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1 15 U.S.C. 3371(a)(2). 

2Section 1(c) of the Natural Gas Act (NGA) 

exempts from the Commission’s NGA jurisdiction 

those pipelines which transport gas in interstate 

commerce if (1) They receive natural gas at or 

within the boundary of a state, (2) all the gas is 

consumed within that state and (3) the pipeline is 

regulated by a state Commission. This exemption is 

referred to as the Hinshaw exemption after the 

Congressman who introduced the bill amending the 

NGA to include section 1(c). See ANR Pipeline Co. 

v. Federal Energy Regulatory Comm’n, 71 F.3d 897, 

898 (1995) (ANR) (briefly summarizing the history 

of the Hinshaw exemption). 

3Arizona Public Service Co. and Sequent Energy 

Management, L.P., 132 FERC ¶ 61,064 (2010) (APS/ 

Sequent). 

4This NOI relates to firm capacity on section 311 

and Hinshaw pipelines used for interstate service 

subject to our jurisdiction under the NGPA or NGA 

and does not extend to non-jurisdictional capacity 

used for purely intrastate service. 

5 15 U.S.C. 3371(c). 

6EPGT Texas Pipeline, 99 FERC ¶ 61,295, at 

62,252 (2002) (EPGT). 

7 18 CFR 284.121–126 (2010). 

8Certain Transportation, Sales, and Assignments 

by Pipeline Companies not Subject to Commission 

Jurisdiction Under Section 1(c) of the Natural Gas 

Act, Order No. 63, FERC Stats. & Regs. ¶ 30,118, 

at 30,824–25 (1980). 

9 18 CFR 284.7(b), 284.9(b) and 284.122 (2010). 

10Regulation of Natural Gas Pipelines After 

Partial Wellhead Decontrol, Order No. 436, FERC 

Stats. & Regs. ¶ 30,665, at 31,502 (1985). 

11See Pipeline Service Obligations and Revisions 

to Regulations Governing Self-Implementing 

Transportation and Regulation of Natural Gas 

Pipeline After Partial Wellhead Decontrol, Order 

No. 636, FERC Stats. & Regs. ¶ 30,939, order on 

reh’g, Order No. 636–A, FERC Stats. & Regs. 

¶ 30,950, order on reh’g, Order No. 636–B, 61 FERC 

¶ 61,272 (1992), order on reh’g, 62 FERC ¶ 61,007 

(1993), aff’d in part and remanded in part sub nom. 

52. From FERC’s Home Page on the 

Internet, this information is available on 

eLibrary. The full text of this document 

is available on eLibrary in PDF and 

Microsoft Word format for viewing, 

printing, and/or downloading. To access 

this document in eLibrary, type the 

docket number excluding the last three 

digits of this document in the docket 

number field. 

53. User assistance is available for 

eLibrary and the FERC’s Web site during 

normal business hours from FERC 

Online Support at 202–502–6652 (toll 

free at 1–866–208–3676) or e-mail at 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202) 502–8659. E-mail the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

By direction of the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

[FR Doc. 2010–27132 Filed 10–26–10; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 284 

[Docket No. RM11–1–000] 

Capacity Transfers on Intrastate 

Natural Gas Pipelines 

October 21, 2010. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of inquiry. 

SUMMARY: The Federal Energy 

Regulatory Commission is seeking 

comments on whether and how holders 

of firm capacity on intrastate natural gas 

pipelines providing interstate 

transportation and storage services 

under section 311 of the Natural Gas 

Policy Act of 1978 and Hinshaw 

pipelines providing such services 

pursuant to blanket certificates issued 

under § 284.224 of the Commission’s 

regulations should be permitted to allow 

others to make use of their firm 

interstate capacity. 

DATES: Comments are due December 27, 

2010. 

FOR FURTHER INFORMATION CONTACT: 

James Sarikas (Technical Information), 

Office of Energy Market Regulation, 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426, (202) 502–6831, 

James.Sarikas@ferc.gov; Anna 

Fernandez (Legal Information), Office of 

the General Counsel, Federal Energy 

Regulatory Commission, 888 First 

Street, NE., Washington, DC 20426, 

(202) 502–6682, 

Anna.Fernandez@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

Notice of Inquiry 

1. Recently, the Commission issued 

an order finding that the Commission’s 

policy prohibiting buy/sell transactions 

applies to interstate open-access 

transportation services provided by (1) 

intrastate natural gas pipelines pursuant 

to section 311 of the Natural Gas Policy 

Act of 1978 (NGPA) 1 and (2) Hinshaw 

pipelines 2 pursuant to blanket 

certificates issued under section 284.224 

of the Commission’s regulations.3 In this 

Notice of Inquiry (NOI), the Commission 

is seeking comments on whether and 

how holders of firm interstate capacity 

on section 311 and Hinshaw pipelines 

should be permitted to allow others to 

make use of their firm interstate 

capacity, including to what extent buy/ 

sell transactions should be permitted.4

I. Current Commission Policy 

2. NGPA section 311 authorizes the 

Commission to allow intrastate natural 

gas pipelines to transport natural gas 

‘‘on behalf of’’ interstate pipelines or 

local distribution companies served by 

interstate pipelines ‘‘under such terms 

and conditions as the Commission may 

prescribe.’’ 5 NGPA section 601(a)(2) 

exempts transportation service 

authorized under NGPA section 311 

from the Commission’s NGA 

jurisdiction. Congress adopted these 

provisions in order to eliminate the 

regulatory barriers between the 

intrastate and interstate markets and to 

promote the entry of intrastate pipelines 

into the interstate market. Such entry 

eliminates the need for duplication of 

facilities between interstate and 

intrastate pipelines.6 Subpart C of the 

Commission’s Part 284 open access 

regulations (18 CFR § 2841.121–126) 

implements the provisions of NGPA 

section 311 concerning transportation 

by intrastate pipelines.7

3. Shortly after the adoption of the 

NGPA, the Commission authorized 

Hinshaw pipelines to apply for NGA 

section 7 certificates, authorizing them 

to transport natural gas in interstate 

commerce in the same manner as 

intrastate pipelines may do under NGPA 

section 311.8 Specifically, section 

284.224 of the Commission’s regulations 

provides for the issuance of blanket 

certificates to Hinshaw pipelines to 

provide open access transportation 

service ‘‘to the same extent that, and in 

the same manner’’ as intrastate pipelines 

are authorized to perform such service 

by subpart C. 

4. The Part 284, subpart C, regulations 

require that intrastate pipelines 

performing interstate service under 

NGPA section 311 must do so on an 

open-access basis.9 However, consistent 

with the NGPA’s goal of encouraging 

intrastate pipelines to provide interstate 

service, the Commission has not 

imposed on intrastate pipelines all of 

the Part 284 requirements imposed on 

interstate pipelines. For example, when 

the Commission first adopted the Part 

284 open access regulations in Order 

No. 436, the Commission exempted 

intrastate pipelines from the 

requirement that they offer open access 

service on a firm basis.10 The 

Commission found that requiring 

intrastate pipelines to offer firm service 

to out-of-state shippers could discourage 

them from providing any interstate 

service, because such a requirement 

could progressively turn the intrastate 

pipeline into an interstate pipeline 

against its will and against the will of 

the responsible state authorities. For the 

same reasons, when the Commission 

adopted Order No. 636 11 restructuring 


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United Distribution Cos. v. FERC, 88 F.3d 1105 

(D.C. Cir. 1996), order on remand, Order No. 636– 

C, 78 FERC ¶ 61,186 (1997), order on reh’g, Order 

No. 636–D, 83 FERC ¶ 61,210 (1998). 

12Order No. 636–B, 61 FERC at 61,992 n.26. 

13Order No. 636, FERC Stats. & Regs. ¶ 30,939 at 

30,418. 

14 Id. 

15See Algonquin Gas Transmission Corp., 59 

FERC ¶ 61,032 (1992) (Algonquin). 

16Order No. 636, FERC Stats. & Regs. ¶ 30,939 at 

30,416. 

17United Distributions Co. v. FERC, 88 F.3d at 

1149–50 (quoting Order No. 636 at 30,416). 

18 Id. 

19As Order No. 636 emphasized: 

The main difference between capacity brokering 

as it now exists and the new capacity release 

program is that under capacity brokering, the 

brokering customer could enter into and execute its 

own deals without involving the pipeline. Under 

capacity releasing, all offers must be put on the 

pipeline’s electronic bulletin board and contracting 

is done directly with the pipeline. 

Order No. 636, FERC Stats. & Regs. ¶ 30,939 at 

30,420 (emphasis in original). 

20 18 CFR 284.8(c)–(e), (h) (2010). 

21Algonquin, 59 FERC ¶ 61,032. 

22El Paso Natural Gas Co., et al., 59 FERC 

¶ 61,031 (1992) (El Paso). 

23 Id. at 61,080. 

24According to their petition, APS is Arizona’s 

largest electric utility company and Sequent 

purchases and sells natural gas and provides other 

energy-related services to customers throughout the 

United States. 

25APS/Sequent, 132 FERC ¶ 61,064 at P 16. 

26 Id. (citing sections 284.7(b)(1) and 284.9(b) of 

the Commission’s regulations, which are applicable 

to intrastate pipelines providing service under 

Subpart C of the Part 284 regulations). 

27APS/Sequent, 132 FERC ¶ 61,064 at P 16. 

the services provided by interstate 

pipelines, the Commission exempted 

intrastate pipelines from the 

requirements of Order No. 636, 

including capacity release, electronic 

bulletin boards (now Internet Web sites) 

and flexible receipt and delivery 

points.12

5. Order No. 636 adopted the capacity 

release program in order to permit 

holders of firm capacity on interstate 

pipelines to ‘‘reallocate unneeded firm 

capacity’’ to the person who values it the 

most.13 The Commission reasoned that 

the capacity release program would 

promote efficient load management by 

the pipeline and its customers and 

would, therefore, result in the efficient 

use of firm interstate pipeline capacity 

throughout the year. It further 

concluded that, ‘‘because more buyers 

will be able to reach more sellers 

through firm transportation capacity, 

capacity reallocation comports with the 

goal of improving nondiscriminatory, 

open access transportation to maximize 

the benefits of the decontrol of natural 

gas at the wellhead and in the field.’’ 14

6. Prior to Order No. 636, the 

Commission had permitted interstate 

pipelines to obtain certificates for 

capacity brokering programs that would 

allow customers to assign their capacity 

directly to other customers on a firstcome, first-served basis, without any 

requirement that the brokering shipper 

post the availability of its capacity or 

allocate it to the highest bidder.15 In 

Order No. 636, however, the 

Commission decided that it could not 

monitor those certificated capacity 

brokering programs adequately to 

ensure against undue discrimination in 

the allocation of capacity.16 When 

transactions occurred directly and 

privately between shippers, there was 

no way to verify that certain purchasers 

were not being favored unreasonably 

over others.17 The Commission 

explained that ‘‘there are simply too 

many potential assignors of capacity 

and too many different programs for the 

Commission to oversee.’’ 18

7. The capacity release program 

addressed those concerns by, among 

other things, requiring that all 

reassignments be transparent. Order No. 

636 prohibited private transfers of 

capacity between shippers and, instead, 

required that all release transactions be 

conducted through the pipeline. 

Therefore, when a releasing shipper 

releases its capacity, the replacement 

shipper must enter into a contract 

directly with the pipeline, and section 

284.13(b) of the Commission’s 

regulations requires the pipeline to post 

information about the replacement 

shipper’s contract including any special 

terms and conditions.19 In addition, the 

capacity release program requires 

certain categories of releases to be 

posted for bidding.20

8. In orders issued concurrently with 

Order No. 636, the Commission 

terminated the capacity brokering 

program.21 The Commission also stated 

it would not authorize any more buy/ 

sell transactions.22 Traditionally, a buy/ 

sell transaction is a commercial 

arrangement whereby a shipper holding 

interstate pipeline capacity buys gas at 

the direction of, on behalf of, or directly 

from another entity (e.g., an end-user), 

ships that gas through its interstate 

pipeline capacity, and then resells an 

equivalent quantity of gas to the 

downstream entity at the delivery point. 

The Commission believed that to permit 

buy/sell transactions to utilize interstate 

pipeline capacity after the capacity 

release mechanism went into effect 

would frustrate the new, nationally 

uniform capacity release program.23

9. On June 25, 2010, Arizona Public 

Service Company (APS) and Sequent 

Energy Management, L.P. (Sequent) 

(collectively, Petitioners) sought 

clarification that a certain proposed 

transaction involving a Hinshaw storage 

facility was not a prohibited buy/sell 

transaction as contemplated by 

Commission policy.24 They contended 

that the Commission’s buy/sell 

prohibition was inapplicable to service 

on Hinshaw pipelines, because the buy/ 

sell prohibition was intended to prevent 

the circumvention of the Commission’s 

capacity release program instituted in 

Order No. 636 and Hinshaw pipelines 

do not offer capacity release. 

Alternatively, Petitioners requested a 

limited waiver should the Commission 

determine that the transaction was a 

prohibited buy/sell transaction. Under 

the proposed agreement, APS would 

have the right to deliver gas to Sequent 

and Sequent would take title to the gas 

and inject it into storage at Chevron 

Keystone Gas Storage, LLC (Keystone 

Storage), a Hinshaw pipeline with a 

limited blanket certificate to provide 

certain storage and hub services in 

interstate commerce. APS would have 

the right to require Sequent to redeliver 

gas to APS and title would pass back to 

APS at the Keystone Storage delivery 

point. Like other section 311 and 

Hinshaw pipelines, Keystone Storage’s 

tariff requires that the storage or 

transportation capacity holder possesses 

title to the gas being stored or 

transported. 

10. The Petitioners raised an issue 

which the Commission had not 

previously addressed—whether the 

prohibition on buy/sell transactions 

applies to interstate open-access 

transportation services provided by 

section 311 and Hinshaw pipelines, and 

the APS/Sequent order found that the 

prohibition did apply. The Commission 

explained that, while Order No. 636 

adopted the prohibition on buy/sell 

transactions in conjunction with the 

creation of the capacity release program 

for interstate pipelines, the prohibition 

on buy/sell transactions, together with 

the shipper-must-have-title rule, play a 

more fundamental role than just 

preventing the circumvention of the 

capacity release program.25 These rules 

help enforce the central requirement of 

the Commission’s Part 284 regulations 

that all open-access pipelines, including 

section 311 and Hinshaw pipelines, 

‘‘must provide such service without 

undue discrimination, or preference.’’ 26

They do this by ensuring that capacity 

is allocated among shippers in a 

transparent manner based on the 

procedures and not unduly 

discriminatory priorities in the 

pipeline’s Commission-approved tariff, 

either for the direct sale of capacity by 

the pipeline or for capacity release by 

firm shippers.27


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28 Id. P 17. 

29 Id. P 19. 

30 Id. P 21. 

31The Associations include Natural Gas Supply 

Association, Electric Power Supply Association, 

and Independent Petroleum Association of 

America. 

32The Marketer Group includes Barclays Capital 

Energy Inc., Chevron U.S.A. Inc., Citigroup Energy 

Inc., ConocoPhillips Company, Encana Marketing 

(USA) Inc., Iberdrola Renewables, Inc., J.P. Morgan 

Ventures Energy Corporation, Tenaska Marketing 

Ventures, Sempra Energy Trading LLC and Shell 

Energy North America (U.S.) L.P. 

33TPA, in addition to the foregoing, requests that 

the Commission clarify that the shipper-must-havetitle rule also does not apply to section 311 and 

Hinshaw pipelines. Section 311 and Hinshaw 

pipelines generally include in their statements of 

operating conditions a requirement that shippers 

possess title to the gas being stored or transported. 

34Arizona Public Service Company and Sequent 

Energy Management, L.P., 133 FERC ¶ 61,049 

(2010). 

11. The Commission acknowledged 

that it does not require section 311 and 

Hinshaw pipelines to include capacity 

release provisions in their tariffs, nor 

have any such pipelines done so. 

However, it did not follow from this fact 

that the prohibition on buy/sell 

transactions was unnecessary. Rather, 

the Commission stated that the absence 

of a capacity release program for section 

311 and Hinshaw pipelines means that 

their tariffs contain no provisions to 

ensure that capacity reassignments by 

shippers are transparent and nondiscriminatory. In these circumstances, 

a blanket authorization of buy/sell 

transactions would allow holders of 

capacity on such pipelines to privately 

contract to allow another party to make 

use of their capacity without informing 

the pipeline or publicly disclosing the 

transaction. This, the Commission 

stated, would create the same potential 

for discrimination and inability of the 

Commission to monitor capacity 

reassignment which led to the adoption 

of the capacity release program as the 

sole method for capacity reassignment 

on interstate pipelines.28

12. Recognizing, however, that 

capacity reassignments could promote 

more efficient use of firm pipeline 

capacity, and given the absence of any 

generic capacity reassignment programs 

on section 311 and Hinshaw pipelines, 

the Commission agreed to consider, on 

a case-by-case basis, requests for waiver 

of the buy/sell prohibition, where it can 

be shown that a particular buy/sell 

transaction provides significant benefits 

to the market.29 Along those same lines, 

the Commission found that, in this case, 

good cause existed to grant Petitioners 

a limited waiver of the Commission’s 

buy/sell prohibition in order to allow 

the proposed agreement to proceed.30

13. Neither of the Petitioners sought 

rehearing of the APS/Sequent order. 

However, following that order, fifteen 

motions to intervene out-of-time were 

filed. Also filed were five requests for 

rehearing of the APS/Sequent order and 

each of those requests were filed by 

entities seeking late intervention. The 

entities seeking rehearing are: (1) Texas 

Pipeline Association (TPA); (2) BG 

Energy Merchants, LLC (BG Energy); (3) 

Morgan Stanley Capital Group Inc. 

(Morgan Stanley); (4) the 

Associations; 31 and (5) the Marketer 

Group.32 Of the five rehearing requests, 

four asked that the Commission reverse 

its ruling expanding the buy/sell 

prohibition to section 311 and Hinshaw 

pipelines and one asked the 

Commission to consider requiring 

section 311 and Hinshaw pipelines to 

offer capacity release. Two of the four 

requests seeking reversal stated that 

issues regarding the secondary market 

on section 311 and Hinshaw pipelines, 

including the buy/sell prohibition, 

should have been addressed in a NOI 

proceeding to examine the available 

options and their implications. 

14. The Marketer Group, Morgan 

Stanley, TPA and the Associations 

requested that the Commission reverse 

its ruling expanding the buy/sell 

prohibition to section 311 and Hinshaw 

pipelines.33 They contended, among 

other things, that the Commission erred 

by expanding the buy/sell prohibition to 

section 311 and Hinshaw pipelines on 

the basis of discrimination concerns 

without a record establishing the 

existence of discrimination. If the 

Commission seeks transparency, 

Morgan Stanley argued that a necessary 

precursor is a capacity release 

mechanism. In fact, Morgan Stanley 

argued that the efficiency gains cited by 

the APS/Sequent order cannot be fully 

realized absent a capacity release 

mechanism on section 311 and Hinshaw 

facilities. The Associations suggested 

that if the Commission wishes to 

address any issues with regard to the 

secondary market of capacity on section 

311 and Hinshaw pipelines, it should 

initiate a notice of inquiry proceeding to 

examine any available options and their 

implications. 

15. The Marketer Group, Morgan 

Stanley, TPA and the Associations also 

argued that the APS/Sequent order 

failed to establish a record addressing 

the potential effect, results, and impacts 

on shippers. Among the issues they 

argued the APS/Sequent order did not 

consider are: (1) The potential market 

uncertainty that may result from the 

expansion of the buy/sell prohibition to 

section 311 and Hinshaw pipelines; (2) 

the impact on the efficient use of section 

311 and Hinshaw pipeline capacity; (3) 

the burden and impracticability of 

entities having to seek a waiver for buy/ 

sell transactions on section 311 and 

Hinshaw pipelines; and (4) the extent of 

the Commission’s jurisdiction to impose 

the buy/sell prohibition on section 311 

and Hinshaw pipelines given Congress’ 

decision to provide the Commission 

with only limited jurisdiction over 

section 311 and Hinshaw pipelines. The 

Marketer Group states that, if the 

Commission believes that it may be in 

the public interest to apply the buy/sell 

prohibition to section 311 and Hinshaw 

pipelines, the Commission should issue 

a NOI in which a record can be 

compiled to examine the necessity for 

and the implications associated with the 

issue. 

16. In its rehearing request, BG Energy 

requested that the Commission institute 

a notice and comment proceeding to 

consider requiring a uniform capacity 

release program for section 311 and 

Hinshaw pipelines that requires 

capacity to be posted and subject to 

bidding on a non-discriminatory basis. 

It contended that a firm shipper on a 

section 311 or Hinshaw pipeline that 

wants to release or acquire interstate 

capacity encounters cumbersome, 

lengthy, and non-transparent 

procedures. 

17. In a contemporaneous order in the 

APS/Sequent proceeding, the 

Commission is denying the late 

interventions and dismissing the 

requests for rehearing.34 In that order, 

the Commission finds that the entities 

requesting late intervention seek only to 

raise general policy issues concerning 

capacity reassignment on section 311 

and Hinshaw pipelines which are more 

appropriately addressed in a rulemaking 

proceeding. 

II. Discussion 

18. As stated above, the Commission 

is issuing this NOI to consider whether 

and how holders of firm interstate 

capacity on section 311 and Hinshaw 

natural gas pipelines should be 

permitted to allow others to make use of 

their firm interstate capacity, including 

to what extent buy/sell transactions 

should be permitted. Specifically, the 

Commission requests comments on the 

following questions: 

A. Questions Related to Application of 

Buy/Sell Prohibition to Section 311 and 

Hinshaw Pipelines 

1. The requests for rehearing in APS/ 

Sequent suggest that marketers and 

others holding firm interstate capacity 


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35See El Paso, 59 FERC ¶ 61,031 at 61,079. 

36 Id. at 61,080. 

37See ANR, 71 F.3d 897. 

38See ANR, 71 F.3d 897. 

39See EPGT, 99 FERC ¶ 61,295 at 62,252–3. 

40Pipeline Posting Requirements under Section 

23 of the Natural Gas Act, Order No. 720, FERC 

Stats. & Regs. ¶ 31,283 (2008), Order No. 720–A, 75 

FR 5178 (Jan. 21, 2010), FERC Stats. & Regs. 

¶ 31,302 (2010), Order No. 720–B, 75 FR 44,893 

(July 30, 2010), FERC Stats. & Regs. ¶ 31,314 (2010). 

41For example, Regency Intrastate Gas, LLC and 

Bay Gas Storage, Ltd. transport over 95 percent of 

their throughput as interstate gas. Crosstex LIG, LLC 

and Enterprise Texas, LLC along with Regency 

Intrastate Gas, LLC predominately serve the 

interstate market and have recently undertaken 

major expansions that are primarily dedicated to 

moving shale gas into the interstate marketplace. 

on section 311 and Hinshaw pipelines 

are using buy/sell transactions to allow 

others to make use of their capacity. Are 

buy/sell transactions commonly used in 

connection with service on section 311 

and Hinshaw pipelines or are such 

transactions relatively rare? Are such 

transactions more commonly used with 

respect to storage capacity as in APS/ 

Sequent or are they used with respect to 

all types of services? Have such 

transactions provided for more efficient 

use of firm capacity on section 311 and 

Hinshaw pipelines? 

2. Are there any experiences or 

concerns of undue discrimination or 

preference or loss of market 

transparency related to the buy/sell 

transactions which have occurred on 

section 311 and Hinshaw pipelines? 

3. Could buy/sell transactions be 

allowed without risk of undue 

discrimination or preference or loss of 

market transparency? Section 311 and 

Hinshaw pipelines generally include in 

their statements of operating conditions 

a requirement that shippers possess title 

to the gas being stored or transported. Is 

application of the shipper-must-havetitle rule sufficient to minimize 

concerns about undue discrimination 

and transparency, since it ensures that 

the capacity holder has an interest in 

the gas being transported? 35

4. When the Commission 

grandfathered existing buy/sell 

transactions at the time of Order No. 

636, the Commission required 

participants in those transactions to 

notify the interstate pipeline of them, 

and the Commission required the 

pipeline, for informational purposes, to 

post notice of the transactions on its 

electronic bulletin board.36 Would a 

similar reporting requirement for 

participants in buy/sell transactions to 

notify the relevant section 311 and 

Hinshaw pipelines and for those 

pipelines to post notice of them 

reasonably mitigate concerns related to 

undue discrimination or preference or 

loss of market transparency? 

5. In ANR,37 the U.S. Court of Appeals 

for the District of Columbia Circuit held 

that the Commission must provide a 

reasonable justification for excluding 

section 311 pipelines from requirements 

imposed on interstate pipelines, where 

such regulatory differences may place 

the interstate pipelines at a competitive 

disadvantage. Would allowing buy/sell 

transactions on section 311 and 

Hinshaw pipelines, but not on interstate 

natural gas pipelines, cause any 

competitive disadvantage to interstate 

pipelines? 

6. Consistent with the NGPA’s goal of 

encouraging intrastate pipelines to 

provide interstate service, the 

Commission has not imposed on 

intrastate pipelines all of the Part 284 

requirements imposed on interstate 

pipelines. Would extending the buy/sell 

prohibition to service on section 311 

and Hinshaw pipelines deter intrastate 

pipelines from participating in the 

interstate market? If so, explain what 

burdens such a prohibition places on 

section 311 and Hinshaw pipelines that 

would make them less likely to offer 

interstate service. 

B. Questions Related to Requiring 

Section 311 and Hinshaw Pipelines 

Providing Firm Service To Also Allow 

Capacity Release 

1. The Commission has consistently 

held that capacity reassignments 

promote more efficient use of firm 

pipeline capacity by enabling a holder 

of such capacity to permit its capacity 

to be used by another party for a higher 

valued use. However, Order No. 636 did 

not require section 311 and Hinshaw 

pipelines providing firm interstate 

services to offer capacity release because 

of a concern that imposing all the 

requirements of Order No. 636 on such 

pipelines could discourage them from 

offering interstate services. Should the 

Commission reexamine its decision not 

to require section 311 and Hinshaw 

pipelines to offer capacity release in 

light of market changes since the 

issuance of Order No. 636 in 1992 and 

the success of the interstate capacity 

release program? 

2. As discussed above, the U.S. Court 

of Appeals for the District of Columbia 

Circuit has held that the Commission 

‘‘must provide a reasonable justification 

for excluding’’ an intrastate pipeline 

from a requirement that binds interstate 

pipelines.38 Similarly, the Commission 

has held that it may grant intrastate 

facilities ‘‘additional flexibility,’’ but not 

if lighter regulation would ‘‘harm any 

party [or] impede the Commission’s goal 

of fostering a national pipeline grid.’’ 39

Does the absence of a transparent 

method for shippers on section 311 and 

Hinshaw pipelines to reassign their 

capacity interfere with the 

Commission’s goal of fostering an 

efficient national pipeline grid in which 

buyers and sellers of natural gas have 

the maximum ability to reach one 

another? Would requiring some or all 

section 311 and Hinshaw pipelines to 

offer capacity release provide sufficient 

benefits to the market as a whole to 

outweigh any costs incurred as a result 

of such a requirement? Does exempting 

section 311 and Hinshaw pipelines from 

offering capacity release give them a 

competitive advantage over interstate 

pipelines? 

3. Should any requirement for section 

311 and Hinshaw pipelines to offer 

capacity release be limited to some 

category of such pipelines whose 

services significantly affect interstate 

markets? If so, how should that category 

be defined (e.g., based on size as shown 

by annual throughput above a certain 

level, percentage of business that is 

interstate, or storage providers with 

market-based rates)? 

4. In Order No. 720,40 the Commission 

required major non-interstate pipelines, 

defined as those pipelines that are not 

natural gas companies under the NGA 

and deliver annually more than 50 

million MMBtu measured in average 

deliveries over the past three years, to 

post daily scheduled volume 

information. Should the Commission 

adopt the threshold utilized in Order 

No. 720 to determine which section 311 

and Hinshaw pipelines would be 

required to offer capacity release? 

5. In this regard, based upon our 

review of existing section 311 and 

Hinshaw pipelines, there are some 

intrastate pipelines whose current 

service consists virtually entirely of 

interstate service provided under NGPA 

section 311.41 This is particularly true of 

some of the newer section 311 and 

Hinshaw storage providers. Should any 

requirement to offer capacity release be 

limited to section 311 and Hinshaw 

pipelines whose business is 

predominantly interstate? If so, what 

standard should be used to determine if 

such a pipeline’s business is 

predominantly interstate? 

6. The capacity release program is 

only applicable to firm services, and the 

Commission does not require section 

311 and Hinshaw pipelines to offer firm 

services. Would a requirement that 

section 311 and Hinshaw pipelines 

offering firm service also offer capacity 

release discourage such pipelines from 

offering any firm interstate service? 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
66050 Federal Register / Vol. 75, No. 207 / Wednesday, October 27, 2010 / Proposed Rules 

Would this concern be minimized if the 

requirement to offer capacity release is 

limited to larger section 311 and 

Hinshaw pipelines whose services are 

predominantly interstate? 

7. If section 311 and Hinshaw 

pipelines are required to offer capacity 

release, should the regulations be the 

same as the capacity release regulations 

for interstate pipelines set forth in 

section 284.8 of the Commission’s 

regulations? Would a subset of those 

regulations be sufficient for purposes of 

preventing undue discrimination and 

promoting transparency, while 

minimizing any burden on the pipelines 

offering capacity release? 

19. Finally, as we recognized in the 

APS/Sequent order, the Commission has 

not previously addressed the issue of 

whether the buy/sell prohibition applies 

to interstate service provided by section 

311 and Hinshaw pipelines. Thus, until 

the Commission issued that order, there 

was no clear policy prohibiting such 

transactions. Therefore, the Commission 

will not institute any enforcement 

actions with respect to prior buy/sell 

transactions involving section 311 and 

Hinshaw pipelines. In addition, the 

Commission grants a blanket waiver of 

the prohibition on buy/sell transactions 

to allow existing and new buy/sell 

transactions involving section 311 and 

Hinshaw pipelines to continue to take 

place until the Commission issues a 

further order in this proceeding. This 

will avoid disrupting any ongoing 

relationships established through 

currently existing buy/sell transactions 

and also avoid discouraging beneficial 

new arrangements, while the 

Commission considers the policy issues 

raised in this proceeding. As we 

recognized in the APS/Sequent order, 

capacity reassignments can promote 

more efficient use of firm pipeline 

capacity by enabling a holder of such 

capacity to permit its capacity to be 

used by another party for a higher 

valued use. 

III. Procedure for Comments 

20. The Commission invites interested 

persons to submit comments and other 

information on the matters, issues, and 

specific questions identified in this 

notice. Comments are due 60 days from 

the date of publication in the Federal 

Register. Comments must refer to 

Docket No. RM11–1–000, and must 

include the commenter’s name, the 

organization they represent, if 

applicable, and their address. 

21. The Commission encourages 

comments to be filed electronically via 

the eFiling link on the Commission’s 

Web site at http://www.ferc.gov. The 

Commission accepts most standard 

word processing formats. Documents 

created electronically using word 

processing software should be filed in 

native applications or print-to-PDF 

format and not in a scanned format. 

Commenters filing electronically do not 

need to make a paper filing. 

22. Commenters unable to file 

comments electronically must mail or 

hand deliver an original copy of their 

comments to: Federal Energy Regulatory 

Commission, Secretary of the 

Commission, 888 First Street, NE., 

Washington, DC 20426. The current 

requirements are specified on the 

Commission’s Web site, see, e.g., the 

‘‘Quick Reference Guide for Paper 

Submissions,’’ available at http:// 

www.ferc.gov/docs-filing/efiling.asp, or 

via phone from FERC Online Support at 

202–502–6652 or toll-free at 1–866– 

208–3676. 

23. All comments will be placed in 

the Commission’s public files and may 

be viewed, printed, or downloaded 

remotely as described in the Document 

Availability section below. Commenters 

are not required to serve copies of their 

comments on other commenters. 

IV. Document Availability 

24. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and print the contents of this 

document via the Internet through the 

Commission’s Home Page (http:// 

www.ferc.gov) and in the Commission’s 

Public Reference Room during normal 

business hours (8:30 a.m. to 5 p.m. 

Eastern time) at 888 First Street, NE., 

Room 2A, Washington, DC 20426. 

25. From the Commission’s Home 

Page on the Internet, this information is 

available in the Commission’s document 

management system, eLibrary. The full 

text of this document is available on 

eLibrary in PDF and Microsoft Word 

format for viewing, printing, and 

downloading. To access this document 

in eLibrary, type the docket number 

(excluding the last three digits) in the 

docket number field. 

26. User assistance is available for 

eLibrary and the Commission’s Web site 

during normal business hours. For 

assistance, please contact the 

Commission’s Online Support at 1–866– 

208–3676 (toll free) or 202–502–6652 

(e-mail at FERCOnlineSupport@ferc.gov) 

or the Public Reference Room at 202– 

502–8371, TTY 202–502–8659 (e-mail at 

public.referenceroom@ferc.gov). 

By direction of the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

[FR Doc. 2010–27156 Filed 10–26–10; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

19 CFR Part 111 

[Docket No. USCBP–2010–0038] 

RIN 1651–AA80 

Permissible Sharing of Client Records 

by Customs Brokers 

AGENCIES: Customs and Border 

Protection, Department of Homeland 

Security. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document proposes to 

amend Customs and Border Protection 

(CBP) regulations in title 19 of the Code 

of Federal Regulations (CFR) pertaining 

to the obligations of customs brokers to 

keep clients’ information confidential. 

The proposed amendment would allow 

brokers, upon the client’s consent in a 

written authorization, to share client 

information with affiliated entities 

related to the broker so that these 

entities may offer non-customs business 

services to the broker’s clients. The 

proposed amendment would also allow 

customs brokers to use a third-party to 

perform photocopying, scanning, and 

delivery of client records for the broker. 

These proposed changes are intended to 

update the regulation to reflect modern 

business practices, while protecting the 

confidentiality of client (importer) 

information. In addition, the proposed 

changes would align the regulations 

with CBP’s previously published rulings 

concerning brokers’ confidentiality of 

client information. 

DATES: Comments must be received on 

or before December 27, 2010. 

ADDRESSES: You may submit comments, 

identified by docket number, by one of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

via docket number USCBP–2010–0038. 

• Mail: Trade and Commercial 

Regulations Branch, U.S. Customs and 

Border Protection, 799 9th Street, NW. 

(Mint Annex), Washington, DC 20229– 

1179. 

Instructions: All submissions received 

must include the agency name and 

docket number for this rulemaking. All 


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