Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61459

Order 7400.9E, dated September 10,

1997, and effective September 16, 1997,

which is incorporated by reference in 14

CFR 71.1. The offshore airspace area

designation listed in this document

would be published subsequently in the

Order. The FAA has determined that

this proposed regulation only involves

an established body of technical

regulations for which frequent and

routine amendments are necessary to

keep them operationally current. It,

therefore: (1) Is not a ‘‘significant

regulatory action’’ under Executive

Order 12866; (2) is not a ‘‘significant

rule’’ under DOT Regulatory Policies

and Procedures (44 FR 11034; February

26, 1979); and (3) does not warrant

preparation of a Regulatory Evaluation

as the anticipated impact is so minimal.

Since this is a routine matter that will

only affect air traffic procedures and air

navigation, it is certified that this rule,

when promulgated, will not have a

significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

ICAO Considerations

As part of this proposal relates to

navigable airspace outside the United

States, this notice is submitted in

accordance with the ICAO International

Standards and Recommended Practices.

The application of International

Standards and Recommended Practices

by the FAA, Office of Air Traffic

Airspace Management, in areas outside

U.S. domestic airspace, is governed by

the Convention on International Civil

Aviation. Specifically, the FAA is

governed by Article 12 and Annex 11,

which pertain to the establishment of

necessary air navigational facilities and

services to promote the safe, orderly,

and expeditious flow of civil air traffic.

The purpose of the document is to

ensure that civil aircraft operations on

international air routes are performed

under uniform conditions.

The International Standards and

Recommended Practices in Annex 11

apply to airspace under the jurisdiction

of a contracting state, derived from

ICAO. Annex 11 provisions apply when

air traffic services are provided and a

contracting state accepts the

responsibility of providing air traffic

services over high seas or in airspace of

undetermined sovereignty. A

contracting state accepting this

responsibility may apply the

International Standards and

Recommended Practices that are

consistent with standards and practices

utilized in its domestic jurisdiction.

In accordance with Article 3 of the

Convention, state owned aircraft are

exempt from the Standards and

Recommended Practices of Annex 11.

The United States is a contracting state

to the Convention. Article 3(d) of the

Convention provides that participating

state aircraft will be operated in

international airspace with due regard

for the safety of civil aircraft.

Since this action involves, in part, the

designation of navigable airspace

outside the United States, the

Administrator is consulting with the

Secretary of State and the Secretary of

Defense in accordance with the

provisions of Executive Order 10854.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

The Proposed Amendment

In consideration of the foregoing, the

Federal Aviation Administration

proposes to amend 14 CFR part 71 as

follows:

PART 71—DESIGNATION OF CLASS A,

CLASS B, CLASS C, CLASS D AND

CLASS E AIRSPACE AREAS;

AIRWAYS; ROUTES; AND REPORTING

POINTS

1. The authority citation for part 71

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of the Federal Aviation

Administration Order 7400.9E, Airspace

Designations and Reporting Points,

dated September 10, 1997, and effective

September 16, 1997, is amended as

follows:

Paragraph 2003 Offshore Airspace Areas

* * * * *

Atlantic High [Revised]

That airspace extending upward from

18,000 feet MSL to and including FL 600

within the area bounded on the east from

north to south by the Moncton FIR, New

York Oceanic CTA/FIR, and the San Juan

Oceanic CTA/FIR; to the point where the San

Juan Oceanic CTA/FIR boundary turns

southwest at lat. 21°08′00′′N., long. 67°45′00′′

W., thence from that point southeast via a

straight line to intersect a 100-mile radius of

the Fernando Luis Ribas Dominicci Airport at

lat. 19°47′28′′ N., long. 67°09′37′′ W., thence

counter-clockwise via a 100-mile radius of

the Fernando Luis Ribas Dominicci Airport

to lat. 18°53′05′′ N., long. 67°47′43′′ W.,

thence from that point northwest via a

straight line to intersect the point where the

Santo Domingo FIR turns northwest at lat.

19°39′00′′ N., long. 69°09′00′′ W., thence from

that point the area is bounded on the south

from east to west by the Santo Domingo FIR,

Port-Au-Prince CTA/FIR, and the Havana

CTA/FIR; bounded on the west from south to

north by the Houston Oceanic CTA/FIR,

southern boundary of the Jacksonville Air

Route Traffic Control Center and a line 12

miles offshore and parallel to the U.S.

shoreline.

* * * * *

Issued in Washington, DC, on November 6,

1997.

Nancy B. Kalinowski,

Acting Program Director for Air Traffic

Airspace Management.

[FR Doc. 97–30215 Filed 11–17–97; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Part 284

[Docket No. RM96–1–007; Order No.

587–F]

Standards for Business Practices of

Interstate Natural Gas Pipelines

November 12, 1997.

AGENCY: Federal Energy Regulatory

Commission.

ACTION: Notice of proposed rulemaking

(NOPR).

SUMMARY: The Federal Energy

Regulatory Commission (Commission) is

proposing to amend its regulations

governing standards for conducting

business practices and electronic

communication with interstate natural

gas pipelines by incorporating by

reference the most recent version of

standards promulgated by the Gas

Industry Standards Board (GISB). The

Commission also is proposing to adopt

regulations, not developed by GISB,

governing intra-day nominations,

operational balancing agreements

(OBAs), netting and trading of

imbalances, standardization of

communications over the public

Internet, and notices of operational flow

orders. In addition, the Commission is

providing policy guidance on other

issues related to business practices of

interstate natural gas pipelines to assist

GISB in developing implementation

standards that could be adopted by the

Commission in future regulations. These

business practices standards

supplement standards adopted by the

Commission in Order Nos. 587, 587–B,

and 587–C.

DATES: Comments are due December 18,

1997.

ADDRESSES: Federal Energy Regulatory

Commission, 888 First Street, N.E.,

Washington DC, 20426.
61460 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

1Standards For Business Practices Of Interstate

Natural Gas Pipelines, Order No. 587, 61 FR 39053

(Jul. 26, 1996), III FERC Stats. & Regs. Regulations

Preambles ¶ 31,038 (Jul. 17, 1996), Order No. 587–

B, 62 FR 5521 (Feb. 6, 1997), III FERC Stats. & Regs.

Regulations Preambles ¶ 31,046 (Jan. 30, 1997),

Order No. 587–C, 62 FR 10684 (Mar. 10, 1997), III

FERC Stats. & Regs. Regulations Preambles ¶ 31,050

(Mar. 4, 1997).

2 GISB is a private, consensus standards

developer composed of members from all segments

of the natural gas industry.

3 GISB Electronic Delivery Mechanism Related

Standards 4.3.6 states that ‘‘within a reasonable

amount of time, all EBB information, functions and

transactions should be achieved via one mode of

communications.’’

4See Standards For Business Practices Of

Interstate Natural Gas Pipelines, Notice of Proposed

Rulemaking and Staff Technical Conference, 61 FR

58790 (Nov. 19, 1996), IV FERC Stats. & Regs.

Proposed Regulations ¶ 32,521 (Nov. 13, 1996). The

disputed issues involve pooling, title transfer

tracking, ranking of gas packages, predetermined

allocations, intra-day nominations, operational flow

orders, fuel sales, and imbalance trading.

5For a standard to issue, it must be approved by

17 out of the 25 members of the GISB Executive

Committee with at least two affirmative votes from

each of the five segments.

6Appendix A lists those filing comment on the

conference. Appendix B lists the disputed

standards.

7Flowing Gas Related Standard 2.1.4, Invoicing

Related Standard 3.3.21, Electronic Delivery

Mechanism Standards 4.3.1 and 4.3.16, and

Capacity Release Related Standard 5.3.30.

FOR FURTHER INFORMATION CONTACT:

Michael Goldenberg, Office of the

General Counsel, Federal Energy

Regulatory Commission, 888 First

Street, NE, Washington, DC 20426,

(202) 208–2294

Marvin Rosenberg, Office of Economic

Policy, Federal Energy Regulatory

Commission, 888 First Street, N.E.,

Washington, DC 20426, (202) 208–

1283

Kay Morice, Office of Pipeline

Regulation, Federal Energy Regulatory

Commission, 888 First Street, N.E.,

Washington, DC 20426, (202) 208–

0507

SUPPLEMENTARY INFORMATION: In

addition to publishing the full text of

this document in the Federal Register,

the Commission provides all interested

persons an opportunity to inspect or

copy the contents of this document

during normal business hours in Room

2A, 888 First Street, N.E., Washington

D.C. 20426. The complete text on

diskette in WordPerfect format may be

purchased from the Commission’s copy

contractor, La Dorn Systems

Corporation. La Dorn Systems

Corporation is located in the Public

Reference Room at 888 First Street, N.E.,

Washington, D.C. 20426.

The Commission Issuance Posting

System (CIPS), an electronic bulletin

board service, also provides access to

the texts of formal documents issued by

the Commission. CIPS is available at no

charge to the user. CIPS can be accessed

over the Internet by pointing your

browser to the URL address: http://

www.ferc.fed.us. Select the link to CIPS.

The full text of this document can be

viewed, and saved, in ASCII format and

an entire day’s documents can be

downloaded in WordPerfect 6.1 format

by searching the miscellaneous file for

the last seven days. CIPS also may be

accessed using a personal computer

with a modem by dialing 202–208–1397

if dialing locally or 1–800–856–3920 if

dialing long distance. To access CIPS,

set your communications software to

19200, 14400, 12000, 9600, 7200, 4800,

2400, or 1200 bps, full duplex, no

parity, 8 data bits and 1 stop bit. The

full text of this order will be available

on CIPS in ASCII and WordPerfect 6.1

format. CIPS user assistance is available

at 202–208–2474.

Notice of Proposed Rulemaking and

Statement of Policy; Order No. 587–F

November 12, 1997.

The Federal Energy Regulatory

Commission (Commission) is proposing

to amend § 284.10 of its regulations

governing standards for conducting

business practices and electronic

communication with interstate natural

gas pipelines by incorporating by

reference the most recent version of

standards promulgated by the Gas

Industry Standards Board (GISB). The

Commission also is proposing to adopt

regulations, not developed by GISB, in

new § 284.10(b)(2) of its regulations.

These regulations would govern intraday nominations, operational balancing

agreements (OBAs), netting and trading

of imbalances, standardization of

communications over the public

Internet, and notices of operational flow

orders. In addition, the Commission is

providing policy guidance on other

issues to eliminate disputes within GISB

over these issues and thereby assist

GISB in developing implementation

standards in these areas.

I. Background

A. Prior Commission Action

In Order Nos. 587, 587–B, and 587–

C1 the Commission began the process of

standardizing the business practices and

communication methodologies of

interstate pipelines to create a more

integrated and efficient pipeline grid.

The Commission incorporated by

reference consensus standards

developed by GISB,2 covering certain

industry business practices—

Nominations, Flowing Gas, Invoicing,

and Capacity Release—as well as

standards and electronic datasets that

detailed the data requirements needed

to conduct these business transactions

electronically. The Commission also

adopted standards providing that these

business transactions would be

conducted over the Internet as well as

standards requiring the posting of

additional information on Internet Web

pages.

During the process of adopting these

standards, there were areas that had

been left unresolved which are relevant

to the Commission’s proposed actions in

this Notice of Proposed Rulemaking

(NOPR). First, in Order No. 587–C, the

Commission declined to adopt

standards in four areas—intra-day

nominations, operational balancing

agreements, netting of imbalances, and

downloading documents from pipeline

Internet Web sites—and requested that

GISB and the industry propose

clarifications or revisions to the

standards by September 1, 1997. In

addition, in Order No. 587–E, the

Commission noted that GISB had

committed itself to completing the

standardization of all functions and

information now provided on pipeline

Electronic Bulletin Boards (EBBs) and

requested a report, by September 1,

1997, on the extent of GISB’s progress

and the contemplated completion

date. 3

Second, in its November 13, 1996

NOPR, 4 the Commission identified

several disputed standards where four

industry segments supported the

standards, but the pipeline segment

prevented a consensus from being

reached.5 To review these issues, the

Commission staff held a technical

conference on December 12 and 13,

1996, and comments on the conference

were filed on February 21, 1997.6

B. GISB’s September 2, 1997 Filing

On September 2, 1997, GISB filed

with the Commission revisions to its

standards (Version 1.2), a report on the

issues raised by the Commission in

Order No. 587–C regarding intra-day

nominations, the unclear OBA and

imbalance standards, and the standard

covering formats for file downloads, and

a report on the progress of its title

transfer tracking task force.

Version 1.2 replaces Versions 1.0 and

1.1. Version 1.2 contains several new

and revised business practices

standards, covering exchange of volume

audit statements, statements of account,

changes to Internet protocols, formats

for posting information on pipeline web

sites, and the confirmation and

validation process for pre-arranged

capacity release transactions.7 The

Version 1.2 standards also contain both
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61461

8The new standards are Nominations Related

Standard 1.4.6 and Flowing Gas Related Standard

2.4.6. The revised standards are Nominations

Related Standards 1.4.1 through 1.4.5, Flowing Gas

Related Standards 2.4.1 through 2.4.5, Invoicing

Related Standards, 3.4.1 through 3.4.3, Capacity

Release Related Standards 5.4.1. through 5.4.4, 5.4.6

through 5.4.13, and 5.4.15, through 5.4.17.

9 Interpretations of Standards 7.3.1 through

7.3.18.

10Order No. 587, 61 FR at 39060, III FERC Stats.

& Regs. Regulations Preambles, at 30,065; Order No.

587-C, 62 FR at 10686, III FERC Stats. & Regs.

Regulations Preambles ¶ 31,050, at 30,583.

11Proposed regulation 284.10(b)(2)(i).

12Proposed regulation 284.10(b)(2)(ii)(A).

13Proposed regulation 284.10(b)(2)(ii)(B).

14Proposed regulation 284.10(b)(2)(iii)(A).

15Proposed regulation 284.10(b)(2)(iii) (B)

through (D).

16Proposed regulation 284.10(b)(2)(iii)(E).

new and revised standards applicable to

the datasets used for electronically

conducting business transactions

relating to nominations, flowing gas,

invoices and capacity release data.8

Finally, the Version 1.2 standards

include GISB’s interpretations of

standards.9

GISB reports that it established a task

force to evaluate the intra-day

nomination process, but the task force

has not yet completed standards to

better synchronize this process across

pipelines. GISB states that the

completion of the intra-day nomination

process was delayed because the

members of the task force came to the

realization that, in order to make the

intra-day process work efficiently, a

fundamental review of the entire

confirmation process was necessary.

GISB concludes that the task force

remains cautiously optimistic that it

will successfully report a

recommendation out of the task force to

the Executive Committee before the end

of 1997.

GISB reports that it has not completed

the clarification of the OBA and

imbalance standards as requested by the

Commission in Order No. 587-C. GISB

states that the standards are pending

before its Business Practices

subcommittee, which intends to review

them when its normal rotation deals

with contract and flowing gas issues.

GISB anticipates consideration of these

issues before the end of 1997.

On electronic communication issues,

GISB explained that it has approved

Electronic Delivery Mechanism

Standard 4.3.16 which provides that

files can be downloaded from pipeline

web sites in two formats: hyper-text

mark-up language (HTML) or rich-textformat (RTF). However, GISB did not

file a progress report on its efforts to

complete the process of standardizing

information currently provided on

pipeline EBBs, as requested in Order

No. 587–E.

GISB included a report by its title

transfer tracking task force on its

progress. The task force has not yet

completed its work, and GISB

comments that this is ‘‘one of the most

challenging and time consuming issues

facing the industry.’’

Comments on the topics addressed by

GISB’s report were filed by Natural Gas

Clearinghouse (NGC), Koch Gateway

Pipeline Company (Koch), and

TransCapacity Limited Partnership

(TransCapacity). NGC contends that

GISB is stymied and that the time has

come for the Commission to resolve the

issues which the Commission set for

consideration in Order No. 587–C. NGC

further states that the title transfer

tracking task force has not addressed the

underlying issue of whether the

pipeline should perform this service,

and argues that this is an issue the

Commission must resolve.

TransCapacity suggests the GISB

process be given more time, within

defined limits, to resolve these issues.

Koch, on the other hand, contends the

Commission should resist further

standardization, because

standardization will impede the

pipelines’ ability to provide creative or

dynamic new services. Koch is

particularly concerned that further

standardization of intra-day

nominations along the lines being

considered by GISB’s task force could

result in depriving shippers on its

pipeline of service options they value.

Koch also is concerned about the

possibility that the Commission will

replace pipelines’ proprietary EBBs with

a requirement for standardized

communication modalities.

II. Discussion

The Commission proposes to

incorporate by reference the Version 1.2

standards passed by GISB to substitute

for the Version 1.0 and 1.1 standards

currently incorporated in the

regulations. In the Commission’s earlier

orders, the Commission adopted

standards only when all segments of the

industry concurred that the standard

was needed to improve efficiency.

However, the Commission has

recognized that policy disputes between

the segments may prevent the

development of standards that are

necessary to the development of an

integrated pipeline grid.10

After having reviewed the transcript

of the December 12–13, 1996 technical

conference, the February 21, 1997

comments submitted on the technical

conference, and the GISB report, the

Commission has concluded that it needs

to resolve policy disputes so that GISB

can focus its efforts on resolving the

technical details of implementation. On

some issues, the Commission is

proposing new regulations when

uniform standards appear necessary to

increase the overall efficiency of the

pipeline grid or when the standard

reflects a fundamental service right to

which similarly situated shippers

should be entitled on all pipelines. On

other issues, the Commission is

providing policy guidance in this NOPR

so that GISB and the industry can

develop the most efficient standards to

implement those policy choices.

Specifically, the Commission is

proposing to incorporate the Version 1.2

standards in section 284.10(b)(1)(i) and

is further proposing in section

284.10(b)(2) to adopt additional

regulations that would: require

pipelines to give firm intra-day

nominations priority over already

nominated and scheduled interruptible

transportation; 11 require pipelines to

enter into operational balancing

agreements at all pipeline to pipeline

interconnects; 12 require pipelines to

permit shippers to offset imbalances

accruing on their different contracts

with a pipeline and trade imbalances

when such imbalances have similar

operational impact on the pipeline’s

systems; 13 require pipelines to post all

information and conduct all business

transactions using the public Internet

and internet protocols by June 1,

1999; 14 require pipelines to adhere to

specific standards in posting

information on pipeline web sites and

in maintaining electronic records; 15 and

require pipelines to provide shippers

with notice of operational flow orders

by posting the notices on the pipelines’

Internet web sites as well as by notifying

shippers through Internet E-Mail or

through notification to the shipper’s

Internet (URL) address. 16 The

Commission is proposing that pipelines

comply with these regulations within 60

days of the issuance of final rule, with

the exception, as noted above, of section

284.10(b)(2)(iii)(A) (requiring pipelines

to conduct business using the Internet),

for which compliance would be

expected by June 1, 1999.

The Commission is providing policy

guidance in the following areas: the

extent of notice interruptible shippers

should be given of rescheduled capacity

allocations, as well as the pipelines’

responsibilities to support title transfer

tracking, to permit gas package ranking

across contracts, and to support the use

of third-parties to provide

reimbursement for compressor fuel.
61462 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

17See Michael E. Porter & Class van der Linde,

Green and Competitive: Ending the Stalemate,

Harvard Business Review 120, 124, 127 (Sept/Oct

1995); Malcolm Gladwell, Just Ask For It, The New

Yorker, 45 (April 7, 1997) (governmental regulation

is sometimes needed to motivate industries to adopt

policies that enhance competition and foster greater

efficiency, but government needs to focus on

outcomes and should work with industry in setting

relevant standards).

18See Texas Eastern Transmission Corporation,

79 FERC ¶ 61,223 (1997).

19Tennessee Gas Pipeline Company, 80 FERC

¶ 61,311 (1997).

20 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.1 and 1.3.2.

21Central clock time is central time taking into

account changes for daylight savings time.

22 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.2.4.

23 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.2.7.

24 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.9.

25 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.10.

With respect to other issues in dispute,

pipeline tracking of multi-tiered

allocations, provision of paper pools,

and penalty calculations, the

Commission does not find that a

sufficient case has been made to justify

its intervention at this time.

With the Commission’s resolution of

the fundamental policy issues, GISB

should be able to formulate the

standards necessary for implementing

the policies addressed in this NOPR.

Although GISB had anticipated being

able to complete standards in some

areas by the end of calendar 1997, the

Commission recognizes that it may need

additional time to consider these

standards in the light of the

Commission’s policy guidance given

here. The Commission finds that a

March 31, 1998 deadline should provide

sufficient time, and the Commission,

therefore, solicits the submission of

final standards from GISB and others in

the industry by that date.

In stepping-in to resolve the disputed

issues, the Commission is in no way

seeking to derogate GISB’s role or its

accomplishments. GISB’s ability to

develop a consensus on the large

number of standards it has adopted is a

signal achievement and testament to the

industry’s ability to work together to

solve mutual problems. However, it

would ignore reality to assume that all

factions will be able to agree on every

issue, particularly when those issues

involve regulatory policy issues. By

resolving these issues, the Commission

is not seeking to replace GISB, but

rather to work together with GISB and

the industry to develop policies and

standards necessary to increase the

efficiency of the pipeline grid.17 Indeed,

the resolution of these policy questions

may permit GISB to focus its resources

on developing the necessary standards

to implement these policies in the most

efficient manner possible.

The Commission’s proposed

standards and its policy guidance in all

these areas are discussed below.

A. Proposed Adoption of the Version 1.2

Standards

Version 1.2 of the standards

principally revises the data elements

used to conduct business transactions

with the pipelines. The Commission

recognizes the difficulty, on the first

shot, of developing a comprehensive set

of data elements that will accommodate

business transactions across all

pipelines. Inevitably, experience with

the Version 1.1 standards would reveal

areas where refinements and

improvements were needed. Adoption

of the Version 1.2 revisions, therefore,

should improve the standards so that

they better accommodate pipeline

business practices. In addition to

incorporating the standards by

reference, the Commission also is

proposing to incorporate the GISB

interpretations. While the

interpretations will not necessarily be

determinative in the event of a dispute,

they, like the GISB principles adopted

previously, will help to provide reliable

guides as to the industry’s

understanding of the standards should

disputes or complaints arise.

The Commission appreciates that the

Version 1.1 standards have been

implemented unevenly across the

pipeline grid. Some pipelines have

received waivers which permit them to

use non-standardized data elements,

while they sought changes or revisions

from GISB.18 Other pipelines have

implemented the Version 1.2 standards

early.19 When implementation is not

uniform, burdens are created for

shippers who have to have several

different sets of data elements to match

the differing requirements of the

different pipelines. The Commission,

therefore, requests comments on

whether in the interests of providing

certainty, it should decline to extend its

waivers of the dataset compliance any

further and require all pipelines to

follow the Version 1.2 standards even if

certain issues are still unresolved.

A related question is how quickly to

issue revisions to the standards. There

clearly is going to be a need to revise

these standards. Indeed, in this NOPR,

the Commission has requested the

submission of additional data elements

for certain transactions. On the other

hand, if the standards are modified too

frequently, shippers incur time and

expense in having to reprogram their

computers to meet the new changes.

Thus, the Commission requests

comment on whether it should grant a

hiatus of a year or more before the

Commission adopts any subsequent

revision of the datasets so that shippers

will be able to implement them without

a risk that they subsequently will have

to remap their computers. A possible

alternative to be considered in the

comments is whether additions to the

datasets could be permitted, so long as

these additions do not affect the ability

of shippers to use the Version 1.2

standards. One of the advantages of EDI

is that it does permit the addition of

data elements without affecting the

ability of shippers to use an earlier

version. Under this approach, shippers

that want to avail themselves of the new

features could do so, while other

shippers could still use the Version 1.2

datasets.

B. Proposed Regulations and Policy

Guidance on Intra-day Nomination

Issues

1. The Issues

Under the GISB standards,20 the

initial nomination for the next day of

gas flow (which starts at 9 a.m.) must be

transmitted to the pipeline by 11:45 a.m.

central clock time (CCT).21 This

nomination is confirmed by 4:30 p.m.

CCT. An intra-day nomination is any

nomination sent after the initial

nomination deadline.22 An intra-day

nomination may be made either on the

day prior to gas flow (after 11:30 a.m.)

or on the day of gas flow.23 Intra-day

nominations are for a daily quantity;

changes in hourly gas flows are

determined by the interconnecting

parties.24

The current standards require a

pipeline to permit one intra-day

nomination four hours prior to gas

flow.25 In Order No. 587–C, the

Commission pointed out that pipelines

chose to implement this standard in

divergent ways. Some pipelines process

intra-day nominations using a ‘‘rolling’’

system permitting the shipper to choose

the time at which it submits the intraday nomination, while others chose a

‘‘batch process’’ in which the pipeline

sets a specified time for processing

intra-day nominations and all intra-day

nominations submitted before that time

are accumulated and processed together.

The batch process also differs from

pipeline to pipeline, with pipelines

choosing different batch times. In

addition, on some pipelines intra-day

nominations for firm service ‘‘bump’’ or

interrupt scheduled or flowing

interruptible gas, while on others they
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61463

26 In its September 2, 1997 comments, Koch,

which states it uses a rolling process without

bumping, contends that if an interconnected

pipeline supports bumping and uses the batch

process, a bump on that pipeline can wreak havoc

on Koch’s system since a bump will ripple down

and disrupt flow.

27See Appendix B.

28 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.1.2.

do not. The Commission commented

that this plethora of approaches

prevented shippers from coordinating

their intra-day nominations across

multiple pipelines, and requested that

GISB provide recommendations by

September 1, 1997 on standards to

provide the necessary coordination.

According to GISB’s September 2,

1997 filing, the task force it assembled

to consider this issue has not completed

its work, because its members came to

the realization that, in order to make the

intra-day nomination process work

efficiently, a fundamental review of the

entire confirmation process was

necessary. GISB included with its filing

the current test model its task force has

developed to deal with this issue.

Under this model, pipelines would

establish three times during which

shippers could synchronize their intraday nominations across multiple

pipelines. The synchronization times

are 6 p.m. (to take effect on the next gas

day) and 10 a.m. and 5 p.m. to take

effect on the same gas day.

BILLING CODE 6717–01–P

BILLING CODE 6717–01–C

In the report, the task force

summarizes the outstanding policy

disputes that it has been unable to

resolve. First, the task force did not

address the ‘‘bumping’’ issue—whether

firm intra-day nominations can

interrupt or displace scheduled

interruptible service. The timeline

proposed by the task force attempts to

accommodate both bumping and nonbumping pipelines.

Second, the task force is unclear as to

the amount of notice and opportunity to

reschedule which Commission policy

accords to interruptible shippers. For

instance, under the test model, an intraday nomination submitted at 6 p.m. on

the day before gas flow will not take

effect until 5 p.m. on the day of gas flow

if it bumps an interruptible shipper. If

the intra-day nomination does not

bump, it will take effect at 9 a.m., rather

than 5 p.m. The time line also provides

that the last intra-day opportunity of the

day, at 5 p.m., does not bump.

The report states that some on the task

force contend that bumping an

interruptible shipper’s scheduled gas is

unfair unless the shipper has the

opportunity to reschedule. Firm

shippers, on the other hand, contend

that since they pay reservation charges,

they are entitled to scheduling priority

and, therefore, their intra-day

nomination should take effect at 9 a.m.

even if the firm intra-day nomination

bumps scheduled interruptible service.

Third, the task force states that some

believe that the synchronized time line

can coexist with those pipelines that use

a rolling intra-day process, because

shippers can choose whether to submit

their nominations at the synchronized

times. Others, however, are concerned

that if a bump occurs, the coexistence of

the two methods seems to unravel.26

They maintain that, if the Commission

requires that firm intra-day nominations

bump scheduled interruptible service,

pipelines may have to switch from the

rolling to the batching process, which

would be a degradation of service to

shippers.

In addition, there was one disputed

standard (Standard No. 77A) dealing

with intra-day nominations. This

standard would have required pipelines

to permit intra-day nominations at all

nominatable receipt and delivery

points.27

2. Commission Resolution of the Issues

The Commission agrees that having

three synchronization times, as

proposed by the task force, would be a

significant improvement on the current

system. As GISB itself has recognized,

however, the adoption of these

nomination timelines is only an interim

step, with the ultimate goal being the

development of a continuous and

contiguous scheduling system.28

The Commission will resolve the

policy disputes highlighted by the GISB

task force to enable GISB to focus on the

implementation details of the standards,

such as ensuring that the intra-day

confirmation procedures are in place so

that nominations will be accepted when

capacity is available. GISB and others in

the industry should submit an intra-day

timeline and scheduling standards in

accordance with these policies by

March 31, 1998.

a. Priorities of Firm and Interruptible

Intra-day Nominations

(1) Commission’s Policy on Service

Priority

The Commission’s policy since Order

No. 636 has been that firm shippers,

who pay reservation charges, are

entitled to service superior to that of

interruptible shippers. Interruptible

shippers, by definition, take the risk that

their service will be interrupted if firm

shippers choose to use their capacity.

In Order No. 636, the Commission did

not require pipelines to provide intraday nomination opportunities, but some

pipelines did so, and the Commission

permitted those pipelines to include

provisions in their tariffs under which

scheduled interruptible nominations

would not be bumped by firm intra-day
61464 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

29See Tennessee Gas Pipeline Company, 73 FERC

¶ 61,158, at 61,456 (1995).

30 Id.

31 Id. (daily variance charge waived, but only for

the day on which the bump takes place).

32See El Paso Natural Gas Company, 77 FERC

¶ 61,176 (1996); Alabama-Tennessee Natural Gas

Company, 79 FERC ¶61,117 (1997); Algonquin Gas

Transmission Company, 78 FERC ¶ 61,281 (1997);

ANR Pipeline Company, 78 FERC ¶ 61,142 (1997);

Arkansas-Western Pipeline Company, 78 FERC

¶ 61,250 (1997); Canyon Creek Compression

Company, 78 FERC ¶ 61,003 (1997); CNG

Transmission Corporation, 78FERC ¶ 61,131 (1997);

Great Lakes Gas Transmission Limited Partnership,

79 FERC ¶ 61,194 (1997); Iroquois Gas Transmission

System, L.P., 79 FERC ¶ 61,196 (1997); K N

Interstate Gas Transmission Company, 79 FERC

¶ 61,208 (1997); Mojave Pipeline Company, 78

FERC ¶ 61,153 (1997); National Fuel Gas Supply

Corporation, 78 FERC ¶ 61,332 (1997); NorAm Gas

Transmission Company, 79 FERC

¶ 61,069 (1997); Overthrust Pipeline Company, 78

FERC ¶ 61,285 (1997); Questar Pipeline Company,

78 FERC ¶ 61,305 (1997); Southern Natural Gas

Company, 78 FERC ¶ 61,125 (1997); Texas Gas

Transmission Corporation, 79 FERC ¶ 61,175

(1997); Trailblazer Pipeline Company, 77 FERC–– ¶

61,328 (1996); Viking Gas Transmission Company,

78 FERC ¶ 61,243 (1997); Young Gas Storage

Company, Ltd., 79 FERC ¶ 61,030 (1997).

33See Transwestern Pipeline Company, 78 FERC

¶ 61,146 (1997); Florida Gas Transmission

Company, 78 FERC ¶ 61,177 (1996).

34Comments of the Interstate Natural Gas

Association of America, at 33 (February 21, 1997);

Koch Gateway Pipeline Company, at 11 (February

21, 1997). See also Comments of Enron Interstate

Pipelines, at 12 (February 21, 1997) (setting intraday schedules is not appropriate for a standardsetting forum).

35Proposed regulation 284.10(b)(2)(i).

nominations. However, as intra-day

nominations became more prevalent,

the Commission’s policy was to apply

its general scheduling priorities to intraday nominations. Thus, the Commission

found that firm intra-day nominations

should be entitled to bump scheduled

interruptible service.29 The

Commission, however, concluded that

interruptible shippers should receive

notice of their rescheduled quantities

and an opportunity to renominate.30 The

Commission also determined that

bumped interruptible shippers should

not be subject to penalties directly

related to the bump on the day on

which the bump takes place.31

When Order No. 587 required all

pipelines to implement intra-day

nominations, the Commission

determined that those pipelines filing to

institute intra-day nominations on their

systems had to follow the general policy

and permit firm intra-day nominations

to bump scheduled interruptible service

upon reasonable notice.32 On those

pipelines with no-bump provisions that

existed prior to Order No. 587, the

Commission permitted the no-bump

provisions to stand, because the

pipeline filings were strictly compliance

filings, and the Order No. 587 standards

did not address the priority issue for

intra-day nominations.33

(2) Proposed Regulation Giving Firm

Intra-Day Nominations Priority Over

Scheduled Interruptible Service

The Commission is proposing to

require that the remaining no-bump

pipelines follow its general policy that

firm intra-day nominations should have

scheduling priority over scheduled

interruptible service. This regulation

would ensure that all firm shippers will

receive the same rights on all pipelines.

INGAA and Koch 34 contend that the

Commission should not seek to

standardize this element of intra-day

service. They maintain that the diversity

in approach is the product of individual

pipeline settlements and customer

preferences which should not be upset.

Not only would a continuation of a

bifurcated intra-day nomination system

deprive firm shippers on some pipelines

with the legitimate priority rights to

which they are entitled, a bifurcated

system also appears to be at odds with

the goal of creating an integrated

pipeline grid. A firm shipper

nominating gas across multiple

pipelines needs to be able to coordinate

its intra-day nominations. Under the

present system, if even one pipeline in

its nomination chain has a no-bump

rule, the shipper may be unable to have

its entire chain of intra-day nominations

confirmed. Thus, a single approach to

bumping appears necessary to integrate

the pipeline grid.

The Commission, however, does agree

with the GISB task force that, if a firm

shipper has had a reasonable

opportunity to reschedule its gas, a

pipeline may provide a final intra-day

nomination opportunity where

scheduled interruptible service will be

protected from bumping. Under the

GISB task force’s model, firm intra-day

nominations submitted at the third

intra-day opportunity at 5 p.m. on the

day of gas flow would not bump

previously scheduled interruptible

service. Eliminating bumping at this

stage would provide a final opportunity

for all shippers to renominate supply

and provide stability.

The Commission, therefore, is

proposing to require pipelines to give

nominations by firm shippers

scheduling priority over nominated and

scheduled volumes for interruptible

service. The pipelines also would have

to provide interruptible shippers with

notice that their volumes will be

reduced.35 Pipelines would be required

to file to implement this provision

within 60 days from the date of a final

rule in this proceeding. Pipelines would

be expected to implement this

regulation based on their current intraday schedule until such time as GISB

completes, and/or the Commission

adopts, a revised intra-day schedule. In

accordance with the previous

discussion, those pipelines that permit

at least three intra-day nomination

opportunities each gas day may file a

request to permit scheduled

interruptible service to have a

scheduling priority higher than a firm

intra-day nomination submitted at the

final intra-day nomination opportunity

of the gas day. Pipelines filing to

comply with this provision also need to

consider whether bumped interruptible

shippers should be exempt from certain

penalties.

(3) Policy Regarding Notice to

Interruptible Shippers

The next question raised by the GISB

task force report is over the extent of

notice, and the opportunity to

renominate, to which an interruptible

shipper should be entitled if a firm

intra-day nomination bumps

interruptible service. For instance,

under the task force’s model, a firm

intra-day nomination may be submitted

at 6 p.m. on the day before gas flow. If

that nomination does not bump

interruptible service, it would become

effective at 9 a.m. on the day of gas flow.

If it bumped interruptible service, one

segment of the task force wants the

nomination to become effective at 5

p.m. on the day of gas flow in order to

permit the interruptible shipper to

attempt to reschedule gas at the 10 a.m.

intra-day nomination. Under this

approach, the firm shipper would have

16 hours of gas flow (5 p.m. until 9 a.m.

the next day) while the interruptible

shipper would have 8 hours of flow (9

a.m. until 5 p.m.) under the initial

nomination before the bump occurs.

Another segment contends that firm

shippers, paying reservation charges,

should have the right to commence gas

flow at 9 a.m. regardless of whether it

would bump interruptible shippers.

As described above, the Commission’s

policy is that firm shippers have

scheduling priority over interruptible

shippers. Thus, in the situation posited

by the GISB task force, firm shippers

should have the right to submit an intraday nomination on the day prior to gas

flow and have that nomination become

effective at the start of the gas day,

rather than eight hours later. While

interruptible shippers are entitled to

notice that their scheduled volumes will

be reduced, they are not necessarily

entitled to an opportunity to reschedule

prior to their volumes being reduced if

such a renomination would interfere

with the ability of a firm shipper to have
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61465

36Under the test model, scheduled quantities for

the 6 p.m. intra-day nomination would be no later

than 10 p.m., for gas that does not begin to flow

until 9 a.m. the next morning. Compare Tennessee

Gas Pipeline Company, 73 FERC ¶ 61,158, at 61,456

(1995) (four hours notice).

37Pipeline Service Obligations and Revisions to

Regulations Governing Self-Implementing

Transportation; and Regulation of Natural Gas

Pipelines After Partial Wellhead Decontrol, Order

No. 636–B, 57 FR 57,911 (December 8, 1992), 61

FERC ¶ 61,272, at 62,013.

38 Indeed, under the current standards firm

shippers have an incentive to overnominate at the

11:30 deadline, because they can always reduce

their nomination through the intra-day nomination

process, but may not be able to increase it.

39Comments of Koch Gateway Pipeline

Company, at 3–4 (Sept. 2, 1997).

40See Tennessee Gas Pipeline Company, 78 FERC

¶ 61,007, at 61,019–20 (1997); Canyon Creek

Compression Company, 78 FERC ¶ 61,003 (1997)

(cannot restrict intra-day nominations to

telemetered points); Trailblazer Pipeline Company,

77 FERC ¶ 61,328 (1996) (cannot restrict intra-day

nominations to telemetered points). Standard 1.3.11

states that intra-day nominations can be used to

request changes to receipt points or delivery points.

18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.11.

41See Tennessee, note 40, supra (permitting intraday nominations beyond the minimum required

under certain rate schedules).

its nomination become effective at the

earliest possible time after confirmation.

In the situation posed by the GISB

task force, the interruptible shippers are

provided with at least 11 hours notice

prior to the start of gas flow for the next

day.36 Thus, even if bumped, they

would not be required to reduce flowing

volumes. Second, the interruptible

shippers would still have the

opportunity at 10 a.m. to reschedule its

entire quantity of gas for the day, subject

to available capacity.

Moreover, interruptible shippers that

wish to avoid the risk of being bumped

can enter into short-term capacity

release transactions to obtain firm

service. Once scheduled, firm

nominations to secondary points have

the same priority as service to primary

points so that a shipper obtaining

released capacity could not be bumped

even by a firm intra-day nomination to

a primary point.37

The Commission has considered

whether, in the situation posited,

pipelines should be required to provide

bumped interruptible shippers with a

further opportunity to reschedule their

gas prior to the 9 a.m. start of the gas

day. However, given the 11 hour

advance notice, and the interruptible

shippers’ ability to reschedule gas at 10

a.m., the Commission does not think

that pipelines need to provide

interruptible shippers with an overnight

opportunity to reschedule their gas prior

to the start of the gas day. Pipelines

wishing to provide more certainty for

interruptible shippers, however, may

provide such a later right if they choose.

According to the task force report,

some parties contend that allowing a

firm intra-day nomination, which

bumps scheduled interruptible service,

to take effect at 9 a.m. does not provide

an adequate incentive for firm shippers

to submit timely and reasonably reliable

nominations at 11:30 a.m. These parties

contend that firm shippers may delay

their nomination, because they can

always rely upon their intra-day right to

make a nomination change effective at

the start of gas flow. The Commission

does not find this hypothetical concern

sufficient to deny firm shippers the right

to renominate their supplies to take into

account changes in weather or other

circumstances. First, firm shippers do

not appear to have an obvious incentive

to purposefully delay their initial

nominations or to submit nominations

not based on their best assessment of

their needs, at the time, for the next

day.38 Second, firm shippers still run a

risk if they delay their nominations,

because a firm shipper’s nomination to

a primary point will not bump already

scheduled secondary firm service to that

point. Thus, a firm shipper that delays

its nomination risks losing its ability to

acquire gas at its primary point.

b. Guidance Regarding the Effect of an

Intra-Day Schedule on Pipelines Using

Rolling or Continuous Processing of

Intra-Day Nominations

Some members of the GISB task force

and some of the comments have raised

the question of whether the move to

batch processing of intra-day

nominations at certain specific times

may result in a degradation of service on

pipelines that currently process intraday nominations on a rolling or

continuous basis. Koch, for instance,

maintains that, if bumping is permitted

according to the GISB task force’s

model, it would be forced to reconsider

whether to move to a batch process.39

As the GISB task force points out, the

identification of synchronization times

is not necessarily inconsistent with a

rolling or continuous process. Shippers

that want to avail themselves of

synchronization can time their

nominations identically on all

pipelines. However, if a pipeline and its

customers find that the synchronization

times along with the requirement that

firm intra-day nominations can bump

scheduled interruptible service creates

too much disruption on a rolling or

continuous system, the pipeline may

move to conform to the standardized

schedule. The efficiency gained by the

entire industry in being able to

coordinate nominations across the

pipeline grid outweighs any potential

diminution of service on the pipeline

using a continuous intra-day

nomination process. Indeed, it is not

clear how valuable the continuous

process is on a single pipeline, since

even if a shipper on that pipeline is

permitted an intra-day change, the

shipper will not know whether similar

coordinating changes will be permitted

on interconnecting pipelines.

c. Submission of Intra-Day Nominations

at All Nomination Points

Disputed Standard No. 77A would

require pipelines to allow intra-day

nominations at all nominatable receipt

and delivery points. The Commission’s

policy is that those intra-day

nominations required by the

Commission must be made available to

all regular open access services, apply to

each contract between the shipper and

the pipeline, and permit the shipper to

request changes at all receipt and

delivery points.40 Pipelines, however,

may impose restrictions on intra-day

nomination opportunities that go

beyond those required by the

Commission.41 Thus, the Commission

will clarify that the three intra-day

opportunities under the GISB task

force’s model would be available at all

points where nominations are

permitted.

C. Proposed Regulations Concerning

Operational Balancing Agreements and

netting and Trading of Imbalances

1. Background

In Order No. 587-C, the Commission

did not adopt two GISB flowing gas

standards relating to operational

balancing agreements (OBAs) (Standard

2.3.29) and netting of imbalances across

contracts (Standard 2.3.30), because the

pipelines’ obligations under the

standards were not clearly defined.

GISB Standard 2.3.29 states:

At a minimum, transportation service

providers should enter into Operational

Balancing Agreements at all pipeline-topipeline (interstate and intrastate)

interconnects, where economically and

operationally feasible.

GISB Standard 2.3.30 states:

All transportation service providers should

allow service requesters (in this instance,

service requester excludes agents) to net

similarly situated imbalances on and across

contracts with the service requester. In this

context, ‘‘similarly situated imbalances’’

includes contracts with the substantially

similar financial and operational

implications to the transportation service

provider.

The Commission found that standards

requiring OBAs and netting of
61466 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

42 18 CFR 284.10(b)(1)(ii), Flowing Gas Related

Standards 2.2.1.

43An imbalance is a discrepancy between the

quantity of gas a shipper tenders to the pipeline at

a receipt point and the amount of gas the shipper

takes at a delivery point.

44Proposed regulation 284.10(b)(2)(ii)(A).

45Appendix B, Disputed Standard No. 85A.

46Proposed regulation 284.10(b)(2)(ii)(B).

47The fee most likely would not exceed the

imbalance penalty or other costs that the out-ofbalance shipper would incur if the imbalance was

not offset.

imbalances were important, but that the

use of the terms ‘‘economically and

operationally feasible’’ and ‘‘similarly

situated financial and operational

implications’’ did not define precisely

enough the pipelines obligations under

the standards. Rather than attempting to

deal with the meaning of these terms in

individual pipeline compliance filings,

the Commission gave GISB until

September 1, 1997 to clarify the

standards.

According to the GISB report, it

initially sent the standards to the

interpretations subcommittee which

determined that interpretation would

not be sufficient and that new standards

would have to be developed. The

standards were then referred to the

business practices subcommittee that,

according to GISB, will not review these

issues until its normal rotation deals

with contract and flowing gas issues,

perhaps by the end of 1997.

2. Proposed Regulations

The Commission has reviewed these

standards in light of Commission

priorities and policies and has

determined that the Commission needs

to propose its own standards in these

areas. In certain respects, the

Commission’s proposals go beyond the

standards being considered by GISB.

a. OBAs

An OBA is a contract between two

parties that specifies the procedures that

will be used to manage operating

variances at an interconnect.42 The OBA

specifies how imbalances 43 or

differences in hourly flow rates will be

handled by the two parties. An OBA

increases the efficiency of the grid,

because a shipper, which has properly

nominated and had its gas confirmed,

will not be held responsible for

imbalances, resulting from the transfer

of gas between the pipelines.

Accordingly, the Commission is

proposing to require interstate pipelines

to enter into OBAs at all interconnecting

points with other interstate and

intrastate pipelines.44 These agreements

must be maintained by the pipelines

and provided upon request to the

Commission and any other requesting

party. If two interstate pipelines are

unable to negotiate an acceptable

agreement, they can file a request for the

Commission to resolve the disputed

terms. If a pipeline finds itself unable to

enter into an OBA with an entity not

regulated by the Commission, it can file

for a waiver of this requirement setting

out any operational or other issues that

have prevented an agreement from being

consummated.

b. Netting and Trading Imbalances

Netting of imbalances refers to the

ability of shippers to offset a positive

imbalance on one contract with a

negative imbalance on another contract.

While GISB standard 2.3.30 would

permit some netting of imbalances by

shippers across contracts, it would not

permit shippers’ agents to net

imbalances. As discussed above, the

standard also was unclear as to which

contacts could be offset against each

other. In addition to this standard, one

of the disputed standards before the

Commission is whether to permit

shippers to trade imbalances amongst

themselves.45

The Commission is proposing to

require pipelines to permit shippers and

their agents to both offset imbalances

accruing on different contracts held by

the shippers and to trade imbalances

with other shippers when the

imbalances have similar operational

impact on the pipeline.46 Permitting

shippers to offset and trade imbalances

in the same operational area allows

shippers to avoid imbalance charges

without jeopardizing system reliability.

If one shipper, for instance, incurs an

overrun and another shipper an

underrun of the same amount, the

pipeline is physically in balance

between those shippers. Moreover,

permitting shippers to trade imbalances

with each other may improve system

reliability because a shipper may be

willing, for a fee, to put gas on a system

or take gas off in order to offset

imbalances incurred by other

shippers.47 Since all shippers would be

permitted to trade imbalances under

this proposal, there would be no reason

why shippers’ agents should not be able

to trade imbalances among the contracts

they manage.

The regulation permits offsets and

imbalance trades when the imbalances

have similar operational impact on the

pipeline operations. The GISB standard

(2.3.30) also included similar financial

implications to the pipelines. The

Commission cannot discern how

pipelines’ legitimate financial interests

are implicated, since the offsets and

trades involve only physical imbalances

and the penalties associated with those

imbalances, not charges for

transportation service.

Under this requirement, the pipelines

would be required to provide shippers

with timely notice of their imbalances

and sufficient time to permit shippers to

execute trades. To facilitate trading,

pipelines should post a shipper’s

imbalances if the shipper requests. The

pipelines would then have to accept and

process trades provided to them by the

shippers or shippers’ agents, including

third-party firms that would conduct

imbalance trading for shippers.

Pipelines further would be expected to

designate in their compliance filings the

largest possible areas on their systems in

which imbalances have similar

operational effects and explain, in

detail, why imbalances crossing these

areas are not sufficiently similar in

operational effect.

Pipelines would not be required to

establish a computerized system on

which trading would take place.

Pipelines, however, are free to establish

such a system and to assess a separate

fee for using that system. If a pipeline

does establish its own trading system, it

must provide equal and nondiscriminatory access for shippers

trading their own imbalances or those

using third-party services.

D. Proposed Regulations for Electronic

Communication

1. Background

For many years, pipelines have

communicated with their customers

using direct dial up connections to

pipeline Electronic Bulletin Boards

(EBBs). Each pipeline EBB is a

proprietary system, with unique

software, log-on, and other procedures.

The uniqueness of each pipeline’s EBB

raises costs to shippers across multiple

pipelines, since redundant computers

and communication software may have

to be maintained and staff must be

trained in the idiosyncracies of each

pipeline’s system. Beginning in 1993,

the Commission has sought to create

greater standardization in

communication so that shippers could

reap the efficiencies of using one

standardized method to transact

business with all pipelines.

The standards developed by GISB so

far, however, do not standardize all the

information pipelines are currently

providing electronically. Pipelines are

continuing to post information and

conduct many transactions on their

proprietary EBBs. For instance, GISB

has not developed standards for

communicating offers to release

capacity and bids for capacity over the
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61467

48 18 CFR 284.10(b)(1)(iv), Electronic Delivery

Mechanism Related Standards 4.3.6.

49See comments of Koch Gateway Pipeline

Company, at 4–7 (September 2, 1997) (arguing EBBs

should not be eliminated).

50Proposed regulation 284.10(b)(2)(iii)(A).

51See Order No. 587, 61 FR at 39065, III FERC

Stats. & Regs. Regulations Preambles at 30,074

(report of GISB’s Future Technology Task Force); 18

CFR 284.10(b)(1)(iv), Electronic Delivery

Mechanism Related Standards 4.3.15.

52Altra Energy Technologies, L.L.C. refers to

these private networks using internet protocols as

extranets.

53The Commission has adopted similar

requirements for the electronic OASIS system in the

electric industry. Open Access Same-Time

Information System (formerly Real-Time

Information Networks) and Standards of Conduct,

Order No. 889, 61 FR 21737 (May 10, 1996), FERC

Stats. & Regs. Regulations Preambles [Jan. 1991–

June 1996] ¶ 31,035, at 31,618–19 (Apr. 24, 1996). 54Proposed regulation 284.10(b)(2)(iii)(B).

Internet and has not provided standards

to enable shippers to download the

Index of Customers in the format

specified by the Commission.

2. Proposed Regulations

a. Proposed Requirement That Pipelines

Provide all Information on the Internet

Using Internet Tools

The Commission remains committed

to standardizing all communications

with the pipelines. For shippers to be

able to use the interstate natural gas grid

efficiently, they need to be able to

transact business across multiple

pipelines without having to incur the

added costs and delay attendant to

having to train personnel to use the

pipelines’ proprietary EBBs. While the

current standards cover some of the

more important transactions with the

pipelines, they still do not remove the

necessity for shippers to deal with

pipeline EBBs.

In Standard 4.3.6, GISB had stated

that ‘‘all EBB information, functions and

transactions should be achieved via one

mode of communications.’’ 48 In Order

No. 587–E, the Commission requested a

report from GISB by September 1, 1997

on its progress in completing the

standardization of communications, but

GISB did not file the requested report.

In its comments, Koch contends the

Commission should not mandate the

exclusive use of Internet technologies,

because shippers on single pipelines

may prefer to use the existing EBBs and

it may be difficult or costly for them to

convert to using the Internet

technologies. Koch points out that thirdparty service providers can assist those

shippers wanting to conduct business

with the pipelines in a standardized

manner.49

To prevent such disputes from

slowing the standardization of

communications further, the

Commission is proposing to require

pipelines to provide all electronic

information and conduct all electronic

transactions with their customers over

the public Internet using only internet

protocols and procedures. Pipelines will

be expected to comply with this

regulation by June 1, 1999.50

GISB has considered the security

issues affecting the use of the public

Internet and concluded that security

concerns can be adequately addressed

through commercially available

software and techniques.51 However,

pipelines also would be required to

provide third party, private

communication networks with equal,

but not preferential, access to the same

information and transactions for a

reasonable connection fee.52 Shippers

with concerns about the Internet could

pay to use these private networks.53

This timetable should give the

pipelines sufficient time to develop the

needed infrastructure and also gives

GISB and the rest of the industry the

opportunity to further standardize the

provision of this information. With the

policy question resolved by the

Commission, GISB can focus

exclusively on developing the needed

standards without debate over the

extent of the pipelines’ responsibilities.

By March 31, 1998, the Commission

requests a report from GISB and the

industry on their progress in developing

needed standards and whether the

Commission needs to establish

procedures to assist in standards

development. Regardless of whether

standards are developed, however,

pipelines should begin preparing to

make the transition to the public

Internet. Even without standards, the

ability to conduct transactions using one

communication method without the

need for different log-on and access

procedures and different software for

each pipeline will increase efficiency.

Standards can still be developed after

implementation of the system.

The Commission disagrees with Koch

that there is no harm to the retention of

dual systems. Maintenance of dual

systems not only drains resources and

talent from developing an efficient

standardized system, it creates an

understandable competitive incentive

for pipelines to favor their proprietary

systems over the standardized system.

Overall efficiency will be enhanced if

rather than working independently to

develop their own systems, the

pipelines work together with the

industry to develop an efficient, userfriendly, standardized system that all

shippers can use. Indeed, as Koch

points out, shippers that do not want to

invest in developing their own internal

communication system can turn to the

competitive market for third-party

services to obtain whatever services

they require.

b. Proposed Regulations Regarding

Presentation of Information on Pipeline

Web Sites

In Order No. 587–C, the Commission

adopted GISB standard 4.3.6 requiring

pipelines to post information for

viewing in HTML format on pipeline

Internet web sites. The Commission,

however, did not adopt GISB standard

4.3.5, stating that in addition to posting

the information for viewing on a web

site, the information should be

downloadable in a GISB specified

electronic structure, because GISB had

not developed the electronic structure.

In Version 1.2 of its standards, GISB has

included standard 4.3.16 which gives

the pipelines the choice of providing

downloadable files either in hyper-text

mark-up language (HTML) or rich-textformat (RTF). The Commission is

proposing to adopt the previously

rejected standard 4.3.5 and new

standard 4.3.16.

The Commission, however, is

concerned that merely specifying the

document format for downloading does

not go far enough. There are no

standards regarding the use of

passwords for obtaining access to the

public information on the web site or

the methods by which information will

be posted and downloaded from the

web site. For instance, the standards do

not require that the information be

searchable on line. A pipeline,

therefore, conceivably could post each

tariff page as an individual HTML

document without giving users the

opportunity to search the entire tariff

online for individual words or phrases.

Therefore, the Commission is proposing

a regulation that would require

pipelines to adhere to standards

regarding accessibility to public

information, searching and copying of

documentation, and downloading

capability.54 The Commission also

requests comments on other possible

standards to improve users’ ability to

access and use this information.

There is a further issue regarding the

comparability of information between

various sources. Pipelines currently

provide the names of shippers in the

capacity release information posted on

their EBBs. However, in the current

datasets for downloading capacity

release information, shippers are

identified only by their assigned Dun &

Bradstreet numbers and there is no
61468 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

55The user would have to accumulate its own

database of numbers and then attempt to obtain the

names from Dun & Bradstreet, at a cost.

56The Commission recognizes, however, that

while the pipeline web sites must contain the same

information as that posted on an EBB or in the EDI

datasets, the downloads from the web site should

not be in EDI format.

57Proposed regulation 284.10(b)(2)(iii)(C). This is

the same principle that applies to the acquisition

of the cross-reference table between the common

transaction point codes and the pipelines’

individual nomenclature for referring to those

points. Standards For Electronic Bulletin Boards

Required Under Part 284 Of The Commission’s

Regulations, Order No. 563–A, 59 FR 23624 (May

9, 1994), III FERC Stats. & Regs. Regulations

Preambles ¶ 30,994, at 31,044–45 (May 2, 1994).

58 18 CFR 284.10(a)(2); Pipeline Service

Obligations and Revisions to Regulations Governing

Self-Implementing Transportation Under Part 284

of the Commission’s Regulations, Order No. 636–A,

57 FR 36128 (Aug. 12, 1992), III FERC Stats. & Regs.

Regulations Preambles ¶ 30,950, at 30,549 (Aug. 3,

1992).

59Proposed regulation 284.10(b)(2)(iii)(D).

60 18 CFR Part 385, Subpart D.

61Appendix B, Disputed Standard No. 23.

62For example, one pipeline representative stated

that even calling in all available personnel, about

24 people, it took them six hours to contact all

affected parties. Transcript of December 13, 1996

technical conference at 37.

63Comments of American Gas Association, at 11

(February 21, 1997); Brooklyn Union Gas Company,

at 1 (February 21, 1997).

available cross-reference table. The use

of a numeric designation for shipper

name is valuable only if it is

accompanied by a means for users of the

information to translate the numeric

designation into the company name, so

the user can determine who is receiving

capacity.55 The easiest solution for this

problem would be for the pipelines to

provide a cross-reference table between

the Dun & Bradstreet numbers and the

names of releasing and replacement

shippers consummating capacity release

transactions on their systems. If, for any

reason, pipelines are unable to provide

a cross-reference table using DUNS

numbers, the industry should either

develop their own numeric designations

for shippers or include shipper names

in the capacity release datasets.

In addition, pipelines need to ensure

that the content of any information that

is provided on multiple formats (on

EBBs, pipeline web sites, or through EDI

formatted files) must be the same

regardless of the format. For instance,

the operationally available capacity

information available from EBBs,

pipeline web sites, and EDI downloads

should have the same content.

Moreover, when the Commission has

specified a download format for EBB

information, the same format should be

used for downloads from pipeline web

sites. For example, the Commission has

specified a download format for the

Index of Customers and that format

should also be available from the

pipelines’ web site.56

The Commission, therefore, is

proposing a regulation requiring that the

content of all information provided

electronically must be the same

regardless of the electronic form used to

display the data. It also is proposing

that, if a pipeline uses numerical

designations to represent information,

such as shipper names, a cross-reference

between the numeric designation and

the represented information must be

available to users, at a cost no higher

than what is necessary to cover

reasonable shipping and handling.57

The generic standards proposed here

should not be the end of the process.

GISB’s future technology task force

recognizes that as additional categories

of information are posted on web sites,

separate standards may need to be

developed for each category of

information. GISB also reports that, at

the instance of its Board of Directors, it

has established a ‘‘Look and Feel’’ team

to develop a consistent and uniform

presentation of information on the

Internet. The Commission urges GISB to

continue to work on these standards,

and looks forward to seeing the

resulting proposals.

As an additional matter, the

Commission is proposing to modify the

data retention requirements related to

transactions and information provided

over the Internet. GISB Standard 4.3.4

provides that transactional data should

be maintained for at least 24 months for

audit purposes, but states further that

this requirement should not otherwise

modify statutory, regulatory, or

contractual record retention

requirements. GISB did not pass a

standard for retention of information

displayed on Internet web pages. The

Commission regulations currently

require pipelines to maintain electronic

data on EBBs for three years and make

that information available to users in

electronic form at a reasonable fee.58

However, the Commission is concerned

that three years may not be a sufficient

retention period for the Commission to

adequately monitor industry practices.

Accordingly, the Commission is

proposing to replace Standard 4.3.4,

with a requirement that pipelines

maintain electronic information

displayed or transmitted using the

Internet for five years and make that

information available in electronic form

for a reasonable fee.59 This regulation

would require public disclosure only of

archived information originally

displayed publicly. Access to archived

confidential business information

would be provided only to the customer

involved in the transaction, the

Commission, or as part of discovery

procedures.60

c. Proposed Requirement for

Notification of OFOs and Critical

Notices Using Internet Posting Along

With E-Mail or Notice to URL Addresses

A standard that has been in dispute

concerns the method by which

pipelines communicate operational flow

orders (OFOs) and other critical notices

to shippers.61 OFOs are orders by a

pipeline requiring shippers to take

certain actions to alleviate emergency

operational conditions on the pipeline’s

system. The four segments, other than

the pipelines, supported a standard to

require pipelines to notify affected

parties of OFOs and critical notices

according to the medium chosen by the

shipper, 24 hour phone, fax, or pager.

The pipelines, on the other hand,

support only electronic notification

using a general posting on their EBB or

Internet web sites.

The pipelines contend requiring

individual notice, particularly for

system-wide OFOs or critical notices is

far too burdensome and may be unfair.62

Given the pipelines’ limited resources to

provide individual notice, some

shippers will receive notice far earlier

than others. Moreover, the pipelines

maintain that if a shipper fails to receive

a telephone or fax transmission, the

pipelines have no electronic record that

it was sent. The shippers maintain that

purely electronic posting on an EBB is

insufficient actual notice, particularly

for notices issued after normal business

hours. In addition, at the conference and

in comments,63 some parties suggested

that posting on the pipeline’s web site

be supplemented by the use of Internet

E-mail or notification to a shipper’s

Internet web address as alternatives for

providing telephonic or fax notice to

shippers.

The Commission concludes this last

approach has the most merit. Internet Email and notification to a shipper’s

Internet address provides the shipper

with direct notice without the need to

monitor the pipeline’s Internet site.

Such notice can be automated by the

pipeline so sending the message should

not create the burdens of individual

telephonic or fax notification.

Automated notice also permits

simultaneous notice to all shippers,

thereby eliminating any potential for

discrimination as to when a shipper

receives notification. Moreover, if a
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61469

64See National Fuel Gas Supply Corporation, 80

FERC ¶ 61,403 (1997) (finding Internet notification

sufficient and noting customers’ ability to use such

notifications to trigger pagers).

65Proposed regulation 284.10(b)(2)(iii)(E).

66Transcript of December 13, 1996 technical

conference, at 17, 34–36.

67Enron Interstate Pipelines refers to these

transactions as ‘‘title transfer only’’ transactions to

differentiate them from transactions involving title

exchange and transportation.

68See Comments of NorAm Gas Transmission

Company and Mississippi River Transmission

Company, at 4 (February 21, 1997).

69Comments of American Gas Association, at 16

(February 21, 1997).

70 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.1.11.

71Comments of Natural Gas Clearinghouse, at 14

(February 24, 1997); Energy Managers Association,

at 9 (February 21, 1997).

72Transcript of December 12, 1997 technical

conference, at 104.

73See Trunkline Gas Company, 75 FERC ¶ 61,003

(1996) (approving a separate flat charge for tracking

Continued

shipper receives notice through Internet

E-Mail or to a web address, the shipper

can, if it wants, obtain telephonic or

pager notice by purchasing

commercially available software

packages and services that permit

Internet notification to trigger a phone

or a pager.64 Thus, the Commission is

proposing to require pipelines to post

OFOs and critical notices on their

Internet web sites and to provide

individual notice to shippers, at the

shipper’s option, either through Internet

E-mail or by a direct notice to a

shipper’s Internet address.65

At the conference, there also was

discussion about the difference between

requiring telephone or fax notice for

system-wide or large-scale OFO

situations and attempting to reach a

small number of shippers by whatever

means is necessary in localized and

critical situations.66 The Commission

continues to expect that for extremely

critical OFOs limited to only a few

shippers, the pipelines will continue to

make every effort to ensure that the

affected shippers are informed.

E. Policies Regarding Title Transfer

Tracking

1. Background

Title transfer tracking refers to the

accounting for transfers of title to gas at

a nomination point when no

transportation is involved. Under the

Commission’s policy, shippers must

have title to gas in order to transport the

gas on a pipeline. Pipelines, therefore,

have always had to perform some title

transfer tracking to ensure that shippers

have title to gas. For example, if shipper

A on an upstream pipeline transports

gas to an interconnect with a

downstream pipeline and transfers the

gas to shipper B on the downstream

pipeline, the pipelines would have to

match those transactions as part of the

process of confirming the nominations.

However, with unbundling and the

development of a more fluid gas market,

transactions at nomination points are

increasing to a much greater extent.

Thus, at an interconnect point, there

may be multiple transfers of title before

the gas is nominated on the downstream

pipeline.67 In order for pipelines to

confirm the gas nominated on the

upstream and downstream pipelines,

there is a need to convey information

about which shipper(s) are delivering

the gas to the shipper on the

downstream pipeline.

GISB established a title transfer

tracking task force to evaluate these

issues and attempt to develop standards

for how title transfer tracking would be

conducted, with a report due by

September of 1997. In its September 2,

1997 filing, GISB included an interim

report by its title transfer tracking task

force summarizing its progress.

According to the report, the task force

has distilled 13 initially proposed

methods for handling title transfers to

five, which it is still considering. It also

has identified 13 remaining issues

relating to title transfer tracking, such as

how title transfers are related to

invoicing, pre-determined allocations

(PDAs), and multi-tiered allocations,

whether title transfers can have

imbalances, and how title transfers fit in

with intra-day scheduling.

NGC in its September 2, 1997

comments states that while the title

transfer tracking task force is evaluating

and defining the process, the task force

is not addressing the underlying issue of

whether the pipelines should be

required to perform the service. NGC

claims the extent of the pipelines’

responsibility to perform title transfer

tracking is an intractable policy dispute

that only the Commission can resolve.

In reviewing the comments filed on

this issue, it is evident that there is a

split between the segments on whether

the pipelines should be responsible for

performing title transfer tracking

service. The pipelines contend that

tracking title exchanges, when no

physical transportation is occurring, is

unrelated to transportation service.68

They maintain that they should not be

responsible for performing an

accounting service for marketers and

others that are seeking to arbitrage in the

volatile gas market. If the Commission

were to require them to perform title

transfer tracking, the pipelines maintain

that they should be able to collect a

separate charge for the service, rather

than having it included in their general

transportation rates. LDCs similarly

contend that shippers using title transfer

services should be required to pay a

separate charge.69 Charging a separate

fee, they maintain, is consistent with the

GISB principle that the users of title

transfer services should bear the cost of

the service.70

Marketers and others 71 contend that

title transfer tracking is related to the

confirmation process and that pipelines

are in the best position to perform this

service because they already process

nominations and confirmations

electronically. The marketers further

contend that if the pipelines do not

perform title transfer tracking, the

pipelines may seek to require shippers

to disclose the string (‘‘daisy chain’’) of

title transfers, so that interconnecting

pipelines can confirm the nomination.

Disclosure of the daisy chain, marketers

assert, is anticompetitive because

marketers would have to disclose to the

ultimate purchaser the marketer’s raison

d’etre—the source of the marketer’s

reasonably priced gas.72 They allege that

the purchaser could appropriate this

information for its own benefit in

succeeding months by eliminating the

marketer and buying gas directly from

the source.

2. Pipeline Obligations With Respect to

Title Transfer Tracking

To assist GISB, the Commission will

resolve this policy dispute regarding the

pipelines’ responsibilities to perform

title transfer tracking. Pipelines must

continue to ensure that shippers on

their systems have title to the gas they

intend to ship. To perform this function,

the Commission sees no reason to

require pipelines to establish a

computerized title transfer tracking

service to account for the purchase and

sale of gas between shippers

independent of transportation. It is the

shipper’s responsibility to furnish the

transporter with the information needed

to establish title to gas and its right to

nominate that gas on the pipeline. GISB

should continue its efforts to develop

standards defining the minimum

information needed for nominations and

confirmations.

While the Commission is not

proposing that the pipelines be required

to perform title transfer tracking, the

Commission recognizes that some

shippers have a need for this service.

Pipelines, therefore, may perform title

transfer tracking service and may assess

a reasonable, independent fee for the

service.73 Charging a separate fee for
61470 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

service) But cf., Williams Natural Gas Company, 79

FERC ¶ 61096 (1997) (rejecting a volumetric, per

Dth, fee for title transfer service).

74See Moss Bluff Hub Partners, L.P., 80 FERC ¶

61,181, at 61,475 (1997); Trunkline Gas Company,

75 FERC ¶ 61,003 (1996).

75Comments of Enron Interstate Pipelines, at 18

(February 21, 1997).

76Title transfer tracking is part of the

confirmation process, because it involves the

confirmation that gas nominated by a shipper will

be injected into the pipeline’s system. It is no

different than a confirmation provided by a

producer or point operator, who, in fact, may be

offering a title transfer tracking service of its own.

77 18 CFR 284.8(b)(4), 284.9(b)(4) (1997).

78See Appendix B.

79See comments of Interstate Natural Gas

Association of America, at 13–18 (February 21,

1997).

80See Standards For Business Practices of

Interstate Natural Gas Pipelines, Notice of Proposed

Rulemaking, 61 FR 58790 (Nov. 19, 1996), IV FERC

Stats. & Regs. Proposed Regulations ¶ 32,521 (Nov.

13, 1996).

81 Disputed Standard No. 77A relating to intraday nominations, Disputed Standard 85A relating to

imbalance trading, and Disputed Standard No. 23

relating to notice of OFO’s. See text accompanying

notes 40, 46, and 61, supra.

82 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.23.

83Comments of Natural Gas Clearinghouse, at 23

(February 24, 1997); Energy Managers Association,

at 15 (February 21, 1997).

84Comments of Columbia Gas Transmission

Corporation and Columbia Gulf Gas Transmission

Corporation, at 4 (February 21, 1997).

85Comments of Enron Interstate Pipelines, at 19

(February 21, 1997).

such service will help to ensure that

shippers will use the service only to the

point at which the shippers value the

service more than the price charged.

Further, shippers should have the

opportunity to develop their own

competitive systems for tracking title

and have the pipeline recognize those

title transfers in determining whether a

shipper has title to the gas it seeks to

transport. Title transfer services already

are beginning to be offered both by

pipelines and by storage and hub

operators and, if the demand exists,

such services should increase.74 Enron

Interstate Pipelines contend that thirdparties in the competitive market can

provide title transfer tracking services,

although Enron recognizes that

pipelines may need to perform a

coordinating role by accepting

confirmations from these third-parties.75

The Commission agrees with Enron

that pipelines must accept title transfer

confirmations from point operators and

third-party service providers, acting as

agents for shippers, on a nondiscriminatory basis.76 Requiring

pipelines to accept such confirmations

from third-parties is consistent with the

Commission’s policy in Order No. 636

that pipelines need not create market

centers, but must not take actions which

will inhibit the development of such

centers.77 The development of thirdparty title transfer tracking services also

will place competitive pressure on

pipelines that choose to offer a title

transfer tracking service and thus help

to ensure the pipelines’ rates are

reasonable.

With the clarification of the pipelines’

role in title transfer tracking, the

Commission expects that GISB should

be able to develop the business practices

and electronic communication

standards relating to the confirmation

process for title transfers. The

Commission will provide GISB until

March 31, 1998 to submit such

standards. Other members of the

industry also may propose standards at

that time as well.

F. Commission Policies Regarding the

Disputed Issues Remaining From the

December 12–13, 1996 Technical

Conference

During the standardization process,

disputes developed in a number of areas

in which the GISB membership was

unable to reach consensus. A number of

standards were supported by four

segments of the industry, but were not

passed by GISB due principally to the

opposition of the pipeline segment.78

The pipelines contended that these

standards are not warranted or that they

represented an attempt by the other

members of the industry to shift costs

onto the pipelines, as the only regulated

entities.79 In the November 13, 1996

NOPR,80 the Commission announced

that in order to exercise its oversight

role, Commission staff would hold a

technical conference on December 12–

13, 1996 to consider these issues. The

technical conference was to provide

further information on those disputed

standards so that the Commission could

determine whether these standards were

of sufficient importance to the

maintenance of an integrated pipeline

grid that the pipelines should be

required to abide by them. Comments

on the technical conference were filed

on February 21, 1997.

Three of the disputed standards were

discussed earlier; 81 the remainder will

be discussed below.

1. Ranking Across Contracts (Disputed

Standard No. 28B)

Disputed Standard No. 28B states that

pipelines should permit rankings across

contracts for the same service requester

and location, when not in conflict with

tariff-based rules. Gas package ranking

refers to the ability of shippers to

designate the amount of gas that will be

allocated to particular markets or

customers in the event the shipper’s full

nomination is not accepted. The

standards adopted by the Commission

already require pipelines to honor

shipper ‘‘rankings when making

reductions during the scheduling

process when this does not conflict with

tariff-based rules.’’ 82 For example, if a

shipper nominates 1,000 MMBtus under

one contract, it can specify how that

1,000 will be divided if the full 1,000

MMBtus is not confirmed. The disputed

standard would specifically extend the

pipelines’ obligation to support ranking

across contracts.

Shippers contend this standard is

needed to give them the flexibility to

manage their own gas supplies.83 They

point out that shippers may be shipping

under a variety of contracts, including

their own firm and interruptible

contracts as well as capacity release

contracts which have their own specific

terms and conditions. They further note

that a capacity release contract may

contain a take-or-pay clause in which a

shipper is required to pay a certain rate

whether it moves gas or not. To

maximize their use of transportation,

shippers contend they should be able to

determine how their transportation is

allocated among their contracts.

The pipelines are not unified in their

position on this standard. Columbia

Gas/Columbia Gulf support allowing

shippers to use rankings across

contracts.84 Enron Interstate Pipelines,

however, is concerned about how such

a provision would impact pipelines’

tariff provisions establishing scheduling

priority.85 They ask, for instance,

whether a shipper would be able to rank

an interruptible contract as having a

higher priority than a firm contract.

The Commission’s general policy is to

allow shippers to manage their gas

supplies and contracts in ways that are

the most favorable to them as long as

such management does not affect the

operational integrity of the pipeline.

The pipelines, therefore, should provide

shippers with the ability to rank gas

supplies across their contracts so long as

the ranking does not adversely affect the

operational integrity of the system.

There are two potential scenarios

identified by the comments: problems

with the shipper’s gas supply resulting

in a reduction in a shipper’s

nomination; and transportation

constraints resulting in the reduction.

If the reduction is related to a loss of

supply, the Commission sees no reason

why shippers should not be able to

specify the contract under which the gas

should flow. Such a determination is
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61471

86 18 CFR 284.10(b)(1)(ii), Flowing Gas Related

Standards 2.2.3.

87 18 CFR 284.10(b)(1)(ii), Flowing Gas Related

Standards 2.3.19.

88 18 CFR 284.10(b)(1)(ii), Flowing Gas Related

Standards 2.3.25.

89Comments of Natural Gas Clearinghouse,

Docket No. RM96–1–000, filed October 1, 1996, at

14.

90Comments of Enron Interstate Pipelines, at 18

(February 21, 1997); Interstate Natural Gas

Association of America, at 33 (February 21, 1997).

91 GISB September 2, 1997 filing at Appendix A,

part 4.

92 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.2.3.

93 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.17 and 1.3.18.

94See comments of Natural Gas Clearinghouse, at

11 (February 24, 1997); Energy Managers

Association, at 10–13 (February 21, 1997).

95Comments of Enron Interstate Pipelines, at 18

(February 21, 1997); Interstate Natural Gas

Association of America, at 33 (February 21, 1997).

96 In-kind fuel reimbursement refers to a

requirement that a customer nominate and put into

the system extra gas to compensate the pipeline for

the gas used by its compressors.

unrelated to any transportation issues

on the pipeline, since there have been

no cuts in transportation.

Even when the reduction is a result of

transportation problems, allowing the

shipper to rank its contracts does not

appear to interfere with pipeline

scheduling priorities. Suppose a shipper

has nominated 100 MMBtus each on

three contracts, firm primary, capacity

release secondary, and interruptible,

from the same receipt to the same

delivery point, but the pipeline can

schedule only the firm primary contract.

Under normal priority rules, the shipper

could receive only the 100 MMBtus of

transportation represented by the firm

primary contract. However, permitting

the shipper to choose how to assign

those 100 MMBtus among its contracts

does not upset the transportation

priority rules. The shipper still would

receive only the 100 MMBtus

represented by its firm primary contract

even if it allocated gas to its secondary

capacity release contract. If the shipper

had nominated no primary firm

transportation in this example, it would

receive no transportation.

Since the business practices standards

already require the pipelines to honor

shipper rankings, no new standards are

necessary. GISB and the industry should

work on dataset changes, if necessary, to

permit cross-contract ranking. Such

standards should be filed by March 31,

1998 along with the title transfer

tracking standards.

2. Multi-Tiered Allocations (Disputed

Standard No. 29)

Disputed Standard No. 28 would

require pipelines to permit all owners of

gas to submit a pre-determined

allocation. A pre-determined allocation

is a set of instructions by owners of gas

as to how gas should be allocated among

amongst them when the actual volumes

do not match with the scheduled

volumes. A pre-determined allocation is

not necessary if the pipeline has an

OBA in effect at a transfer point.86 The

standards currently require pipelines to

accept one tier of allocations from the

upstream or downstream custody

transfer party.87 The standard data

elements accommodate multi-tiered

allocations, but pipelines are not

required to accept or support such

allocations.88 The dispute is whether

pipelines should be required to support

multi-tiered allocations from all owners

of gas, including the wellhead operator

and each producer owner.

Those supporting multi-tiered

allocations contend that they fit well

with title transfers occurring at the

wellhead.89 The pipelines generally

maintain that multi-tiered allocations

are merely another aspect of title

transfer tracking and contend that they

should not be required to perform such

accounting for transactions not

occurring on their systems.90

The current regulations give those

parties connecting with a pipeline the

right to determine how gas is to be

allocated at the interconnection with the

pipeline system. The Commission fails

to see why this right needs to be

extended so that pipelines become

responsible for maintaining the

accounting records for allocations

occurring at the well-head or at

interconnections not affecting the

pipeline. The request for pipelines to

accept multi-tiered allocations appears

to be just another aspect of the request

for the pipelines to track all title

transfers, and, as discussed above, the

Commission does not view title transfer

tracking as the responsibility of the

pipelines. The GISB task force has

recognized that accounting for multitiered allocations is another aspect of

title transfer tracking,91 and GISB

should continue to work on standards

that will allow such allocations to be

performed by third-parties.

3. Paper Pooling (Disputed Standard

Nos. 38A, 38B, 40B)

The disputed standards would require

pipelines to establish so-called ‘‘paper

pools’’ in zones, segments, or rate areas

where shippers can deliver gas without

an additional transportation charge. The

disputed standards also would require

allocation of imbalances to the pooler or

the pooling agreement.

Pooling refers to the aggregation of gas

from multiple physical or logical points

to a single physical or logical point.92

The current standards require that

shippers be able to both deliver gas from

receipt points into at least one pool and

receive quantities at a delivery point

from at least one pool.93

Those supporting paper pooling

contend that aggregation of gas supplies

is necessary for the gas market to work

efficiently, although they do not explain

why paper pooling is absolutely

necessary to achieve this efficiency.94

The further contend that pooling is

necessary to permit pool to pool

transfers. The pipelines maintain that

the requests for additional pooling

standards are another aspect of the

request that pipelines provide title

transfer tracking services.95

The existing standards recognize the

benefits of pooling and the pipelines are

required to provide at least one pool for

both receipt and deliveries of gas. Those

advocating paper pooling standards

have not provided a sufficient rationale

for these standards at this time. Some

pipelines currently offer paper pools,

while others offer physical pooling in

which shippers may have to pay a

transportation charge to move gas into

the pool. When a pool exists in a rate

zone, the charge for shipment in that

zone must be incurred either for

shipment to the pool or shipment out of

the pool. The marketers and producers

advocating paper pooling do not

provide sufficient justification for

imposing the transportation charge on

the outbound transportation in all

situations. Moreover, to some extent, the

argument for paper pooling is connected

to title transfer tracking, because those

proposing the use of paper pools want

to use pool to pool transfers as a way of

transferring title. But, as discussed

above, the Commission is not requiring

pipelines to offer title transfer tracking

service, so there is little reason to

require all pipelines to permit paper

pooling at this time.

4. Fuel Reimbursement Standards

(Disputed Standard Nos. 44, 49A, 50A,

51A, 54B, 55, 56B, 57B, 58, 59B, 60–65,

66B, 67, 95A)

The current standards have simplified

and made more uniform the process of

providing in-kind fuel reimbursement

for compressor fuel.96 These standards

provide, in part, that pipelines must

adhere to a standard method for

calculating fuel, provide fuel

reimbursement percentages at the

beginning of the month, not reject

nominations for fuel due to differences

of less than 5 Dth, and provide a fuel
61472 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

97 18 CFR 284.10(b)(1)(i), Nominations Related

Standards 1.3.16, 13.3.28 through 1.3.30.

98See transcript of December 13, 1996 technical

conference at 58.

99See Comments of Columbia Gas/Columbia Gulf,

at 7 (February 21, 1997); INGAA, at 27 (February

21, 1997); Enron Interstate Pipelines, at 25

(February 21, 1997); Koch, at 17 (February 21,

1997); Viking, at 4 (February 21, 1997); Williston

Basin, at 5 (February 21, 1997).

100Transcript of December 12, 1996 technical

conference at 243.

101See Algonquin Gas Transmission Company, 63

FERC ¶ 61,188, at 62,374 (1993); Texas Eastern

Transmission Corporation, 63 FERC ¶ 61,100, at

61,486 (1993); Transcontinental Gas Pipe Line

Corporation, 55 FERC ¶ 61,446, at 62,369 (1991).

102See Texas Eastern, supra note 101, supra.

matrix for receipt and delivery point

combinations.97

The disputed standards would further

standardize in-kind fuel reimbursement

by requiring that pipelines make fuel

rate changes prospectively only, that

pipelines can change fuel rates only on

six month intervals, and that pipelines

will have to true-up fuel rates to actuals

periodically and on a prospective basis.

The disputed standards also cover a

number of alternatives to in-kind fuel

reimbursement, such as fuel cash-out,

negotiated sales, and cost of service. At

the December 12–13, 1996 technical

conference, it was not clear whether

shippers wanted to mandate that

pipelines provide an alternative to inkind fuel reimbursement or whether

they simply wanted standards for these

alternatives so that if pipelines choose

to offer an alternative, the shippers

would not be faced with different

implementation methods.98 Some

marketers, such as NGC, also want to

ensure that they are able to compete

with pipelines in providing fuel service.

Pipelines oppose additional

standardization of fuel reimbursement.99

The pipelines maintain that they should

not be required to reenter the merchant

function to buy gas in order to provide

an alternative to in-kind fuel

reimbursement. Such a requirement,

they assert, reverses the unbundling

mandate of Order No. 636. They further

contend that alternatives to in-kind fuel

reimbursement are not yet in

widespread use and that standardization

of a new service will prevent innovation

and creativity in the early stages of

development.

In the Commission’s view, the case for

including these additional fuel

reimbursement standards has not been

made at this time. With respect to inkind fuel reimbursement, there appears

to be no need to limit pipelines to two

fuel reimbursement changes per year, as

the disputed standard would provide.

Pipelines may have a need to file for

further changes, and can file to

implement such changes when

necessary under section 4 of the Natural

Gas Act. The current standard requiring

pipelines to provide fuel reimbursement

percentages at the beginning of the

month provides sufficient notice for

shippers to obtain the correct fuel

percentages and update their computers

for all pipelines on a set schedule.

The Commission also agrees with the

pipelines that standardizing alternatives

to in-kind fuel reimbursement is

premature at this point, since such

alternatives are not in widespread use.

Nor is it clear why creating standards

for cash out mechanisms is more

important for fuel reimbursement than

for the other areas, such as penalties, in

which cash outs also are employed. It

may be worthwhile for the Commission

to reexamine standardization of cashout

mechanisms as part of a more

comprehensive examination of penalty

structures, but that is beyond the scope

of this proceeding.

The Commission, however, finds that

pipelines, whether or not they provide

fuel service, should permit shippers that

do not want to calculate fuel to contract

with third-party agents to provide the

required fuel at the necessary points.

The pipelines must accept fuel

nominations from these third-party

providers. For those pipelines that do

provide fuel service, they must allow

third-parties to provide fuel on a nondiscriminatory basis.

5. Penalty Determination (Disputed

Standard No. 88A)

Disputed Standard No. 88A would

provide that imbalance penalties would

be based on the lesser of operationally

provided data or actual data. There is

some dispute over the meaning of the

standard. While the standard seems to

contemplate that imbalance penalties

would be calculated based on the lower

of the two figures, Natural Gas

Clearinghouse contended at the

technical conference that the standard

only applied to the determination of the

penalty category, not to the volumes

against which the penalty would be

applied.100 For instance, under Natural

Gas Clearinghouse’s reading of the

standard, if the reported imbalance put

the shipper in the 10% penalty category,

the shipper would pay the penalty

associated with that category on the

actual imbalance amount, even if the

actual imbalance would have placed the

shipper in a higher penalty category.

Pipelines contend cash-outs for

imbalances need to be dealt with on a

case specific basis. Enron Interstate

Pipelines, for instance, argues that the

standard is too broad and fails to

recognize that in many cases, the

shipper or point operator, and not the

pipeline, is the party with better access

to the data. It maintains, for instance,

that pipelines and shippers may agree in

settlements to forgo the expense of

installing electronic flow measurement

devices, which would limit the accuracy

of the pipeline’s operational

measurements.

As a general principle, the

Commission’s policy is to determine the

penalty category by the data provided to

the shipper, particularly when the

pipeline is doing the measurement.101 A

shipper should be responsible only for

penalty category it reasonably could

have anticipated based on the

information provided by the pipeline.

The cash out price, however, should be

based on the actual imbalance

incurred.102

The Commission does not find that a

generic standard is necessary on this

issue. There appears no compelling

reason to insist on uniformity across all

pipelines on this issue. As the pipelines

point, there may be some circumstances

in which the policy is not reasonable

and those issues are best handled on a

case-by-case basis.

III. Information Collection Statement

The following collections of

information contained in this proposed

rule have been submitted to the Office

of Management and Budget (OMB) for

review under Section 3507(d) of the

Paperwork Reduction Act of 1995, 44

U.S.C. 3507(d). The Commission solicits

comments on the Commission’s need for

this information, whether the

information will have practical utility,

the accuracy of the provided burden

estimates, ways to enhance the quality,

utility, and clarity of the information to

be collected, and any suggested methods

for minimizing respondents’ burden,

including the use of automated

information techniques. The following

burden estimates include the costs of

complying with GISB’s Version 1.2

standards and the Commission’s

proposed regulations regarding intraday nominations, the use of OBAs at

pipeline interconnects, the trading of

imbalances, and communications using

the Internet. The proposed requirements

regarding communication over the

Internet build upon the computer

infrastructure pipelines have already

created to comply with Order No. 587.

The burden estimates are primarily

related to start-up and will not be ongoing costs except for the recordkeeping

requirement.
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61473

103 5 CFR 1320.11.

104Order No. 486, Regulations Implementing the

National Environmental Policy Act, 52 FR 47897

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

1986–1990 ¶30,783 (1987).

105 18 CFR 380.4.

106See 18 CFR 180.4(a)(2)(ii), 380.4(a)(5),

3804.(a)(27).

107 5 U.S.C. 601–612.

ESTIMATED ANNUAL BURDEN

Data collection No. of

respondents

No. of responses per

respondent

Hours per

response

Total annual

hours

FERC–545 ........................................................................................................ 93 1 58 5,394

FERC–549C ..................................................................................................... 93 1 4,483 416,919

Total Annual Hours for Collection

(Reporting + Recordkeeping, (if

appropriate)) = 422,313.

Information Collection Costs: The

Commission seeks comments on the

costs to comply with these

requirements. It has projected the

average annualized cost for the total of

93 respondents to be the following:

FERC–545 FERC–549C Totals

Annualized Capital/Startup Costs .................................................................................... $284,303 $21,641,327 $21,192,630

Annualized Costs (Operations & Maintenance) ............................................................... 0 333,321 333,321

Total Annualized Costs ............................................................................................. 284,303 21,974,648 22,258,951

The Office of Management and

Budget’s (OMB) regulations 103 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–545, Gas Pipeline Rates:

Rate Change (Non-Formal); FERC–549C,

Standards for Business Practices of

Interstate Natural Gas Pipelines.

Action: Proposed collections.

OMB Control No: 1902–0154, 1902–

0174.

Respondents: Business or other for

profit, (Interstate natural gas pipelines;

(Not applicable to small business)).

Frequency of Responses: One-time

implementation (business procedures,

capital/start-up).

Necessity of the information: This

rule, if implemented, proposes to revise

the requirements contained in 18 CFR

284.10. These requirements would

further the process of standardizing

business practices and electronic

communications with interstate

pipelines begun by the Commission in

Order No. 587. Through the adoption of

the regulations proposed in this NOPR,

the Commission is seeking to continue

to the process of establishing a more

efficient and integrated interstate

pipeline grid. By requiring adherence to

these regulations on an industry-wide

basis, the Commission seeks to reduce

variations in pipeline business practices

and communication protocols,

permitting pipelines and their

customers to more efficiently obtain

information from and transact business

across multiple pipelines.

The information collection

requirements of this proposed rule will

be reported directly to the industry

users. The implementation of these data

requirements will help the Commission

carry out its responsibilities under the

Natural Gas Act to monitor activities of

the natural gas industry to ensure its

competitiveness and to assure the

improved efficiency of industry’s

operations. The Commission’s Office of

Pipeline Regulation will use the data in

rate proceedings to review rate and tariff

changes by natural gas companies for

the transportation of gas, for general

industry oversight, and to supplement

the documentation used during the

Commission’s audit process.

Internal Review: The Commission has

reviewed the requirements pertaining to

business practices and electronic

communication with natural gas

interstate pipelines and made a

determination that the proposed

revisions are necessary to establish a

more efficient and integrated pipeline

grid. These requirements conform to the

Commission’s plan for efficient

information collection, communication,

and management within the natural gas

industry. The Commission has assured

itself, by means of its internal review,

that there is specific, objective support

for the burden estimates associated with

the information requirements.

Interested persons may obtain

information on the reporting

requirements by contacting the

following: Federal Energy Regulatory

Commission, 88 First Street, N.E.,

Washington, D.C. 20426, (Attention:

Michael Miller, Division of Information

Services, Phone: (202) 208–1415, fax:

(202) 273–0873,

email:mmiller@ferc.fed.us)

Comments concerning the collection

of information(s) and the associated

burden estimate(s), should be sent to the

contact listed above and to the Office of

Management and Budget, Office of

Information and Regulatory Affairs,

Washington, D.C. 20503 [Attention:

Desk Officer for the Federal Energy

Regulatory Commission, phone: (202)

395–3087, fax: (202) 395–7285]

IV. Environmental Analysis

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.104 The Commission has

categorically excluded certain actions

from these requirements as not having a

significant effect on the human

environment.105 The actions proposed

to be taken here fall within categorical

exclusions in the Commission’s

regulations for rules that are clarifying,

corrective, or procedural, for

information gathering, analysis, and

dissemination, and for sales, exchange,

and transportation of natural gas that

requires no construction of facilities.106

Therefore, an environmental assessment

is unnecessary and has not been

prepared in this rulemaking.

V. Regulatory Flexibility Act

Certification

The Regulatory Flexibility Act of 1980

(RFA) 107 generally requires a

description and analysis of final rules

that will have significant economic

impact on a substantial number of small

entities. The proposed regulations

would impose requirements only on

interstate pipelines, which are not small

businesses, and, these requirements are,

in fact, designed to reduce the difficulty
61474 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

of dealing with pipelines by all

customers, including small businesses.

Accordingly, pursuant to section 605(b)

of the RFA, the Commission hereby

certifies that the regulations proposed

herein will not have a significant

adverse impact on a substantial number

of small entities.

VI. Comment Procedures

The Commission invites interested

persons to submit written comments on

the matters and issues proposed in this

notice to be adopted, including any

related matters or alternative proposals

that commenters may wish to discuss.

An original and 14 copies of comments

must be filed with the Commission no

later than [insert date 30 days after

publication in the Federal Register].

Comments should be submitted to the

Office of the Secretary, Federal Energy

Regulatory Commission, 888 First

Street, NE, Washington, DC 20426, and

should refer to Docket No. RM96–1–007.

All written comments will be placed in

the Commission’s public files and will

be available for inspection in the

Commission’s Public Reference Room at

888 First Street, NE, Washington, DC

20426, during regular business hours.

Additionally, comments should be

submitted electronically. Commenters

are encouraged to file comments using

Internet E-Mail. Comments should be

submitted through the Internet by EMail to comment.rm@ferc.fed.us in the

following format: on the subject line,

specify Docket No. RM96–1–007; in the

body of the E-Mail message, specify the

name of the filing entity and the name,

telephone number and E-Mail address of

a contact person; and attach the

comment in WordPerfect’’ 6.1 or lower

format or in ASCII format as an

attachment to the E-Mail message. The

Commission will send a reply to the EMail to acknowledge receipt. Questions

or comments on electronic filing using

Internet E-Mail should be directed to

Marvin Rosenberg at 202-208–1283, EMail address

marvin.rosenberg@ferc.fed.us.

Commenters also can submit

comments on computer diskette in

WordPerfect 6.1 or lower format or in

ASCII format, with the name of the filer

and Docket No. RM96–1–007 on the

outside of the diskette.

List of Subjects in 18 CFR Part 284

Continental shelf, Natural gas,

Reporting and recordkeeping

requirements; Incorporation by

reference.

By direction of the Commission.

Lois D. Cashell,

Secretary.

In consideration of the foregoing, the

Commission proposes to amend Part

284, Chapter I, Title 18, Code of Federal

Regulations, as set forth below.

PART 284—CERTAIN SALES AND

TRANSPORTATION OF NATURAL GAS

UNDER THE NATURAL GAS POLICY

ACT OF 1978 AND RELATED

AUTHORITIES

1. The authority citation for Part 284

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C 7101–7532; 43 U.S.C 1331–

1356.

2. In section 284.10, paragraph (a)(6)

is added and paragraph (b) is revised to

read as follows:

§ 284.10 Standards for Pipeline Business

Operations and Communications.

(a) * * *

(6) A pipeline’s obligation to provide

information pursuant to this paragraph

will terminate when all relevant

information is provided pursuant to

paragraph (b)(2)(iii)(A) of this section.

(b) Business Practices and Electronic

Communication Standards. (1)(i) An

interstate pipeline that transports gas

under subparts B or G of this part must

comply with the following business

practice and electronic communication

standards promulgated by the Gas

Industry Standards Board, which are

incorporated herein by reference:

(A) Nominations Related Standards

(Version 1.2, July 31, 1997), with the

exception of Standard 1.3.32;

(B) Flowing Gas Related Standards

(Version 1.2, July 31, 1997), with the

exception of Standards 2.3.29 and

2.3.30;

(C) Invoicing Related Standards

(Version 1.2, July 31, 1997);

(D) Electronic Delivery Mechanism

Related Standards (Version 1.2, July 31,

1997), with the exception of Standard

4.3.4; and

(E) Capacity Release Related

Standards (Version 1.2, July 31, 1997).

(ii) This incorporation by reference

was approved by the Director of the

Federal Register in accordance with 5

U.S.C. 552(a) and 1 CFR Part 51. Copies

of these standards may be obtained from

the Gas Industry Standards Board, 1100

Louisiana, Suite 4925, Houston, TX

77002. Copies may be inspected at the

Federal Energy Regulatory Commission,

Public Reference and Files Maintenance

Branch, 888 First Street NE.,

Washington, DC 20426 and at the Office

of the Federal Register, 800 North

Capitol St. NW., Suite 700, Washington,

DC.

(2) An interstate pipeline that

transports gas under subparts B or G of

this part must comply with the

following requirements.

(i) Nominations. A pipeline must

accord an intra-day nomination

submitted by a firm shipper scheduling

priority over nominated and scheduled

volumes for interruptible shippers. An

interruptible shipper must be provided

with notice that its scheduled volumes

are to be reduced.

(ii) Flowing Gas. (A) Operational

Balancing Agreements. A pipeline must

enter into Operational Balancing

Agreements at all points of

interconnection between its system and

the system of another interstate or

intrastate pipeline.

(B) Netting and Trading of

Imbalances. A pipeline must establish

provisions permitting shippers and their

agents to offset imbalances accruing on

different contracts held by the shipper

with the pipeline and to trade

imbalances with other shippers where

such imbalances have similar

operational impact on the pipeline’s

system.

(iii) Communication Protocols. (A)(1)

All electronic information provided and

electronic transactions conducted by a

pipeline must be provided on the public

Internet. A pipeline must provide, upon

request, private network connections

using internet tools, internet directory

services, and internet communication

protocols and must provide these

networks with non-discriminatory

access to all electronic information. A

pipeline may charge a reasonable fee to

recover the costs of providing such an

interconnection.

(2) A pipeline must implement this

requirement no later than June 1, 1999.

(B) A pipeline must comply with the

following requirements for documents

constituting public information posted

on the pipeline web site:

(1) The documents must be accessible

to the public over the public Internet

using commercially available web

browsers, without imposition of a

password or other access requirement;

(2) Users must be able to search an

entire document online for selected

words and users must be able to copy

selected portions of the documents; and

(3) Documents on the web site should

be directly downloadable without the

need for users to first view the

documents on the web site.

(C) A pipeline must provide the same

content for all information regardless of

the electronic format in which it is

provided. If a pipeline uses a numeric

or other designation to represent
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules 61475

information, an electronic crossreference table between the numeric or

other designation and the information

represented must be available to users,

at a cost not to exceed reasonable

shipping and handling.

(D) A pipeline must maintain for a

period of five years electronic records of

the information displayed and

transactions conducted electronically

under this section. The pipeline must

make this archived information

available in electronic form for a

reasonable fee.

(E) A pipeline must post operational

flow orders, critical periods, and critical

notices on their Internet web site and

must notify affected parties of such

notices in either of the following ways

to be chosen by the affected party:

Internet E-Mail or direct notification to

the parties’ Internet URL address.

Note—The following appendices will

not appear in the Code of Federal

Regulations.

APPENDIX A.—COMMENTS ON DECEMBER 12–13, 1996, TECHNICAL CONFERENCE

Commenter Abbreviation

Altra Energy Technologies, L.L.C. .................................................................................................................... Altra.

American Gas Association ................................................................................................................................ AGA.

ANR Pipeline Company and Colorado Interstate Gas Company ..................................................................... ANR/CIG.

Arizona Public Service Company and Salt River Project Agricultural Improvement and Power District ......... APS/SRP.

The Brooklyn Union Gas Company .................................................................................................................. Brooklyn Union.

Columbia Gas Transmission Corporation and Columbia Gulf Transmission Corporation ............................... Columbia Gas/Columbia Gulf.

El Paso Natural Gas Company ......................................................................................................................... El Paso.

Energy Managers Association .......................................................................................................................... EMA.

Enron Capital & Trade Resources Corporation ................................................................................................ Enron Capital and Trade.

Enron Interstate Pipelines (Northern Natural Gas Company, Transwestern Pipeline Company, Florida Gas

Transmission Company, and Black Marlin Pipeline Company).

Enron Interstate Pipelines.

Florida Power & Light Company ....................................................................................................................... FPL.

Interstate Natural Gas Association of America ................................................................................................. INGAA.

Koch Gateway Pipeline Company .................................................................................................................... Koch.

National Fuel Gas Distribution Corporation ...................................................................................................... National Fuel Distribution.

Natural Gas Clearinghouse ............................................................................................................................... NGC.

Natural Gas Pipeline Company of America ...................................................................................................... NGPL.

Natural Gas Supply Association ....................................................................................................................... NGSA.

NorAm Gas Transmission Company and Mississippi River Transmission Corporation ................................... NGT/MRT.

Northwest Industrial Gas Users ........................................................................................................................ NWIGU.

NrG Information Services Inc. ........................................................................................................................... NrG.

Pacific Gas and Electric Company ................................................................................................................... PG&E.

The Peoples Gas Light and Coke Company and North Shore Gas Company ................................................ Peoples/North Shore.

Producers Energy Marketing, LLC and Independent Petroleum Association of America ................................ ProEnergy/IPAA.

TransCapacity Limited Partnership ................................................................................................................... TransCapacity.

Viking Gas Transmission Company .................................................................................................................. Viking.

Williston Basin Interstate Pipeline Company .................................................................................................... Williston.

Appendix B.—Proposed GISB

Standards Defeated By One Industry

Segment

Operational Flow Orders

Proposed Standard No. 23 Declaration of

operational flow orders, critical periods, and/

or critical notices should be transmitted to

the affected trading parties. Trading parties

should keep the transportation service

providers apprised of the specific locations

for this transmittal. These locations are 24

hour phone, fax, and/or pager. The

communication should contain, by reference,

specific tariff provision(s) that is (are)

applicable to each situation being declared.

Gas Package Rankings

Proposed Standard No. 28B Applicable

rankings should be permitted across

contracts for the same service requester and

location, when not in conflict with tariffbased rules.

Multi-Tiered Allocations

Proposed Standard No. 29 All owners of

gas submitting nominations or confirmations

should be able to submit a predetermined

allocation (PDA). Gas should be allocated

based on the PDA submitted by the owner.

If a PDA is not submitted, the service

provider’s default should be used.

Pooling

Proposed Standard No. 38A To the extent

operationally compatible with Transportation

Service Provider operations and not to their

economic detriment, paper pool(s) should be

created on each pipeline. Pools should be

created so that gas which is already in the

zone, segment or rate area (as applicable)

where the pool is located can be placed in

the pool without transportation.

Proposed Standard No. 38B To the extent

operationally compatible with Transportation

Service Provider operations and not to their

economic detriment, logical pool(s) should

be created on each pipeline.

Proposed Standard No. 40B Any

differences between a Aggregator’s (pooler’s)

scheduled quantities and allocated quantities

at locations for its pool should be allocated

to the pooler, or the pooling agreement.

Aggregators (poolers) should be responsible

for managing the imbalances created by

variances with their scheduled quantities.

Fuel Reimbursement

Proposed Standard No. 44 Defining

standards for administering the following

fuel reimbursement options: in-kind, fuel

cash-out, negotiated sales and cost of service

does not preclude service providers from

offering other options. The choice of fuel

reimbursement method(s) is subject to

regulatory procedures, where applicable.

Proposed Standard No. 49A For in-kind

fuel reimbursement methods, fuel rates can

change on six month intervals, on April 1

and October 1.

Proposed Standard No. 50A For in-kind

fuel reimbursement and except where preSeptember 30, 1996 settlements provide

otherwise, fuel rates will have a true-up to

actual fuel periodically on a prospective

basis.

Proposed Standard No. 51A For in-kind

fuel reimbursement methods, fuel rates

changes should be made prospectively.

Proposed Standard No. 54B Other than

situations where regulatory agencies require

cost of service to be the only option

provided, the rate for cost of service provided

fuel should be stated separately.

Proposed Standard No. 55 For cost of

service as the fuel reimbursement method,

the rate for cost of service provided fuel

should be collected as a variable charge.

Proposed Standard No. 56B No party

should be advantaged or disadvantaged in

the offering or use of a service by virtue of

any costs to provide that service being

administered via regulatory proceedings for

unassociated services.
61476 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Proposed Rules

1 In this document, the agency is citing relevant

material to baking powder, soda, and pectin that

originally appeared in Ref. 2 to the reproposal on

serving sizes that appeared in the Federal Register

of November 27, 1991 (56 FR 60394), and Ref. 66

to the final rule on serving sizes that appeared in

the Federal Register of January 6, 1993 (58 FR 2229

at 2296). (See Docket No. 90N–0165.) For the

convenience of the reader the materials are

contained in ‘‘Ref. 1’’ of this document.

Proposed Standard No. 57B Fuel

encompasses, but is not limited to, the energy

consumed in providing the transportation

service (i.e. natural gas, fuel oil, propane,

electricity) and lost and unaccounted for gas.

Proposed Standard No. 58 For cash-out as

the fuel reimbursement method, Service

Requester should notify Service Provider of

its election to exercise the cash-out option for

fuel one day prior to the close of the NYMEX

natural gas futures trading for the next

calendar month.

Proposed Standard No. 59B Where cashout, as a fuel reimbursement method, is

offered as an option by a Service Provider,

the Service Requester should notify Service

Provider of its election to exercise the cashout option for fuel one day prior to the close

of the NYMEX natural gas futures trading for

the next calendar month.

Proposed Standard No. 60 Fuel Cash-out

options should be exercised for a minimum

of one calendar month.

Proposed Standard No. 61 Fuel Cash-out

quantities should be determined by

multiplying allocated receipts by fuel

percentages as stated in the tariff or

applicable contract(s).

Proposed Standard No. 62 Fuel Cash-out

price should be an established commodity

market price (i.e. index or competitive bid)

in rate area, zone or segment of the activity,

or be based on the same fuel cash-out index

used for imbalances.

Proposed Standard No. 63 The fuel cashout value (fuel quantities times fuel cash-out

price) should be separately stated on the

invoice for the related activity.

Proposed Standard No. 64 If fuel cash-out

price is index-based, the determination of the

applicable indices should based on the

approved tariff provisions or applicable

contract(s).

Proposed Standard No. 65 If fuel cash-out

price is other than index-based, the Service

Provider should post that price three days

prior to the close of the NYMEX natural gas

futures trading for the next calendar month.

Proposed Standard No. 66B There should

be no cross-subsidization by Service

Providers of fuel provision service(s) by

transportation service(s) when both fuel

provision services and transportation

services are provided by the service provider.

Proposed Standard No. 67 Negotiated

fuel gas sales are sales of gas by the service

provider for the use of the service requester

as fuel for its transportation transaction. The

price and terms and conditions applicable to

the sales transaction should be negotiated

between the transportation service provider

and the service requester.

Proposed Standard No. 95A If negotiated

fuel gas sales are offered, all transportation

terms, conditions applicable to fuel sales

service should be specified in the

transportation service providers tariff, if

applicable.

Intraday Nominations

Proposed Standard No. 77A Intraday

nominations should be allowed at all

nominatable receipt and delivery points and

at pooling points.

OBAs and Imbalances

Proposed Standard No. 85A All

transportation service providers who have

sufficient system storage should allow

service requesters (in this instance, service

requester excludes agents) to net similarly

situated imbalances on and across contracts

with the transportation service provider

among themselves. In this context, ‘‘similarly

situated imbalances’’ includes contracts with

the substantially similar financial and

operational implications to the transportation

service provider.

Proposed Standard No. 88A Imbalance

penalties should be based on the lesser of the

imbalance penalties based on operationally

provided measurement/allocated data and

actual measurement/allocated data.

[FR Doc. 97–30233 Filed 11–17–97; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 101

[Docket No. 94P–0240]

Food Labeling; Serving Sizes;

Reference Amount for Baking Powder,

Baking Soda, Pectin

AGENCY: Food and Drug Administration,

HHS.

ACTION: Proposed rule.

SUMMARY: The Food and Drug

Administration (FDA) is proposing to

amend the nutrition labeling regulations

to change the reference amount

customarily consumed per eating

occasion for the food category ‘‘baking

powder, baking soda, pectin’’ from 1

gram (g) to 0.6 g to more accurately

reflect the amount of these products that

is customarily consumed. The agency is

also proposing to include 1/8 teaspoon

(tsp) as an additional allowable

household measure because it is a

common household measure available

to consumers. The agency is proposing

this action in response to a petition filed

by Arm & Hammer.

DATES: Submit written comments by

February 2, 1998. See section IV of this

document for the proposed effective

date of a final rule based on this

document. Submit written comments on

the collection of information

requirements by December 18, 1997.

ADDRESSES: Submit written comments

to the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857.

Submit written comments on the

information collection requirements to

the Office of Information and Regulatory

Affairs, Office of Management and

Budget (OMB), New Executive Office

Bldg., 725 17th St. NW., rm. 10235,

Washington, DC 20503, ATTN: Desk

Officer for FDA.

FOR FURTHER INFORMATION CONTACT:

Ellen M. Anderson, Center for Food

Safety and Applied Nutrition (HFS–

165), Food and Drug Administration,

200 C St. SW., Washington, DC 20204,

202–205–5662.

SUPPLEMENTARY INFORMATION:

I. Background

In the Federal Register of July 19,

1990 (55 FR 29517), FDA proposed

standard serving sizes for 159 food

product categories based on the amount

of food commonly consumed per eating

occasion by infants, toddlers (children

under 4 years of age), and the general

population (persons 4 years of age or

older). FDA did not suggest any specific

serving size for baking soda, baking

powder, or pectin at that time.

On November 8, 1990, before FDA

issued a final rule on serving sizes,

Congress passed the Nutrition Labeling

and Education Act of 1990 (hereinafter

referred to as ‘‘the 1990 amendments’’).

Section 2a of the 1990 amendments

added section 403(q)(1)(A)(i) of the

Federal Food, Drug, and Cosmetic Act

(the act) (21 U.S.C. 343(q)(1)(A)(i)) to

require that virtually all foods under

FDA’s jurisdiction bear nutrition

information that is based on a serving

size which reflects the amount of food

that is customarily consumed and

which is expressed in a common

household measure that is appropriate

to the food. Section 2(b)(1)(B) of the

1990 amendments also directed FDA to

adopt regulations that establish

standards for defining serving sizes.

In response to the 1990 amendments,

among other actions, FDA issued a

reproposal on serving sizes (56 FR

60394, November 27, 1991) and asked

for comments on all proposed reference

amounts. In response to a notice of

public meeting, the agency received

suggestions recommending a serving

size of ‘‘1 tablespoon’’ for baking

powder, ‘‘1 teaspoon’’ for pectin, and no

recommendation for baking soda. No

consumption data were provided for

any of the three products (Ref. 1)1. In the