212 Targa reads Order No. 720 as requiring it “to establish an

internal gas control function” to comply with the Commission’s posting

regulations.

213

130. As the Commission stated in Order No. 720, the Commission’s major noninterstate pipeline posting regulations do not regulate the rates, terms, or

conditions of service for major non-interstate pipelines.

214 To the extent that

Targa complains of the need to designate personnel to ensure compliance with the

data posting requirements, we deny the company’s rehearing request. Compliance

with the Commission’s regulations is mandatory for all non-exempt major noninterstate pipelines. However, to the extent that Targa’s comments assume that

Order No. 720 requires major non-interstate pipelines to schedule natural gas

transportation on a daily basis, we clarify that Order No. 720 imposes no such

requirement. Natural gas transportation that is not scheduled need not be posted.

If natural gas transportation is scheduled on a daily basis, then such scheduled

volumes should be posted along with other required data.

211 Targa Request for Rehearing and Clarification at 9.

212 Id.

213 Id.

214 Order No. 720 at P 24.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 70

131. Further, the Commission clarifies that, if a major non-interstate pipeline

schedules natural gas transportation using a timeframe different from daily

scheduling (e.g., weekly or monthly scheduling), postings must nevertheless occur

on a daily basis utilizing the most recent scheduling data. Major non-interstate

pipelines that engage in such scheduling practices must use reasonable efforts to

estimate daily natural gas scheduled flows. Further, major non-interstate pipelines

must explain the basis for such estimates on their Internet websites. For example,

if a major non-interstate pipeline schedules natural gas transportation for the

upcoming week, it could post daily scheduled flows in equal amounts each day

(i.e., 1/7th

of the weekly scheduled amount) if it believes that deliveries will be

uniform each day.

d. Postings for Bi-Directional Scheduled Volumes

132. In Order No. 720, the Commission required major non-interstate pipelines

to post, for each eligible point and on a daily basis, “Scheduled Volume”

215 and

incorporated this requirement in 18 CFR 284.14(a)(4).

133. Atmos requests clarification regarding posting of Scheduled Volume at

points with bi-directional scheduled natural gas flows (i.e., points of both receipt

and delivery).

216 Atmos urges the Commission to determine that net volumes be

215 Order No. 720 at P 94.

216 Atmos Request for Rehearing and Clarification at 5-6.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 71

posted at such points. Similarly, Atmos requests clarification regarding posting at

points where bi-directional scheduled transportation results in displacement.

217

134. In response to Atmos' request, the Commission clarifies that bi-directional

scheduled volumes should not be netted against each other prior to posting. The

Commission modifies 18 CFR 284.14(a)(4) consistent with this determination and

requires Scheduled Volume to be posted for each direction of scheduled natural

gas flow. While the Commission agrees, as Atmos argues, that market observers

should be aware that Atmos' and other major non-interstate pipelines' bidirectional scheduling affects available capacity, the Commission believes that, for

transparency purposes, posting more information about such scheduling is

preferable than less information. Postings for points that operate as both receipt

and delivery points should include Scheduled Volume in each direction

separately.

218 To the extent that a major non-interstate pipeline believes that such

posting would provide misleading data regarding available capacity at the point, it

may post a narrative explaining how such scheduled volumes affect available

capacity.

217 Id. at 6-7.

218 The Commission will leave the manner of posting such bi-directional

flows to the major non-interstate pipeline’s discretion. For example, a major noninterstate pipeline may choose to reflect bi-directional scheduled volumes at a

single point as two separate points, one for each direction of scheduled flow.

Alternatively, it could list two separate volumes for a single point, identifying the

direction of each scheduled volume.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 72

e. Timing of Postings

135. In Order No. 720, the Commission determined postings by major noninterstate pipelines should be made no later than 10:00 p.m. central clock time on

the day prior to scheduled gas flow.

219 AGA and National Grid request that the

Commission include this requirement in the regulations adopted.

220 The

Commission agrees and section 284.14(a)(4) of our regulations has been modified

to require postings by 10:00 p.m. central clock time the day prior to scheduled

flow.

f. Reporting by Customer Class

136. In Order No. 720, the Commission required major non-interstate pipelines

to post information regarding scheduled flows on an aggregated basis.

221 Yates

requests that the Commission expand this requirement to include postings at each

point by customer class and to identify affiliate relationships.

222 Yates argues that

such postings could enable market participants to detect unduly discriminatory

activities by major non-interstate pipelines.

223

219 Order No. 720 at P 97.

220 AGA Request for Rehearing and Clarification at 28; National Grid

Request for Rehearing and Clarification at 10.

221 Order No. 720 at P 137.

222 Yates Request for Rehearing and Clarification at 5-7.

223 Id. at 7.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 73

137. The Commission will not require the posting of additional data by customer

class. As explained in Order No. 720, the Commission's primary goal is to

enhance the transparency of the interstate natural gas market by requiring major

non-interstate pipelines to post information regarding scheduled natural gas

volumes that may impact interstate natural gas price formation. Requiring

customer class-specific data would not further this goal.

g. Conversion from Standard Cubic Feet (scf)

138. The pipeline posting regulations adopted in Order No. 720 provided for

measurements in Btu to determine whether major non-interstate pipelines were

subject to the rule and the receipt and delivery points to be posted. In

supplemental comments, NGSA suggests that the Commission clarify that it is

acceptable for major non-interstate pipelines to utilize a standard conversion of

1,000 Btu per scf to determine whether a point is required to be posted.

224

139. We grant the requested clarification. To the extent that a pipeline cannot

reasonably determine scheduled volumes utilizing Btu, it may choose to utilize

1,000 Btu per scf as a conversion factor. This conversion factor may be used to

establish whether a pipeline is a major non-interstate pipeline subject to the

Commission’s regulations and also whether specific receipt and delivery points

must be posted.

224 NGSA Supplemental Comments at 3-4.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 74

h. Clarification of Information to be Posted

140. California LDCs request clarification that available capacity should be

calculated, for purposes of postings by major non-interstate pipelines, by

subtracting Design Capacity from Scheduled Volume.

225 The Commission agrees

and clarifies that Available Capacity for physical points is calculated by

subtracting Design Capacity from Scheduled Volume. To the extent that

Available Capacity is not an appropriate estimate of the additional volumes of

natural gas that could be scheduled at a point, pipelines may provide an

explanation accompanying their postings.

E. Exemptions

1. Pipelines Upstream of Processing Plants

141. In Order No. 720, the Commission adopted an exemption to the posting

requirements contained in § 284.14(a) for major non-interstate pipelines that lie

entirely upstream of a processing, treatment, or dehydration plant.

226 The

Commission declared that a pipeline may be upstream of a processing plant if it

flows into another line that flows into a processing plant.

227 The Commission did

not provide a general exemption for gathering pipelines.

228 The Commission also

225 California LDCs Request for Rehearing and Clarification at 19.

226 Order No. 720 at P 113.

227 Id.

228 Id. at P 114.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 75

declined to adopt an exemption for pipelines that lie partially upstream and

partially downstream of a processing, treatment, or dehydration plant, instead

holding that the increased threshold mitigated compliance difficulties posed for

such pipelines.

229 The Commission held that, in contrast to the “primary function

test,” the new regulation exemptions served as an easily-applied bright-line test for

determining whether a major non-interstate pipeline should post information in

compliance with this rule.

230

a. Requests for Rehearing and Clarification

142. Anadarko and Encana request rehearing, and Shell requests clarification,

regarding whether the Commission should extend the exemption to major noninterstate pipelines that are entirely upstream of processing, treatment or

dehydration plants but for the presence of stub lines incidental to the operation of

those plants.

231 Anadarko comments that if the only portion of a major noninterstate pipeline system that is downstream of a processing, treatment, or

dehydration plant is a stub line incidental to that plant, solely used to connect that

229 Id. at P 115.

230 Id.

231 Anadarko Request for Rehearing and Clarification at 6-7; Encana

Request for Rehearing and Clarification at 5-7; Shell Request for Rehearing and

Clarification at 4-6.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 76

plant to an interstate pipeline, then that major non-interstate pipeline should not be

required to comply with the reporting requirements of section 284.14(a).

232

143. Anadarko cites Commission precedent, claiming that stub lines are

generally held to be incidental to the provision of gathering services and, as such,

are not subject to Commission jurisdiction under section 1 of the NGA.

233

Anadarko and Encana both state that the relevant information for the gas flowing

through the stub lines would be captured at the receipt point on whatever pipeline

that sub line flows into; thus requiring posting under Order No. 720 would be

duplicative.

234 Encana further urged the Commission to adopt such an exemption

to avoid unnecessary burdens on gathering and processing companies in exercising

its transparency authority.

235

144. Copano seeks clarification that the exemption for pipelines lying entirely

upstream of processing applies to a pipeline where, under normal operating

conditions, the entire gas stream flowing on the pipeline is delivered into a

downstream pipeline and is contractually committed to be processed at a

processing plant located on the downstream pipeline.

236

232 Anadarko Request for Rehearing and Clarification at 6.

233 Id.

234 Id. at 7; Encana Request for Rehearing and Clarification at 6-7.

235 Encana Request for Rehearing and Clarification at 6.

236 Copano Request for Rehearing and Clarification at 5.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 77

145. Enogex comments the Commission should exempt non-contiguous systems

located entirely upstream of processing plants.

237 Enogex states that Enogex Gas

Gathering LLC operates several separate, non-contiguous systems. Enogex also

requests that the Commission apply the modified primary function test to

determine whether facilities are exempt under the Final Rule rather than the

bright-line test promulgated therein.

238 Enogex cites Commission precedent

applying the primary function test, claiming that the modified primary function

test is the standard the Commission has consistently applied to determine whether

a given facility performs a gathering or transmission function.

239

b. Commission Determination

146. The Commission is persuaded that a major non-interstate pipeline with a

stub line incidental to a processing plant and that delivers all of its transported gas

directly into a single pipeline should not be required to comply with the posting

requirements. The Commission, therefore, grants rehearing on this issue.

However, if a major non-interstate pipeline’s stub line delivers gas to multiple

pipelines or to end-users, then the major non-interstate pipeline will not be

exempt.

237 Enogex Request for Rehearing and Clarification at 9.

238 Id. at 7-9.

239 Id. at 7.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 78

147. The Commission agrees with Anadarko and Encana that major noninterstate pipelines with stub lines that deliver gas entirely into a single pipeline

are in a substantially similar position regarding impact on interstate natural gas

price formation as pipelines that lie entirely upstream of processing plants. As the

Commission stated in Order No. 720, natural gas that requires processing is not

fungible with interstate pipeline quality natural gas and, therefore, data regarding

the transportation of such natural gas has substantially less transparency value.

240

While natural gas that enters a stub line following processing is of “pipeline

quality,” transportation of that gas directly to a single pipeline has no different

price effect than if natural gas flowed directly from a processing plant into an

adjacent, interconnected interstate pipeline.

148. If a pipeline downstream of a processing plant makes deliveries of natural

gas to more than one pipeline or to end-users, then such deliveries could have an

effect on the supply of natural gas to different portions of the interstate market

and, therefore, on price formation. To the extent that Anadarko and Encana

request rehearing to expand the exemption beyond stub line delivery directly to a

single pipeline, the Commission rejects the requests. 

149. Further, the Commission rejects Copano’s request for rehearing. Order No.

720 stated that, for purposes of this exemption, “a pipeline may be upstream of a

240 Order No. 720 at P 113.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 79

processing plant if it flows into another line that flows into a processing plant.”

241

Copano requests that we extend this analysis to contractual agreements to process

gas downstream from a major non-interstate pipeline. We understand Copano’s

request to include situations where, although a contractual commitment exists to

deliver natural gas to a processing plant, some or all of the delivered natural gas

molecules may be delivered into interstate or non-interstate pipelines without

processing.

242 In this circumstance, at least some of the delivered natural gas is

fungible with pipeline quality natural gas and, for the reasons we expressed in

Order No. 720, the Commission will not extend the exemption to major noninterstate pipelines that deliver pipeline quality natural gas.

243

150. Regarding Enogex’s request for clarification of the exemption regarding

non-contiguous pipelines, the Commission directs Enogex and other noncontiguous gathering pipelines to our clarifications regarding companies operating

non-contiguous pipelines, supra at P 71 et seq. To the extent that Enogex operates

separate pipelines, it must determine whether each pipeline is a major noninterstate pipeline subject to the posting requirements.

241 Id. P 113.

242 To the extent that Copano, or another major non-interstate pipeline,

delivers natural gas to another pipeline that must then physically flow through a

processing plant, then the exemption would apply as the Commission stated in

Order No. 720. Id.

243 Id.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 80

151. For the reasons expressed in Order No. 720, the Commission denies

Enogex’s request for rehearing regarding use of the modified primary function test

to define the exemption for unprocessed gas transportation. As Enogex correctly

observes, the test is the method utilized by the Commission “to determine whether

a given facility performs a gathering or transmission function.”

244 The test was

created to assist the Commission to determine whether facilities are transmission

facilities subject to our traditional rates, terms, and conditions regulation. NGA

section 23 embodies a different purpose (i.e., transparency of interstate natural gas

price formation) with a different jurisdictional reach (i.e., any market participant)

and the modified primary function test is therefore inapposite. Further, application

of the test would require case-by-case evaluation by each potential major noninterstate pipeline to determine its status under the rule. As Order No. 720 held,

application of the test would be unnecessarily burdensome for pipelines and the

Commission.

245

2. Pipelines that Deliver Primarily to End Users

152. Order No. 720 adopted an exemption to the posting requirements in section

284.14 of the Commission's regulations for major non-interstate pipelines that

deliver more than 95 percent of their volumes to retail customers as measured by

244 Enogex Request for Rehearing and Clarification at p. 7.

245 Order No. 720 at P 114.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 81

average deliveries over the preceding three calendar years.

246 This exemption is

codified at 18 CFR 284.14(b)(2).

153. The Commission explained that many sales to end-users have substantial

impacts on wholesale energy markets.

247 In part, the Commission relied upon its

findings in Order No. 704-A to define "retail" sales of natural gas as bundled

transactions through an LDC at state-approved tariff rates.

248 Order No. 720

concluded that, where such transactions dominate a major non-interstate pipeline's

deliveries, the transparency importance of a pipeline's postings is diminished.

Balancing this lessened transparency benefit with the burdens on LDCs to post

data, the Commission decided to exempt LDCs from posting if a pipeline's retail

deliveries exceed 95 percent of the total deliveries averaged over three calendar

years. The Commission also noted that, by increasing the threshold to become a

major non-interstate pipeline from 10 million MMBtu (as proposed in the NOPR)

to 50 million MMBtu, it had already exempted a large number of small LDCs

from the posting regulations.

249

246 Id. P 120.

247 Id. P 121 (citing Order No. 704-A at P 40-43).

248 Id.

249 Id. P 122.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 82

a. Requests for Rehearing and Clarification

154. AGA, MidAmerican, National Grid, NICOR, Dow Pipeline, ONEOK

Gathering, and California LDCs argue on rehearing that the Commission should

extend the retail delivery exemption to major non-interstate pipelines with the

requisite deliveries to all end-users, not just retail transactions.

250

155. AGA, MidAmerican, and National Grid complain that Order No. 720

substantially departed from the NOPR in that the NOPR proposed to exempt

pipelines based upon deliveries to end-users rather than retail deliveries.

251 These

companies argue that, as a result, affected companies had no opportunity to

comment on the scope of this exemption.

156. MidAmerican states that the only rationale provided by the Commission

explaining the exclusion of unbundled transactions was a reference to Order No.

704.

252 MidAmerican understands Order No. 704-A as confirming the

Commission's concern regarding interstate transportation to end-users and not

250 AGA Request for Rehearing and Clarification at 10-16; MidAmerican

Request for Rehearing and Clarification at 3-5; National Grid Request for

Rehearing and Clarification at 4-8; NICOR Request for Rehearing and

Clarification at 2-5; Dow Pipeline Request for Rehearing and Clarification at 3-5;

ONEOK Gathering Request for Rehearing and Clarification at 6-8; California

LDCs Request for Rehearing and Clarification at 18-19.

251 AGA Request for Rehearing and Clarification at 5-6; MidAmerican

Request for Rehearing and Clarification at 6-9; National Grid Request for

Rehearing and Clarification at 4-8.

252 MidAmerican Request for Rehearing and Clarification at 7.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 83

transportation from LDCs to end-users.

253 MidAmerican argues that data

regarding deliveries to any customers under state-approved transmission tariffs is

not useful to understand wholesale natural gas prices.

157. Nicor argues that the Commission's analogy to Order No. 704-A is

misplaced. Nicor states that Order No. 704-A imposed an annual reporting

requirement for wholesale purchases and sales by market participants while Order

No. 720 imposes posting requirements for major non-interstate pipelines.

254 Nicor

argues that all sales of natural gas on its system are either being sold at retail or

"just delivered."

255 Nicor's argument stems from its conclusion that “flows on a

LDC's system would not meaningfully add to . . . understanding of the supply and

demand fundamentals that affect wholesale natural gas prices."

256 Even if the

Commission does not modify the exemption, Nicor argues that the regulatory text

should be clarified that retail transactions are only those bundled transactions at a

tariff rate.

257

158. Targa claims that the Commission's determination in Order No. 720 to

exempt only major non-interstate pipelines with greater than 95 percent of

253 Id. at 7-10. MidAmerican suggests that the paragraphs cited in Order

No. 704-A relate to interstate transportation only.

254 Nicor Request for Rehearing and Clarification at 3-4.

255 Id.

256 Id. at 4.

257 Id. at 2-5.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 84

deliveries to retail customers is unsupported by the record in this proceeding.

258

Targa points to the fact that the only comments received on this point were

submitted by pipelines and pipeline representatives counseling against this type of

limitation to the exclusion.

259 Targa also claims that the Commission has not

drawn a legally cognizable distinction between pipelines that deliver more than 95

percent of annual flows to end-users and pipelines that deliver 95 percent of flows

to retails customers.

260

159. Other petitioners seek to expand the exemption not only to cover deliveries

to all end-users, but to other transactions as well. For example, Targa argues for

further expansion of the exemption to cover Hinshaw pipelines that supply natural

gas to end-users and other pipelines within a state. Targa states that there is no

justification for disparate treatment of such supply pipelines and LDCs for

purposes of the exemption.

261 AGA agrees with Targa on this point.

160. National Grid and AGA argue that two other transactions should also be

part of the 95 percent of deliveries included in the exclusion: volumes delivered to

and from a liquefied natural gas storage facility behind an LDC's city-gate and

258 Targa Request for Rehearing and Clarification at 10-14.

259 Id. at 12.

260 Id. at 14.

261 Targa Request for Rehearing and Clarification at 10-14.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 85

volumes that flow through delivery points shared with other LDCs.

262 National

Grid states that these transactions, like all deliveries to end-users, cannot

contribute to an understanding of wholesale price formation.

161. AGA additionally argues that deliveries from one LDC to another should

be deemed a delivery to end use customers.

263 California LDCs request that the

Commission require LDCs to post information only at citygates and not within the

LDC systems themselves.

264

b. Commission Determination

162. The Commission grants rehearing to provide an exemption from the posting

requirements for all major non-interstate pipelines that deliver more than 95

percent of their annual flows to end-users as measured by average deliveries over

the preceding three calendar years. We agree with AGA, MidAmerican, National

Grid, NICOR, Dow Pipeline, ONEOK Gathering, and California LDCs that

deliveries to end-users generally have the same effect on deliveries to retail

customers (a subset of all end-users). As the Commission explained elsewhere in

Order No. 720 and above, transparency is enhanced through an understanding of

natural gas scheduled flows on non-interstate systems. The structure of natural

262 National Grid Request for Rehearing and Clarification at 9-10; AGA

Request for Rehearing and Clarification at 11-17.

263 AGA Request for Rehearing and Clarification at 20-21.

264 California LDCs Request for Rehearing and Clarification at 15-17;

California LDCs Supplemental Comments at 6-9.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 86

gas price sales and transportation transactions by an LDC to end-users is irrelevant

for purposes of interstate price formation.

265

163. The Commission also clarifies, as National Grid and AGA suggest, that

deliveries to on-system storage facilities (including deliveries to on-system

liquefied natural gas (LNG) storage) are included within the exemption. Such

deliveries have no effect on interstate natural gas price formation. The

Commission modifies section 284.14(b)(2) to include deliveries to on-system

storage.

164. We deny AGA’s request to include deliveries from one LDC to another in

the end-use exemption and California LCDs’ request to limit posting by LDCs

only to citygates. In such circumstances, LDCs are not providing service to endusers, but are operating in essentially the same fashion as traditional intrastate

pipelines. To the extent that National Grid’s and AGA’s requests regarding shared

points relate to deliveries and receipts form one LDC to another, those requests are

also denied.

165. The Commission will also clarify that major non-interstate pipelines other

than LDCs can qualify for this exemption if they meet the delivery threshold.

However, we deny rehearing as requested by Targa and AGA to broadly exempt

265 Because we grant the rehearing request and revise our regulations

consistent with the proposal contained in the NOPR, we need not address AGA's,

MidAmerican's, and National Grid's arguments regarding the notice provided

regarding the Final Rule or Dow Pipeline’s alternative request for waiver.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 87

Hinshaw pipelines that supply natural gas to end-users and other pipelines within a

state. Pipelines that deliver substantial quantities of natural gas to other pipelines

for subsequent re-delivery to end-users are not similarly situated with pipelines

that deliver 95 percent of their volumes to end-users. Receipts and deliveries at

interconnections between pipelines provide useful market information to

understand changes in daily flows in response to such things as regional prices;

pipeline maintenance; and pipeline disruptions, for example caused by a

compressor outage.

166. Lastly, the Commission notes that reference to NGA section 23(d)(2) is

unavailing to most non-interstate pipelines seeking to avoid posting of data.

266

That section prohibits the Commission from requiring compliance from “natural

gas producers, processors, or users who have a de minimis market presence.”

Most non-interstate pipelines are not producers, processors, or users of natural gas.

3. Storage Facilities

167. In Order No. 720, the Commission adopted an exemption for major noninterstate pipelines that function as stand-alone storage providers.

267 This

exemption is codified in 18 CFR 284.14(b)(3). The Commission reasoned that

much of the flow data that could be obtained from storage providers would be

266 15 U.S.C. 717t-2(d)(2).

267 Order No. 720 at P 136.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 88

provided by interconnected interstate or major non-interstate pipeline postings.

268

Further, the Commission clarified that flow data affecting interstate price

formation, not natural gas storage inventory, would enhance transparency and,

thus, posting of storage-specific data was unnecessary.

269 Given these facts, the

Commission exempted major non-interstate pipeline storage providers from the

posting requirements of the rule as such postings would be unduly burdensome.

270

a. Requests for Rehearing and Clarification

168. Enogex argues on rehearing that the exemption should be extended to all

major non-interstate pipelines that provide storage service in addition to

transportation service.

271 Enogex states that the Commission provided no

explanation for excluding from the exemption major non-interstate pipelines with

storage and transportation service.

272

b. Commission Determination

169. The Commission denies Enogex’s request for rehearing. As explained in

Order No. 720 and supra at P 33 et seq.,

273 the posting of scheduled flow

268 Id. P 136-37.

269 Id. P 136.

270 Id. P 137.

271 Enogex Request for Rehearing and Clarification at 10.

272 Id.

273 Order No. 720 at P 39-56.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 89

information on major non-interstate pipelines will enhance interstate transparency

and market efficiency. In Order No. 720, the Commission exempted noninterstate storage providers from the posting regulations because it determined that

scheduled flow, not natural gas storage inventory information, furthered the rule’s

transparency goal. The Commission also noted that, because major non-interstate

pipelines that provide transportation service would provide scheduled flow

information to receipt and delivery points connected to non-interstate storage

providers, at least some flow data into and out of storage providers would be

publicly available. Given these facts, the Commission determined that the

exemption was warranted.

F. Safe Harbor

170. In response to the NOPR, certain commenters requested a safe harbor for

postings made by major non-interstate pipelines under the promulgated regulations

to excuse inadvertent posting errors by non-interstate pipelines that make a goodfaith effort to comply with the posting requirements. The Commission declined to

adopt a safe harbor, differentiating between the posting requirements set forth in

the order and the very limited circumstances where the Commission has, in the

past, provided a safe harbor.

274

274 Id. P 151-52.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 90

a. Requests for Rehearing and Clarification

171. Certain petitioners and commenters request rehearing of the Commission’s

determination to not adopt a safe harbor provision based on claimed uncertainties

and ambiguities in the posting requirements.

275

172. TPA and Occidental seek clarification that the Commission will not

penalize unintentional mistakes by parties acting in good faith.

276 TPA comments

that enforcement of our regulations regarding major non-interstate pipelines within

six months is a narrow timeframe and that such pipelines will be hard pressed to

design and implement systems to post the required data.

277 TPA also notes that

errors are likely to occur during the normal course of business.

278 Occidental

comments that the potential for inadvertent posting errors is particularly

significant based on the fact that the posting requirements apply to parties who

historically have not been subject to posting requirements and because many have

not tracked the data that the Commission is requiring them to report.

279

275 California LDCs Request for Rehearing and Clarification at 17;

Occidental Request for Rehearing and Clarification at 6-7; TPA Supplemental

Comments at 46.

276 TPA Supplemental Comments at 46; Occidental Supplemental

Comments at 6-7.

277 TPA Supplemental Comments at 46.

278 Id.

279 Occidental Request for Rehearing and Clarification at 7.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 91

173. California LDCs do not take issue with the Commission’s determination to

not adopt a safe harbor provision in perpetuity. Instead, it recommends that the

Commission adopt a limited safe harbor for the first six months after the new

regulations are implemented so that non-interstate pipeline which make a good

faith effort to comply will not be penalized if they make inadvertent errors in

reporting.

280

b. Commission Determination

174. Nothing in the supplemental comments persuades the Commission to

depart from the reasoning in Order No. 720 and the petitioners’ requests are

denied. While the Commission has, on rare occasions, adopted a safe harbor in

other contexts, it does not believe one is warranted here. The safe harbor adopted

in the Policy Statement on Price Indices was a direct extension of our policy goal

to “encourage [industry participants] voluntarily to report energy transactions to

providers or price indices.” 281 The posting requirements set forth in Order No.

720 and this order are mandatory posting requirements adopted consistent with the

directives of EPAct 2005, and are not the voluntary reporting of price data to an

index developer; therefore, there is no policy need to provide an incentive for

280 California LDCs Request for Rehearing and Clarification at 17.

281 Price Discovery in Natural Gas and Electric Markets; Policy Statement

on Natural Gas and Electric Price Indices, 104 FERC ¶ 61,121 (2003), clarified,

109 FERC ¶ 61,184 (2004).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 92

posting the information required.

282 As discussed in Order No. 720, other

mandatory requirements, such as the filing of FERC Form No. 2, generally do not

include a safe harbor.

283

175. The Commission further distinguishes the decision here not to adopt a safe

harbor from the temporary safe harbor adopted in Order No. 704-A. There, the

Commission determined that, as FERC Form No. 552 would be completed by a

large number of relatively unsophisticated companies with little experience filing

materials with the Commission, a one-time safe harbor for initial filings of the

form was appropriate.

284 Major non-interstate pipelines tend to be large,

sophisticated natural gas transportation businesses, often with substantial

experience complying with state public service commission reporting

requirements, and with dedicated regulatory staff available to ensure compliance

with our regulations.

176. Further, the Commission does not believe that the posting requirements set

forth in Order No. 720 were unclear or ambiguous; however, to the extent that

commenters believed they were unclear or ambiguous, they have been provided an

opportunity to request clarification or rehearing, which many did. Additionally,

major non-interstate pipelines will have 150 days following publication of this

282 Order No. 720 at P 152.

283 Id.

284 Order No. 720 at P 71.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 93

Order No. 720-A in the Federal Register before they must comply with the posting

regulations. The Commission expects that all major non-interstate pipelines will

have sufficient opportunity to create internal operating procedures to ensure

compliance.

285

177. The Commission will exercise discretion evaluating non-compliance by

major non-interstate pipelines with our posting requirements. As the Commission

has explained,

286 Office of Enforcement staff considers a number of factors to

determine whether investigations involving noncompliance are warranted and

whether a violation of the Commission’s regulations warrants sanctions or other

remedies. In fact, Office of Enforcement staff “frequently exercises prosecutorial

discretion to resolve minor infractions with voluntary compliance measures rather

than with penalties.”

287 The most recent Office of Enforcement Annual Report is

replete with examples of self-reports of minor errors which were not pursued by

the Office of Enforcement.

288

285 We remind major non-interstate pipelines that they may contact our

Compliance Help Desk for assistance regarding compliance with our regulations,

including questions regarding posting scheduled flow data at receipt and delivery

points.

286 Enforcement of Statutes, Regulations and Orders, Revised Policy

Statement on Enforcement, 123 FERC ¶ 61,156, at P 23-26 and P 31-32 (2008).

287 Id. P 9.

288 2009 Report on Enforcement, Docket No. AD07-13-002 at 10-14 (2009)

(inadvertent errors in Electric Quarterly Report submissions not sanctioned;

inadvertent violation of price reporting guidelines not sanctioned).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 94

G. Interstate Pipeline Posting of No-Notice Service

178. Order No. 720 required interstate natural gas pipelines to post volumes of

no-notice service flows at each receipt and delivery point before 11:30 a.m. central

clock time (the timely cycle under NAESB Nomination Standard 1.32) three days

after the day of gas flow.

289 In the NOPR, the Commission considered requiring

interstate natural gas pipelines to post actual flow information within twenty-four

hours, but upon further consideration in Order No. 720, the Commission required

the posting of only no-notice volumes within three days after the day of gas flow.

Order No. 720 found that this would achieve the goals of the Commission with

less of a burden than full posting of actual flows with a twenty-four hour

deadline.

290 Because the Commission gave interstate pipelines more time to post

and because an interstate pipeline should already have the no-notice information

that we are requiring them to post, the Commission found that this requirement

was not unduly burdensome.

291

179. The Commission explained that making information on no-notice

volumes available is important because it allows interstate natural gas market

participants and other market observers to better understand price formation and

289 Order No. 720 at P 160.

290 Id. P 162, 166.

291 Id. P 166.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 95

historical patterns of flow.

292 Without no-notice information, the market cannot

see large and unexpected increases in gas demand and, therefore, cannot

understand price formation both during and after no-notice service is utilized.

180. The Commission noted that no-notice service information would be of

particular importance in understanding price behavior in the northern tier of the

country during extreme weather conditions.

293 The Commission also noted that

no-notice information could also prevent manipulation and unduly discriminatory

behavior because it would increase transparency and therefore discourage such

activities.

294 In addition, the Commission noted that no-notice postings would

help shippers understand why capacity that appears to be available is actually not

available during situations when no-notice service is being used.

295

a. Requests for Rehearing and Clarification

181. Williston Basin seeks rehearing and INGAA requests clarification and

rehearing of the Commission’s decision to require interstate natural gas pipelines

to post volumes of no-notice service flows, both claiming that the requirement is

arbitrary and capricious.

296

292 Id. P 165.

293 Id. P 163.

294 Id. P 165.

295 Id. P 164.

296 Williston Basin Request for Rehearing and Clarification at 1; INGAA

Request for Rehearing and Clarification at 1-2.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 96

182. Williston Basin comments that the requirement to post information on nonotice service would not provide any useful market information and would

therefore have no impact on market decisions.

297 Williston Basin claims that the

majority of no-notice service relates to storage activity which is based on weatherdriven demand, and because most no-notice shippers inject in the summer months

at prevailing market rates and withdraw at a different time when prices are

different, the true market price of the gas on that particular day is not reflected.

298

Williston Basin states that the posting of scheduled pipeline capacity and volume

data provides the timeliest and accurate information for assessing market

fundamentals, and reporting no-notice service is not necessary and would not

provide any relevant market information.

299

183. Williston Basin and INGAA both request that the Commission adopt the

same de minimis standard for no-notice interstate pipeline postings as applied to

major non-interstate pipeline postings.

300 Williston Basin claims that it is

discriminatory for the Commission to not apply the same standard for interstate

pipelines.

301 INGAA states that there are certain delivery points that are so small

297 Williston Basin Request for Rehearing and Clarification at 1-2.

298 Id. at 2.

299 Id.

300 Id. at 3; INGAA Request for Rehearing and Clarification at 6-7.

301 Williston Basin Request for Rehearing and Clarification at 3.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 97

that they have no measureable impact on market fundamentals and are not worth

the cost and administrative burden necessary to comply with the rule; therefore,

INGAA suggests that the Commission establish a de minimis rule that would

exempt delivery points with an average annual delivery rate of less than 2,500 Mcf

per day.

302

184. On rehearing, INGAA argues that the no-notice reporting requirement is

not supported by a substantial record of evidence because the Commission did not

develop a record on the various ways pipelines provide and measure no-notice

service.

303 INGAA asks the Commission to consider that interstate pipelines have

varying tariffs and contracts for how they provide no-notice transportation services

for customers. INGAA requests that the Commission clarify that a pipeline can

satisfy the no-notice posting requirement by providing data corresponding to how

it provides no-notice transportation service.

304 For example, INGAA claims that

in the majority of cases, there is no way for a pipeline to determine a receipt point

for its no-notice service, therefore, it recommends that the Commission clarify that

interstate pipelines are not required to post no-notice volumes at receipt points.

305

In addition, INGAA asks the Commission to recognize the role of aggregation in

302 INGAA Request for Rehearing and Clarification at 7.

303 Id. at 1-2.

304 Id. at 2.

305 Id. at 2-3.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 98

the administration of no-notice service and asks the Commission to clarify that

interstate pipelines who report aggregate volume to customers and who use

aggregate volume to administer no-notice service contracts satisfy the no-notice

posting requirement by posting aggregate volumes.

306

185. INGAA also asks that the Commission take into consideration that

interstate pipelines have varying metering and measurement equipment, and

INGAA requests that the Commission clarify that a pipeline can satisfy the nonotice posting requirement by posting estimated volumes when a pipeline

estimates its no-notice volumes for operational purposes (e.g., volumes are posted

on a monthly or weekly basis; meters are controlled by third parties).

307 INGAA

states that it would not be economic for pipelines to install real-time measurements

equipment at each delivery point; therefore, INGAA asks the Commission to

clarify that it is appropriate for a pipeline to report whatever information is

available to the pipeline within the three days allowed for posting.

b. Commission Determination

186. The Commission denies Williston Basin’s and INGAA’s requests for

rehearing. The Commission believes that the posting of information about nonotice service will enhance transparency and that this requirement is not unduly

burdensome. The Commission continues to believe that no-notice service has an

306 Id. at 3-5.

307 Id. at 5-6.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 99

impact on market decisions and price formation as described in Order No. 720.

The Commission recognizes that a large percentage of no-notice service relates to

weather-driven storage activity, and many no-notice shippers inject in the summer

months at prevailing market rates and withdraw at a different time when prices are

different; however, during such occasions, when no-notice shippers withdraw gas,

the absence of posting of no-notice service means that the market cannot see these

large responses to gas demand at a time when the market is particularly sensitive

to variations in natural gas availability. Market participants do not have access to

information necessary to understand price formation during such occasions, and

for this very reason, the Commission believes that the posting of no-notice service

volumes is necessary to achieve transparency.

187. The Commission denies petitioners’ requests for rehearing and clarification

that would establish a de minimis standard for posting of information about nonotice service. The Commission is not persuaded to adopt a de minimis standard

for no-notice posting because it believes that all interstate no-notice volumes are

relevant to interstate wholesale price formation.

308 Even very small or transitory

no-notice volumes can have a substantial impact on natural gas prices during times

of system stress. Indeed, it is precisely at these times when no-notice service is

most utilized.

308 Unlike non-interstate transportation that has an indirect effect on

interstate natural gas price formation, interstate transportation has a direct effect

on prices.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 100

188. The Commission’s conclusion is reinforced by our authority, exercised in

Order No. 637 and elsewhere, to require interstate pipelines to post substantial

data regarding their operations.

309 However, if a pipeline believes that its nonotice service is so insubstantial so as to not influence price formation, the

pipeline may submit a detailed description of its no-notice operations and request a

waiver from our regulations. The Commission will consider such requests on a

case-by-case basis.

189. The Commission takes into consideration the fact that interstate pipelines

have varying tariffs and contracts for providing no-notice service. The

Commission recognizes that sometimes there is no way for a pipeline to determine

a receipt point for its no-notice service; however, the Commission denies the

request that interstate pipelines not be required to post no-notice volumes at

receipt points. To the extent that the receipt point data is available for no-notice

service, pipelines must post that information. In the event that a pipeline does not

have receipt point data, then the pipeline may indicate that the required data field

is left intentionally blank. The Commission also recognizes that some pipelines

309 Regulation of Short-Term Natural Gas Transportation Services and

Regulation of Interstate Natural Gas Transportation Services, Order No. 637,

65 FR 10156 (Feb. 25, 2000), FERC Stats. & Regs. ¶ 31,091, at 31,332, clarified,

Order No. 637-A, FERC Stats. & Regs. ¶ 31,099, reh’g denied, Order No. 637-B,

92 FERC ¶ 61,062 (2000), aff’d in part and remanded in part sub nom. Interstate

Natural Gas Ass’n of America v. FERC, 285 F.3d 18 (D.C. Cir. 2002), order on

remand, 101 FERC ¶ 61,127 (2002), order on reh’g, 106 FERC ¶ 61,088 (2004),

aff’d sub nom. American Gas Ass’n v. FERC, 428 F.3d 255 (D.C. Cir. 2005).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 101

traditionally report aggregate no-notice volumes to their customers. However,

posting aggregate volumes does not satisfy the no-notice posting requirement if a

pipeline has access to the records of the daily volumes. If the data is available or

could be made available, then the pipeline must post the non-aggregated volume

data, even if it prefers a different format when dealing with customers. If a

pipeline does not have access to non-aggregated data, then it should post

aggregated data.

190. Finally, the Commission assures petitioners that it has taken into

consideration the fact that interstate pipelines have varying metering and

measurement equipment and clarifies that pipelines must only post information

that is available to them. Our transparency regulations do not require the

construction of new metering equipment. Instead, an interstate pipeline should

post whatever data it has available within three days of the flow, noting any

deficiencies in the posting on its website. A pipeline should not post estimated

volumes, but rather actual flow. If, subsequent to an initial posting, more

complete no-notice service data becomes available, interstate pipelines must

update previously posted information.

H. Additional Exemptions

1. Natural Gas Companies with Service Area

Determinations under NGA Section 7(f)

191. In Order No. 720, the Commission stated that local distribution companies

with service area determinations under section 7(f) of the NGA were not

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 102

categorically excluded from the posting requirements as such companies that

exceed the 50 million MMBtu annual threshold may have a substantial impact on

regional interstate natural gas markets.

310

192. WGL requests clarification and, in the alternative, rehearing regarding the

definition of “major non-interstate pipeline” as applied to natural gas companies

that have obtained service area determinations under section 7(f) of the NGA.

311

Our pipeline posting requirements apply to “major non-interstate pipelines.” As

provided in 18 CFR 284.1(d), major non-interstate pipelines are comprised only of

those pipelines not subject to our NGA jurisdiction as “natural gas companies.”

312

WGL contends that a strict reading of the regulation would exclude local

distribution companies with service area determinations under section 7(f) as such

companies are “natural gas companies” under the NGA.

193. AGA requests clarification that LDCs that have service area determinations

under section 7(f) can qualify for the posting exemptions contained in 18 CFR

284.14(b).

194. The Commission grants WGL’s request for rehearing and modifies 18 CFR

284.1(d) to provide that pipelines with a Commission-approved service area

determination may be major non-interstate pipelines if they exceed the delivery

310 Order No. 720 at P 149.

311 WGL Request for Rehearing and Clarification at 3.

312 18 CFR 284.1(d).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 103

threshold and otherwise do not qualify for an exemption. The Commission agrees

with WGL that there is no practical difference between an LDC operating entirely

within a single state and LDCs operating in multiple states under a section 7(f)

service area determination. Consistent with WGL’s and AGA’s requests, the

Commission also clarifies that LDCs with service area determinations may be

major non-interstate pipelines for purposes of this rule.

2. Pipelines Owned or Operated by End Users

195. Dow Chemical requests clarification, or in the alternative rehearing,

regarding application of the Commission’s pipeline posting regulations to

pipelines that are owned and/or operated by an end-user to transport natural gas to

that end-user.

313 Dow Chemical argues that price transparency in the interstate

market would not be enhanced by requiring such pipelines to post scheduled flow

information.

314

196. The Commission grants the requested clarification. Where a pipeline

delivers all of its transported natural gas directly to an end-user that owns or

operates the pipeline, the pipeline is an extension of the end-user’s plant or other

natural gas consumption facilities. To require posting in such circumstances

would be the functional equivalent of requiring each large consumer of natural gas

to post consumption information on a daily basis. However, if a pipeline delivers

313 Dow Chemical Request for Rehearing and Clarification at 3.

314 Id. at 4.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 104

natural gas to entities other than the owner or operator of the pipeline, then it is not

exempted from the regulation. The Commission modifies section 284.14(b) of our

regulations to incorporate this exemption.

III. Cost of Compliance

197. In Order No. 720, the Commission estimated the compliance costs of the

pipeline posting regulations for both interstate and major non-interstate

pipelines.

315 The order found that the average annual cost of compliance for

interstate pipelines and major non-interstate pipelines was approximately $5,000

and $30,000, respectively.

316

A. Requests for Rehearing and Clarification

198. No petitioner objects to the Commission’s estimate of compliance costs for

interstate pipelines. However, two petitioners question the compliance costs for

major non-interstate companies. California LDCs claim that initial compliance

costs for each LDC may exceed $500,000 to calculate and record the design

capacity of delivery points as well as establishing procedures to capture new

delivery points for which posting is required. Based upon these costs, the

California LDCs conclude that the cost of compliance far outweighs the benefits

of the rule.

317

315 Order No. 720 at P 86.

316 Id. P 171.

317 California LDCs Request for Rehearing and Clarification at 12-13.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 105

199. TPA argues that some TPA members will encounter increased compliance

costs to design and implement scheduling processes at points where they currently

do not schedule natural gas.

318 Further, TPA notes that non-interstate pipelines

may schedule delivery of natural gas to LDCs at sets of delivery points rather than

individual delivery points. TPA claims that the rule would require such pipelines

to establish mechanisms to account for scheduled flows to each point.

319 Further,

TPA claims that “[s]ome TPA members . . . estimate implementation and start-up

costs in the hundreds of thousands of dollars.”

320 While TPA acknowledges that

Order No. 720 did not adopt posting requirements for segments or actual flow, and

thus, reduced the potential cost of compliance, it argues that Order No. 720

ignores other costs estimated by TPA members.

321

B. Commission Determination

200. The Commission disagrees with the California LDCs and TPA and finds, as

it did in Order No. 720, that the benefits of our transparency regulations

substantially outweigh the cost of compliance. Enhanced transparency will result

in a more efficient wholesale natural gas market, more informed and better market

318 TPA Request for Rehearing and Clarification at 41.

319 Id.

320 Id. at 42.

321 Id. at 43.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 106

choices made by market participants, and, ultimately, lower natural gas prices for

consumers.

201. The Commission notes that Order No. 720’s cost of compliance estimates

were based upon comments received in response to the NOPR and the substantial

reduction in compliance costs attendant in the Commission’s decision not to

require posting of actual natural gas flows or on pipeline segments. Further, Order

No. 720 acknowledged that both start-up and annual compliance costs would vary

among pipelines.

322

202. The Commission emphasizes that only scheduled natural gas volumes are

to be posted. The comments by TPA do not dissuade the Commission from the

determination that “most if not all of the gas control divisions of the affected

companies currently have ready access to the information captured” by the rule.

323

In large part, it appears that TPA’s concerns stem from fundamental

misunderstandings of the Final Rule. For example, TPA notes that some of its

member pipelines do not schedule flows at certain points, but that the rule requires

such pipelines to restructure their operations to adopt a scheduling process.

324 The

regulations do not require pipelines to modify their operations so as to schedule

natural gas flows at point where such flows have not heretofore been scheduled.

322 Order No. 720 at P 171.

323 Id. P 56.

324 TPA Request for Rehearing and Clarification at p. 41.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 107

Section 284.14(a) of the Commission’s regulations makes clear that major noninterstate pipelines must post the amount of natural gas scheduled at each relevant

point “whenever capacity is scheduled.”

325 Likewise, TPA assumes that volumes

scheduled to an aggregated receipt point for an LDC customer must be broken out

by physical receipt point. As clarified in this order, the Commission’s regulations

will allow for posting of aggregated scheduled flows to virtual or pooling points.

The Commission does not believe that major non-interstate pipelines will incur

significant expenses adopting new scheduling procedures as our regulations do not

require such changes.

203. TPA and the California LDCs claim that the major non-interstate pipelines

that they represent may incur start-up costs of hundreds of thousands of dollars to

comply with Order No. 720. Such costs seem disproportionately high given that

other major non-interstate pipelines have not expressed similar concerns on

rehearing. The Commission also finds such claims doubtful given the

sophistication of these pipelines, their experience with electronic data capture,

their familiarity with the receipt and delivery points on their systems, and, for at

least some of these pipelines, their substantial experience with posting flow data

on electronic databases. For these reasons and given the generality of the

compliance cost claims by TPA and the California LDCs, the Commission will not

325 18 CFR 284.14(a).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 108

modify the conclusion that compliance costs for the rule exceed the substantial

value of enhanced market transparency.

IV. Information Collection Statement

204. The Office of Management and Budget (OMB) regulations require it to

approve certain reporting and recordkeeping (information collection) requirements

imposed by an agency.

326 In the Final Rule and in this Order on Rehearing and

Clarification, the Commission addresses two requirements for the posting or

collection of information, one for interstate and one for major non-interstate

pipelines.

327 The Commission adopts no changes to its regulations regarding

posting requirements for interstate pipelines. However, the Commission has

submitted notification of the modified information collection requirements for

major non-interstate pipelines to OMB for its review and approval under section

3507(d) of the Paperwork Reduction Act of 1995.

328

205. The requirement for major non-interstate pipelines to post scheduled

volume information would imposes an information collection burden on major

non-interstate pipelines. Certain non-interstate pipelines have asserted on

rehearing that costs would be high if additional equipment were needed to meet

326 5 CFR 1320.11.

327 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.

328 44 U.S.C. 3507(d).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 109

quick posting deadlines. However, the Commission does not believe that

installation of additional equipment will be necessary to meet major non-interstate

pipelines’ obligations. The burden that is imposed by these regulations is largely

for the collection and posting of this information in the required format.

329

Elsewhere in this preamble, the Commission has further addressed requests for

rehearing and clarification regarding the burden of the requirements.

206. OMB regulations require OMB to approve certain information collection

requirements imposed by agency rule. The Commission submitted notification of

this rule to OMB.

Public Reporting Burden:

The start-up and annual burden estimates for complying with this rule are as

follows:

Data

Collection

No. of

Respondents

No. of

Daily

Postings

per

Respondent

Estimated

Annual

Burden

Hours per

Respondent

Total

Annual

Hours For

All

Respondents

Estimated

Start-Up

Burden Per

Respondent

Part 284

FERC-551

Major Non329 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 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.”).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 110

Data

Collection

No. of

Respondents

No. of

Daily

Postings

per

Respondent

Estimated

Annual

Burden

Hours per

Respondent

Total

Annual

Hours For

All

Respondents

Estimated

Start-Up

Burden Per

Respondent

Interstate Pipeline

Postings

70 2 365 25,550 40

The total annual hours for collection (including recordkeeping) for all respondents

is estimated to be 25,550 hours.

Information Posting 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-551

Major Non-Interstate

Pipeline Postings $142 $30,000 $30,142

Title: FERC- 551.

Action: Proposed Information Posting and Information Filing.

OMB Control No: 1902-0243.

Respondents: Business or other for profit.

Frequency of Responses: Daily posting requirements.

Necessity of the Information: The daily posting of additional information by

interstate and major non-interstate pipelines is necessary to provide information

regarding the price and availability of natural gas to market participants, state

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 111

commissions, the Commission and the public. The posting would contribute to

market transparency by aiding the understanding of the volumetric/availability

drivers behind price movements; it would provide a better picture of disruptions in

natural gas flows in the case of disturbances to the pipeline system; and it would

allow the monitoring of potentially manipulative or unduly discriminatory activity.

V. Regulatory Flexibility Act

207. The Regulatory Flexibility Act of 1980 (RFA)

330 generally requires a

description and analysis of final rules that will have significant economic impact

on a substantial number of small entities. The RFA requires consideration of

regulatory alternatives that accomplish the stated objectives of a proposed rule and

that minimize any significant economic impact on such entities. 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 $7.0 million.

331 In Order No. 720,

the Commission stated its belief that none of the pipelines required to comply with

requirements in the rule had receipts of less than $7.0 million annually and

therefore, the daily posting proposal will not impact small entities.

330 5 U.S.C. 601-612.

331 See U.S. Small Business Administration, Table of Small Business Size

Standards,

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablep

df.pdf (effective July 31, 2006).

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 112

208. In keeping with the provisions of the RFA, the Commission established a

delivery threshold of 50 million MMBtu which would eliminate compliance

burdens for smaller non-interstate pipelines by taking into account the resources

that are available to small entities in order to comply with the posting

requirements. In response to the comments on rehearing and supplemental

comments, the Commission is also exercising an additional regulatory alternative

by exempting some major non-interstate pipelines with certain operational

characteristics from the posting requirements and otherwise modifying the

requirements to lessen the burden on posting pipelines. For example, the

Commission is directing major non-interstate pipelines to review points with no

known design capacity annually, rather on a rolling basis, to determine whether

information for the point must be posted. Further, major non-interstate pipelines

are exempt from posting scheduled natural gas volumes at points that have

scheduled flows less than 5,000 MMBtu per day on each day within the prior three

calendar years.

209. Additional exemptions include: major non-interstate pipeline that have

stub lines incidental to a processing plant and that delivers all of its transported gas

directly into a single pipeline; major non-interstate pipelines that deliver more than

95 percent of their annual flows to end-users as measured by average deliveries

over the preceding three calendar years; major non-interstate pipelines that deliver

to on-system storage facilities (including deliveries to on-system LNG storage);

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 113

pipelines that transport all of their natural gas directly to an end-user that owns or

operates the pipeline.

VI. Document Availability

210. In addition to publishing the full text of this document in the Federal

Register, the Commission will provide all interested persons an opportunity to

view and/or print the contents of this document via the Internet through FERC's

Home Page (http://www.ferc.gov) and in FERC's Public Reference Room during

normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street,

NE, Room 2A, Washington, DC 20426.

211. 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.

212. User assistance is available for eLibrary and the FERC’s website during

normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-

866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference

Room at (202) 502-8371, TTY (202)502-8659. E-mail the Public Reference

Room at public.referenceroom@ferc.gov.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 114

VII. Effective Date and Compliance Deadlines

213. Order No. 720 set compliance deadlines for interstate and major noninterstate pipelines to comply with the transparency posting requirements.

332 The

Commission ordered interstate pipelines subject to the new posting requirements

to comply with the promulgated regulations no later than 60 days following

publication in the Federal Register; major non-interstate pipelines were given 150

days after such publication to comply.

333 On January 15, 2009, in response to

motions from major non-interstate pipelines for an extension of time to comply

with Order No. 720, the Commission extended compliance for major noninterstate pipelines until 150 days following the issuance of an order addressing

the pending requests for rehearing.

334 The Commission did not modify the

deadline by which interstate pipelines must comply with the requirements of Order

No. 720.

335 The compliance deadlines were chosen to allow the applicable entities

sufficient time to update their information technology systems and establish an

Internet website for the postings.

332 Order No. 720 at P 167-68.

333 Id.

334 Pipeline Posting Requirements Under section 23 of the Natural Gas Act,

126 FERC ¶ 61,047, at P 2, 4 (2009).

335 Id. at P 4. Thus, interstate pipelines were required to begin posting nonotice flow no later than January 30, 2009.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 115

A. Requests for Rehearing and Clarification

214. No parties submitted requests for rehearing or comments regarding the

deadline for compliance with the Final Rule.

B. Commission Determination

215. The Commission’s regulations regarding the posting of data related to nonotice service by interstate pipelines are not modified in this order. Interstate

pipelines should continue compliance with our regulations.

216. The Commission’s revised regulations regarding postings by major noninterstate pipelines will become effective 30 days following publication in the

Federal Register. The Commission continues to believe, that, for major noninterstate pipelines, a compliance deadline of 150 days following the issuance of

this order on rehearing allows sufficient time for pipelines to update their

information technology systems and establish an Internet website for the required

postings. This time frame for compliance will allow major non-interstate pipelines

to complete the current heating season without the need to implement new posting

procedures while ensuring that new postings are available prior to the next heating

season. Therefore, major non-interstate pipelines must comply within 150 days of

the issuance of this order on rehearing.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 116

List of subjects in 18 CFR Part 284

Continental shelf; Incorporation by reference; Natural gas; Reporting and

recordkeeping requirements.

By the Commission. Commissioner Norris voting present.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 117

For the reasons stated in the preamble, the Federal Energy Regulatory

Commission, amends 18 CFR Chapter I as follows.

PART 284 – CERTAIN SALES AND TRANSPORTATION OF NATURAL

GAS UNDER THE NATURAL GAS POLICY ACT OF 1978 AND

RELATED AUTHORITIES

1. The authority citation for part 284 continues to read as follows:

Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 43

U.S.C. 1331-1356.

2. Section 284.1 is revised to read as follows:

§ 284.1 Definitions.

* * * * *

(d) Major non-interstate pipeline means a pipeline that fits the following

criteria:

(1) It is not a “natural gas company” under section 1 of the Natural Gas

Act, or is a “natural gas company” and has obtained a service area determination

under section 7(f) of the Natural Gas Act from the Commission;

(2) It delivers annually more than fifty (50) million MMBtu (million

British thermal units) of natural gas measured in average deliveries for the

previous three calendar years; or, if the pipeline has been operational for less than

three years, its design capacity permits deliveries of more than fifty (50) million

MMBtu of natural gas annually.

3. Section 284.14 is revised to read as follows:

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 118

§ 284.14. Posting requirements of major non-interstate pipelines.

(a) Daily posting requirement. A major non-interstate pipeline must

post on a daily basis on a publicly-accessible Internet web site and in

downloadable file format equal and timely access to information regarding receipt

or delivery points, including non-physical scheduling points.

(1) A major non-interstate pipeline must post data for each receipt or

delivery point, or for any point that operates as both a delivery and receipt point to

for the major non-interstate pipeline, to which natural gas transportation is

scheduled:

(i) with a physically metered design capacity equal to or greater than

15,000 MMBtu (million British thermal units)/day; or

(ii) if a physically metered design capacity is not known or does not exist

for such a point, with a maximum volume scheduled to such a point equal to or

greater than 15,000 MMBtu on any day within the prior three calendar years.

(2) Notwithstanding the requirements of subsection 284.14(a)(1), a receipt

point is not subject to the posting requirements of this section if the maximum

scheduled volume at the receipt point was less than 5,000 MMBtu on every day

within the prior three calendar years. If a point has operated as both a receipt and

delivery point any time within the prior three calendar years, subsection

284.14(a)(2) shall not apply to that point.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 119

(3) A major non-interstate pipeline that must post data for a receipt or

delivery point shall do so within 45 days of the date that the point becomes

eligible for posting.

(4) For each delivery or receipt point that must be posted, a major noninterstate pipeline must provide the following information by 10:00 p.m. central

clock time the day prior to scheduled natural gas flow: Transportation Service

Provider Name, Posting Date, Posting Time, Nomination Cycle, Location Name,

Additional Location Information if Needed to Distinguish Between Points,

Location Purpose Description (Receipt, Delivery, Bilateral, or Non-physical

Scheduling Point), Posted Capacity (physically metered design capacity or

maximum flow within the last three years), Method of Determining Posted

Capacity (Capacity or Maximum Volume), Scheduled Volume, Available

Capacity (Calculated as Posted Capacity minus Scheduled Capacity), and

Measurement Unit (Dth, MMBtu, or MCf). For receipt or delivery points with bidirectional scheduled flows, the Scheduled Volume for scheduled flow in each

direction must be posted. The information in this subsection must remain posted

for at least a period of one year.

(b) Exemptions to daily posting requirement. The following categories

of major non-interstate pipelines are exempt from the posting requirement of

§ 284.14(a):

(1) Those that are located upstream of a processing, treatment or

dehydration plant;

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 120

(2) Those that deliver more than ninety-five percent (95%) of the natural

gas volumes they flow directly to end-users or on-system storage as measured in

average deliveries for the previous three calendar years;

(3) Storage providers;

(4) Those that deliver the entirety of their transported natural gas

directly to an end-user that owns or operates the major non-interstate pipeline.

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 121

Appendix A: List of Petitioners and Abbreviations.

Petitioners Abbreviations

1. American Gas Association AGA

2. Anadarko Petroleum Corporation Anadarko

3. Atmos Pipeline-Texas Atmos

4. Bear Paw Energy LLC and ONEOK Field

Services Company, LLC

Bear Paw/ONEOK

5. Copano Energy LLC Copano Energy

6. Dow Chemical Company Dow Chemical

7. Dow Pipeline Company and Dow Intrastate Gas

Company

Dow Pipeline

8. Ecana Oil & Gas (USA) Inc. Encana

9. Enogex LLC and Enogex Gas Gathering LLC Enogex

10. Gas Processors Association Gas Processors

11. Interstate Natural Gas Association of America INGAA

12. Louisiana Office of Conservation LOC

13. MidAmerican Energy Company MidAmerican

14. National Grid Gas Delivery Companies National Grid

15. Nicor Gas Company Nicor

16. ONEOK Gas Transportation, LLC and ONEOK

Gas Transmission, LLC

ONEOK Gathering

17. Pacific Gas & Electric Company PG&E

18. Pacific Gas & Electric Company, Southern

California Gas Company, and San Diego Gas &

Electric Company

California LDCs

19. Railroad Commission of Texas Railroad Commission of

Texas

20. Shell Offshore, Inc Shell

21. Southwest Gas Corporation Southwest Gas

22. Targa Louisiana Intrastate LLC Targa

23. Texas Pipeline Association TPA

24. Washington Gas Light Company WGL

25.Williston Basin Interstate Pipeline Company Williston Basin

26.Yates Petroleum Corporation and Agave Energy

Corporation

Yates

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Docket No. RM08-2-001 122

Appendix B: List of Supplemental Commenters and Abbreviations.

Supplemental Commenters Abbreviations

1. American Gas Association AGA

2. Atmos Pipeline -Texas APT

3. Kinder Morgan Texas Intrastate Pipeline Group KM

4. Occidental Permian Ltd. Occidental

5. ONEKOK Gas Transmission, LLC and ONEOK Westex

Transmission, LLC

ONEOK Gathering

6. Natural Gas Supply Association NGSA

7. Pacific Gas & Electric Company, Southern California

Gas, and San Diego Gas & Electric Company

California LDCs

8. Texas Pipeline Association TPA

20100121-3044 FERC PDF (Unofficial) 01/21/2010
Document Content(s)

RM08-2-001.DOC........................................................1-126

20100121-3044 FERC PDF (Unofficial) 01/21/2010