Document ID: FERC-2006-0385-0002
Agency: ferc
Document Type: Rule
Title: Revisions To Record Retention Requirements for Unbundled Sales Service, Persons Holding Blanket Marketing Certificates, and Public Utility Market-Based Rate Authorization Holders
Posted Date: 2006-05-26T04:00Z

[Federal Register: May 26, 2006 (Volume 71, Number 102)]
[Rules and Regulations]               
[Page 30284-30287]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my06-9]                         

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 35 and 284

[Docket No. RM06-14-000; Order No. 677]

 
Revisions To Record Retention Requirements for Unbundled Sales 
Service, Persons Holding Blanket Marketing Certificates, and Public 
Utility Market-Based Rate Authorization Holders

Issued May 19, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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

SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
amending its regulations to extend from three to five years the record 
retention requirement applicable to transactions pursuant to blanket 
certificates for unbundled natural gas sales services held by 
interstate natural gas pipelines, blanket marketing certificates held 
by persons making sales for resale of natural gas at negotiated rates 
in interstate commerce, and market-based rate authorizations held by 
certain sellers of electricity and related products.

DATES: Effective Date: This Final Rule will become effective June 26, 
2006.

[[Page 30285]]

FOR FURTHER INFORMATION CONTACT:
Mark Higgins, Office of Enforcement, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
8273. Mark.Higgins@ferc.gov.
Tina Ham, Office of General Counsel, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. (202) 502-
6224. Tina.Ham@ferc.gov.
Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead 
Brownell, and Suedeen G. Kelly; Revisions to Record Retention 
Requirements for Unbundled Sales Service, Persons Holding Blanket 
Marketing Certificates, and Public Utility Market-Based Rate 
Authorization Holders; Final Rule

I. Introduction

    1. On February 16, 2006, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) in which we proposed to revise Sec. Sec.  284.288(b) 
and 284.403(b) of our regulations,\1\ as promulgated by Order No. 
644.\2\ Sections 284.288(b) and 284.403(b) of the regulations require 
sellers to retain for a period of three years all data and information 
upon which they billed the prices charged for natural gas sales or 
prices they reported for use in price indices. Similarly, the 
Commission proposed revising new Sec.  35.37(d) of the Commission's 
regulations under the Federal Power Act. Section 35.37(d) is the 
codification of former Market Behavior Rule 5.\3\ Section 35.37(d) 
requires that sellers retain for a period of three years all data and 
information upon which they billed the prices charged for electricity 
and related products in sales made under their market-based rate 
tariffs and authorizations or prices they reported for use in price 
indices.\4\
---------------------------------------------------------------------------

    \1\ 18 CFR 284.288(b) and 284.403(b) (effective March 29, 2006). 
Prior to March 29, 2006, the record retention rules were contained 
in 18 CFR 284.288(c) and 284.403(c), but were re-designated at 
paragraphs (b) of those sections in Amendments to Codes of Conduct 
for Unbundled Sales Service and for Persons Holding Blanket 
Marketing Certificates, Order No. 673, 71 FR 9709 (Feb. 27, 2006), 
FERC Stats. & Regs. ] 31,207 (2006).
    \2\ Amendments to Blanket Sales Certificates, Order No. 644, 68 
FR 66323 (Nov. 26, 2003), FERC Stats. & Regs. ] 61,153 (2003), reh'g 
denied 107 FERC ] 61,174 (2004) (Order No. 644).
    \3\ The Commission recently codified certain Market Behavior 
Rules, including Market Behavior Rule 5, which was formerly a tariff 
condition for market-based rate sellers of electricity and related 
products. Conditions for Public Utility Market-Based Rate 
Authorization Holders, 114 FERC ] 61,163 (2006). The Commission in 
that order also rescinded Market Behavior Rules 2 and 6. Id. The 
Commission had promulgated former Market Behavior Rule 5 along with 
the other Market Behavior Rules in Investigation of Terms and 
Conditions of Public Utility Market-Based Rate Authorizations, 
``Order Amending Market-Based Rate Tariffs and Authorizations,'' 105 
FERC ] 61,218 (2003), reh'g denied, 107 FERC ] 61,175 (2004) (Market 
Behavior Rules Order).
    \4\ 18 CFR 35.37(d) (effective February 27, 2006).
---------------------------------------------------------------------------

II. Background

    2. In the NOPR, the Commission stated that subsequent to the 
issuance of Order No. 644 and the Market Behavior Rules Order, Congress 
provided the Commission with specific anti-manipulation authority in 
sections 315 and 1283 of the Energy Policy Act of 2005 (EPAct 2005).\5\ 
To implement this new authority, the Commission issued Order No. 670, 
where we said we would adhere to the generally applicable five-year 
statute of limitations where we seek civil penalties for violations of 
the new anti-manipulation rules.\6\ In the NOPR we pointed out that it 
would be inconsistent to allow complaints or enforcement actions 
seeking civil penalties for alleged violations to our anti-manipulation 
authority to be commenced more than three years after the transactions 
giving rise to such actions were carried out, but not to require that 
the data and information related to such transactions be retained for 
at least that long. Accordingly, the NOPR proposed to extend the record 
retention requirements of Sec. Sec.  284.288(b) and 284.403(b) 
regarding natural gas records, and Sec.  35.37(d) regarding electric 
records, from three to five years, in order to be consistent with the 
recently issued Order No. 670.\7\
---------------------------------------------------------------------------

    \5\ Energy Policy Act of 2005, Public Law 109-58, 119 Stat. 594 
(2005), sections 315 and 1283.
    \6\ Prohibition of Energy Market Manipulation, Order No. 670, 71 
FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ] 31,202, p. 30,069 at 
P 63 (2006) (Order No. 670). In Order No. 670, the Commission did 
not adopt a specific statute of limitations on complaints or 
enforcement actions that may be brought pursuant to the Commission's 
anti-manipulation authority, but we did note that, when a statutory 
provision under which civil penalties may be imposed lacks its own 
statute of limitations (as is the case with respect to the 
Commission's anti-manipulation authority), a five-year limitation 
period applies. Id. citing 28 U.S.C. 2462 (2000).
    \7\ NOPR at P 7.
---------------------------------------------------------------------------

III. Discussion

    3. Two parties, the Edison Electric Institute and its Alliance of 
Energy Suppliers (together, EEI) and the American Public Gas 
Association (APGA), filed comments.\8\ EEI and APGA seek clarification 
regarding certain implementation issues involving the Commission's 
proposal to extend the record retention requirement from three to five 
years, but do not object to the proposed five-year retention period.
---------------------------------------------------------------------------

    \8\ Another party, Edison Mission Energy, Edison Mission Market 
and Trading, Inc., and Midwest Generation EME, LLC (Edison Mission), 
filed a motion to intervene pursuant to the Commission's Rules of 
Practice and Procedure, 18 CFR 385.212 and 385.214.
---------------------------------------------------------------------------

A. Comments

    4. EEI states that under the current rule, a party is no longer 
required to maintain records created on March 1, 2002 after March 1, 
2005.\9\ EEI points out that if the proposed rule were finalized on May 
1, 2006, then parties who no longer have records from March 2002 would 
technically be out of compliance with the Commission's rules because 
the March 2002 records were not maintained for five years.\10\ 
Therefore, EEI requests that the Commission specify in the Final Rule 
that all new records must be maintained for five years and any existing 
records must be maintained for five years, but that removal of records 
three or more years old prior to issuance of the Final Rule will not be 
a rule violation.\11\
---------------------------------------------------------------------------

    \9\ EEI at 2.
    \10\ Id.
    \11\ Id.
---------------------------------------------------------------------------

    5. APGA supports the Commission's proposal to extend the record 
retention requirement provided in Sec. Sec.  284.288 and 284.403 of the 
Commission's regulations from three to five years.\12\ APGA, however, 
requests the Commission clarify that the five-year period is a minimum 
period, subject to extension if at the end of a five-year period 
private parties or the Commission have initiated an investigation or 
formal litigation (whether regulatory or judicial) against a 
jurisdictional entity.\13\ Accordingly, APGA urges the Commission to 
make clear that destruction of records at the end of the five-year 
period (or thereafter) is not permitted so long as an investigation or 
formal litigation involving the affected entity is ongoing.\14\
---------------------------------------------------------------------------

    \12\ APGA at 2.
    \13\ Id.
    \14\ Id.
---------------------------------------------------------------------------

B. Commission Determination

    6. The Commission adopts the Final Rule as proposed in the NOPR and 
revises Sec. Sec.  284.288(b) and 284.403(b) of our regulations to 
require applicable sellers to retain for a period of five years all 
data and information upon which they bill the prices charged for 
natural gas sales or prices they report for use in price indices. 
Similarly, we revise Sec.  35.37(d) of the Commission's regulations to 
require applicable sellers to retain for a period of five years all 
data and information upon which they bill the prices charged for 
electricity and related products in sales made under their market-based 
rate tariffs and authorizations or prices they report for

[[Page 30286]]

use in price indices. These revisions reflect a two-year increase in 
the record retention requirement applicable to transactions pursuant to 
blanket certificates for unbundled natural gas sales services held by 
interstate natural gas pipelines, blanket marketing certificates held 
by persons making sales for resale of natural gas at negotiated rates 
in interstate commerce, and market-based rate authorizations held by 
certain sellers of electricity and related products. The extension of 
the record retention requirement we adopt here is necessary to ensure 
consistency with the new rule prohibiting market manipulation adopted 
in Order No. 670 and the generally applicable five-year statute of 
limitations where we seek civil penalties for violations of the new 
anti-manipulation rules or other rules, regulations, or orders as to 
which the price data may be relevant.
    7. In response to EEI's comments, the Final Rule does not apply 
retroactively to records that were not retained because they were three 
or more years old. The Final Rule requires that all new records must be 
retained for five years and any existing records, including those more 
than three years old, must be retained for five years. However, the 
failure to retain records more than three years old, prior to the 
effective date of the Final Rule, will not be a violation of the Final 
Rule.
    8. In response to APGA's comments, the Commission notes that upon 
the commencement of an investigation, whether formal or informal, the 
entity being investigated is routinely directed to preserve and retain 
all existing and future records relevant to the subject matter of the 
investigation. Moreover, we note that Sec. Sec.  125.2(l) and 225.2(l) 
of our regulations require that entities involved in litigation are to 
retain all relevant records.\15\
---------------------------------------------------------------------------

    \15\ 18 CFR 125.2(l) and 225.2(l) (2005).
---------------------------------------------------------------------------

IV. Information Collection Statement

    9. As discussed herein, the Commission is extending the record 
retention period of Sec. Sec.  284.288(b), 284.403(b) and 35.37(d) of 
the Commission's regulations from three years to five years consistent 
with the statute of limitations that applies to actions seeking civil 
penalties for violations of the Commission's new anti-manipulation rule 
or other rules, regulations, or orders as to which price data and 
information may be relevant. The increased duration of information 
retention contained in this Final Rule has been submitted to the Office 
of Management and Budget (OMB) for review under the section 3507(d) of 
the Paperwork Reduction Act of 1995.\16\ OMB's regulations require OMB 
to approve certain information collection requirements imposed by 
agency rule.\17\
---------------------------------------------------------------------------

    \16\ 44 U.S.C. 3507(d) (2000).
    \17\ 5 CFR 1320.11 (2005).
---------------------------------------------------------------------------

    10. The Commission's regulations in Sec. Sec.  284.288(b), 
284.403(b) and 35.37(d) specify the mandatory record retention 
requirements applicable to certain sellers of natural gas and 
electricity. The information provided to the Commission under part 284 
for record retention purposes remains identified as FERC-549. The 
Commission identifies the information provided for under part 35 as 
FERC-516. As discussed above, the Commission is extending the mandatory 
record retention requirements in Parts 35 and 284 of its regulations 
for an additional two years.
    11. Comments were solicited in the NOPR on the need for the 
increased record retention period, whether it will have practical 
utility, the accuracy of burden estimates in the NOPR, and for 
suggested methods of minimizing respondents' burdens. No comments were 
received on the need for, or burden or costs, of the increased records 
retention period. The burden for complying with this Final Rule is 
estimated as follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of       Number of       Hours per     Total annual
       Data collection FERC-516 & FERC-549          respondents      responses       response          hours
----------------------------------------------------------------------------------------------------------------
Records Retention:
    FERC-516....................................           1,150               1               2           2,300
    FERC-549....................................             222               1               2             444
                                                 ---------------------------------------------------------------
        Totals..................................           1,372               1               2           2,744
----------------------------------------------------------------------------------------------------------------

    Total Annual hours for Record Retention: Recordkeeping, 2,744 
hours.
    Information Retention Costs: The Commission projects an annualized 
This cost is based on 120 cubic feet (20 four-drawer file cabinets 
transferred off site to a storage facility). The costs include cubic 
feet of storage plus the cost of floor space plus the costs for records 
storage cartons. The Commission is requiring that entities retain 
records for an additional two years. Total costs = $2,584,848. Greater 
savings can be accomplished if documents are stored electronically, 
i.e., one file cabinet (four-drawer) (10,000 pages on average) = 500 
MegaBytes (MByte) = one CD ROM.
    Title: FERC-549, Gas Pipeline Rates: Natural Gas Policy Act, 
Section 311; FERC-516, Electric Rate Schedule Filings.
    Action: Proposed Collection.
    OMB Control No: 1902-0086 and 1902-0096.
    Respondents: Businesses or other for profit.
    Frequency of Responses: Records of market-based rate transactions 
shall be retained for five years instead of three.
    Necessity of the Information: It would be very difficult (if 
possible at all) for the Commission to monitor and prosecute violations 
of pipeline and blanket certificate sales of natural gas and market-
based rate sales of electricity unless the underlying data and 
information supporting the prices charged for sales were retained. This 
data retention requirement is consistent with the information and data 
retention requirements applicable to sellers having cost-based 
rates.\18\ Requiring pipeline and blanket certificate sellers of 
natural gas, and market-based rate sellers of electricity, to retain 
records is also consistent with the Commission's past practices as set 
forth in Sec. Sec.  284.288(b), 284.403(b) and 35.37(d) of the 
Commission's regulations and, although the Commission adopts a 
retention period of five years (as opposed to the previous three-year 
requirement), such longer period is now required to ensure the 
information and data will remain available to support complaints and 
enforcement actions involving civil penalties for violations that 
occurred more than three years earlier.
---------------------------------------------------------------------------

    \18\ See 18 CFR parts 125 and 225 (2005).

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

[[Page 30287]]

V. Environmental Analysis

    12. 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.\19\ The 
Commission has categorically excluded certain actions from this 
requirement as not having a significant effect on the human 
environment. Included in the exclusion are rules that are clarifying, 
corrective, or procedural or that do not substantially change the 
effect of the regulations being amended.\20\ This Final Rule does not 
substantially change the regulations being amended, but merely extends 
for an additional period of time the existing retention requirements of 
the regulations and, therefore, falls under this exception; 
consequently, no environmental assessment is necessary.
---------------------------------------------------------------------------

    \19\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (1987), FERC Stats. & Regs. ] 30,783 
(1987).
    \20\ 18 CFR 380.4(a)(2)(ii) (2005).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act Certification

    13. The Regulatory Flexibility Act of 1980 \21\ generally requires 
a description and analysis of final rules that will have significant 
economic impact on a substantial number of small entities.\22\ The 
Commission is not required to make such analyses if a rule would not 
have such an effect. The Final Rule merely extends an already existing 
record retention requirement from three to five years. Therefore, the 
Commission certifies that the Final Rule will not have a significant 
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 601-612 (2000).
    \22\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act, which defines a 
``small business concern'' as a business which is independently 
owned and operated and which is not dominant in its field of 
operation. 15 U.S.C. 632 (2000). The Small Business Size Standards 
component of the North American Industry Classification System 
defines a small electric utility as one that, including its 
affiliates, is primarily engaged in the generation, transmission, 
and/or distribution of electric energy for sale and whose total 
electric output for the preceding fiscal years did not exceed 4 
million MWh. 13 CFR 121.201 (Section 22, Utilities, North American 
Industry Classification System, NAICS) (2004).
---------------------------------------------------------------------------

VII. Document Availability

    14. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through 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. E.S.T.) at 888 First Street, NE., Room 2A, 
Washington, DC 20426.
    15. From the Commission's Home Page on the Internet, this 
information is available in the eLibrary. The full text of this 
document is available on eLibrary both 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.
    16. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours. For assistance, please contact 
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).

VIII. Effective Date and Congressional Notification

    17. This Final Rule will be effective June 26, 2006. 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.\23\ The Commission will 
submit the Final Rule to both houses of Congress and the Government 
Accountability Office.
---------------------------------------------------------------------------

    \23\ See 5 U.S.C. 804(2) (2000)
---------------------------------------------------------------------------

List of Subjects

18 CFR Part 35

    Electric power rates, Electric utilities, Reporting and 
recordkeeping requirements.

18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping 
requirements.

    By the Commission.
Magalie R. Salas,
Secretary.

0
In consideration of the foregoing, the Commission amends parts 35 and 
284 of Chapter I, Title 18, Code of Federal Regulations, as follows:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 35 continues to read as follows:

    Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

0
2. In Sec.  35.37, paragraph (d), the word ``three'' is removed and the 
word ``five'' is inserted in its place.

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

0
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.

0
2. In Sec.  284.288, paragraph (b), the word ``three'' is removed and 
the word ``five'' is inserted in its place.

0
3. In Sec.  284.403, paragraph (b), the word ``three'' is removed and 
the word ``five'' is inserted in its place.

 [FR Doc. E6-8098 Filed 5-25-06; 8:45 am]

BILLING CODE 6717-01-P