130 FERC ¶ 61,196 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 157 

[Docket No. RM05-1-002] 

Regulations Governing the Conduct of Open Seasons for Alaska Natural Gas 

Transportation Projects 

(Issued March 18, 2010) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule. 

SUMMARY: The Commission is amending its regulations, in order to clarify them in 

response to Order Nos. 717 and 717-A, governing the Standards of Conduct for 

transmission providers. These amendments are required in order to make clear to 

prospective applicants for an Alaska natural gas transportation project which Standards of 

Conduct are applicable to conducting open seasons for Alaska natural gas transportation 

projects. This clarification will benefit both prospective applicants and prospective 

shippers of an Alaska natural gas transportation project by eliminating any uncertainties 

those parties may have pertaining to the standards of conduct governing open seasons for 

such a project. 

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

publication in the FEDERAL REGISTER].
FOR FURTHER INFORMATION CONTACT: 

Jacqueline Holmes 

Assistant General Counsel, Energy Projects 

Office of the General Counsel 

888 First Street, NE 

Washington, DC 20426 

jacqueline.holmes@ferc.gov

Whit Holden 

Office of the General Counsel 

888 First Street, NE 

Washington, DC 20426 

edwin.holden@ferc.gov

SUPPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Regulations Governing the Conduct of Docket No. RM05-1-002 

Open Seasons for Alaska Natural Gas 

Transportation Projects 

ORDER NO. 2005-B 

FINAL RULE 

(Issued March 18, 2010) 

TABLE OF CONTENTS 

 Paragraph Numbers 

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

II. Background ............................................................. 3 

III. Discussion .............................................................. 8 

IV. Information Collection Statement .................................. 33 

V. Environmental Analysis .............................................34 

VI. Regulatory Flexibility Act ........................................... 35 

VII. Document Availability ............................................... 36 

VIII. Effective Date ......................................................... 39 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 and John R. Norris. 

Regulations Governing the Conduct of Docket No. RM05-1-002 

Open Seasons for Alaska Natural Gas 

Transportation Projects 

ORDER NO. 2005-B 

FINAL RULE 

(Issued March 18, 2010) 

I. Introduction

1. By this instant final rule, the Commission is amending Part 157, Subpart B of its 

regulations, specifically 18 CFR §§ 157.34 and 157.35, in order to clarify and reconcile 

them in response to Order Nos. 717 and 717-A,1

 governing the Standards of Conduct for 

transmission providers. Part 157, Subpart B contains the regulations governing open 

seasons for Alaska natural gas transportation projects. Specifically, the Commission is 

eliminating references to “energy affiliates” in §§ 157.34 and 157.35 of the 

Commission’s regulations in order to be consistent with Order No. 717, in which the 

Commission eliminated the concept of “energy affiliates” in response to the U.S. Court of 

 1 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). 
Docket No. RM05-1-002 - 2 - 

Appeals for the D.C. Circuit decision in National Fuel Gas Corporation v. FERC 

(National Fuel).

2

 

2. The Commission, in Order No. 717, also eliminated the corporate functional 

approach taken in Order No. 2004’s3

 Standards of Conduct in favor of an employee 

functional approach. In doing so, the Commission revised and reformed the Standards of 

Conduct to combine the best elements of Order No. 2004, with those of the Standards of 

Conduct originally adopted by the Commission in Order Nos. 4974

 (for the gas industry) 

and 8895

 (for the electric industry). By this rule, the Commission is reconciling 

 2

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

3 Standards of Conduct for Transmission Providers, Order No. 2004, FERC Stats. 

& Regs. ¶ 31,155 (2003), order on reh’g, Order No. 2004-A, FERC Stats. & Regs. 

¶ 31,161, order on reh’g, Order No. 2004-B, FERC Stats. & Regs. ¶ 31,166, order on 

reh’g, Order No. 2004-C, FERC Stats. & Regs. ¶ 31,172 (2004), order on reh’g, Order 

No. 2004-D, 110 FERC ¶ 61,320 (2005), vacated and remanded as it applies to natural

gas pipelines sub nom. National Fuel Gas Supply Corp. v. FERC, 468 F.3d 831 (D.C. Cir 

2006); see Standards of Conduct for Transmission Providers, Order No. 690, FERC Stats. 

& Regs. ¶ 31,237, order on reh’g, Order No. 690-A, FERC Stats. & Regs. ¶ 31,243 

(2007); see also Standards of Conduct for Transmission Providers, Notice of Proposed 

Rulemaking, FERC Stats. & Regs. ¶ 32,611 (2007); Notice of Proposed Rulemaking, 

FERC Stats. & Regs. ¶ 32,630 (2008). 

4 Inquiry into Alleged Anticompetitive Practices Related to Marketing Affiliates of 

Interstate Pipelines, Order No. 497, 53 FR 22139 (Jun. 14, 1988), FERC Stats. & Regs. 

Regulations Preambles 1986-1990 ¶ 30,820 (1988), Order No. 497-A, order on reh’g, 

54 FR 52781 (Dec. 22, 1989), FERC Stats. & Regs., Regulations Preambles 1986-1990 

¶ 30,868 (1989) Order No. 497-B, order extending sunset date, 57 FR 9 (Jan. 2, 1992), 

FERC Stats. & Regs., Regulations Preambles January 1991-June 1996 ¶ 30,934 (1991), 

reh’g denied, 57 FR 5815 (Feb. 18, 1992), aff’d in part and remanded in part sub nom. 

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

No. 497). 

5 Open Access Same-Time Information System and Standards of Conduct, Order 

No. 889, FERC Stats. & Regs. ¶ 31,035 (1996), order on reh’g, Order No. 889-A, FERC 

Stats. & Regs. ¶ 31,049, reh’g denied, Order No. 889-B, 81 FERC ¶ 61,253 (1997). 
Docket No. RM05-1-002 - 3 - 

references in § 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 

regulations as a result of Order Nos. 717 and 717-A. 

II. Background

3. In 1988, the Commission, in Order No. 497, first adopted Standards of Conduct 

for transmission providers. In Order No. 497, the Commission sought to deter undue 

preferences by (i) separating a transmission function provider’s employees engaged in 

transmission services from those engaged in its marketing services, and (ii) requiring that 

all transmission customers, affiliated and non-affiliated, be treated on a nondiscriminatory basis. 

4. In 2003, the Commission issued Order No. 2004, which broadened the Standards 

of Conduct to include a new category of affiliate, the energy affiliate.6

 The new 

standards were made applicable to both the electric and gas industries, and provided that 

the transmission employees of a transmission provider7

 must function independently not 

 6

 The Order No. 2004 Standards of Conduct defined an energy affiliate as an 

affiliate of a transmission provider that (1) engages in or is involved in transmission 

transactions in U.S. energy or transmission markets; (2) manages or controls transmission 

capacity of a transmission provider in U.S. energy or transmission markets; (3) buys, 

sells, trades, or administers natural gas or electric energy in U.S. energy or transmission 

markets; or (4) engages in financial transactions relating to the sale or transmission of 

natural gas or electric energy in U.S. energy or transmission markets. Order No. 2004, 

FERC Stats. & Regs. ¶ 31,155 at P 40; see also 18 CFR 358.3(d). Certain categories of 

entities were excluded from this definition in subsequent sections of the regulations. 

7

 A transmission provider was defined as (1) any public utility that owns, operates, 

or controls facilities used for the transmission of electric energy in interstate commerce; 

or (2) any interstate natural gas pipeline that transports gas for others pursuant to subpart 

A of Part 157 or subparts B or G of Part 284 of the same chapter of the regulations. 

Order No. 2004, FERC Stats. & Regs. ¶ 31,155 at P 33-34; see also 18 CFR 358.3(a). 
Docket No. RM05-1-002 - 4 - 

only from the company’s marketing affiliates but from its energy affiliates as well, and 

that transmission providers may not treat either their energy affiliates or their marketing 

affiliates on a preferential basis. 

5. In 2005, the Commission issued Order No. 2005,8

 amending its regulations to 

establish requirements governing the conduct of open seasons for proposals to construct 

Alaska natural gas transportation projects.9

 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. 

6. In 2006, in National Fuel, the U.S. Court of Appeals for the D.C. Circuit 

overturned the standards as applied to gas transmission providers on the ground that the 

evidence of energy affiliate abuse cited by the Commission was not in the record.10 As a 

result of the court’s decision in National Fuel, on January 9, 2007, the Commission 

 8 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). 

 9

Order No. 2005 fulfilled the Commission’s responsibilities under section 103 

(e)(1) of the Alaska Natural Gas Pipeline Act (the Act), enacted on October 13, 2004, 

which directed the Commission, within 120 days from enactment of the Act, to 

promulgate regulations governing the conduct of open seasons for Alaska natural gas 

transportation projects, including procedures for allocation of capacity. 

10 National Fuel, 468 F.3d at 841. 
Docket No. RM05-1-002 - 5 - 

issued an interim rule, Order No. 690,11 which repromulgated the portions of the 

Standards of Conduct not challenged in National Fuel as applied to natural gas 

transmission providers. Subsequently, on October 16, 2008, the Commission issued 

Order No. 717 amending the Standards of Conduct for transmission providers to make 

them clearer and to refocus the rules on the area where there is the greatest potential for 

abuse. 

7. The reforms in Order No. 717 were intended to eliminate the elements that had 

rendered the Standards of Conduct difficult to enforce and apply. The Commission 

strove to conform the Standards of Conduct with the court’s opinion in National Fuel and 

combine the best elements of Order No. 2004 with those elements of the Standards of 

Conduct originally adopted in Order Nos. 497 and 889. Specifically, Order No. 717 (i) 

eliminated the concept of energy affiliates, and (ii) eliminated the corporate separation 

approach in favor of the employee functional approach used in Order Nos. 497 and 889. 

III. Discussion

8. The Commission’s 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. The Commission sought to do this by applying 

certain of the Standards of Conduct requirements of Order No. 2004 to all project 

 11 Standards of Conduct for Transmission Providers, Order No. 690, 72 FR 2427 

(Jan. 19, 2007); FERC Stats. & Regs. ¶ 31,237 (2007) (Interim Rule); clarified by, 

Standards of Conduct for Transmission Providers, Order No. 690-A, 72 FR 14235 

(Mar. 27, 2007); FERC Stats. & Regs. ¶ 31,243 (2007). 
Docket No. RM05-1-002 - 6 - 

applicants conducting open seasons for an Alaska natural gas transportation project 

because this would minimize the risk that an affiliate of a project applicant would have an 

advantage over non-affiliates in obtaining capacity through the open season. 

9. First, in § 157.35(c), the Commission required project 

applicants to 

The employees of this unit 

project applicant, as well as the project applicant’s Marketing 

This, the Commission stated, would prevent Energy Affiliates 

the project applicant who participate in the open season from 

0. Second, in § 157.35(d), the Commission provided that the project 

ponsor’s unit or division conducting an open season would be subject to certain 

 

create/designate a unit or division to conduct the open season. 

or division are treated as transmission function employees, 

and as such are required, 

under Order No. 2004, to function independent of the other 

non-regulated divisions of the 

and Energy Affiliates.12 

or Marketing Affiliates of 

having the advantage of 

information or strategy that non-affiliated open season 

participants do not have. 

1

s

12 See 18 CFR 358.4(a)(1). 
Docket No. RM05-1-002 - 7 - 

provisi of ally, those pertaining to: separation of 

functions (18 R. § 

§ 358.4(e)(3), (4), (5) and (6)); information access (18 CFR § 358.5(a)); 

formation disclosure (18 CFR § 358.5(b)); prohibitions against discrimination 

8 CFR §§ 358.5(c)(3) and(5)) and discounts (18 CFR § 358.5(d). 

ons the Standards of Conduct, specific

CF § 358.4(a)(1) and (3)); written procedures (18 CFR 

§

in

(1

A. Concept of “Energy Affiliates”

1. Current Alaska Open Season Regulations –§§ 157.34 (c)(19), 

(20)(i) and (ii), and (21), and 157.35(c)

11. The current regulations governing the conduct of open seasons for Alaska natural 

lar, 

a prospective applicant must list and identify in organizational 

charts e in

tandards of Conduct.

pen Season Regulations –§§ 157.34 (c)(19), 

gas transportation projects refer in several sections to “energy affiliates.” In particu

paragraphs (19), (20)(i) and (ii), and (21) of § 157.34(c): include “Energy Affiliates” 

among the entities that 

to b cluded in the prospective applicant’s Notice of Open Season. 

12. Additionally, as part of the Commission’s regulations to prevent undue 

 discrimination or preference in the conduct of open seasons for Alaska natural gas 

transportation projects, § 157.35(c): requires that all prospective applicants 

 

conducting open seasons for an Alaska natural gas transportation project function 

independent of, among others, their Energy Affiliates, as defined the Commission’s 

S

B. New Alaska O
Docket No. RM05-1-002 - 8 - 

(20)(i) and (ii), and (21), and 157.35(c)

13. As stated above, Order No. 717 eliminated the concept of “energy affiliates” by 

deleting that term, as it was defined in § 358.3(d)13 of the pre-Order No. 717 Standards of 

Conduct. Order No. 717 also deleted from the Standards of Conduct the definition of 

“marketing affiliate,” consistent with its goal of eliminating Order No. 2004’s corporate 

 

ale in 

n 

f 

functional approach. In its stead, Order No. 717 refers to the terms “marketing function” 

in new § 358.3(c)14 and “marketing function employee” in new § 358.3(d).15 In the case

of interstate pipelines and their affiliates, marketing function means “the sale for res

interstate commerce, or the submission of offers to sell interstate commerce, natural gas” 

subject to several exclusions, including “sales of natural gas solely from a seller’s ow

production, or a “seller’s own gathering or processing facilities.”16 However, for 

purposes of these regulations, these exclusions, which also existed under the definition o

“marketing” under the Order No. 2004 Standards of Conduct (see 18 CFR 358.3(l)(1)), 

 

ion made 

t 

cannot be read to exclude any prospective project sponsors that comprised or were

affiliated with the owner of the Alaskan North Slope natural gas. The Commiss

this clear by providing in § 157.35(d) of the open season regulations that all projec

applicants, even those who would not otherwise be subject to the Standards of Conduct 

 13 18 CFR 358.3(d). 

14 18 CFR 358.3(c). 

15 18 CFR 358.3(d). 

16 18 CFR 358.3(c)(iii) and (iv). 
Docket No. RM05-1-002 - 9 - 

provisions, must comply with certain enumerated sections of the Standards of Conduct. 

 to render the regulations governing the conduct of open 

 also making clear that the “producer exemption” of § 358.3(c)(iii) does not apply in 

tion projects . 

15. C references to “Energy 

Affiliates” in that pr rm 

se terms 

 clear 

 

 

14. Therefore, in order

seasons for Alaska natural gas transportation projects consistent with the current 

Standards of Conduct, the Commission is amending paragraphs (19), (20) and 

(21) of § 157.34(c) to eliminate references to “energy affiliates” and “marketing 

affiliates,” and is adopting Order No. 717’s employee functional approach as reflected in 

the marketing function/marketing function employee concept. However, the Commission 

is

the case of prospective applicants conduction open seasons for Alaska natural gas 

transporta

The ommission is also amending § 157.35(c) to eliminate

ovision of the open season regulations, and to replace the te

“marketing affiliates” with “affiliates” performing a “marketing function,” as tho

are defined in the current Standards of Conduct. Again, the Commission is making

in this section that the “producer exemption” of § 358.3(c)(iii) does not apply in the case

of prospective applicants conduction open seasons for Alaska natural gas transportation

projects. 

C. Specific Provisions of the Standards of Conduct

Current Alaska Open Season Regulations –§ 157.35(d)

16. As explained above, Commission provided in § 137.35(d) that the project 

sponsor’s unit or division conducting an open season would be subject to certain 

provisions of the Commission’s Standards of Conduct, namely, §§ 358.4(a)(1) and (3); 

358.4(e)(3), (4), (5), and (6); 358.5(a), (b), (c)(3) and (5); and 358.5(d). That section 
Docket No. RM05-1-002 - 10 - 

also provided that the exemptions from § 358.4(a)(1) and (3) set forth in 

 applicant 

No. 

§ 358.4(a)(4), (5), and (6) of the open season regulations also applied to any project 

applicant conducting an open season for an Alaska natural gas transportation project. 

17. Below, we will discuss the specific Standards of Conduct with which an

for an Alaska natural gas transportation project must comply and compare those 

requirements with those contained in the Standards of Conduct as revised by Order 

717. 

D. Separation of Functions − §§ 358.4(a)(1) and (3) (2004) 

18. Under § 157.35(d) of the Commission’s open season regulations, any 

project applicant conducting an open season for an Alaska natural gas transportation 

18

 system 

e 

t 

pplicant’s obligations since no emergency circumstances affecting system reliability 

would occur at the open season stage. The second difference is that reference to 

“Marketing and Energy Affiliates” has been replaced by reference to “marketing function 

 

project must comply with the separation of functions requirements of the Standards of 

Conduct found in §§ 358.4(a)(1) and (3) of the Commission’s regulations. 17 

19. The independent functioning requirements of § 358.4(a)(1) now appear in 

the new Standards of Conduct, as amended by Order No. 717, at § 358.5(a) of the 

Commission’s regulations. The new standard has two minor differences from the Order 

No. 2004 standard. First, the exception for emergency circumstances affecting

reliability was replaced by a broader exception “as permitted in this part or otherwis

permitted by Commission order.” This change should have no impact on a projec

a

(a)(1) and (3). 17 Old 18 CFR 358.4

18 18 CFR 358.5(a). 
Docket No. RM05-1-002 - 11 - 

employees,” reflecting Order No. 717’s elimination of the Energy Affiliate and the 

adoption of an employee functional approach in lieu of a corporate functional approach. 

The se now 

ference to “Marketing and Energy Affiliates” with reference to “marketing function 

mployees.” 

E. Written Procedures − §§ 358.4(e)(3), (4), (5) and (6)

paration of functions requirements described in § 358.4(a)(3) are

found in § 358.5(b) of the new standards, 19 although they, too, are now expressed 

in terms that reflect Order No. 717’s employee functional approach by replacing 

re

e

 

0. Section 157.35(d) of the Commission’s open season regulations also imposes on 

ny project applicant conducting an open season for an Alaska natural gas transportation 

roject certain requirements pertaining to written procedures, training, and compliance 

versight as set out in §§ 358.4(e)(3), (4), (5) and (6). Specifically, 

 358.4(e)(3) requires each project applicant to post on its internet website its written 

rocedures describing how it will comply with the applicable Standards of Conduct and 

ursuant to § 358.4(e)(4), these procedures are to be distributed to specified 

mployees. Also, under the requirements of § 358.4(e)(5), each project applicant 

 required to train its employees involved in the open season or part of the open season 

nit/division, officers, directors and employees with access to transportation information 

r information concerning gas purchases, sales or marketing functions. Finally, the 

 

2

a

p

20 o

§

p

p

e

is

u

o

 19 18 CFR 358.5(b). 

20 Old 18 CFR 358.4(e)(3),(4), (5) and (6). 
Docket No. RM05-1-002 - 12 - 

project applicant must also designate a Chief Compliance Officer who will be responsible 

r Standards of Conduct compliance as set out in § 358.4(e)(6). 

1. Requirements pertaining to written procedures, training, and compliance oversight 

re now set out in §§ 358.7(d) (posting written procedures); 358.8(b)(2) 

istribution of written procedures); 358.8(c)(1) (employee training); and 358.8(c)(2) 

esignation of compliance officer). Although there are some differences in the details 

f these procedures, they are minor, and should impose no undue burdens on project 

pplicants conducting open seasons. Likewise, they will not dilute or alter the 

ommission’s goal to ensure a non-discriminatory open season for an Alaska natural gas 

ansportation project. 

2. For example, the new Standards of Conduct do not specifically require that the 

rocedures to be posted must be “in such detail as will enable customers and the 

ommission to determine that the Transmission Provider is in compliance with the 

quirements of this section.” Additionally, the training requirements of the old 

tandards of Conduct must now be met annually and new employees must be trained 

ithin 30 days. Finally, in addition to designating a Chief Compliance Officer, the 

new Standards of Conduct require that the Chief Compliance Officer’s name and contact 

information be posted.23 

 

fo

2

a

(d

(d

o

a

C

tr

2

p

C

21

re

S

22

w

21 Compare old 18 CFR 358.4(e)(3) with 18 CFR 358.7(d). 

22 Compare old 18 CFR 358.4(e)(5) with 18 CFR 358.8(c)(1). 

23 Compare old 18 CFR 358.4(e)(6)with 18 CFR 358.8(c)(2). 
Docket No. RM05-1-002 - 13 - 

F. Information Access and Disclosure − §§ 358.5(a) and (b)

3. The application of the information access (18 CFR 358.5(a)) and disclosure 

8 CFR 358.5(b)) requirements also apply to project applicants in order to ensure 

at employees of Marketing/Energy Affiliates participating in the Open Season will 

ot have access to any transmission information that is not publicly available to nonffiliated participants and to require that any disclosure of non-public transmission 

formation to a Marketing/Energy Affiliate will be immediately disclosed to all other 

ctual and potential open season participants by posting that information on the project 

pplicant’s internet website. Additionally, § 157.35(d) provides that the 

quirements set out in § 358.5(b)(4) for written consent before releasing nonffiliated customer information to a Marketing or Energy Affiliate and posting that 

onsent on the Internet also apply to project applicants. 

4. Requirements pertaining to information access and disclosure are now set out in 

§ 358.6 and 358.7(a), (b), and (c). Although reworded to reflect the 

limination of the Energy Affiliate and the replacement of references to Marketing 

ffiliates with the concept of marketing function employees, the new Standards of 

onduct similarly ensure that a project sponsor’s affiliated employees who conduct a 

arketing function will not have access to any transmission information that is not 

publicly available to non-affiliated open season participants and similarly require that any 

 

2

(1

24 th

n

a

in

a

a

re

a

c

2

§

e

A

C

m

 24 As explained infra, the concept of Energy Affiliate has been eliminated, an

arketing affiliate has been supplanted by the concept of the marketing function 

d the 

m

employee. 
Docket No. RM05-1-002 - 14 - 

disclosure of non-public transmission information to a marketing function employee will 

e immediately posted on project applicant’s internet website for all other actual and 

otential open season participants to see. 

G. Prohibition Against Discrimination –§§ 358.5(c)(3) and (5)

b

p

 

25. In Order No. 2005, the Commission sought to broadly 

project applicant conducting an open season and limit its 

discrimination requirements of 

(d), the non358.5(c)(3) and (5) 

requires a Transmission 

er to process all similar requests for transmission in the 

anner and within 

the same period of time; and § 358.5(c)(5) prohibits 

transmission providers from 

ting or Energy Affiliates any preference 

lesale 

prohibit discrimination by a 

ability to unduly favor a 

Marketing/Energy Affiliate by imposing some of the nonOrder No. 2004. Specifically, under § 157.35

discrimination 

provisions of the Standards of Conduct contained in §§ 

25

were made to apply to project applicants. Section 358.5(c)(3) 

Provid

same m

giving their Marke

over any other who

 25 Old 18 CFR 358.5(c)(3) and (5). 
Docket No. RM05-1-002 - 15 - 

customer in matters relating to the sale or purchase of 

transmission service. The 

Commission felt that these provisions would ensure that a 

rovide any preferences to affiliated participants in the 

rohibitions remain intact under new §§ 358.4(c) and (d). 

H. iscounts - § 358.5(d)

project applicant will not 

p

context of an open season. These 

p

D

26. Finally, § 157.35(d) imposes on a project applicant the provisions of 

§ 358.5(d),26 under which a Transmission Provider is required to post an offer of 

a discount for transmission service at the time an offer is contractually binding.27 This, 

too, was done to ensure the transparency of the open season process and discourage 

undue preferences. 

27. In Order No. 717, the Commission deleted the obligation of § 157.35(d) to 

post discount information from the current Standards of Conducts. In P 218 of Order No. 

717, we stated the following: 

The Commission further clarifies that where the information called for 

 26

27 If an offer of a discount becomes contractually binding through the execution of 

a precedent agreement, the offer must be posted at that time, not at the time of the final 

agreem

 Old 18 CFR 358.5(d). 

ent. See Order No. 2004-A, FERC Stats. & Regs. ¶ 31,161 at P 227. 
Docket No. RM05-1-002 - 16 - 

under the posting requirements of the Standards is duplicative of 

f 

 and 

ission provider is to follow the posting requirements, inclusive of 

egulations or orders. We 

tions or orders are 

nduct. 

8. The Commission recognizes that other provisions of our regulations or orders, 

e to 

uding, 

, issues of price...).29 Under § 157.34(d)(4) of the 

 

information required to be posted by transmission providers under other 

provisions of our regulations or orders, such as the posting requirements o

18 CFR part 284 and 18 CFR part 37, only a single posting is required,

the transm

substance, venue, and timing, of the other r

believe the posting requirements contained in such regula

sufficient to fulfill the transparency goals of the Standards of Co

Inasmuch as discount information is required to be posted both for the gas 

and electric industries under other provisions of our regulations, we delete 

proposed section 358.4(b), which had set forth proposed requirements for 

the posting of discount information.28 

2

such as the posting requirements of 18 CFR part 284 and 18 CFR part 37 might not attach 

to a prospective applicant for an Alaska natural gas transportation project. However, 

under the open season regulations, such an applicant may not give undue preferenc

any person in matters relating to the sale or purchase of transmission service (incl

but not limited to

 28 FERC Stats. & Regs. ¶ 31,280, at P 218 (2008). 

29 This requirement appears in both the Order No. 2004 Standards of Conduct (18 

CFR 358.5(c)(5)) and the Order No. 717 Standards of Conduct (18 CFR 358.4(d)). 
Docket No. RM05-1-002 - 17 - 

Commission’s regulations, a prospective applicant must submit copies of all precedent 

agreements to the Commission, at which time any discounted rates would be revealed, 

and the Commission can address any concerns or complaints regarding preferential 

treatment at that time. 

I. Exemptions –§§ 358.4(a)(4), (5), and (6)

 

29. In addition, § 157.35(d) provides that the exemptions 

from §§ 

The applicable exemptions from the separation of functions 

the project applicant to share various categories of employees, 

including: support, field 

and maintenance employees (§ 358.4(a)(4)); senior officers 

executing transmission system 

operations or market functions or act as conduits for sharing 

tion with 

358.4(a)(1) and (3) set forth in §§ 358.4(a)(4), (5), and (6) 

also apply to each 

project applicant conducting an Alaska natural gas 

transportation project open season. 

would also apply to permit 

and directors who are 

not “Transmission Function Employees” (as defined by 18 

CFR 358.3(j)), provided 

that they do not participate in directing, organizing, or 

prohibited informa
Docket No. RM05-1-002 - 18 - 

a M

man

arketing or Energy Affiliate (§ 358.4(a)(5)); and risk 

agement employees 

who are not engaged in transmission functions or sales or 

(§ 358.4(a)(6)). 

ployees may be 

xtent that, the employee in question is not one “who 

30

Conduct provisions regarding 

the Standards of Conduct currently listed in the open season 

regulations do, that the open 

season is conducted in a manner that is non-discriminatory 

 equal access to 

 

commodity functions 

30. The new Standards of Conduct do not specifically enumerate similar categories of 

employees that may be shared. Instead, the sharing of these types of em

permitted by virtue of, and to the e

actively and personally engages on a day-to-day basis in marketing functions.” 

31. As discussed above, applying the new Standards of 

the functional separation, information access and disclosure, 

and non-discrimination 

provisions of Order No. 717 to the open season process will 

ensure, in the same way that 

and provides

 

30 See 18 CFR 358.3(d). 
Docket No. RM05-1-002 - 19 - 

all participants, particularly those not affiliated with the 

project applicants. If during or 

son the Commission determines that 

the project applicant has 

capacity. 

to 

following the open sea

violated any of these requirements, the results of the open 

season with regard to the 

affiliates of that project applicant may be voided and a new 

open season held for that 

32. Therefore, in order to render the regulations governing the conduct of open 

seasons for Alaska natural gas transportation projects consistent with the current 

Standards of Conduct, the Commission is amending paragraph (d) of § 157.35 

replace the various Order No. 2004 Standards of Conduct which project sponsors 

conducting open seasons for an Alaska natural gas transportation project must comply 

with the applicable new Standards of Conduct promulgated under Order No. 717, as 

discussed above. 

IV. Information Collection Statement

33. Office of Management and Budget (OMB) regulations require OMB to 

approve certain information collection requirements imposed by agency rule.31 

 31 5 CFR 1320.12. 
Docket No. RM05-1-002 - 20 - 

However, this instant Final Rule does not increase or decrease the 

information collection requirements that are already imposed under the Commission’s 

ironmental Analysis

open season regulations for Alaska natural gas transportation projects already imposed 

and compliance with OMB regulations is thus not required. 

V. Env

red to prepare an Environmental Assessment or 

a 

under 

ssessment or Environmental Impact Statement. Included is an 

xemption for procedural, ministerial, or internal administrative actions. This 

lemaking is exempt under that provision. 

I. Regulatory Flexibility Act

34. The Commission is requi

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.32 Issuance of this instant Final Rule does not represent 

major federal action having a significant adverse effect of the human environment 

the Commission’s regulations implementing the National Environmental Policy Act of 

1969. Part 380 of the Commission’s regulations lists exemptions to the requirement to 

draft an Environmental A

33 e

ru

V

5. The Regulatory Flexibility Act of 1980 (RFA)34 3 generally requires a description 

 32 Regulations Implementing the National Environmental Policy Act, Order No. 

486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987). 

33 18 CFR 380.4(a)(1). 

34 5 U.S.C. 601-12. 
Docket No. RM05-1-002 - 21 - 

and analysis of final rules that will have significant economic impact on a substantial 

ons for 

e 

nt Standards of Conduct by reconciling references to the specific 

ason for an 

r 

ature, this 

dards 

pear 

han 

require

 

number of small entities. This instant Final Rule concerns amendments to certain 

provisions of the Commission’s regulations governing the conduct of open seas

Alaska natural gas transportation projects, namely, 18 CFR 157.34 and 157.35. These 

changes are being made in order to render the open season regulations consistent with th

Commission’s curre

Standards of Conduct with which a project sponsor conducting an open se

Alaska natural gas transportation project must comply. In large measure, the 

amendments made in this instant rule do not impose obligations on any Alaska natural 

gas transportation project applicants that are different than the obligations imposed unde

the current open season regulations. Rather than being substantive in n

rulemaking merely reconciles the references to specific requirements under the Stan

of Conduct imposed under Order No. 2004, with those requirements as they now ap

in the Standards of Conducts as a result of Order No. 717. Other than in minor details, 

such as training and posting requirements, as discussed above, any differences in the 

responsibilities imposed as a result of this rulemaking are differences in form rather t

in substance as a result of the new employee functional approach taken by Order No. 

717. The Commission certifies that it will not have a significant economic impact upon 

participants in Commission proceedings. Therefore, an analysis under the RFA is not 

d. 

VII. Document Availability

36. In addition to publishing the full text of this document in the Federal Register, the 
Docket No. RM05-1-002 - 22 - 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

usiness hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

ashington, DC 20426. 

7. From the Commission’s Home Page on the Internet, this information is available 

n eLibrary. The full text of this document is available on eLibrary in PDF and 

icrosoft Word format for viewing, printing, and/or downloading. To access this 

ocument in eLibrary, type the docket number excluding the last three digits of this 

ocument in the docket number field. 

8. User assistance is available for eLibrary and the Commission’s website during 

ormal business hours from FERC Online Support at 202-502-6652 (toll-free at 1-866- 

208-3676) or email at ferconlinesupport@ferc

b

W

3

o

M

d

d

3

n

.gov, or the Public Reference Room at 202- 

02-8371, TTY 202-502-8659. E-mail the Public Reference Room at 

ublic.referenceroom@ferc.gov

5

p . 

VIII. Notice and Comment and Effective Date

9. The Commission is issuing this rule as an instant Final Rule without a period for 

ublic comment. Under 5 U.S.C. 553(b), notice and comment procedures are 

nnecessary where a rulemaking concerns only agency procedure or practice, or where 

e agency finds that notice and comment is impracticable, unnecessary, or contrary to 

e public interest. 

0. This rule concerns the amendment of 18 CFR 157.34 and 157.35 

3

p

u

th

th

4
Docket No. RM05-1-002 - 23 - 

in order to clarify them in response to Order Nos. 717 and 717-A, governing the 

tandards of Conduct for transmission providers. The changes made in this rulemaking 

en 

easons for an Alaska natural gas transportation project must comply. 

1. Moreover, on January 29, 2010, TransCanada Alaska Company LLC filed, 

ursuant to § 157.38 of the Commission’s regulations, a Request for Commission 

pproval of Detailed Plan for Conducting an Open Season in Docket No. PF09-11-001, 

nd the Commission is aware that another potential sponsor of a proposed Alaska natural 

as transportation project is preparing to soon file with the Commission its plan for 

onducting an open season. It is therefore important to clarify as expediently as possible 

xactly what is required of prospective applicants in order for them to comply with the 

pen season regulations involving the Commission’s Standards of Conduct. For these 

king are 

iew do not apply to 

agency procedure and practice and will 

substan 

43. n in the 

S

pertain to certain of these standards with which all project applicants conducting op

s

4

p

A

a

g

c

e

35 o

reasons, the Commission finds that notice and public procedure on this rulema

impracticable, unnecessary, and contrary to the public interest. 

42. The provisions of 5 U.S.C. § 801 regarding Congressional rev

this Final Rule, because this Final Rule concerns 

tially affect the rights of non-agency parties. 

These regulations are effective [insert date that is 30 days from publicatio

FEDERAL REGISTER]. 

 35 In this regard, the Commission is mindful of the Alaska Natural Gas Pipeline 

Act’s o erall objective of facilitating the timely development of an Alaska natural gas 

transportation project to bring Alaskan natural gas to markets in Alaska and in the lower 

48 states. 

v
Docket No. RM05-1-002 - 24 - 

List of subjects in 18 CFR Part 157, Administrative practice and procedure; Natural 

( S E A L ) 

Nathaniel J. Davis, Sr., 

In consideration of the foregoing, the Commission amends part 157, Chapter I, 

itle 18, Code of Federal Regulations, as follows: 

ART 157 - APPLICATIONS FOR CERTIFICATES OF PUBIC CONVENIENCE 

BANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT 

. The authority citation for part 157 continues to read as follows: 

Authority

 gas; Reporting and record keeping requirements 

By the Commission 

Deputy Secretary. 

T

P

AND NECESSITY AND FOR ORDERS PERMITTING AND APPROVING 

A

1

: 15 U.S.C. 717-717w 

2. In § 157.34, paragraphs (19), (20), and (21) are revised to read as 
Docket No. RM05-1-002 - 25 - 

follows: 

§ 157.34 Notice of open season. 

* * * *

n the 

e" as defined in § 358.3(a) of 

this chapter. Marketing units and or affiliates are those conducting a “marketing 

function” as defined in section 358.3(c) of this chapter, except that 

the exemption in 358.3(c(2)(iii) shall not apply ; 

(20) A comprehensive organizational chart showing: 

(i) The organizational structure of the prospective applicant's parent 

corporation(s) with the relative position in the corporate structure of marketing and sales 

units and any affiliates involved in the production of natural gas in the State of Alaska. 

(ii) The job titles and descriptions, and chain of command for all officers and 

directors of the prospective applicant's marketing and sales units and any affiliates 

involved in the production of natural gas in the State of Alaska; and 

(21) A statement that any officers and directors of the prospective applicant's 

affiliated sales and marketing units and affiliates involved in the production of natural gas 

in the State of Alaska named in paragraph (c)(19) of this section will be prohibited from 

 * 

(19) A list of the names and addresses of the prospective applicant's affiliated 

sales and marketing units and affiliates involved in the production of natural gas i

State of Alaska. Affiliated unit means "Affiliat
Docket No. RM05-1-002 - 26 - 

obtaining information about the conduct of the open season or allocation of capacity that 

is not posted on the "open season." 

* * * * * 

4. In § 157.35, paragraphs (c) and (d) are revised to read as follows: 

§ 157.35 Undue discrimination and preference. 

* * * * * 

(c) Each prospective applicant conducting an open season under this subpart 

must function independent of the other divisions of the prospective applicant as well as 

the prospective applicant's “affiliates” performing a “marketing function” as those 

terms are defined in §§358.3(a) and (c) of the Commission's regulations, except that 

the exemption in 358.3(c(2)(iii) shall not apply. In instances in which the prospective 

applicant is not an entity created specifically to conduct an open season under this 

subpart, the prospective applicant must 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 project applicant's “affiliates” performing a “marketing 

function” as those terms are defined in § 358.3(a) of this chapter, except that the 

exemption in 358.3(c(2)(iii) shall not apply. 

(d) Each project applicant conducting an open season under this subpart that is 

not otherwise subject to the provisions of part 358 of this chapter must comply with the 

following sections of that part: §§ 358.4(c) and (d), 358.5, 358.6, 358.7(a), (b), 

and (c), and 358.8 (b) and (c) of this chapter.