[Federal Register Volume 62, Number 46 (Monday, March 10, 1997)]
[Rules and Regulations]
[Pages 10684-10690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5786]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM96-1-004; Order No. 587-C]


Standards for Business Practices of Interstate Natural Gas 
Pipelines

Issued March 4, 1997.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission is amending its open 
access regulations by incorporating by reference standards promulgated 
by the Gas Industry Standards Board (GISB). These standards require 
interstate natural gas pipelines to publish specified information on 
Internet Web pages and to follow certain new and revised business 
practices procedures. These business practices standards supplement 
standards adopted by the Commission in Order No. 587. 61 FR 39053 (Jul. 
26, 1996).

DATES: This rule is effective April 9, 1997.
    Pipelines are to make pro forma tariff filings to implement the 
business practices standards by May 1, 1997. Implementation of the 
Internet Web page standards must take place by August 1, 1997, and the 
revised and new business practices standards by November 1, 1997.

ADDRESSES: Federal Energy Regulatory Commission, 888 First Street, 
N.E., Washington DC, 20426.

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.,

[[Page 10685]]

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, NE., Washington DC 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and 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 5.1 format. CIPS user 
assistance is available at 202-208-2474.
    CIPS is also available on the Internet through the Fed World 
system. Telnet software is required. To access CIPS via the Internet, 
point your browser to the URL address: http://www.fedworld.gov and 
select the ``Go to the FedWorld Telnet Site'' button. When your Telnet 
software connects you, log on to the FedWorld system, scroll down and 
select FedWorld by typing: 1 and at the command line and type: /go 
FERC. FedWorld may also be accessed by Telnet at the address 
fedworld.gov.
    Finally, 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 also located in the Public 
Reference Room at 888 First Street, N.E., Washington, DC 20426.

    Standards for Business Practices of Interstate Natural Gas 
Pipelines; Order No. 587-C--Final Rule.

Docket No. RM96-1-004

Issued March 4, 1997.
    The Federal Energy Regulatory Commission (Commission) is amending 
its open access regulations to adopt standards requiring interstate 
natural gas pipelines to publish certain information on Internet Web 
Pages and to implement new business practice standards covering 
nominations and flowing gas. The regulations incorporate by reference 
standards promulgated by the Gas Industry Standards Board (GISB), a 
private standards organization devoted to developing standards 
representing a consensus of the interests in the natural gas industry.

I. Background

    In Order No. 587,<SUP>1 the Commission incorporated by reference 
consensus standards developed by GISB covering certain industry 
business practices--Nominations, Flowing Gas, Invoicing, and Capacity 
Release--as well as datasets that detailed the data requirements needed 
to conduct business transactions in these areas. On November 13, 1996, 
the Commission issued a Notice of Proposed Rulemaking (NOPR) <SUP>2 
proposing to adopt additional standards submitted by GISB (on September 
30, 1996) in three general areas: communication standards for 
conducting standardized business transactions across the Internet, 
standards for providing other information on Internet Web pages, and 
five revisions to existing business practices standards and 25 new 
principles, definitions, and standards covering nominations and flowing 
gas. The Commission already has issued, on January 30, 1997, a final 
rule incorporating by reference the standards for conducting the 
business transactions over the Internet. With respect to the remaining 
two areas--publication of information on Internet Web pages and the 
supplemental business practices standards, the NOPR proposed to follow 
GISB's proposed schedule of a final rule to be issued in March 1997, 
with implementation of the additional Internet standards in August of 
1997 and pipeline tariff filings for the business practices standards 
to be made in May, June, and July of 1997, with implementation in 
November 1997.
---------------------------------------------------------------------------

    \1\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (Jul. 26, 1996), III FERC 
Stats. & Regs. Regulations Preambles para. 31,038 (Jul. 17, 1996), 
reh'g denied, Order No. 587-A, 61 FR 55208 (Oct. 25, 1996), 77 FERC 
para. 61,061 (Oct. 21, 1996), Order No. 587-B, 62 FR 5521 (Feb. 6, 
1997), 78 FERC para. 61076 (1997).
    \2\ 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 para. 32,521 
(Nov. 13, 1996).
---------------------------------------------------------------------------

    In addition, the NOPR gave notice of a staff technical conference 
that would be convened to discuss the future direction of 
standardization and certain issues that had been disputed during the 
GISB meetings. The technical conference was held on December 12 and 13, 
1996, with comments on the conference to be submitted by February 21, 
1997.
    Fifteen comments were filed on the NOPR from Natural Gas Supply 
Association, Williams Interstate Natural Gas System (WINGS), Burlington 
Resources Oil & Gas Company (Burlington Resources), Natural Gas 
Clearinghouse, Conoco, Inc., and Vastar Gas Marketing Inc.(filing 
jointly) (NGC/Conoco/Vastar), Pacific Gas and Electric Company (PG&E), 
Williston Basin Interstate Pipeline Company (Williston Basin), Altra 
Energy Technologies, L.L.C. (Altra), Energy Managers Association 
(Energy Managers), Gas Industry Standards Board (GISB), NorAm Gas 
Transmission Company and Mississippi River Transmission Corporation 
(filing jointly) (NorAm), ANR Pipeline Company and Colorado Interstate 
Gas Pipeline Company (filing jointly), Enron Capital & Trade Resources 
Corp. (Enron Capital & Trade Resources), TransCapcity Limited 
Partnership (limited to technical conference issues), Southern 
California Edison Company (SoCal Edison), and the PanEnergy Companies. 
On February 21, 1997, comments on the technical conference were filed.

II. Discussion

    The Commission is incorporating by reference the GISB standards for 
providing information on Internet Web pages, with the exception of 
Standard 4.3.5, which provides that the documents posted on pipeline 
Web pages will be downloadable in a GISB-specified electronic 
structure. The Commission is not adopting this standard because GISB 
has failed to approve the requisite electronic structure.
    The Commission is incorporating by reference the revisions to and 
the new business practices principles, definitions, and standards, with 
the exception of three standards, Nomination Standard 1.3.32 dealing 
with intra-day nominations and Flowing Gas Standards 2.3.29 and 2.3.30 
dealing the obligation of pipelines to enter into operational balancing 
agreements (OBAs) and the ability of shippers to net imbalances across 
contracts, respectively. While the Commission agrees that standards are 
needed in these areas, it is not accepting these standards at this time 
because the scope of the pipelines'' obligations to comply are not 
clear.
    The Commission also is making one change to the schedule proposed 
by GISB. Rather than staggered compliance filings in May, June, and 
July, all pipelines must file their pro forma tariff sheets on May 1, 
1997. Pipelines are

[[Page 10686]]

required to implement the requirements to publish information on Web 
pages by August 1, 1997 and to implement the business practices 
standards by November 1, 1997.
    NGC/Conoco/Vastar and Energy Managers contend that GISB was unable 
to satisfactorily resolve issues in several hotly disputed areas, and 
they ask the Commission to act now to adopt standards in these areas 
that they have proposed.<SUP>3 These suggested standards are all within 
the areas discussed at the December 12 and 13, 1996 technical 
conference on which comments were filed on February 21, 1997.
---------------------------------------------------------------------------

    \3\ The proposed standards involve pooling, title transfer 
tracking, ranking of gas packages, predetermined allocations, intra-
day nominations, operation flow orders, fuel sales, and imbalance 
trading.
---------------------------------------------------------------------------

    The Commission, therefore, will not act in these areas until it has 
an opportunity to review the technical conference comments. The 
Commission, however, is firmly committed to standardizing those 
elements of pipeline service that will increase the efficiency of the 
interstate pipeline grid as well as the competitive position of the 
natural gas industry as a whole. As the Commission recognized in Order 
No. 587, standardization is an on-going process, with new standards 
being developed and refinements and enhancements made to existing 
standards as experience is gained.<SUP>4
---------------------------------------------------------------------------

    \4\ Order No. 587, 61 FR at 39057, III FERC Stats. & Regs. 
Preambles at 30,060.
---------------------------------------------------------------------------

    The Commission recognizes that GISB too is continuing to consider 
revisions and new standards in some of the same areas.<SUP>5 If 
progress in developing standards is impeded by intractable disputes 
over policy issues, the Commission will resolve these policy issues to 
expedite the process. The Commission urges GISB to identify such issues 
as soon as they are manifest. Once the Commission makes a 
determination, GISB can then develop the technical standards needed for 
implementation.
---------------------------------------------------------------------------

    \5\ For instance, during the technical conference, participants 
pointed out that the disputed issues relating to pooling, title 
transfer tracking, and gas package rankings, are part of a pilot 
test being conducted by GISB on title transfer tracking. Transcript 
of December 12, 1996 Conference, at 183. The results of this pilot 
test are due in September of 1997.
---------------------------------------------------------------------------

A. Posting of Information on Internet Web Pages

    GISB passed two standards relating to the posting of information on 
Internet Web pages. Standard 4.3.6 requires pipelines to establish a 
World Wide Web home page that provides the following information: 
notices (critical notices, operation notices, system-wide notices); 
Order No. 566 affiliated marketer information (affiliate allocation 
log, discount postings); operationally available and unsubscribed 
capacity; Index of Customers; and the pipeline's tariff. Standard 4.3.5 
requires that the documents maintained on the pipeline's designated Web 
site will be downloadable on demand in a GISB specified electronic 
structure. All commenters support these requirements.
    However, in the November 13, 1996 NOPR, the Commission stated that 
GISB needed to file the electronic structures referenced in Standard 
4.3.5 prior to the issuance of the final rule, so these structures 
could be included in the rule.<SUP>6 Since GISB has not yet approved 
these electronic structures, the Commission cannot adopt Standard 
4.3.5.
---------------------------------------------------------------------------

    \6\ 61 FR at 58793, IV FERC Stats. & Regs. Proposed Regulations 
at 33,259.
---------------------------------------------------------------------------

    The Commission will adopt Standard 4.3.6, since specification of 
the electronic structure for file downloads is not required for 
pipelines to implement this standard's requirement for publishing the 
specified information on Web pages. The ability to download 
information, however, is critical for customers who do not want to read 
the information on-line or who want the information in computer-
readable form. GISB, therefore, needs to adopt the required electronic 
structure quickly. A rapid determination will still enable the 
Commission to issue a final rule in time for the download structure to 
be implemented on August 1, 1997, at the same time as the requirement 
for publishing the information on Web pages.
    Williston Basin raises questions about the portion of Standard 
4.3.6 which states that pipelines should make all pertinent information 
and functions now performed or contained on the pipelines'' proprietary 
Electronic Bulletin Boards (EBBs) available in one mode of 
communication (either through the Internet or another technology) 
within a reasonable time after standards are developed for such 
functions. Williston Basin contends that, while EBB information is 
being transferred to the Internet, pipelines should not have to develop 
GISB-approved procedures for both the Internet and EBBs because to do 
so would be burdensome and cost prohibitive. Williston Basin also 
requests clarification of the terms ``pertinent EBB functions'' and a 
``reasonable amount of time,'' claiming that they do not provide 
pipelines with specific direction to implement the standards.
    Standard 4.3.6 applies only to providing information at pipeline 
Web sites. Thus, Williston Basin is not required by this standard to 
make any changes to its EBB procedures.<SUP>7 There is no need to 
interpret the terms referenced by Williston Basin. This portion of the 
standard is hortatory, establishing the consensus of the industry on 
the goals to be achieved. The standard requires no further 
implementation by the pipelines until additional standards are 
developed. Williston Basin will have the opportunity at that time to 
raise any concerns with implementation.
---------------------------------------------------------------------------

    \7\ Pipelines have to make changes to their EBBs when required 
by other standards. For instance, Invoicing Standard 3.3.2 requires 
that all paper and electronic transactions use standard field name 
descriptors. This would apply both to paper and EBB invoicing 
procedures. See GISB Interpretation C96012, approved February 6, 
1997, http://www.NeoSoft.com/\<difference>gisb/gisb.htm (Committees, 
Sub-Committees, and Task Forces) (Feb. 20, 1997).
---------------------------------------------------------------------------

B. Business Practices Standards

    The revised and new business practices principles, definitions, and 
standards <SUP>8 clarify and supplement the standards adopted in Order 
No. 587.<SUP>9 In part, these standards require pipelines to honor 
shippers'' determinations of delivery priorities, clarify shipper's 
abilities to correct operational flow orders (OFOs), and standardize 
the methods for calculating the amount of gas needed to reimburse 
pipelines for compressor fuel, so that shippers can accurately submit 
nominations for transportation across multiple pipelines, with many 
zones.
---------------------------------------------------------------------------

    \8\ The revised standards are 1.3.7, 1.3.14, 1.3.23, 2.3.9, and 
5.3.22. The new principles are 1.1.12 through 1.1.16, and 2.1.2 and 
2.1.3. The new definitions are 1.2.5 through 1.2.7 and 2.2.1. The 
new standards are 1.3.24 through 1.3.31, 1.3.33, 1.3.34, and 2.3.31.
    \9\ After issuance of the November 13, 1996 NOPR, GISB approved 
a change to Flowing Gas Standard 2.3.9 that clarified the language, 
but did not change the meaning of the standard. The Commission is 
adopting the revised language.
---------------------------------------------------------------------------

    Out of the 30 business practices standards passed by GISB, the 
Commission is not adopting three of the standards at this time, because 
the pipelines' obligations under the standards are unclear. The lack of 
clarity in these standards is understandable given the tight deadlines 
on GISB and the obvious need for the various segments of the industry 
to reach compromises. However, during the process of reviewing the 
filings to comply with Order No. 587, it became clear that adoption of 
imprecise standards can sometimes cause more harm than good. When 
obligations are

[[Page 10687]]

not fully defined by the standard, pipelines propose divergent and non-
standardized approaches. The adoption of divergent approaches often 
runs counter to the very purpose of standardization--the creation of 
efficiency through adoption of uniform procedures.
    For these three standards, the Commission has been unable to 
discern from the GISB documentation the intended scope and meaning of a 
standard. The discrepancies in implementation, therefore, make the 
compliance filings much more difficult to process because the 
Commission has difficulty, on an individual case basis, trying to 
reconcile the divergent approaches, especially given the short time 
frames established for compliance filings.
    Rather than approving standards which are vague and then try to 
create standardization during the compliance process, the Commission 
will not accept the standards at this time. Standards in these areas 
are needed. The Commission, however, will give GISB and the industry 
more time--until September 1, 1997--in which to reconsider and devise 
standards that delineate clearly the pipelines' obligations in these 
areas. If no resolution is reached by then, the Commission will take 
appropriate action to devise the needed standards.
    The Commission will address below the specifics of the three 
standards that are not being accepted. It will also address the 
comments regarding a standard the Commission is accepting--Nomination 
Standard 1.3.28 dealing with the posting of fuel rate standards.
1. Intra-Day Nominations and Standard 1.3.32
    GISB proposed one additional definition and a new intra-day 
nomination standards. Definition 1.2.7 provides for two types of intra-
day nominations: (i) A nomination received during the gas day for the 
same day of gas flow, and (ii) A nomination received after the 
nomination deadline for the following gas day. Standard 1.3.32 provides 
that:

    All pipelines should allow at least one intra-day nomination per 
day for each transportation service that allows for intra-day 
nominations. Additional intra-day nominations should be permitted on 
a best efforts basis.

    WINGS, NGC/Conoco/Vastar, Energy Managers, and Burlington Resources 
raise questions about the intra-day nomination process. WINGS comments 
that additional standards for intra-day nominations are needed, to 
avoid discrepancies in pipeline implementation of the two kinds of 
intra-day nominations defined by GISB. Energy Managers contends that 
Standard 1.3.32 is a poor standard and should not be adopted, and it 
suggests three replacement standards. NGC/Conoco/Vastar and Burlington 
Resources contend further intra-day nomination standards are needed. 
NGC/Conoco/Vastar seek standards to ensure that intra-day nominations 
are available for all rate schedules and to deal with rescheduling of 
service that is bumped by a higher priority firm service. Burlington 
Resources argues that since GISB has not established standards on 
whether firm intra-day nominations can bump scheduled interruptible 
service, the Commission should establish a policy on this issue. It 
maintains that firm service should be given bumping rights to reflect 
the higher priority of that service, for which shippers are paying a 
premium price.
    The Commission agrees with WINGS that Standard 1.3.32 does not 
provide sufficient clarity as to what is expected of the pipelines. The 
term ``best efforts'' as used in this context does not describe exactly 
when pipelines can decline to process intra-day nominations. For 
instance, it may mean that pipelines have to process intra-day 
nominations whenever submitted as long as such nominations do not 
affect scheduled quantities for other shippers.<SUP>10
---------------------------------------------------------------------------

    \10\ The Commission already has dealt with the imprecision in 
the phrase ``for each transportation service that allows for intra-
day nominations.'' In Tennessee Gas Pipeline Company, 78 FERC para. 
61,007, slip op. at 9, the Commission held that all regular open-
access services, including interruptible service, must be accorded 
the right to submit intra-day nominations. The Commission concluded, 
however, that pipelines could propose a service eliminating the 
intra-day nomination right for a reduced rate.
---------------------------------------------------------------------------

    The Commission is particularly chary about adopting another non-
specific intra-day nomination standard given the lack of 
standardization in the implementation of the intra-day nomination 
standards adopted in Order No. 587. Nomination Standard 1.3.10 provides 
that ``at least one (1) intra-day nomination can be submitted 4 hours 
prior to gas flow.'' The standard, however, did not specify the method 
of implementation, and pipelines chose two divergent models: a 
``rolling intra-day'' nomination permitting the shipper to choose the 
time at which it submits the intra-day nomination, which the pipeline 
then processes in four hours from the time of submission; and 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. Pipelines, for instance, have 
established different times for batching intra-day nominations. In 
addition, on some pipelines using the batch process, intra-day 
nominations for firm service bump scheduled interruptible gas.<SUP>11 
Other batch pipelines propose only that the firm intra-day nominations 
will be given priority over interruptible intra-day nominations.<SUP>12
---------------------------------------------------------------------------

    \11\ Tennessee, for instance, has a batch intra-day process and 
permits bumping of interruptible with four hours notice to the 
interruptible shipper. It does not, however, permit bumping for its 
hourly intra-day nominations (available to firm shippers). Tennessee 
Gas Pipeline Company, Pro Forma Tariff, Article III, section 4 (d)-
(m), Sheets 312-314c.
    \12\ See Northern Border Pipeline Company, Pro Forma Second 
Revised Volume No. 1, Pro Forma Sheet Nos. 100 and 101 (when intra-
day nominations exceed the capacity of the pipeline firm intra-day 
nominations have priority over interruptible).
---------------------------------------------------------------------------

    This diverse approach means that shippers will be unable to 
coordinate effectively their intra-day nominations, since an intra-day 
nomination may be due at one time on one pipeline, while a different 
time is specified on an interconnecting pipeline. In addition, during 
the staff technical conference held on December 12 and 13, 1996, other 
issues relating to intra-day nominations were raised. Some participants 
favored the rolling intra-day nomination approach over the batch 
process because it gave shippers more flexibility in scheduling their 
intra-day nominations.<SUP>13 Others raised the question of whether a 
rolling approach to intra-day nominations can be implemented without a 
no-bump rule. They claimed that permitting firm intra-day nominations 
to bump scheduled interruptible transportation would create scheduling 
difficulties, because each intra-day nomination potentially would 
affect other nominations, causing a ripple effect up and down the 
pipeline and interconnecting pipelines.<SUP>14
---------------------------------------------------------------------------

    \13\ Transcript of December 12, 1996 conference, at 116, 213; 
Transcript of December 13, 1996 conference, at 127.
    \14\ Transcript of December 12, 1996 conference, at 117; 
transcript of December 13, 1996 conference, at 136.
---------------------------------------------------------------------------

    GISB itself appears to recognize that its current standards do not 
achieve the necessary standardization. The GISB Executive Committee has 
voted to establish a task force to examine the lack of coordination in 
intra-day nomination procedures.
    In order to achieve the efficiencies that derive from uniform 
nomination procedures, greater standardization of intra-day nomination 
procedures clearly is required. Clarification of the intended meaning 
of Standard 1.3.32 may not

[[Page 10688]]

create the needed standardization, and the focus, therefore, should not 
be on clarifying the existing standard, but on achieving the needed 
uniformity in the intra-day nomination process. Accordingly, the 
Commission will review the comments submitted on February 21, 1997 
along with any recommendations from GISB filed on September 1, 1997 in 
determining how to proceed on this issue.
2. Flowing Gas Standards 2.3.29 and 2.3.30
    GISB Standard 2.3.29 states:

    At a minimum, transportation service providers should enter into 
Operational Balancing Agreements at all pipeline-to-pipeline 
(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 substantially similar financial 
and operational implications to the transportation service provider.

    Energy Managers suggests that the phrase ``economically and 
operationally feasible'' waters down, and therefore should be removed 
from, Standard 2.3.29. NGC/Conoco/Vastar state that they support 
Standard 2.3.30 as long as the term ``similarly situated'' is not read 
so narrowly as to defeat the purpose of the standard.
    While the Commission finds that standards requiring OBAs and 
netting of imbalances are necessary, the use of the terms 
``economically and operationally feasible'' and ``similarly situated 
financial and operational implications'' do not define precisely enough 
the pipelines' obligations under the standards. For example, there is 
no basis for determining whether shippers should be able to net 
imbalances between an interruptible contract and a firm contract in the 
same zone. Also, the terms economically feasible and similarly situated 
financial implications are undefined and seem unnecessary in both 
standards. If ``financial'' in Standard 2.3.30 refers to the rate paid 
for service, for instance, there seems no basis for treating a 
discounted contract differently from a full-rate contract in terms of 
netting imbalances.<SUP>15
---------------------------------------------------------------------------

    \15\ A review of the discussions at the GISB Executive Committee 
meeting, where the language was developed, does not clarify the 
intended meaning of the standards. Volume IV, Report of the Gas 
Industry Standards Board, Docket No. RM96-1-000, 398-99, 412-428 
(September 30, 1996). For instance, examples are discussed of 
situations that might fall within or without the Standards, there 
was no delineation or agreement on the full scope of the intended 
meaning.
---------------------------------------------------------------------------

    Rather than attempting to deal with the meaning of these terms in 
individual compliance filings, GISB needs to define precisely the 
circumstances in which pipelines can decline to permit netting of 
imbalances. Therefore, the Commission will not be accepting this 
standard in this rule and will give GISB until September 1, 1997 to 
clarify these standards.
3. Nomination Standard 1.3.28
    Two comments raise questions about Standard 1.3.28, which provides 
that fuel rates for in-kind fuel reimbursement should be made effective 
only at the beginning of the month. WINGS expresses concern about this 
standard because one of its pipelines, Kern River, has little or no 
system storage. Without storage, WINGS contends that the pipeline may, 
on rare occasions, have to adjust fuel rates in the middle of the 
month. WINGS suggests that this standard be made a principle or that, 
if adopted as a standard, the Commission should not preclude a pipeline 
from filing to change fuel rates in mid-month upon a showing of need.
    The Commission will not change this standard to a principle as 
requested by WINGS. Standardizing the in-kind reimbursement process for 
fuel is important to simplify the nomination process, particularly when 
shippers are transporting gas across many pipelines, with a 
multiplicity of zones. A consensus of the industry found that to 
simplify the nomination process, all pipelines must set fuel rates at 
the beginning of the month. With this limitation on fuel rate changes, 
shippers can obtain the correct fuel rates at one time and update their 
computer programs to reflect these rates on a set schedule, without 
having to be concerned about mid-month, random changes on select 
pipelines. WINGS fails to provide data or other evidence that pipelines 
without storage are unable to make adjustments or other arrangements so 
that they can comply with the standard. For example, Great Lakes Gas 
Transmission Limited Partnership, another pipeline without storage, 
posts monthly fuel percentages and makes adjustments for actual fuel 
use in the percentages for subsequent months.<SUP>16
---------------------------------------------------------------------------

    \16\ Great Lakes Gas Transmission Limited Partnership, 76 FERC 
para. 61,260, at 62,333 (1996).
---------------------------------------------------------------------------

    Enron Capital & Trade Resources seeks clarification that in 
implementing this standard, pipelines should notify shippers of fuel 
rate changes no less than 30 days prior to the proposed effective date. 
Enron Capital & Trade Resources contends that 30-days notice is in 
accord with the notice requirement for tariff changes contained in 
section 154.207 of the Commission's regulations.
    The Commission will not grant the requested clarification. The 
standard itself specifies no advance notice period. The purpose of the 
standard is to establish one date when shippers can obtain fuel 
reimbursement percentages so that they can program their computers once 
for the entire month. Thus, the fuel rates need to be posted in 
sufficient time for shippers to use these rates in making nominations 
subject to the new rate. To the extent that pipelines make tariff 
filings to change fuel reimbursement rates, they would have to comply 
with the Commission filing and notice regulations. Some pipelines, 
however, have fuel tracking or other provisions in their tariffs which 
permit changes in fuel rates without tariff filings.<SUP>17
---------------------------------------------------------------------------

    \17\ Id.
---------------------------------------------------------------------------

III. Implementation Schedule

    Pipelines will be required to implement the Internet Web page 
standards by August 1, 1997, and the revised and new business practices 
standards on November 1, 1997. Rather than adopting the staggered 
schedule for pipeline tariff filings proposed by GISB, the pipelines 
will be required to make their pro forma tariff filings to comply with 
the standards by May 1, 1997.
    The Commission's experience based on the first set of compliance 
filings is that it takes a substantial period of time to review all of 
the filings. Under the proposed staggered schedule, 60 tariff filings 
would be due on July 1, 1997, which would not provide the Commission 
with sufficient time to review these filings and issue the two rounds 
of orders in time to meet a November 1, 1997 implementation date.
    The Commission recognizes that some pipelines may be in the process 
of implementing the standards adopted in Order No. 587 at the same time 
they are making pro forma tariff filings to comply with this rule. 
However, there are many fewer business practices standards adopted in 
this rule than in Order No. 587, and, more important, implementation of 
these standards do not require fundamental changes in pipeline 
operations. They merely build upon the standards previously adopted. 
Thus, pipelines should not face major obstacles in making the required 
filings on May 1, 1997, and the Commission will require all filings on 
this date to

[[Page 10689]]

ensure that the filings can be reviewed and processed in a timely 
fashion.
    In making their pro forma tariff filings, pipelines must file the 
pro forma sheets as if they are proposed revisions of sheets in the 
existing tariff volume (with changes identified as provided in 
Sec. 154.201 of the Commission's regulations) with the words ``Pro 
Forma'' before the volume name.<SUP>18 In addition, in complying with 
Sec. 154.203 of the Commission's regulations, a pipeline must file as 
part of its statement of the nature, the reasons, and the basis for the 
filing, a complete table showing for each GISB standard adopted by the 
Commission, in this rule, the complying tariff sheet number, and an 
explanatory statement, if necessary, describing any reasons for 
deviations from or changes to each GISB standard. Any pipeline seeking 
waiver or extension of the requirements of this rule is required to 
file its request within 30 days of the issuance of this rule. Comments 
on these filings will be due 21 days from the date of filing.
---------------------------------------------------------------------------

    \18\ E.g. Fourth Revised Sheet No. 150, FERC Gas Tariff, Pro 
Forma Third Revised Volume No. 1. For the electronically filed 
tariff sheets, ``Pro Forma'' must be inserted at the beginning of 
the name field (VolumeID) in the Tariff Volume Record, i.e., the 
TF02 record.
---------------------------------------------------------------------------

IV. Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act of 1980 (RFA) <SUP>19 generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The regulations adopted in this rule impose requirements only on 
interstate pipelines, which are not small businesses, and, these 
requirements are, in fact, designed to reduce the difficulty 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 adopted in this rule will not 
have a significant adverse impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \19\ /5 U.S.C. 601-612.
---------------------------------------------------------------------------

V. 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. <SUP>20 The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment. <SUP>21 The action taken here falls 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. <SUP>22 Therefore, an environmental assessment is 
unnecessary and has not been prepared in this rulemaking.
---------------------------------------------------------------------------

    \20\ Order No. 486, Regulations Implementing the National 
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs. Preambles 1986-1990 para. 30,783 (1987).
    \21\ 18 CFR 380.4.
    \22\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).
---------------------------------------------------------------------------

VI. Information Collection Statement

    OMB's regulations in 5 CFR 1320.11 require that it approve certain 
reporting and recordkeeping requirements (collections of information) 
imposed by an agency. Upon approval of a collection of information, OMB 
shall assign an OMB control number and an expiration date. Respondents 
subject to the filing requirements of this Rule shall not be penalized 
for failing to respond to these collections of information unless the 
collections of information display valid OMB control numbers.
    The collections of information related to the subject Final Rule 
fall under the existing reporting requirements of FERC-549C, Standards 
for Business Practices of Interstate Natural Gas Pipelines (OMB Control 
No. 1902-0174) and FERC-545, Gas Pipeline Rates: Rate Change (Non-
Formal) (OMB Control No. 1902-0154). The following estimates of 
reporting burden are related only to this Rule and include the costs 
for pipelines to comply with the new and revised business practice 
standards and the additional costs of implementing the requirement for 
posting additional information on an Internet Web page. The burden 
estimates are primarily related to start-up and will not be on-going 
costs.
    Public Reporting Burden: (Estimated Annual Burden).

----------------------------------------------------------------------------------------------------------------
                                                                                                       Estimated
                                                                     Number of     Total    Estimated    total  
                     Affected data collection                       respondents  responses  hours per    hours  
                                                                                  (annual)   response   (annual)
----------------------------------------------------------------------------------------------------------------
FERC-545..........................................................          86          86         58      4,988
FERC-549C.........................................................          86          86      3,147    270,642
                                                                   ---------------------------------------------
      Total.......................................................          86          86      3,205    275,630
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection (including record keeping, if 
appropriate) is estimated to total 275,630. The average annualized cost 
per respondent is projected to be the following:

----------------------------------------------------------------------------------------------------------------
                                                                           Annualized                           
                                                              Annualized      costs                             
                                                               capital/    (operations                  Total   
                  Affected data collection                     startup         and       Number of    annualized
                                                              costs per   maintenance)  respondents     costs   
                                                              respondent       per                              
                                                                           respondent                           
----------------------------------------------------------------------------------------------------------------
FERC-545...................................................       $2,900             0           86     $249,400
FERC-549C..................................................      157,350             0           86   13,532,100
                                                            ----------------------------------------------------
      Total................................................      160,250             0           86   13,781,500
----------------------------------------------------------------------------------------------------------------

    The business practices standards and Internet protocols adopted in 
this Rule are necessary to establish a more efficient and integrated 
pipeline grid. Requiring such standards on an industry-wide basis will 
reduce the variations in pipeline business and communication practices 
and will allow buyers to easily and efficiently obtain

[[Page 10690]]

and transport gas from all potential sources of supply. The 
standardization of business practices conforms 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.
    The information required in this Final Rule will be reported 
directly to the industry users and later be subject to audit by the 
Commission. The implementation of these data requirements will help the 
Commission carry out its responsibilities under the Natural Gas Act and 
coincide with the current regulatory environment which the Commission 
instituted under Order No. 636 and the restructuring of the natural gas 
industry.
    Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
888 First Street NE., Washington, DC 20426 [Attention: Michael Miller, 
Information Services Division, 202-208-1415] or the Office of 
Management and Budget [Attention: Desk Officer for the Federal Energy 
Regulatory Commission 202-395-3087].

VII. Effective Date

    These regulations are effective April 9, 1997. The Commission has 
determined, with the concurrence of the Administrator of the Office of 
Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

    Continental shelf, Incorporation by reference, Natural gas, 
Reporting and recordkeeping requirements.

    By the Commission.
Lois D. Cashell,
Secretary.

    In consideration of the foregoing, the Commission amends 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 Sec. 284.10, paragraphs (b)(1)(i) through (b)(1)(v) are 
revised to read as follows:


Sec. 284.10  Standards for Pipeline Business Operations and 
Communications.

* * * * *
    (b) * * *
    (1) * * *
    (i) Nominations Related Standards (Version 1.1, January 31, 1997), 
with the exception of Standard 1.3.32;
    (ii) Flowing Gas Related Standards (Version 1.1, January 31, 1997), 
with the exception of Standards 2.3.29 and 2.3.30;
    (iii) Invoicing Related Standards (Version 1.1, January 31, 1997);
    (iv) Electronic Delivery Mechanism Related Standards (Version 1.0, 
October 24, 1996), with the exception of Standard 4.3.5; and
    (v) Capacity Release Related Standards (Version 1.1, January 31, 
1997).
* * * * *
[FR Doc. 97-5786 Filed 3-7-97; 8:45 am]
BILLING CODE 6717-01-P