132 FERC ¶ 61,175 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 John R. Norris, and Cheryl A. LaFleur. 

Regulations Governing the Conduct of Open Seasons for 

Alaska Natural Gas Transportation Projects 

Docket No. RM05-1-003 

ORDER DENYING CLARIFICATION AND REHEARING 

(Issued August 26, 2010) 

1. On April 19, 2010, the State of Alaska filed a request for clarification, or in the 

alternative, rehearing of Order No. 2005-B.1

 In its request, Alaska requests the 

Commission to clarify, or alternatively to provide on rehearing, that the Standards of 

Conduct that the Commission has incorporated into the Commission’s Open Season 

regulations2

 will continue to apply after the end of the initial bidding period of an open 

season and through the pipeline’s commencement of transportation service under the 

jurisdiction of the Natural Gas Act (NGA). For reasons discussed below, we are denying 

the State of Alaska’s request. 

Background

2. In 2005, the Commission issued Order No. 2005,3

 establishing requirements 

governing the conduct of open seasons for proposals to construct Alaska natural gas 

 1 Regulations Governing the Conduct of Open Seasons for Alaska Natural Gas 

Transportation Projects, Order No. 2005-B, 75 Fed. Reg. 15,356 (March 29, 2010), 

FERC Stats. & Regs. ¶ 31,304 (2010). 

2

 18 C.F.R. §§ 157.30-157.39 (2010). 

3 Regulations Governing the Conduct of Open Seasons for Alaska Natural Gas 

Transportation Projects, Order No. 2005, FERC Stats. & Regs. ¶ 31,174 (2005), order 

on reh’g, Order No. 2005-A, FERC Stats. & Regs. ¶ 31,187 (2005). 
Docket No. RM05-1-003 - 2 - 

transportation projects. Among other things, in order to further the Commission’s goal 

of a non-discriminatory open season, Order No. 2005 applied certain of the Standards 

of Conduct requirements of Order No. 2004, several of which incorporated Order 

No. 2004’s “energy affiliate” concept. 

3. In 2008, in response to the U.S. Court of Appeals for the D.C. Circuit decision in

National Fuel Gas Corporation v. FERC,

4

 the Commission issued Order No. 717.5 

Order No. 717 eliminated the concept of “energy affiliates” in connection with the 

application of the Commission’s Standards of Conduct established in Order No. 2004. 

Additionally, Order No. 717 eliminated the corporate functional approach taken in Order 

No. 2004’s Standards of Conduct in favor of an employee functional approach and 

revised the Commission’s Standards of Conduct accordingly. 

4. On March 18, 2010, the Commission issued Order No. 2005-B, for the purpose of 

clarifying and reconciling the Commission’s Open Season regulationsin response to the 

changes to the Standards of Conduct resulting from Order No. 717. Specifically, Order 

No. 2005-B amended sections 157.34 and 157.35 of the Open Season regulations6

 to 

eliminate references to the Order No. 2004-based “energy affiliates” concept. 

Additionally, Order No. 2005-B reconciled references in section 157.35(d) to the specific 

Standards of Conduct with which a project sponsor conducting an open season for an 

Alaska natural gas transportation project must comply, as they have been revised and 

now appear in the Commission’s open season regulations as a result of Order No. 717. 

The State of Alaska’s Request

5. Alaska contends that in order to fulfill its responsibility under the Alaska Natural 

Gas Pipeline Act (ANGPA)7

 to promote competition and ensure a non-discriminatory 

allocation of capacity on Alaska natural gas transportation projects, the Commission must 

provide that the Standards of Conduct that Order No. 2005-B incorporated into the 

Commission’s Open Season regulations continue to apply after the end of the initial 

 4

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

5 Standards of Conduct for Transmission Providers, Order No. 717, 73 FR 63796 

(Oct. 27, 2008); FERC Stats. & Regs. ¶ 31,280 (2008), order on reh’g and clarification, 

Order No. 717-A, FERC Stats. & Regs. ¶ 31,297 (2009), order on reh’g, Order No. 717-

B, 129 FERC ¶ 61,123 (2009). 

6

 18 C.F.R. §§ 157.34 and 157.35 (2010). 

7

 15 U.S.C. §§720 (2006), et seq. 
Docket No. RM05-1-003 - 3 - 

bidding period of an open season and through the time that the pipeline commences 

transportation service under the jurisdiction of the NGA. 

6. Alaska states that in Order No. 2005-B, the Commission refers alternatively to 

“open season” and the “open season process.”8

 On this basis, Alaska distinguishes 

between the 90-day “open season” during which prospective shippers must submit their 

bids, and the “open season process” which, according to the state, includes the period 

after the initial 90-day open season when the project sponsors will be negotiating 

precedent agreements with potential shippers, including negotiated rates and conditions 

of service.9

 Alaska asserts that the actual transportation service agreements will not be 

executed until a considerable time thereafter, and that ongoing negotiations between the 

pipeline and potential shippers regarding the process of allocating capacity, negotiating 

precedent agreements, negotiating transportation service agreements, and discussing and 

filing tariff terms and conditions of service will occur from the initial bidding process 

through the time at which an Alaska natural gas pipeline goes into service. Thus, Alaska 

contends that the Standards of Conduct must apply throughout this time period, in order 

to ensure no undue preference is provided to affiliated shippers concerning allocations of 

capacity, rates or other terms and conditions of service. 

7. Alaska asserts that the Commission has variously indicated, in both Order 

No. 2005 and in the open season regulations, its intent that the Standards of Conduct 

extend beyond the 90-day “open season” period. The state cites to the requirement that 

project sponsors must consider bids tendered after the expiration of the open season, as 

well as the provision in the open season regulations that the Commission may require 

 8

 Specifically, Alaska cites to Order No. 2005-B, FERC Stats. & Regs. ¶ 31,304 at 

P 8, wherein the Commission states that its “goal in promulgating §§ 157.34 and 157.35 

of its regulations was to prevent unduly discriminatory behavior and limit the ability of a 

project applicant for an Alaska natural gas transportation project to unduly favor its 

affiliates in the open season process.” 

9

 In the case of the open season plan recently approved by the Commission in 

TransCanada Alaska Company LLC, 130 FERC ¶ 61,263 (2010), for example, the 

90-day “open season” ends on July 30, 2010. The project sponsor will then notify each 

bidder whether it has submitted a conforming bid within 5 days, and notify potential 

shippers whether it intends to go forward with a project by September 1, 2010. 

Conforming bidders are to be notified of the total aggregated capacity for conforming 

bids for the selected route by October 31, 2010. In the time period between September 1, 

2010 and November 30, 2010, the sponsor and shippers will negotiate the terms of their 

precedent agreements, and bidder must execute final versions of their respective 

precedent agreements by December 31, 2010. 
Docket No. RM05-1-003 - 4 - 

design changes when considering a proposed voluntary expansion of an Alaska natural 

gas transportation project as indications that the Commission intended its regulations 

apply to post-open season activities. In particular, Alaska states that section 157.35(a) of 

the Open Season regulations, providing that “[a]ll binding open seasons shall be 

conducted without undue discrimination or preference in the rates, terms or conditions of 

service and all capacity allocated as a result of any open season shall be awarded without 

undue discrimination or preference of any kind,” reflects an intent that the Standards of 

Conduct must apply during the entire open season and capacity allocation process. 

Answers to the Request

8. Both TransCanada Alaska Company, LLC and Alaska Pipeline Project (together 

referred to as APP), and Denali –The Alaska Pipeline LLC (Denali) filed motions for 

leave to answer and answers to Alaska’s filing. As the parties recognize, Rule 213(a)(2) 

of the Commission’s Rules of Practice and Procedure10 prohibits answers to request for 

rehearing unless otherwise permitted by the decisional authority. The Commission grants 

APP’s and Denali’s motions for leave to file answers to the State of Alaska’s rehearing 

request since the answers provide a better understanding of the issues and have assisted 

us in the decision-making process.11

9. First, both APP and Denali contend that Alaska’s request is both untimely and 

unrelated to Order No. 2005-B because the issue of the time period during which the 

Standards of Conduct were to apply was not changed by Order No. 2005-B. APP and 

Denali maintain that if the issue existed at all, it existed when Order No. 2005 was issued 

five years ago and Alaska failed to raise it at that time. 

10. Second, APP argues that ANGPA section 103(e)(1) directs the Commission to 

“issue regulations governing the conduct of open seasons for Alaska natural gas 

transportation projects (including procedures for the allocation of capacity).” APP asserts 

that the Commission was not authorized by ANGPA to extend the open season 

regulations beyond the open season to regulate conduct up to the pipeline’s in-service 

date.12

 

(continued...) 

10 18 C.F.R. § 213(a)(2) (2010). 

11 See, e.g., PSM Interconnection, LLC, 126 FERC ¶ 61,030, at P 15 (2009); BP 

West Coast Prods., LLC, 121 FERC ¶ 61,239, at P 34 (2007). 

12 While we need not address this matter in detail, given our denial of Alaska’s 

request for rehearing, we note that ANGPA simply required us to establish Alaska open 

season regulations, but in no way prohibited us from exercising our plenary NGA 
Docket No. RM05-1-003 - 5 - 

11. Third, APP claims that there is no real distinction between the “open season” and 

the “open season process,” and, therefore, Alaska’s requested clarification is unnecessary. 

APP states whether that period is called the “open season” or the “open season process” 

makes no difference because the allocation of capacity is not final until precedent 

agreements are executed and submitted to the Commission and the Standards of Conduct 

are obviously intended to apply until that point. APP states that the purpose of the Open 

Season regulations has been fulfilled once capacity has been allocated. Denali, on the 

other hand, claims that Commission’s Open Season regulations are focused on the 

discrete period during which an Alaska natural gas transportation project will conduct an 

open season. In this regard, Denali refers to the Commission’s discussion in Order No. 

2005 and 2005-A regarding the various parties’ positions on the duration of the open 

season and the initial establishment of a 210-day open season process,13 and the 

subsequent reduction of that process to 180 days.14 However, states Denali, if the 

Commission agrees with APP’s view, then the Standards of Conduct should apply only 

up to the deadline established for the execution of precedent agreements, which under 

Denali’s plan, would be March 3, 2011. 

12. Finally, Denali states that Alaska’s claimed need for assurance that no undue 

preference is provided to affiliated shippers concerning allocations of capacity, rates or 

other terms and conditions of service is provided by the Commission’s existing statutory 

and regulatory authority when it addresses the application for a certificate under section 7 

of the NGA for authorization to construct and operate an Alaska natural gas 

transportation project. Specifically, Denali asserts that under NGA section 7, the 

Commission has the authority to impose reasonable conditions on a certificate, and that 

through this conditioning authority, the Commission may direct entities that are not 

“natural gas companies” under the NGA to modify proposed tariff provisions, eliminate 

sections of service agreements, and remove provisions from contracts between a pipeline 

and a shipper or make those provisions available on a non-discriminatory basis to other 

shippers.15 

 

authority to impose whatever conditions we deemed appropriate regarding Alaska 

projects. 

13 Order No. 2005, FERC Stats. & Regs. ¶ 31,174 at PP 49-51. 

14 Order No. 2005-A, FERC Stats. & Regs. ¶ 31,187 at PP 70, 72. 

15 As examples of cases in which the Commission has used this authority, Denali 

cites Bison Pipeline LLC, 131 FERC ¶ 61,013, at PP 32-52, 60-63 (2010) and 

Fayetteville Express Pipeline LLC, 129 FERC ¶ 61,235, at PP 32-47 (2009). 
Docket No. RM05-1-003 - 6 - 

Commission’s Response

13. The Commission imposed certain specified Standards of Conduct upon any 

sponsor of a prospective project conducting open seasons when it issued Order No. 2005 

in February 2005. No parties sought rehearing of that aspect of the Open Season 

regulations. One party, the North Slope Producers,16 sought clarification of the 

requirement in section 157.35(c) of the Open Season regulations that the project applicant 

“create or designate a unit or division to conduct the open season that must function 

independent of the other divisions of the project applicant as well as the applicant’s 

Marketing and Energy affiliates.” The Commission, in Order No. 2005-A, clarified that 

requirement to make clear that a functionally independent project sponsor created for the 

purpose of conducting the open season would not need to create yet another entity to be 

in compliance with this requirement.17 No party suggested that the Commission revise 

the regulations to state that the Standards of Conduct provisions should apply for an 

extended period. 

14. Alaska’s assertion that the Commission should clarify that the Standards of 

Conduct apply after the initial bidding period and up to and through the pipeline’s 

commencement of transportation service is being raised for the first time in response to 

the issuance of Order No. 2005-B. However, Order No. 2005-B in no way altered or 

affected the affected period during which the Standards of Conduct imposed under 

section 157.35(d) was to apply. As described above, Order No. 2005-B merely amended 

sections 157.34 and 157.35 of the Commission’s Open Season regulations18 to eliminate 

references to “energy affiliates” and to reconcile references in section 157.35(d) of the 

Open Season regulations to the specific Standards of Conduct with which a project 

sponsor conducting an open season for an Alaska natural gas transportation project must 

comply, as they were revised and now appear in the Commission’s regulations as a result 

of Order No. 717. For these reasons, the Commission denies rehearing since the issues 

raised by Alaska are an untimely collateral attack on Order No. 2005 on an issue that was 

not raised in Order No. 2005-B, and therefore are beyond the proper scope of rehearing. 

15. Alaska’ alternative request for clarification is premised on the notion that the Open 

Season regulations reflect an intent that the Standards of Conduct must apply not only 

during the entire open season and capacity allocation process, but also all the way up to 

 16 The North Slope Producers is comprised of BP Exploration (Alaska), Inc., 

ConocoPhillips Company, and ExxonMobil Corporation. 

17 See Order No. 2005-A, FERC Stats. & Regs. ¶ 31,187 at PP 107, 108. 

18 18 C.F.R. §§ 157.34 and 157.35. 
Docket No. RM05-1-003 - 7 - 

time that the pipeline goes into service. The Commission made clear in Order No. 2005 

that the Open Season regulations represented an effort to balance a project sponsor’s need 

for flexibility to design and finance a viable project with the “equally compelling needs to 

ensure fair competition in the transportation and sale of natural gas, promote the 

development of natural gas resources in addition to those in the North Slope, and 

consider Alaskan in-state requirements.”19 To provide project sponsor flexibility, the 

Commission chose not to impose prescriptive rules that included such details as when 

opens seasons were to occur and precise criteria to be used in evaluating bids and 

allocating capacity.20 Instead, the Commission concluded that a level playing field was 

needed to ensure fair competition and promote development of all Alaskan gas resources. 

The Commission chose to accomplish this by imposing strict requirements on all project 

proposals, and on affiliate-owned projects in particular, with respect to the public 

disclosure of detailed information as to project design, how capacity is to be allocated, 

and the proposed rates, terms and conditions.21 

16. To this end, the Commission imposed the functional separation, information 

access, and disclosure provisions of the Standards of Conduct during an open season for 

an Alaska natural gas transportation project for the purpose of ensuring that the open 

season is conducted in a manner that provides equal access to all participants, particularly 

those not affiliated with the project applicants.22 In short, the Commission strove for 

providing “an open season process that will provide reasonable flexibility to pipeline 

sponsors, while ensuring sufficient exchange of information and regulatory oversight to 

ensure that the goal of fair, open competition in the transportation and sale of natural gas 

is met.”23 

17. Additionally, the Commission sought in Order No. 2005 to broadly prohibit 

discrimination by a project applicant conducting an open season and limit its ability to 

unduly favor an affiliate by imposing some of the non-discrimination requirements of 

Order No. 2004 on project applicants. Specifically, under section 157.35(d), the non-

 19 Order No. 2005, FERC Stats. & Regs. ¶ 31,174 at P 11. 

20 Id. Throughout Order No. 2005, the Commission made clear that it was not 

taking a prescriptive regulatory approach in developing the Open Season regulations, see, 

e.g., Order No. 2005, FERC Stats. & Regs. ¶ 31,174 at P 46, 47, 50, 51. 

21 See Order No. 2005, FERC Stats. & Regs. ¶ 31,174 at P 12. 

22 See Order No. 2005, FERC Stats. & Regs. ¶ 31,174 at PP 74, 81. 

23 Id. P 17. 
Docket No. RM05-1-003 - 8 - 

discrimination provisions of the Standards of Conduct contained in sections 358.5(c)(3) 

and (5) were made to apply to project applicants.24 The Commission felt that these 

provisions would ensure that a project applicant will not provide any preferences to 

affiliated participants in the context of an open season. These prohibitions remain intact 

under new sections 358.4(c) and (d), as promulgated in Order No. 717, and are 

incorporated into the Open Season regulations pursuant to Order No. 2005-B.25 

18. The non-discrimination requirements of the Standards of Conduct imposed on 

project applicants pertain to the processing of requests for transportation service and the 

prohibition against any preference to affiliates in matters relating to the sale or purchase 

of transmission service. These requirements apply to activities which in the context of an 

open season occur during the negotiations between prospective bidders and the project 

sponsor regarding the terms of any precedent agreements. In the Commission orders 

approving the Open Season plans of APP and Denali,26 the Commission recognized that 

these negotiations, which may occur beyond the 90-day open season during which 

prospective shippers must submit conforming bids, are a key element of the open season 

process. 27 According to APP’s and Denali’s open season plans, bidders must execute 

final versions of their precedent agreements by December 31, 2010, and March 3, 2011. 

Once the terms of a final precedent agreement have been reached, the goal sought to be 

achieved through the Open Season regulations will have been met and there is no basis 

 24 Section 358.5(c)(3) required a Transmission Provider to process all similar 

requests for transmission in the same manner and within the same period of time; and 

section 358.5(c)(5) prohibited transmission providers from giving their Marketing or 

Energy Affiliates any preference over any other wholesale customer in matters relating to 

the sale or purchase of transmission service. 

25 Moreover, separate from the non-discrimination provisions of the Standards of 

Conduct incorporated into the Open Reason regulations by virtue of section 157.35(d), 

section 135.35(a) also provides that “[a]ll open seasons shall be conducted without undue 

discrimination or preference in the rates, terms or conditions of service and all capacity 

allocated as a result of any open season shall be awarded without undue discrimination or 

preference of any kind.” 

26 See TransCanada Alaska Energy LLC (TransCanada), 130 FERC ¶ 61,263 

(2010) and Denali – The Alaska Pipeline LLC (Denali), 131 FERC ¶ 61,226 (2010). 

27 TransCanada, 130 FERC ¶ 61,263 at P 39: Denali 131 FERC ¶ 61,226 at P 31. 
Docket No. RM05-1-003 - 9 - 

for requiring that a project applicant must comply with the specific Standards of Conduct 

beyond that time. 28

19. The Open Season regulations provide transparency to ensure that negotiations 

during the open season will be conducted without undue discrimination or prejudice. The 

Commission has ample oversight and enforcement authority to resolve disputes over the 

conduct of the open season through a variety of its resources and procedures, including 

the Enforcement Hotline, Dispute Resolution Service, as well as the Commission’s Fast 

Track Complaint processing procedures.29 The Commission made clear in its orders 

approving APP’s and Denali’s open season plans that parties are not foreclosed from 

raising rate and tariff issues at a later stage and that the Commission would address these 

issues in the future. The Commission has sufficient authority under the NGA to direct 

any applicant for a section 7(c) certificate authorizing the construction and operation of 

an Alaska natural gas transportation project to modify proposed tariff provisions, 

eliminate sections of service agreements, and remove provisions from contracts between 

a pipeline and a shipper or make those provisions available on a non-discriminatory basis 

to other shippers. We were not convinced when we issued Order No. 2005, and we are 

not convinced now, that restrictions beyond those we have imposed are necessary to 

ensure fair and open competition during open seasons for Alaska natural gas pipeline 

projects. Therefore, we reject Alaska’s request for clarification and note that as 

discussed above, the Standards of Conduct apply from the beginning of the open season 

until precedent agreements are executed. 

 28 The Commission is not persuaded that the provision allowing late bids suggests 

a different result. Not only does section 157.34(d)(2) of the Open Season regulations 

provide the bases on which a prospective applicant can reject late bids by qualifying 

bidders, it also allows the applicant to seek Commission approval to reject any further 

bids. 

29 The Commission’s Interpretive Order Modifying No-Action Letter Process and 

Reviewing Other Mechanisms for Obtaining Guidance, PL08-2-000, 123 FERC ¶ 61,157 

(2008), provides informative discussion of any of these processes. 
Docket No. RM05-1-003 - 10 - 

The Commission orders: 

 The State of Alaska’s request for clarification, or in the alternative rehearing, of 

Order No. 2005-B is denied. 

By the Commission. 

( S E A L ) 

Nathaniel J. Davis, Sr., 

Deputy Secretary.