Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 2427 

Authority: 5 U.S.C. 301; 7 U.S.C. 

163w(a)(1); 21 U.S.C. 346a(e)(1)(C); section 

201 of Pub. L. 109–54; and 42 U.S.C. 300v–

1(b). 

§ 26.1506 [Amended] 

■ 2. Section 26.1506 is amended by 

revising the citation ‘‘40 CFR Part 32’’

to read ‘‘2 CFR part 1532.’’

PART 30—[AMENDED] 

■ 3. The authority citation for part 30 

continues to read as follows: 

Authority: 7 U.S.C. 135 et seq.; 15 U.S.C. 

2601 et seq.; 33 U.S.C. et seq.; 42 U.S.C. 241, 

242b, 243, 246, 300f, 300j–1, 300j–2, 300j–3, 

1857 et seq., 6901 et seq., 7401 et seq., 9601 

et seq.; OMB Circular A–110 (64 FR 54926, 

October 8, 1999). 

§ 30.13 [Amended] 

■ 4. Section 30.13 is amended by 

revising twice the citation ‘‘40 CFR Part 

32’’ to read ‘‘2 CFR part 1532.’’

Appendix to Part 30—[Amended] 

■ 5. Appendix to part 30 is amended by 

removing paragraph 8. 

PART 32—[REMOVED] 

■ 6. Under authority Sec. 2455, Pub. L. 

103–355, 108 Stat. 3327 (31 U.S.C. 6101 

note); E.O. 11738 (3 CFR, 1973 Comp., 

p. 799); E.O. 12549 (3 CFR, 1986 Comp., 

p. 189); E.O. 12689 (3 CFR, 1989 Comp., 

p. 235) part 32 is removed. 

PART 35—[AMENDED] 

■ 7. The authority citation for part 35 

continues to read as follows: 

Authority: 42 U.S.C. 9601 et seq. 

§ 35.6055 [Amended] 

■ 8. Section 35.6055 is amended by 

removing paragraphs(a)(3) and (a)(4) 

and redesignating paragraphs (a)(5) and 

(a)(6) as (a)(3) and (a)(4) respectively. 

§ 35.6105 [Amended] 

■ 9. Section 35.6105 is amended by 

removing paragraphs(a)(3) and (a)(4) 

and redesignating paragraphs (a)(5) and 

(a)(6) as (a)(3) and (a)(4) respectively. 

PART 36—[AMENDED] 

■ 10. The authority citation for part 36 

continues to read as follows: 

Authority: 41 U.S.C. 701 et seq. 

§ 36.510 [Amended] 

■ 11. Section 36.510(c) is amended by 

revising the citation ‘‘40 CFR Part 32’’

to read ‘‘2 CFR part 1532.’’

PART 46—[AMENDED] 

■ 12. The authority citation for part 46 

continues to read as follows: 

Authority: Section 103(b)(5) of the Clean 

Air Act, as amended (42 U.S.C. 7403(b)(5)); 

sections 104(b)(5) and (g)(3)(B) of the Clean 

Water Act, as amended (33 U.S.C. 1254(b)(5) 

and (g)(3)(B)); section 1442 of the Safe 

Drinking Water Act, as amended (42 U.S.C. 

300j-1); section 8001 of the Solid Waste 

Disposal Act, as amended (42 U.S.C. 6981); 

section 10 of the Toxic Substances Control 

Act, as amended (15 U.S.C. 2609); section 20 

of the Federal Insecticide, Fungicide, and 

Rodenticide Act, as amended (7 U.S.C. 136r); 

sections 104(k)(6)and 311 of the 

Comprehensive Environmental Response, 

Compensation, and Liability Act (42 U.S.C. 

9604(k)(6) and 42 U.S.C. 9660). 

■ 13. Section 46.130 is amended by 

revising the second sentence to read as 

follows: 

§ 46.130 Debarment and suspension. 

* * * Names of individuals who are 

excluded or disqualified are located in 

the Excluded Parties List System 

maintained by the General Services 

Administration and currently located at 

http://www.epls.gov. 

§ 46.215 [Amended] 

■ 14. Section 46.215(c) is amended by 

revising the citation ‘‘40 CFR Part 32’’

to read ‘‘2 CFR part 1532.’’

PART 80—[AMENDED] 

■ 15. The authority citation for part 80 

continues to read as follows: 

Authority: 42 U.S.C. 7414, 7545, 7542, and 

7610(a). 

§ 80.65 [Amended] 

■ 16. Section 80.65(f)(2)(iv) is amended 

by revising the citation ‘‘40 CFR Part 

32’’ to read ‘‘2 CFR part 1532.’’

■ 17. Section 80.65(f)(2)(v) is amended 

by revising the citation ‘‘40 CFR Part 

32’’ to read ‘‘2 CFR part 1532.’’

§ 80.125 [Amended] 

■ 18. Section 80.125(e) is amended by 

revising the citation ‘‘40 CFR Part 32’’

to read ‘‘2 CFR part 1532.’’

Title 48 Federal Acquisition 

Regulations System—Chapter XV—

Environmental Protection Agency 

PART 1509—[AMENDED] 

■ 19. The authority citation for part 

1509 continues to read as follows: 

Authority: Sec. 205(c), 63 Stat. 390, as 

amended, 40 U.S.C. 486(c). 

1509.403 [Amended] 

■ 20. Section 1509.403 is amended by 

revising the citation ‘‘40 CFR Part 32’’

to read ‘‘2 CFR part 1532.’’

[FR Doc. E7–641 Filed 1–18–07; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 358 

[Docket No. RM07–6–000; Order No. 690] 

Standards of Conduct for 

Transmission Providers 

Issued January 9, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Interim rule. 

SUMMARY: This interim rule responds to 

the decision of the United States Court 

of Appeals for the District of Columbia 

vacating and remanding the standards of 

conduct rule, Order No. 2004, as it 

relates to interstate natural gas 

pipelines, in National Fuel Gas Supply 

Corporation v. FERC, 468 F.3d 831 (D.C. 

Cir. 2006). The court objected to the 

Federal Energy Regulatory 

Commission’s (Commission’s) 

expansion of the prior standards of 

conduct to include energy affiliates, and 

vacated the entire rule as it relates to 

natural gas pipelines. The interim rule 

repromulgates the standards of conduct 

that were not challenged before the 

court on an interim basis while the 

Commission considers how to respond 

to the court’s decision on a permanent 

basis. 

EFFECTIVE DATE: This rule is effective 

January 9, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Deme Anas, Office of Enforcement, 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426. Telephone: (202) 502–8178. Email: demetra.anas@ferc.gov. Stuart 

Fischer, Office of Enforcement, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 20426. 

Telephone: (202) 502–8517. E-mail: 

stuart.fischer@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Joseph T. Kelliher, 

Chairman; Suedeen G. Kelly, Marc Spitzer, 

Philip D. Moeller, and Jon Wellinghoff. 

I. Introduction 

1. The Federal Energy Regulatory 

Commission (Commission) is 

promulgating interim standards of 


frosa on PROD1PC71 with RULES
2428 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 

1On November 25, 2003, the Commission added 

Part 358 to the Commission’s regulations adopting 

standards of conduct that apply uniformly to 

natural gas and electric utility transmission 

providers. Standards of Conduct for Transmission 

Providers, Order No. 2004, FERC Stats. & Regs., 

Regulations Preambles ¶ 31,155 (2003), order on 

reh’g, Order No. 2004–A, III FERC Stats. & Regs. ¶

31,161 (2004), 107 FERC ¶ 61,032 (2004), order on 

reh’g, Order No. 2004–B, III FERC Stats. & Regs. ¶

31,166 (2004), 108 FERC ¶ 61,118 (2004), order on 

reh’g, Order No. 2004–C, 109 FERC ¶ 61,325 (2004), 

order on reh’g, Order No. 2004–D, 110 FERC ¶

61,320 (2005), vacated and remanded as it applies 

to natural gas pipelines, National Fuel Gas Supply 

Corporation v. FERC, 468 F.3d 831 (D.C. Cir. 2006). 

2National Fuel slip op. at 4 [published cite not 

yet available]. 

3National Fuel, slip op. at 4. Order No. 2004 was 

not appealed as it applies to electric utility 

transmission providers. 

4National Fuel, slip op. at 4. 

5 Mid-Tex Electric Cooperative, Inc. v. FERC, 822 

F.2d 1123 (D.C. Cir. 1987). 

6 Mid-Tex Electric Cooperative, Inc. v. FERC, 773 

F.2d 327 (D.C. Cir. 1985). 

7 Mid-Tex, at 1129–30. 

8 Mid-Tex, at 1130. 

9 Mid-Tex, at 1132. 

10 5 U.S.C. 553(b)(3)(B) (2000). 

11 Inquiry Into Alleged Anticompetitive Practices 

related to Marketing Affiliates of Interstate 

Pipelines, Order No. 497, 53 FR 223139 (1988), 

FERC Stats. & Regs., Regulations Preambles 1986–

1990 ¶ 30,820 (1988); Order No. 497–A, order on 

reh’g, 54 FR 52781 (1989), FERC Stats & Regs., 

Regulations Preambles 1986–1990 ¶ 30,868 (1989); 

Order No. 497–B, order extending sunset date, 55 

FR 53,291 (1990), FERC Stats. & Regs., Regulations 

Preambles 1986–1990 ¶ 30,908 (1990); Order No. 

497–C, order extending sunset date, 47 FR 9 (1992), 

FERC Stats. & Regs., Regulations Preambles 1991–

1996 ¶ 30934 (1991), reh’g denied, 47 FR 5815 

(1992), 58 FERC ¶ 61,139 (1992); aff’d in part and 

remanded in part sub nom. Tenneco Gas v. FERC, 

969 F.2d 1187 (D.C. cir. 1992). 

12Order No. 2004, supra note 1, (in the 

description of the revisions to Title 18 of the Code 

of Federal Regulations). 

conduct regulations that govern the 

relationship between natural gas 

transmission providers and their 

marketing affiliates to respond to the 

decision of the United States Court of 

Appeals for the District of Columbia 

concerning the Standards of Conduct for 

Transmission Providers under Order 

No. 2004.1 In National Fuel Gas Supply 

Corporation v. FERC (National Fuel),2

the court found that the Commission 

did not support the standards of 

conduct’s expansive definition of energy 

affiliates and vacated Order Nos. 2004, 

2004–A, 2004–B, 2004–C and 2004–D 

(collectively referred to as Order No. 

2004) as applied to natural gas 

pipelines, and remanded the orders to 

the Commission.3 Specifically, the court 

rejected the Commission’s attempt to 

extend the standards of conduct beyond 

pipelines’ relationships with their 

marketing affiliates to govern pipelines’

relationships with numerous nonmarketing affiliates, such as producers, 

gatherers, and local distribution 

companies (energy affiliates). In light of 

this finding, the court found moot the 

other issues raised on appeal.4

2. The purpose of this order is to 

repromulgate the standards of conduct 

not challenged in the National Fuel 

appeal in the interim while the 

Commission considers how to respond 

to the court’s decision on a permanent 

basis. To that end, the Commission 

plans to issue a Notice of Proposed 

Rulemaking (NOPR) in the very near 

future. The interim rule will thus help 

eliminate any uncertainty about how the 

standards of conduct apply to natural 

gas transmission providers while the 

Commission develops a final rule. 

3. The Commission believes that this 

interim rule is consistent with the 

court’s decision in National Fuel and 

meets the standards for an interim rule 

without notice and comment under the 

Administrative Procedure Act as set out 

in the court’s opinion in Mid-Tex 

Electric Cooperative, Inc. v. FERC (MidTex).5 In Mid-Tex, the court reviewed 

the Commission’s interim rule regarding 

the construction work in progress 

(CWIP) accounts for electric utilities 

that had previously been vacated and 

remanded by the court.6 Despite 

objections to the interim CWIP rule, the 

court upheld the interim rule as 

consistent with the letter and spirit of 

its previous ruling.7 The court 

concluded that the Commission could 

reasonably infer that should it become 

necessary or proper to provide a 

regulation prior to its full 

reconsideration of the CWIP issue, it 

may do so if it addresses the issues 

raised by the court.8

4. The Mid-Tex court also concluded 

that the Commission had good cause to 

adopt an interim rule without prior 

notice and comment.9 The 

Administrative Procedure Act permits 

rulemaking without prior notice and 

comment when an agency ‘‘for good 

cause * * * finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest.’’ 10 In its order adopting the 

interim rule regarding CWIP, the 

Commission emphasized three factors 

for foregoing prior notice and comment. 

First, the Commission stressed both the 

interim nature of the CWIP rule and the 

ongoing public process in formulating a 

permanent CWIP policy. Second, the 

Commission observed that the 

fundamental policy underlying the 

CWIP had been accepted by the court. 

Third, the Commission took notice that 

an interim rule was needed to avoid 

regulatory confusion. 

5. Guided by the standards in MidTex, the Commission has structured this 

interim rule in accordance with the 

court’s decision in National Fuel while 

the Commission conducts a public 

notice and comment process for 

promulgating a final rule. The 

Commission has adhered to both the 

letter and the spirit of the court’s 

decision in National Fuel by fashioning 

an interim rule under which the 

standards of conduct do not apply to the 

relationship between natural gas 

transmission providers and energy 

affiliates, which is the aspect of the 

standards of conduct that the court 

found infirm. 

6. The issuance of this interim rule is 

also consistent with the three factors 

articulated in Mid-Tex for issuing an 

interim rule without prior notice and 

comment under the Administrative 

Procedures Act. First, the Commission 

stresses that the instant interim rule is 

not intended to serve as a permanent 

rule and that it is commencing a 

rulemaking proceeding through the 

issuance in the very near future of a 

NOPR. Second, the interim rule follows 

both the letter and spirit of the court’s 

opinion in National Fuel because, for 

natural gas pipelines, it eliminates the 

provisions of Order No. 2004 that were 

subject to appeal and instead adopts 

provisions originally promulgated in 

Order No. 497, which was upheld in 

relevant part by the court in Tenneco 

Gas v. FERC.11 Third, the Commission 

needs to issue an interim rule to avoid 

regulatory confusion. When the 

Commission adopted Order No. 2004, it 

rescinded the standards of conduct 

promulgated by Order No. 497.12

Because National Fuel vacated Order 

No. 2004 as applied to natural gas 

transmission providers, there are no 

existing regulations governing the 

relationship between natural gas 

transmission providers and their 

marketing affiliates. This interim rule 

repromulgates rules from Order No. 

2004 that were not challenged on 

appeal. With respect to provisions that 

were challenged, as noted, the 

Commission is temporarily re-adopting 

the standards of conduct provisions 

promulgated under Order No. 497. 

Otherwise, there would be no rules in 

place governing the relationship 

between natural gas pipelines and their 

affiliates—a situation which the 

Commission believes would not be in 

the public interest as such rules have for 

almost two decades played an important 

role in the agency’s program to ensure 

non-discriminatory access by pipeline 

customers to competitive wellhead 

markets. 

7. Accordingly, in this interim rule, 

for natural gas transmission providers, 

the Commission modifies the 


frosa on PROD1PC71 with RULES
Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 2429 

13Since the standards of conduct will no longer 

govern the relationship between natural gas 

transmission providers and their energy affiliates, 

this addresses the issue concerning the scope of the 

energy affiliate exception for local distribution 

companies appealed by National Fuel Gas 

Distribution Corporation and National Fuel Gas 

Supply raised in National Fuel. 

14 18 CFR 358.4(a)(6) (2006). 

15 18 CFR 385.5(c)(4) (2006). 

16See supra note 10. 

17 15 U.S.C. 717c and 717d (2000). See also 

former 18 CFR part 161 (2003). 

18Open Access Same-Time Information System 

(Formerly Real-Time Information Network) and 

Standards of Conduct, Order No. 889, 61 FR 21737 

(May 10, 1996), FERC Stats. & Regs., Regulations 

Preambles 1991–1996 ¶ 31,035 (Apr. 24, 1996); 

Order No. 889–A, order on reh’g, 62 FR 12484 (Mar. 

14, 1997), FERC Stats. & Regs., Regulations 

Preambles 1996–2000 ¶ 31,049 (Mar. 4, 1997); 

Order No. 889–B, reh’g denied, 62 FR 64715 (Dec. 

9, 1997), FERC Stats. & Regs., Regulations 

Preambles 1996–2000 ¶ 31,253 (Nov. 25, 1997). 

19 16 U.S.C. 824d and 824e (2000). See also 

former 18 CFR 37.4 (2003). 

20Order No. 2004 at P 8. 

21The Commission defined energy affiliates as 

any affiliate that is engaged or involved in 

transmission transactions; manages or controls 

pipeline capacity; buys, sells, trades or administers 

natural gas in domestic energy or transmission 

markets; and engages in financial transactions 

relating to the sale or transmission of natural gas in 

such markets. 18 CFR 358.3(d) (2006). 

22Under Order No. 497, marketing included 

affiliates and business divisions engaged in making 

sales for resale of natural gas in interstate commerce 

(former 18 CFR 161.2(c)); and under Order No. 889, 

marketing covered affiliates and business divisions 

engaged in making sales for resale of electric energy 

in interstate commerce (former 18 CFR 37.3(e)). 

23National Fuel at 4. 

regulations originally promulgated by 

Order No. 2004 consistent with the 

court’s decision and issues appealed. 

The interim regulations will make clear 

that the standards of conduct apply to 

the relationship between natural gas 

transmission providers and marketing 

affiliates, and that the standards of 

conduct will not govern the relationship 

between natural gas transmission 

providers and their other energy 

affiliates. Because Order No. 2004 

defined marketing differently than 

Order No. 497, the Commission is 

revising the definition of marketing 

consistent with Order No. 497.13

8. Although the court did not consider 

petitioners’ appeals with respect to 

specific sections of Part 358 as it 

vacated Order No. 2004 based on the 

lack of record support for the new 

definition of energy affiliate, the interim 

regulations will treat each of the 

sections challenged on appeal as if the 

court had held those sections infirm as 

well. Specifically, for natural gas 

transmission providers, the interim rule 

will: (1) omit restrictions on shared risk 

management activities and employees 14

and (2) revise the requirement to post all 

discretionary acts.15 Also raised on 

appeal were two issues discussed in the 

preamble of Order No. 2004, but not 

codified in regulatory text. Here, too, 

although the court did not consider 

these issues, the Commission will 

incorporate into this preamble 

modifications consistent with 

petitioners’ appeals of Order No. 2004 

as if the court had ruled in their favor. 

Specifically, the Commission will (1) 

allow natural gas transmission providers 

to treat lawyers as permissibly shared 

employees; and (2) not require newly 

certificated natural gas pipeline 

transmission providers to observe the 

standards of conduct until they 

commence transmission services. 

9. In the very near future, the 

Commission will issue a NOPR, which 

will seek comments on adopting 

permanent changes to Part 358 

consistent with National Fuel. As a 

result, the Commission expects that the 

provisions in the interim rule will 

remain in effect until we have 

completed the rulemaking process for a 

final rule for Standards of Conduct for 

Transmission Providers. The 

Commission further expects the process 

for adopting a final rule to proceed 

without delay. 

II. Background 

A. Order No. 2004 

10. Prior to Order No. 2004, the 

Commission had two separate sets of 

regulations governing standards of 

conduct for transmission providers. The 

regulations applicable to natural gas 

pipelines were issued in Order No. 497 

in 1988,16 pursuant to the agency’s 

statutory authority under sections 4 and 

5 of the Natural Gas Act.17 In 1996, the 

Commission issued Order No. 889,18

which created standards of conduct 

regulations applicable to electric public 

utilities under sections 205 and 206 of 

the Federal Power Act.19 Both rules had 

the same goal: To prevent transmission 

providers from exercising their control 

over transmission to engage in undue 

discrimination or preference in favor of 

their marketing affiliates over nonaffiliates. Both rules employed the same 

general approach: Requiring employees 

engaged in transmission services to 

function independently from employees 

of its marketing affiliates and imposing 

prohibitions restricting transmission 

providers from sharing certain 

information with their marketing 

affiliates. 

11. In Order No. 2004, the 

Commission revised the standards of 

conduct so that one set of standards of 

conduct applied uniformly to both 

natural gas pipelines and electric public 

utilities.20 The Commission also 

expanded the coverage of the standards 

of conduct to govern the relationships 

between transmission providers and 

energy affiliates.21 Previously, the 

standards of conduct governed the 

relationship between transmission 

providers and their marketing 

affiliates.22

B. Matters Appealed 

12. Five issues were appealed from 

Order No. 2004: (1) Extension of the 

standards of conduct to cover the 

relationship between natural gas 

transmission providers and their energy 

affiliates under section 358.3(d); (2) the 

scope of the restrictions on sharing risk 

management employees between the 

natural gas transmission providers and 

their marketing/energy affiliates under 

section 358.4(a)(6); (3) the scope of the 

restrictions on sharing lawyers between 

natural gas transmission providers and 

their marketing/energy affiliates; (4) the 

scope of the requirement that natural 

gas transmission providers post all 

discretionary acts under section 

358.5(c)(4); and (5) the timing as to 

when newly certificated pipelines 

become subject to the standards of 

conduct. 

C. The Court’s Decision 

13. In National Fuel, the court vacated 

Order No. 2004 as applicable to natural 

gas pipelines because of the expansion 

of the standards of conduct to include 

the new definition of energy affiliates. 

The court explained that the 

Commission relied on both theoretical 

grounds and on record evidence to 

justify this expansion. The court 

concluded that the Commission’s record 

evidence did not withstand scrutiny 

and, thus, concluded the expansion was 

arbitrary and capricious in violation of 

the Administrative Procedure Act.23

The court vacated Order No. 2004 as 

applicable to natural gas pipelines. In 

light of this disposition, the court did 

not address the other four issues raised 

on appeal regarding Order No. 2004. 

III. Discussion 

A. Partially Repromulgating Part 358 

14. Much of Order No. 2004 codified 

case-by-case exceptions that had 

evolved during the implementation of 

Order Nos. 497 and 889, which were 

beneficial to the natural gas 

transmission providers and not 

appealed. Some of the provisions under 

Order No. 2004 that were not challenged 

on appeal included: codifying 

exceptions to the independent 


frosa on PROD1PC71 with RULES
2430 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 

24 18 CFR 358.4 (2006). 

25 18 CFR 358.5(b)(6) and (8) (2006). 

26 18 CFR 358.4(a)(2) (2006). 

27 18 CFR 358.4(e)(5) (2006). 

28 18 CFR 358.5(a) and (b) (2006). 

29 18 CFR 358.4(e)(6) (2006). 

30Former 18 CFR 161.2(c) (2003). 

31 Vector Pipeline, L.P., 97 FERC ¶ 61,085 (2001). 

32Order No. 2004 at P 112. See also 18 CFR 

358.4(a)(6) (2006). 

33 18 CFR 358.5(c)(4) (2006). 34Order No. 497 at 31,142. 

functioning requirement; 24 revising 

information sharing prohibitions to 

reflect practical considerations 25 and 

emergency circumstances; 26 codifying a 

training requirement; 27 revising and 

imposing new posting requirements to 

improve transparency; 28 and requiring 

the transmission providers to designate 

a chief compliance officer.29

15. This interim rule maintains one 

set of standards of conduct regulations 

for both the natural gas and electric 

utility industries. The Commission, 

however, is only making changes 

applicable to natural gas transmission 

providers consistent with National Fuel. 

Therefore, the interim rule makes 

inapplicable to natural gas transmission 

providers those portions of the 

standards of conduct that the court 

found unsupportable or that were 

challenged on appeal. However, it also 

repromulgates those sections that were 

not appealed and not found infirm. 

16. In response to several informal 

inquiries, the Commission also clarifies 

that waivers or exemptions that the 

Commission issued under Order No. 

2004 are not negatively impacted by the 

National Fuel decision. 

B. Natural Gas Transmission Providers 

and Their Energy Affiliates 

17. Because the court’s decision 

focused on the Commission’s lack of 

evidence to support expanding the 

standards of conduct to govern the 

relationship between natural gas 

transmission providers and their energy 

affiliates, the interim rule adds a new 

provision stating that the standards of 

conduct do not govern the relationship 

between natural gas transmission 

providers and their energy affiliates. 

The effect of this change, along with the 

modification to the definition of 

marketing as discussed below, is that 

the standards of conduct for natural gas 

transmission providers will only govern 

the relationship between a transmission 

provider and its marketing affiliates, 

consistent with the prior standards of 

conduct before the adoption of Order 

No. 2004. New section 358.1(e) reads as 

follows: 

The standards of conduct in this part do 

not govern the relationship between a natural 

gas Transmission Provider as defined in 

§ 358.3(a)(2) and its Energy Affiliates. 

C. New Definition of Marketing Affiliate 

18. Order No. 2004 revised the 

definition of marketing affiliate 

previously codified by Order No. 497. 

As a result, the interim rule will 

promulgate regulations that mirror the 

exceptions to the definition of 

marketing that were found in Order No. 

497.30 Specifically, a new provision at 

section 358.3(l) provides as follows: 

Marketing or brokering under section 

358.3(e) means a sale of natural gas to any 

person or entity by a seller that is not an 

interstate pipeline, except when: (1) The 

seller is selling gas solely from its own 

production; (2) The seller is selling gas solely 

from its own gathering or processing 

facilities; or (3) The seller is an intrastate 

natural gas pipeline or a local distribution 

company making an on-system sale. 

D. Sharing of Risk Management 

Employees 

19. Prior to Order No. 2004, the 

standards of conduct were silent on 

whether a transmission provider could 

share risk management employees with 

its marketing affiliates. In reviewing the 

standards of conduct procedures 

submitted by Vector Pipeline, however, 

the Commission held that a natural gas 

pipeline could not share risk 

management employees if the functions 

included assessing the creditworthiness 

of a transmission customer.31

Subsequently, in Order No. 2004, the 

Commission reiterated that holding and 

permitted the sharing of risk 

management employees provided that 

they were not ‘‘engaged in transmission 

functions or sales or commodity 

functions with their Marketing or 

Energy Affiliate.’’ 32 INGAA appealed 

this issue. 

20. As mentioned above, the court did 

not address the risk management 

exception in the independent 

functioning requirement. Still, because 

it was raised as an issue on appeal, the 

Commission believes that to be faithful 

to the court’s decision, section 

358.4(a)(6) must be amended. Therefore, 

the Commission is adding, on an 

interim basis, a second sentence to that 

section as follows: 

This provision does not apply to 

natural gas transmission providers. 

E. Discretionary Tariff Provision 

21. In Order No. 2004, the 

Commission required the transmission 

provider to maintain a log detailing the 

circumstances and manner in which it 

exercised discretion under any terms of 

its tariff and post it on its OASIS or 

internet Web site.33 The regulatory 

language in Order No. 2004 was 

substantively identical to the 

requirement under Order No. 889, but it 

was different than the requirement 

under Order No. 497. Former section 

161.3(k) promulgated under Order No. 

497 required a pipeline to maintain a 

written log of waivers that the pipeline 

grants with respect to tariff provisions 

that provide for such discretionary 

waivers and provide the log to any 

person requesting it within 24 hours of 

the request. On appeal, one of the 

petitioners claimed that section 

358.5(c)(4) was much broader than 

former section 161.3(k), arguing that 

there was a significant difference 

between granting waivers of tariff 

provisions that provide for such 

discretionary waivers (former section 

161.3(k)) and exercising discretion 

under any terms of its tariff (section 

358.5(c)(4)). 

22. In response to the National Fuel 

decision, on an interim basis, the 

Commission is revising section 

358.5(c)(4). First, we will make clear 

that 358.5(c)(4) only applies to electric 

public utility transmission providers 

and, second, we will adopt the language 

regarding discretionary waivers from 

Order No. 497 for natural gas 

transmission providers. Accordingly, we 

adopt the following language at section 

358.5(c)(4): 

(i) Electric Transmission Providers must 

maintain a written log, available for 

Commission audit, detailing the 

circumstances and manner in which they 

exercised their discretion under any terms of 

the tariff. The information contained in this 

log is to be posted on the OASIS or Internet 

Web site within 24 hours of when a 

Transmission Provider exercises its 

discretion under any terms of the tariff. 

(ii) Natural gas Transmission Providers 

must maintain a written log of waivers that 

the natural gas Transmission Provider grants 

with respect to tariff provisions that provide 

for such discretionary waivers and provide 

the log to any person requesting it within 24 

hours of the request. 

23. The Commission recognizes that 

many natural gas transmission providers 

have put in place procedures to post 

information regarding discretionary 

waivers on their Internet Web sites. Of 

course, this is an acceptable means of 

complying with the requirement in lieu 

of providing the log to any person 

requesting it within 24 hours of the 

request. 

F. Sharing of Lawyers 

24. With respect to the sharing of 

lawyers, under the Order No. 497 

standards of conduct, lawyers were 

treated as permissibly shared 

employees.34 Order No. 2004 was silent 


frosa on PROD1PC71 with RULES
Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 2431 

35Order No. 2004–A at P 157. 36Section 358.3(j) defines transmission function 

employee as an employee, contractor, consultant or 

agent of a transmission provider who conducts 

transmission system operations or reliability 

functions, including, but not limited to, those who 

are engaged in day-to-day duties and 

responsibilities for planning, directing, organizing 

or carrying out transmission-related operations. 

37Order No. 2004–A at P 157. 

38Order No. 2004–B at P 74. 

39Former 18 CFR 161.1 (2003). 

40 5 CFR 1320.11 (2006). 

41Letter from OMB to the Commission (Jan. 20, 

2004) (OMB Control Number 1902–0157); ‘‘Notice 

of Action’’ letter from OMB to the Commission 

(Jan. 20, 2004) (OMB Control Number 1902–0173). 

42 44 U.S.C. 3507(d) (2000). 

43Order No. 486, Regulations Implementing the 

National Environmental Policy Act, 52 FR 47897 

(Dec. 17, 1987), FERC Stats. & Regs. Preambles 

1986–1990 ¶ 30,783 (1987). 

44 18 CFR 380.4 (2006). 

45 18 CFR 380.4(a)(2)(ii) and 380.4(a)(5) (2006). 

as to the classification of lawyers. In 

Order No. 2004–A, the Commission 

clarified that a lawyer who participates 

in transmission policy decisions on 

behalf of a Transmission Provider 

would be considered a transmission 

function employee (and hence, not 

permissibly shared).35 Additionally, the 

Commission explained that lawyers may 

provide legal or regulatory advice in 

their traditional roles without becoming 

transmission function employees,36 but, 

an individual’s title of ‘‘lawyer’’ did not 

automatically exempt him/her from the 

independent functioning requirement. 

The Commission stated that if lawyers 

participate in transmission policy 

decisions on behalf of transmission 

providers, the Commission considers 

that participation to be a transmission 

function and the lawyers to be 

transmission function employees.37

Following requests for clarification, the 

Commission stated that lawyers may 

provide legal or regulatory advice in 

their traditional roles without becoming 

transmission function employees, but to 

the extent that lawyers conduct 

transmission functions or are involved 

in planning, directing or organizing 

transmission functions, the lawyer’s 

status as a ‘‘lawyer’’ does not exempt 

him/her from also being a transmission 

function employee.38

25. This issue was appealed. In light 

of the court’s decision, the Commission 

clarifies that participating in business 

decisions by rendering legal advice does 

not make a lawyer a transmission 

function employee. Since this issue was 

discussed in the preamble to Order No. 

2004, there is no regulatory text to adopt 

or revise. However, this clarification is 

intended to provide direction to the 

natural gas industry that the 

Commission will treat lawyers as 

permissibly shared employees for 

natural gas transmission providers. 

G. Timing of When a Natural Gas 

Transmission Provider Becomes Subject 

to the Standards of Conduct 

26. Under Order No 497, a natural gas 

transmission provider became subject to 

the standards of conduct when the 

transmission provider commenced 

transportation transactions with its 

marketing or brokering affiliate.39 In the 

preamble of Order No. 2004, the 

Commission stated that newly formed 

transmission providers would become 

subject to the standards of conduct 

when the transmission providers begin 

soliciting business or negotiating 

contracts, as those are activities which 

the Commission considers transmission 

function activities. Since the timing of 

applicability of the standards of conduct 

was one of the items on appeal, the 

Commission will treat this issue as if the 

court had ruled against the Commission 

on this issue. As a result, the 

Commission will not require natural gas 

transmission providers to observe the 

standards of conduct until they 

commence transportation transactions 

with their marketing affiliates. Because 

this issue was discussed in the preamble 

to Order No. 2004, there is no regulatory 

text to adopt or revise. However, in the 

interim, the foregoing statement is 

intended to provide direction to the 

industry with respect to when the 

Commission will consider natural gas 

transmission providers subject to the 

standards of conduct. 

IV. Information Collection Statement 

27. The Office of Management and 

Budget (OMB) regulations require 

approval of certain information 

collection requirements imposed by 

agency rules.40 Previously, the 

Commission submitted to OMB the 

information collection requirements 

arising from the standards of conduct 

adopted in Order No. 2004. OMB 

approved those requirements.41 This 

interim rule does not impose any 

additional information collection 

burden on industry participants. 

28. The Commission is submitting 

notification of the information 

collection requirements imposed in the 

Interim Rule to OMB for its review and 

approval under section 3507(d) of the 

Paperwork Reduction Act of 1995.42

Comments are solicited on the 

Commission’s need for this information, 

whether the information will have 

practical utility, the accuracy of 

provided burden estimates, ways to 

enhance the quality, utility, and clarity 

of the information to be collected, and 

any suggested methods of minimizing 

respondent’s burden, including the use 

of automated information techniques. 

29. OMB regulations require OMB to 

approve certain information collection 

requirements imposed by agency rule. 

The Commission is submitting 

notification of this proposed rule to 

OMB. 

Title: FERC–592. 

Action: Proposed Collection. 

OMB Control No: 1902–0157. 

Respondents: Business or other for 

profit. 

Frequency of Responses: On occasion. 

Necessity of the Information: The 

information is necessary to ensure that 

all regulated transmission providers 

treat all transmission customers in a 

non-discriminatory basis. 

Internal Review: The Commission has 

reviewed the requirements pertaining to 

natural gas pipelines and determined 

the interim rule is necessary to avoid a 

regulatory gap. 

30. These requirements conform to 

the Commission’s plan for efficient 

information collection, communication, 

and management within the natural gas 

and electric public utility industries. 

The Commission has assured itself, by 

means of internal review, that there is 

specific, objective support for the 

burden estimates associated with the 

information requirements. 

31. Interested persons may obtain 

information on the reporting 

requirements by contacting: Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 20426, 

[Attention: Michael Miller, Office of the 

Chief Information Officer], phone: (202) 

502–8415, fax: (202) 208–2425, e-mail: 

Michael.miller@ferc.gov. Comments on 

the requirements of the proposed rule 

also may be sent to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

Washington, DC 20503 [Attention: Desk 

Officer for the Federal Energy 

Regulatory Commission]. 

V. Environmental Analysis 

32. The Commission is required to 

prepare an Environmental Assessment 

or an Environmental Impact Statement 

for any action that may have a 

significant adverse effect on the human 

environment.43 The Commission has 

categorically excluded certain actions 

from these requirements as not having a 

significant effect on the human 

environment.44 The action proposed 

here falls within the categorical 

exclusions provided in the 

Commission’s regulations because this 

rule is clarifying and corrective and 

does not substantially change the effect 

of the regulations being amended.45


frosa on PROD1PC71 with RULES
2432 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 

46 5 U.S.C. 601–612 (2000). 

47See 5 U.S.C. 601(3) (2000). 

48 5 U.S.C. 801(a)(1)(A) (2000). 

Therefore, an environmental assessment 

is unnecessary and has not been 

prepared in this rulemaking. 

VI. Regulatory Flexibility Act 

33. The Regulatory Flexibility Act of 

1980 46 generally requires a description 

and analysis of final rules that will have 

significant economic impact on a 

substantial number of small entities. 

Because most transmission providers do 

not fall within the definition of ‘‘small 

entity,’’ 47 the Commission certifies that 

this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

VII. Document Availability 

34. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the Internet through 

FERC’s Home Page (http://www.ferc.gov) 

and in FERC’s Public Reference Room 

during normal business hours (8:30 a.m. 

to 5 p.m. Eastern time) at 888 First 

Street, NE., Room 2A, Washington DC 

20426. 

35. 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. 

36. User assistance is available for 

eLibrary and the FERC’s website during 

normal business hours from our Help 

line at (202) 502–8222 or the Public 

Reference Room at (202) 502–8371 Press 

0, TTY (202) 502–8659. E-Mail the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

VIII. Effective Date and Congressional 

Notification 

37. These regulations are effective on 

date of issuance. The Commission has 

determined, with the concurrence of the 

Administrator of the Office of 

Information and Regulatory Affairs of 

OMB, that this rule is not a ‘‘major rule’’

as defined in section 351 of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996. The Commission 

will submit the interim rule to both 

houses of Congress and the General 

Accounting Office.48

List of Subjects in 18 CFR Part 358 

Electric power plants, Electric 

utilities, Natural gas, Reporting and 

recordkeeping requirements. 

By the Commission. 

Magalie R. Salas, 

Secretary. 

■ In consideration of the foregoing, the 

Commission revises part 358, Chapter I, 

Title 18, Code of Federal Regulations, to 

read as follows. 

PART 358—STANDARDS OF 

CONDUCT 

Sec. 

358.1 Applicability. 

358.2 General principles. 

358.3 Definitions. 

358.4 Independent functioning. 

358.5 Non-discrimination requirements. 

Authority: 15 U.S.C. 717–717w, 3301–

3432; 16 U.S.C. 791–825r, 2601–2645; 31 

U.S.C. 9701; 42 U.S.C. 7101–7352. 

§ 358.1 Applicability. 

(a) This part applies to 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 this 

chapter. 

(b) This part applies to any public 

utility that owns, operates, or controls 

facilities used for the transmission of 

electric energy in interstate commerce. 

(c) This part does not apply to a 

public utility Transmission Provider 

that is a Commission-approved 

Independent System Operator (ISO) or 

Regional Transmission Organization 

(RTO). If a public utility transmission 

owner participates in a Commissionapproved ISO or RTO and does not 

operate or control its transmission 

facilities and has no access to 

transmission, customer or market 

information covered by § 358.5(b), it 

may request an exemption from this 

part. 

(d) A Transmission Provider may file 

a request for an exemption from all or 

some of the requirements of this part for 

good cause. 

(e) The Standards of Conduct in this 

part do not govern the relationship 

between a natural gas Transmission 

Provider as defined in § 358.3(a)(2) and 

its Energy Affiliates. 

§ 358.2 General principles. 

(a) A Transmission Provider’s 

employees engaged in transmission 

system operations must function 

independent from employees of its 

Marketing and Energy Affiliates. 

(b) A Transmission Provider must 

treat all transmission customers, 

affiliated and non-affiliated, on a nondiscriminatory basis, and must not 

operate its transmission system to 

preferentially benefit its Marketing or 

Energy Affiliates. 

§ 358.3 Definitions. 

(a) Transmission Provider means: 

(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 this chapter. 

(3) A Transmission Provider does not 

include a natural gas storage provider 

authorized to charge market-based rates 

that is not interconnected with the 

jurisdictional facilities of any affiliated 

interstate natural gas pipeline, has no 

exclusive franchise area, no captive 

ratepayers and no market power. 

(b) Affiliate means: 

(1) Another person that controls, is 

controlled by or is under common 

control with, such person. An Affiliate 

includes a division that operates as a 

functional unit, 

(2) For any exempt wholesale 

generator, as defined under Section 

32(a) of the Public Utility Holding 

Company Act of 1935, as amended, the 

same as provided in section 214 of the 

Federal Power Act. 

(c) Control (including the terms 

‘‘controlling,’’ ‘‘controlled by,’’ and 

‘‘under common control with’’) as used 

in this part and § 250.16 of this chapter, 

includes, but is not limited to, the 

possession, directly or indirectly and 

whether acting alone or in conjunction 

with others, of the authority to direct or 

cause the direction of the management 

or policies of a company. A voting 

interest of 10 percent or more creates a 

rebuttable presumption of control. 

(d) Energy Affiliate means an affiliate 

of a Transmission Provider that: 

(1) Engages in or is involved in 

transmission transactions in U.S. energy 

or transmission markets; or 

(2) Manages or controls transmission 

capacity of a Transmission Provider in 

U.S. energy or transmission markets; or 

(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. 

(5) A local distribution company 

division of an electric public utility 

Transmission Provider shall be 

considered the functional equivalent of 

an Energy Affiliate, unless it qualifies 

for the exemption in § 358.3(d)(6)(v). 

(6) An Energy Affiliate does not 

include: 


frosa on PROD1PC71 with RULES
Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 2433 

(i) A foreign affiliate that does not 

participate in U.S. energy markets; 

(ii) An affiliated Transmission 

Provider or an interconnected foreign 

affiliated natural gas pipeline that is 

engaged in natural gas transmission 

activities that are regulated by the state, 

provincial or national regulatory boards 

of the foreign country in which such 

facilities are located. 

(iii) A holding, parent or service 

company that does not engage in energy 

or natural gas commodity markets or is 

not involved in transmission 

transactions in U.S. energy markets; 

(iv) An affiliate that purchases natural 

gas or energy solely for its own 

consumption. ‘‘Solely for its own 

consumption’’ does not include the 

purchase of natural gas or energy for the 

subsequent generation of electricity. 

(v) A State-regulated local distribution 

company that acquires interstate 

transmission capacity to purchase and 

resell gas only for on-system sales, and 

otherwise does not engage in the 

activities described in §§ 358.3(d)(1), 

(2), (3) or (4), except to the limited 

extent necessary to support on-system 

sales and to engage in de minimis sales 

necessary to remain in balance under 

applicable pipeline tariff requirements. 

(vi) A processor, gatherer, Hinshaw 

pipeline or an intrastate pipeline that 

makes incidental purchases or sales of 

de minimis volumes of natural gas to 

remain in balance under applicable 

pipeline tariff requirements and 

otherwise does not engage in the 

activities described in §§ 358.3(d)(1), 

(2), (3) or (4). 

(e) Marketing, sales or brokering 

means a sale for resale of natural gas or 

electric energy in interstate commerce. 

Sales and marketing employee or unit 

includes: 

(1) An interstate natural gas pipeline’s 

sales operating unit, to the extent 

provided in § 284.286 of this chapter, 

and 

(2) A public utility Transmission 

Provider’s energy sales unit, unless such 

unit engages solely in bundled retail 

sales. 

(3) Marketing or sales does not 

include incidental purchases or sales of 

natural gas to operate interstate natural 

gas pipeline transmission facilities. 

(f) Transmission means natural gas 

transportation, storage, exchange, 

backhaul, or displacement service 

provided pursuant to subpart A of part 

157 or subparts B or G of part 284 of this 

chapter; and electric transmission, 

network or point-to-point service, 

reliability service, ancillary services or 

other methods of transportation or the 

interconnection with jurisdictional 

transmission facilities. 

(g) Transmission Customer means any 

eligible customer, shipper or designated 

agent that can or does execute a 

transmission service agreement or can 

or does receive transmission service, 

including all persons who have pending 

requests for transmission service or for 

information regarding transmission. 

(h) Open Access Same-time 

Information System or OASIS refers to 

the Internet location where a public 

utility posts the information, by 

electronic means, required by part 37 of 

this chapter. 

(i) Internet Web site refers to the 

Internet location where an interstate 

natural gas pipeline posts the 

information, by electronic means, 

required by §§ 284.12 and 284.13 of this 

chapter. 

(j) Transmission Function employee 

means an employee, contractor, 

consultant or agent of a Transmission 

Provider who conducts transmission 

system operations or reliability 

functions, including, but not limited to, 

those who are engaged in day-to-day 

duties and responsibilities for planning, 

directing, organizing or carrying out 

transmission-related operations. 

(k) Marketing Affiliate means an 

Affiliate as that term is defined in 

§ 358.3(b) or a unit that engages in 

marketing, sales or brokering activities 

as those terms are defined at § 358.3(e). 

(l) Marketing or brokering under 

§ 358.3(e) means a sale of natural gas to 

any person or entity by a seller that is 

not an interstate pipeline, except when: 

(1) The seller is selling gas solely from 

its own production; 

(2) The seller is selling gas solely from 

its own gathering or processing 

facilities; or 

(3) The seller is an intrastate natural 

gas pipeline or a local distribution 

company making an on-system sale. 

§ 358.4 Independent functioning. 

(a) Separation of functions. (1) Except 

in emergency circumstances affecting 

system reliability, the transmission 

function employees of the Transmission 

Provider must function independently 

of the Transmission Provider’s 

Marketing or Energy Affiliates’

employees. 

(2) Notwithstanding any other 

provisions in this section, in emergency 

circumstances affecting system 

reliability, a Transmission Provider may 

take whatever steps are necessary to 

keep the system in operation. 

Transmission Providers must report to 

the Commission and post on the OASIS 

or Internet Web site, as applicable, each 

emergency that resulted in any 

deviation from the standards of conduct, 

within 24 hours of such deviation. 

(3) The Transmission Provider is 

prohibited from permitting the 

employees of its Marketing or Energy 

Affiliates from: 

(i) Conducting transmission system 

operations or reliability functions; and 

(ii) Having access to the system 

control center or similar facilities used 

for transmission operations or reliability 

functions that differs in any way from 

the access available to other 

transmission customers. 

(4) Transmission Providers are 

permitted to share support employees 

and field and maintenance employees 

with their Marketing and Energy 

Affiliates. 

(5) Transmission Providers are 

permitted to share with their Marketing 

or Energy Affiliates senior officers and 

directors who are not ‘‘Transmission 

Function Employees’’ as that term is 

defined in § 358.3(j). A Transmission 

Provider may share transmission 

information covered by § 385.5(a) and 

(b) with its shared senior officers and 

directors provided that they do not 

participate in directing, organizing or 

executing transmission system 

operations or marketing functions; or act 

as a conduit to share such information 

with a Marketing or Energy Affiliate. 

(6) Transmission Providers are 

permitted to share risk management 

employees that are not engaged in 

Transmission Functions or sales or 

commodity Functions with their 

Marketing and Energy Affiliates. This 

provision does not apply to natural gas 

transmission providers. 

(b) Identifying affiliates on the public 

Internet. (1) A Transmission Provider 

must post the names and addresses of 

Marketing and Energy Affiliates on its 

OASIS or Internet Web site. 

(2) A Transmission Provider must 

post on its OASIS or Internet Web site, 

as applicable, a complete list of the 

facilities shared by the Transmission 

Provider and its Marketing and Energy 

Affiliates, including the types of 

facilities shared and their addresses. 

(3) A Transmission Provider must 

post comprehensive organizational 

charts showing: 

(i) The organizational structure of the 

parent corporation with the relative 

position in the corporate structure of the 

Transmission Provider, Marketing and 

Energy Affiliates; 

(ii) For the Transmission Provider, the 

business units, job titles and 

descriptions, and chain of command for 

all positions, including officers and 

directors, with the exception of clerical, 

maintenance, and field positions. The 

job titles and descriptions must include 

the employee’s title, the employee’s 

duties, whether the employee is 


frosa on PROD1PC71 with RULES
2434 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 

involved in transmission or sales, and 

the name of the supervisory employees 

who manage non-clerical employees 

involved in transmission or sales. 

(iii) For all employees who are 

engaged in transmission functions for 

the Transmission Provider and 

marketing or sales functions or who are 

engaged in transmission functions for 

the Transmission Provider and are 

employed by any of the Energy 

Affiliates, the Transmission Provider 

must post the name of the business unit 

within the marketing or sales unit or the 

Energy Affiliate, the organizational 

structure in which the employee is 

located, the employee’s name, job title 

and job description in the marketing or 

sales unit or Energy Affiliate, and the 

employee’s position within the chain of 

command of the Marketing or Energy 

Affiliate. 

(iv) The Transmission Provider must 

update the information on its OASIS or 

Internet Web site, as applicable, 

required by §§ 358.4(b)(1), (2) and (3) 

within seven business days of any 

change, and post the date on which the 

information was updated. 

(v) The Transmission Provider must 

post information concerning potential 

merger partners as affiliates within 

seven days after the potential merger is 

announced. 

(vi) All OASIS or Internet Web site 

postings required by part 358 must 

comply, as applicable, with the 

requirements of § 37.6 or §§ 284.12(a) 

and (c)(3)(v) of this chapter. 

(c) Transfers. Employees of the 

Transmission Provider, Marketing or 

Energy Affiliates are not precluded from 

transferring among such functions as 

long as such transfer is not used as a 

means to circumvent the Standards of 

Conduct. Notices of any employee 

transfers between the Transmission 

Provider, on the one hand, and the 

Marketing or Energy Affiliates on the 

other, must be posted on the OASIS or 

Internet Web site, as applicable. The 

information to be posted must include: 

the name of the transferring employee, 

the respective titles held while 

performing each function (i.e., on behalf 

of the Transmission Provider, Marketing 

or Energy Affiliate), and the effective 

date of the transfer. The information 

posted under this section must remain 

on the OASIS or Internet Web site, as 

applicable, for 90 days. 

(d) Books and records. A 

Transmission Provider must maintain 

its books of account and records (as 

prescribed under parts 101, 125, 201 

and 225 of this chapter) separately from 

those of its Energy Affiliates and these 

must be available for Commission 

inspections. 

(e) Written procedures. (1) By 

February 9, 2004, each Transmission 

Provider is required to file with the 

Commission and post on the OASIS or 

Internet Web site a plan and schedule 

for implementing the standards of 

conduct. 

(2) Each Transmission Provider must 

be in full compliance with the standards 

of conduct by September 22, 2004. 

(3) The Transmission Provider must 

post on the OASIS or Internet Web site, 

current written procedures 

implementing the standards of conduct 

in such detail as will enable customers 

and the Commission to determine that 

the Transmission Provider is in 

compliance with the requirements of 

this section by September 22, 2004 or 

within 30 days of becoming subject to 

the requirements of part 358. 

(4) Transmission Providers will 

distribute the written procedures to all 

Transmission Provider employees and 

employees of the Marketing and Energy 

Affiliates. 

(5) Transmission Providers shall train 

officers and directors as well as 

employees with access to transmission 

information or information concerning 

gas or electric purchases, sales or 

marketing functions. The Transmission 

Provider shall require each employee to 

sign a document or certify electronically 

signifying that s/he has participated in 

the training. 

(6) Transmission Providers are 

required to designate a Chief 

Compliance Officer who will be 

responsible for standards of conduct 

compliance. 

§ 358.5 Non-discrimination requirements. 

(a) Information access. (1) The 

Transmission Provider must ensure that 

any employee of its Marketing or Energy 

Affiliate may only have access to that 

information available to the 

Transmission Provider’s transmission 

customers (i.e., the information posted 

on the OASIS or Internet Web site, as 

applicable), and must not have access to 

any information about the Transmission 

Provider’s transmission system that is 

not available to all users of an OASIS or 

Internet Web site, as applicable. 

(2) The Transmission Provider must 

ensure that any employee of its 

Marketing or Energy Affiliate is 

prohibited from obtaining information 

about the Transmission Provider’s 

transmission system (including, but not 

limited to, information about available 

transmission capability, price, 

curtailments, storage, ancillary services, 

balancing, maintenance activity, 

capacity expansion plans or similar 

information) through access to 

information not posted on the OASIS or 

Internet Web site or that is not 

otherwise also available to the general 

public without restriction. 

(b) Prohibited disclosure. (1) An 

employee of the Transmission Provider 

may not disclose to its Marketing or 

Energy Affiliates any information 

concerning the transmission system of 

the Transmission Provider or the 

transmission system of another 

(including, but not limited to, 

information received from non-affiliates 

or information about available 

transmission capability, price, 

curtailments, storage, ancillary services, 

balancing, maintenance activity, 

capacity expansion plans, or similar 

information) through non-public 

communications conducted off the 

OASIS or Internet Web site, through 

access to information not posted on the 

OASIS or Internet Web site that is not 

contemporaneously available to the 

public, or through information on the 

OASIS or Internet Web site that is not 

at the same time publicly available. 

(2) A Transmission Provider may not 

share any information, acquired from 

non-affiliated transmission customers or 

potential non-affiliated transmission 

customers, or developed in the course of 

responding to requests for transmission 

or ancillary service on the OASIS or 

Internet Web site, with employees of its 

Marketing or Energy Affiliates, except to 

the limited extent information is 

required to be posted on the OASIS or 

Internet website in response to a request 

for transmission service or ancillary 

services. 

(3) If an employee of the Transmission 

Provider discloses information in a 

manner contrary to the requirements of 

§ 358.5(b)(1) and (2), the Transmission 

Provider must immediately post such 

information on the OASIS or Internet 

Web site. 

(4) A non-affiliated transmission 

customer may voluntarily consent, in 

writing, to allow the Transmission 

Provider to share the non-affiliated 

customer’s information with a 

Marketing or Energy Affiliate. If a nonaffiliated customer authorizes the 

Transmission Provider to share its 

information with a Marketing or Energy 

Affiliate, the Transmission Provider 

must post notice on the OASIS or 

Internet Web site of that consent along 

with a statement that it did not provide 

any preferences, either operational or 

rate-related, in exchange for that 

voluntary consent. 

(5) A Transmission Provider is not 

required to contemporaneously disclose 

to all transmission customers or 

potential transmission customers 

information covered by § 358.5(b)(1) if it 

relates solely to a Marketing or Energy 


frosa on PROD1PC71 with RULES
Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Rules and Regulations 2435 

Affiliate’s specific request for 

transmission service. 

(6) A Transmission Provider may 

share generation information necessary 

to perform generation dispatch with its 

Marketing and Energy Affiliate that does 

not include specific information about 

individual third party transmission 

transactions or potential transmission 

arrangements. 

(7) Neither a Transmission Provider 

nor an employee of a Transmission 

Provider is permitted to use anyone as 

a conduit for sharing information 

covered by the prohibitions of 

§§ 358.5(b)(1) and (2) with a Marketing 

or Energy Affiliate. A Transmission 

Provider may share information covered 

by §§ 358.5(b)(1) and (2) with employees 

permitted to be shared under 

§§ 358.4(a)(4), (5) and (6) provided that 

such employees do not act as a conduit 

to share such information with any 

Marketing or Energy Affiliates. 

(8) A Transmission Provider is 

permitted to share information 

necessary to maintain the operations of 

the transmission system with its Energy 

Affiliates. 

(c) Implementing tariffs. (1) A 

Transmission Provider must strictly 

enforce all tariff provisions relating to 

the sale or purchase of open access 

transmission service, if these tariff 

provisions do not permit the use of 

discretion. 

(2) A Transmission Provider must 

apply all tariff provisions relating to the 

sale or purchase of open access 

transmission service in a fair and 

impartial manner that treats all 

transmission customers in a nondiscriminatory manner, if these tariff 

provisions permit the use of discretion. 

(3) A Transmission Provider must 

process all similar requests for 

transmission in the same manner and 

within the same period of time. 

(4) (i) Electric Transmission Providers 

must maintain a written log, available 

for Commission audit, detailing the 

circumstances and manner in which 

they exercised their discretion under 

any terms of the tariff. The information 

contained in this log is to be posted on 

the OASIS or Internet website within 24 

hours of when a Transmission Provider 

exercises its discretion under any terms 

of the tariff. 

(ii) Natural gas Transmission 

Providers must maintain a written log of 

waivers that the natural gas 

Transmission Provider grants with 

respect to tariff provisions that provide 

for such discretionary waivers and 

provide the log to any person requesting 

it within 24 hours of the request. 

(5) The Transmission Provider may 

not, through its tariffs or otherwise, give 

preference to its Marketing or Energy 

Affiliate, over any other wholesale 

customer in matters relating to the sale 

or purchase of transmission service 

(including, but not limited to, issues of 

price, curtailments, scheduling, priority, 

ancillary services, or balancing). 

(d) Discounts. Any offer of a discount 

for any transmission service made by 

the Transmission Provider must be 

posted on the OASIS or Internet Web 

site contemporaneous with the time that 

the offer is contractually binding. The 

posting must include: the name of the 

customer involved in the discount and 

whether it is an affiliate or whether an 

affiliate is involved in the transaction, 

the rate offered; the maximum rate; the 

time period for which the discount 

would apply; the quantity of power or 

gas upon which the discount is based; 

the delivery points under the 

transaction; and any conditions or 

requirements applicable to the discount. 

The posting must remain on the OASIS 

or Internet Web site for 60 days from the 

date of posting. 

[FR Doc. E7–659 Filed 1–18–07; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs And Border 

Protection 

19 CFR Part 123 

Required Advance Electronic 

Presentation of Cargo Information for 

Truck Carriers: ACE Truck Manifest 

AGENCY: Customs and Border Protection, 

Department of Homeland Security. 

ACTION: Notice. 

SUMMARY: Pursuant to section 343(a) of 

the Trade Act of 2002 and implementing 

regulations, truck carriers and other 

eligible parties are required to transmit 

advance electronic truck cargo 

information to the Bureau of Customs 

and Border Protection (CBP) through a 

CBP-approved electronic data 

interchange. In a previous notice, CBP 

designated the Automated Commercial 

Environment (ACE) Truck Manifest 

System as the approved interchange and 

announced that the requirement that 

advance electronic cargo information be 

transmitted through ACE would be 

phased in by groups of ports of entry. 

The previous notice identified the first 

group of ports where use of the ACE 

Truck Manifest System is mandated. 

This notice announces the second group 

of land border ports that will require 

truck carriers to file electronic manifests 

through the ACE Truck Manifest 

System. 

DATES: Trucks entering the United 

States through land border ports of entry 

in the states of California, Texas, and 

New Mexico will be required to transmit 

the advance information through the 

ACE Truck Manifest system effective 

April 19, 2007. 

FOR FURTHER INFORMATION CONTACT: Mr. 

James Swanson, via e-mail at 

james.d.swanson@dhs.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

Section 343(a) of the Trade Act of 

2002, as amended (the Act; 19 U.S.C. 

2071 note), required that CBP 

promulgate regulations providing for the 

mandatory transmission of electronic 

cargo information by way of a CBPapproved electronic data interchange 

(EDI) system before the cargo is brought 

into or departs the United States by any 

mode of commercial transportation (sea, 

air, rail or truck). The cargo information 

required is that which is reasonably 

necessary to enable high-risk shipments 

to be identified for purposes of ensuring 

cargo safety and security and preventing 

smuggling pursuant to the laws enforced 

and administered by CBP. 

On December 5, 2003, CBP published 

in the Federal Register (68 FR 68140) a 

final rule to effectuate the provisions of 

the Act. In particular, a new § 123.92 (19 

CFR 123.92) was added to the 

regulations to implement the inbound 

truck cargo provisions. Section 123.92 

describes the general requirement that, 

in the case of any inbound truck 

required to report its arrival under 

§ 123.1(b), if the truck will have 

commercial cargo aboard, CBP must 

electronically receive certain 

information regarding that cargo 

through a CBP-approved EDI system no 

later than 1 hour prior to the carrier’s 

reaching the first port of arrival in the 

United States. For truck carriers arriving 

with shipments qualified for clearance 

under the FAST (Free and Secure Trade) 

program, § 123.92 provides that CBP 

must electronically receive such cargo 

information through the CBP-approved 

EDI system no later than 30 minutes 

prior to the carrier’s reaching the first 

port of arrival in the United States. 

ACE Truck Manifest Test 

On September 13, 2004, CBP 

published a notice in the Federal 

Register (69 FR 55167) announcing a 

test allowing participating Truck Carrier 

Accounts to transmit electronic manifest 

data for inbound cargo through ACE, 

with any such transmissions 

automatically complying with advance 


frosa on PROD1PC71 with RULES