Document ID: FERC-2011-0549-0001
Agency: ferc
Document Type: Proposed Rule
Title: Bidding by Affiliates in Open Seasons for Pipeline Capacity
Posted Date: 2011-04-13T04:00Z

[Federal Register Volume 76, Number 71 (Wednesday, April 13, 2011)]
[Proposed Rules]
[Pages 20571-20575]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8915]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM11-15-000]

Bidding by Affiliates in Open Seasons for Pipeline Capacity

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking, DOE.

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SUMMARY: The Federal Energy Regulatory Commission is proposing 
revisions to its regulations governing interstate natural gas pipelines 
to prohibit multiple affiliates of the same entity from bidding in an 
open season for pipeline capacity in which the pipeline may allocate 
capacity on a pro rata basis, unless each affiliate has an independent 
business reason for submitting a bid. The Commission is also proposing 
that if more than one affiliate of the same entity participates in such 
an open season, then none of those affiliates may release any capacity 
obtained in that open season pursuant to a pro rata allocation to any 
affiliate, or otherwise allow any affiliate to obtain the use of the 
allowed capacity.

DATES: Comments are due May 31, 2011.

ADDRESSES: You may submit comments, identified by docket number and in 
accordance with the requirements posted on the Commission's Web site, 
http://www.ferc.gov. Comments may be submitted by any of the following 
methods:
     Agency Web Site: Documents created electronically using 
word processing software should be filed in native applications or 
print-to-PDF format, and not in a scanned format, at http://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery: 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. These 
requirements can be found 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.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process,

[[Page 20572]]

see the Comment Procedures section of this document.

FOR FURTHER INFORMATION CONTACT:

Jennifer Kunz, Office of the General Counsel, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. 
Jennifer.Kunz@ferc.gov. (202) 502-6102.
Robert McLean, Office of the General Counsel, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426. 
Robert.McLean@ferc.gov. (202) 502-8156.

Notice of Proposed Rulemaking

Table of Contents

(April 7, 2011)

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                                                              Paragraph
                                                                 Nos.
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I. Background..............................................            2
II. Prohibition on Multiple Affiliate Bidding in Open                  9
 Seasons for Pipeline Capacity.............................
III. Prohibition on Release of Capacity....................           15
IV. Regulatory Requirements................................           18
    A. Information Collection Statement....................           18
    B. Environmental Analysis..............................           19
    C. Regulatory Flexibility Act..........................           20
    D. Comment Procedures..................................           22
    E. Document Availability...............................           26
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    1. In this Notice of Proposed Rulemaking, the Commission proposes 
to revise its Part 284 regulations to prohibit multiple affiliate 
bidding in open seasons for interstate natural gas pipeline capacity 
and the subsequent release of acquired capacity to affiliates under 
certain circumstances. Specifically, the Commission proposes to 
prohibit multiple affiliates of the same entity from bidding in an open 
season for pipeline capacity in which the pipeline may allocate 
capacity on a pro rata basis, unless each affiliate has an independent 
business reason for submitting a bid. The Commission also proposes that 
if more than one affiliate of the same entity participates in such an 
open season, then none of those affiliates may release any capacity 
obtained in that open season pursuant to a pro rata allocation to any 
affiliate, or otherwise allow any affiliate to obtain the use of the 
allowed capacity. These proposals would prevent anticompetitive gaming 
of the pro rata allocation methodology by using multiple affiliates of 
the same entity to acquire a larger share of the available capacity 
than one affiliate would be able to acquire by itself.

I. Background

A. Open Seasons for Pipeline Capacity

    2. The Commission's policy under the Natural Gas Act (NGA) \1\ is 
to allocate available interstate pipeline capacity to the shipper that 
values it the most, up to the maximum rate.\2\ In furtherance of this 
goal, the Commission favors the use of open seasons to allocate 
capacity and permits but does not require a net present value (NPV) 
evaluation as a tool for determining the highest valued use.\3\
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    \1\ 15 U.S.C. 717 et al. (2006).
    \2\ N. Natural Gas Co., 108 FERC ] 61,044, at P 11 (2004); 
Texican N. La. Transport, LLC v. Southern Natural Gas Co., 129 FERC 
] 61,270, at P 70 (2009) (Texican I), order on reh'g, 132 FERC ] 
61,167, at P 23, 26 (2010) (Texican II).
    \3\ Texican II, 132 FERC ] 61,167 at P 26.
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    3. Some pipelines hold open seasons to alert shippers to the 
availability of capacity on the pipeline and allow the shippers to bid 
for available capacity. The pipeline's open season process is an open 
and transparent procedure that is set forth in the pipeline's tariff. 
The pipeline notifies shippers of the availability of capacity by 
posting an open season notice on its EBB and/or Web site for the 
available capacity. During the open season, the Commission requires 
pipelines to sell all available capacity to shippers willing to pay the 
pipeline's maximum recourse rate.\4\
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    \4\ Promotion of a More Efficient Capacity Release Market, 72 FR 
65916 (November 26, 2007), FERC Stats. & Regs. ] 32,625, at P 40 
(2007), (citing Tenn. Gas Pipeline Co., 91 FERC ] 61,053 (2000), 
reh'g denied, 94 FERC ] 61,097 (2001), petitions for review denied 
sub nom., Process Gas Consumers Group v. FERC, 292 F.3d 831, 837 (DC 
Cir. 2002)).
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    4. NPV is a method for awarding capacity from the bids received 
during the open season.\5\ NPV is a standard method of evaluating bids 
for capacity by using the time value of money to determine the present 
value of a time series of discounted cash flows.\6\ The highest bidder, 
based on the NPV of the bid, receives the capacity. Factors determining 
NPV are price, volume of gas, and duration of the contract. The 
Commission has stated that a ``net present value evaluation * * * 
allocates capacity to the shipper who will produce the greatest revenue 
and the least unsubscribed capacity. As such, it is an economically 
efficient way of allocating capacity and is consistent with Commission 
policy.'' \7\
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    \5\ NPV is not the only method a pipeline could use. Another is 
the ``first come-first served'' approach, where the first shipper to 
submit a qualifying bid receives the capacity.
    \6\ Saltville Gas Storage Co., L.L.C., 128 FERC ] 61,257, at P 2 
n.3 (2009).
    \7\ Tenn. Gas Pipeline Co., 76 FERC ] 61,101, at 61,522 (1996), 
order on reh'g, 79 FERC ] 61,297 (1997), order on reh'g, 82 FERC ] 
61,008 (1998), remanded sub nom. Process Gas Consumers Group v. 
FERC, 177 F.3d 995 (DC Cir. 1999), order on compliance, 91 FERC ] 
61,333 (2000), order on remand, 91 FERC ] 61,053 (2000), reh'g 
denied, 94 FERC ] 61,097 (2001), petitions for review denied sub 
nom. Process Gas Consumers Group v. FERC, 292 F.3d 831, 837 (DC Cir. 
2002).
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    5. In the event that there is not sufficient capacity to meet all 
equal maximum bids, pipelines apply a tiebreaker mechanism. One such 
mechanism is the pro rata allocation methodology. Under a pro rata 
allocation tiebreaker mechanism, in the event that there is not 
sufficient capacity to meet all qualifying bids, the capacity is 
allocated pro rata, i.e., based on the ratio of each shipper's 
respective nomination to all qualifying nominations, applied to the 
total available capacity.\8\
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    \8\ An alternative tiebreaker mechanism for multiple maximum 
bids is to award the capacity to the earliest applicant. The 
Commission has stated that ``no single tiebreaker method is 
definitely better than other methods; each system has advantages and 
disadvantages * * *. So long as its method is reasonable [a 
pipeline] may choose any method it wishes for inclusion as the 
default tiebreaker in its tariff.'' Trailblazer Pipeline Co., 103 
FERC ] 61,225, at 61,869 (2003), order on reh'g and compliance 
filing, 108 FERC ] 61,049, at 61,305 (2004).
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B. Multiple Affiliate Bidding

    6. It has come to the attention of the Commission that some 
entities have developed and applied a strategy of bidding with multiple 
affiliates in open seasons for available capacity in order to defeat 
the pro rata allocation tiebreaker mechanism and obtain a greater share 
of the available capacity than a single bidder could have acquired by 
itself. Under conditions where the available capacity is limited and 
the value of the

[[Page 20573]]

capacity is high, shippers are strongly motivated to obtain as much of 
that valuable capacity as possible in order to take advantage of the 
opportunity for profit. Where the available capacity is finite, the 
price is capped by the pipeline's maximum tariff rate, and the 
tiebreaker is a pro rata allocation, shippers can obtain more capacity 
than they would be able to obtain themselves by bidding multiple 
affiliates to defeat the pro rata allocation mechanism.
    7. Since the pro rata allocation mechanism will result in 
proportional shares of the capacity being distributed to the qualifying 
bidders, each affiliate with a maximum NPV bid could then release the 
capacity to a single affiliate or otherwise allow its affiliate 
effectively to obtain the use of the allocated capacity, resulting in 
an entity receiving a larger share than it would have been able to 
acquire by itself. Such gaming of the pro rata allocation mechanism has 
a chilling effect on competition and permits entities that apply a 
multiple affiliate bidding strategy inappropriately to gain a 
disproportionate share of available capacity by denying a fair 
distribution to all maximum bidders. This has the effect of harming 
entities that submit only one bid and, by extension, harming their 
customers.
    8. The foregoing discussion is based upon recent Commission 
experience with multiple affiliate bidding.\9\ Based on that 
experience, the Commission now proposes to revise its regulations to 
make explicit that, unless independent business reasons exist, as 
discussed further below, such bidding is inappropriate and, therefore, 
prohibited.
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    \9\ Tenaska Marketing Ventures, et al., 126 FERC ] 61,040 (2009) 
(order approving stipulations and agreements). See also Trailblazer 
Pipeline Co., 101 FERC ] 61,405 (2002), order on technical 
conference and denying reh'g, 103 FERC ] 61,225 (2003), order on 
reh'g and compliance filing, 108 FERC ]61,049 (2004). The Commission 
notes that the conduct on Trailblazer predated section 4A of the 
NGA, 15 U.S.C. 717c-1 (2006), the anti-manipulation authority 
granted to the Commission in the Energy Policy Act of 2005, Public 
Law 109-58, 119 Stat. 594 (2005).
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II. Prohibition on Multiple Affiliate Bidding in Open Seasons for 
Pipeline Capacity

    9. The Commission is of the view that multiple affiliate bidding as 
described above lessens competition because other bidders not engaging 
in similar conduct will necessarily receive less capacity--not because 
such bidders value the capacity any less, but because they bid only 
through the unit of the company intending to use the capacity or 
because they did not have multiple affiliates. Those who submit bids by 
multiple affiliates receive a disproportionate share of the available 
capacity, placing bidders that did not submit bids by multiple 
affiliates at a competitive disadvantage. In theory, a company could 
employ this strategy to the extreme by bidding hundreds or even 
thousands of affiliates in a single open season to squeeze out 
competitors and give that company a dominant share of the capacity. The 
affiliates bidding would not need to have any direct customers or 
employees to confer the competitive advantage to the affiliate designed 
to benefit from the multiple affiliate bidding--in fact, a company 
could create affiliate corporations merely for the sake of bidding in 
open seasons to obtain the benefit of multiple affiliate bidding. 
Regardless of the degree to which multiple affiliate bidding is used to 
obtain a competitive advantage, ultimately bidders that do not submit 
bids by multiple affiliates will be harmed, and by extension their 
customers will be harmed, by losing valuable capacity to bidders that 
employ a multiple affiliate bidding strategy.
    10. Furthermore, this multiple bidding behavior frustrates the 
Commission's policy of allocating capacity to the shipper that values 
it the most. By bidding multiple affiliates under a pro rata 
tiebreaker, an entity can gain a greater share of valuable capacity not 
because it values the capacity more than other bidders, but merely 
because it arranges to submit more maximum NPV bids through the use of 
affiliates.
    11. The Commission, however, recognizes that not all multiple 
affiliate bidding is used to defeat a pro rata allocation mechanism. In 
some cases, affiliates may have independent business reasons for 
submitting their bids. For example, a marketing arm of an energy 
company may bid to secure capacity for its wholesale customers and a 
retail operation of the same company may bid to secure capacity to 
serve its retail customers, and each would have an independent business 
reason for its bid. Or a marketing company may have two or more 
affiliates operating in different geographic areas, thus serving 
distinct markets all of which may be served by transportation on the 
same pipeline. When affiliates bid in such cases, other bidders are not 
unduly harmed, undue discrimination is not practiced, and Commission 
policy is not violated.
    12. Although there may be instances where affiliates have an 
independent business reason for bidding for given capacity, in the 
Commission's view amendments to our existing regulations are necessary 
to prevent entities without such independent reasons from defeating a 
pro rata allocation mechanism by using multiple affiliate bidding to 
lessen competition and obtain more capacity than they could 
independently. Therefore, the Commission proposes to add a new section 
284.15 to its regulations, prohibiting multiple affiliates of the same 
entity from participating in an open season for pipeline capacity 
conducted by any interstate pipeline providing service under subparts B 
and G of part 284 of the Commission's regulations in which the pipeline 
may allocate capacity on a pro rata basis, unless each affiliate has an 
independent business reason for submitting a bid. The Commission 
proposes that, for purposes of the new regulation, the term 
``affiliate'' be defined as provided in section 358.3(a)(1) and (3) of 
the Commission's existing regulations.\10\
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    \10\ 18 CFR 358.3(a)(1) and (3) (2010). Section 358.3(a)(1) 
provides that an affiliate of a specified entity is ``another person 
that controls, is controlled by or is under common control with, the 
specified entity. An affiliate includes a division of the specified 
entity that operates as a functional unit.'' Section 358.3(a)(3) 
defines the term ``control.''
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    13. It is impossible to describe in advance every situation that 
demonstrates an independent business reason. This phrase is intended to 
assure companies bidding for capacity that our rule will not prohibit 
transactions with economic substance, in which the bidding affiliate is 
providing service of value to its customers that is facilitated or 
enhanced by the capacity being acquired, such as the scenarios 
described in P 11. Those scenarios are illustrative of situations in 
which a business unit uses awarded capacity to serve its own customers 
or otherwise acts consistently with its business plan, interests, and 
obligations. Indications that a company is not acting independently 
would be if the business unit is used by its parent or affiliate in a 
way that differs from its usual business operations, is used to perform 
transactions that an affiliate or parent could not, or is acting as an 
``alter ego'' of an affiliate or parent. The independent business 
reason criterion ensures that bidders for pipeline capacity act in a 
market-driven, pro-competitive manner, not in an effort to gain an 
unfair competitive advantage in acquiring capacity. The general 
guidance provided here reflects the fact that we oversee a dynamic and 
evolving market where addressing yesterday's concerns may not address 
tomorrow's concerns. Over time, however, experience in applying this 
rule should be instructive to both the Commission and capacity market 
participants. As we

[[Page 20574]]

apply the rule, we will be mindful of the fact that we are not only 
taking steps to assure non-discriminatory access to capacity but also 
providing guidance to market participants in general.\11\
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    \11\ The approach taken here is similar to that taken in Order 
No. 644, which adopted market behavior rules for sellers of natural 
gas. Amendments to Blanket Sales Certificates, Order No. 644, FERC 
Stats. & Regs. ] 31,153 (2003), reh'g denied 107 FERC ] 61,174 
(2004). Order No. 644 adopted rules that prohibited transactions 
without a ``legitimate business purpose'' and that were ``intended 
to or foreseeably could manipulate market prices, market conditions, 
or market rules for natural gas.'' In that case the rule prohibited 
certain transactions (such as wash trades and collusion), but the 
Commission specifically declined to limit the rule to pre-determined 
circumstances. Order No. 644, FERC Stats. & Regs. ] 31,153 at P 32-
36. Similarly, here we recognize scenarios in which the independent 
business reason standard can be met, and decline to limit the rule 
to pre-determined circumstances. The relevant market behavior rules 
adopted in Order No. 644 were rescinded after the Commission adopted 
section 1c.1 of the Regulations. Amendments to Codes of Conduct for 
Unbundled Sales Service and for Persons Holding Blanket Marketing 
Certificates, Order No. 673, FERC Stats. & Regs. ] 31,207 (2006).
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    14. This proposed rule is designed to ensure that an entity cannot 
use multiple affiliates solely to secure a larger allocation of 
capacity than it could acquire by itself. The proposed rule would also 
provide clear notice to parties participating in open seasons for 
interstate pipeline capacity that multiple affiliate bidding and 
subsequent release of acquired capacity to one affiliate, or other 
devices to confer the value of the capacity on one affiliate, are 
prohibited.

III. Prohibition on Release of Capacity

    15. The Commission adopted its capacity release program as part of 
the restructuring of interstate natural gas pipelines required by Order 
No. 636.\12\ The capacity release program permits firm shippers to 
release their capacity to others when they are not using it.\13\ The 
Commission notes that some companies bidding with multiple affiliates 
have used capacity release as the final step in consolidating multiple 
shares of capacity for use by one of the company's units.\14\ By 
releasing the capacity acquired in the open season, affiliates are able 
to transfer the capacity each acquires to a single company that 
benefits by obtaining more capacity than it could have obtained by 
itself.
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    \12\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation and Regulation of Natural 
Gas Pipelines After Partial Wellhead Decontrol, Order No. 636, 57 FR 
13267 (April 16, 1992), FERC Stats. & Regs., Regulations Preambles 
January 1991-June 1996 ] 30,939 (1992), order on reh'g, Order No. 
636-A., 57 FR 36128 (August 12, 1002), FERC Stats. & Regs., 
Regulations Preambles January 1991-June 1996 ] 30,950 (1992); order 
on reh'g, Order No. 636-B, 57 FR 57911 (Dec. 8, 1992), 61 FERC ] 
61,272 (1992), order on reh'g, 62 FERC ] 61,007 (1993), aff'd in 
part, vacated and remanded in part, United Dist. Cos. v. FERC, 88 
F.3d 1105 (DC Cir. 1996), order on remand, Order No. 636-C, 78 FERC 
] 61,186 (1997).
    \13\ In brief, under the Commission's capacity release program, 
a firm shipper (releasing shipper) sells its capacity by returning 
its capacity to the pipeline for reassignment to the buyer 
(replacement shipper). The pipeline contracts with, and receives 
payment from, the replacement shipper and then issues a credit to 
the releasing shipper. The replacement shipper on a long term, year 
or more release, may pay less than the pipeline's maximum tariff 
rate, but not more. 18 CFR 284.8(e) (2010). The results of all 
releases are posted by the pipeline on its Internet Web site and 
made available through standardized, downloadable files.
    \14\ Tenaska Marketing Ventures, et al., 126 FERC ] 61,040 at P 
13, 18.
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    16. In order to prevent the use of capacity release or other 
mechanisms as part of a scheme to game a pro rata allocation by 
transferring the benefit of the capacity to the affiliate that has a 
business use for the capacity, the Commission proposes to prohibit 
affiliates from releasing any capacity obtained in an open season 
pursuant to a pro rata allocation to any affiliate or otherwise from 
allowing any affiliate effectively to obtain the use of the allocated 
capacity. This will not inhibit two or more affiliates from obtaining 
and using valuable pro rated capacity where they each have an 
independent business reason for their bids. If the affiliate has an 
independent business reason for initially bidding on the capacity, it 
presumably has a need for the capacity once it has been awarded it. 
Therefore, requiring the capacity-winning affiliate to retain the 
capacity in such a circumstance should present little, if any, hardship 
to such affiliate. If a company believes that retaining capacity in a 
certain case would in fact create a hardship to an affiliate, the 
company can seek a waiver of the prohibition.\15\
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    \15\ If multiple affiliate bidding occurs in open seasons for 
relatively short term capacity, hardship is unlikely. If multiple 
affiliates acquire longer-term capacity, later changes in markets or 
corporate structure could create a hardship for an affiliate to keep 
the capacity it had been awarded. For example, a successful bidder 
might lose the market for which the capacity had been obtained and 
wish to release the capacity to an affiliate for other use, or a 
company may reorganize to merge the successful bidder with another 
affiliate or to reassign the successful bidder's functions to 
another affiliate. In such cases, the affected entity should seek a 
waiver of the prohibition and present the facts that support a 
release of the capacity to an affiliate.
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    17. This prohibition against capacity release reinforces the 
prohibition against multiple affiliate bidding unless each affiliate 
has an independent business reason for submitting a bid by further 
deterring affiliates from bidding for capacity for which they have no 
independent use. Should an affiliate violate the prohibition against 
multiple affiliate bidding, that affiliate would incur an additional 
violation with resulting penalties for transferring the advantage of 
the multiple affiliate bidding to the affiliated entity that would 
benefit from it. This complementary prohibition provides an additional 
deterrent to violation of the first prohibition, helping to ensure that 
the only instances of multiple affiliate bidding are those with 
independent business reasons for each bid. In the Commission's view, 
this prohibition, in combination with the provision prohibiting 
multiple affiliate bidding unless each affiliate has an independent 
business reason for submitting a bid, will fairly ensure that both 
steps of the gaming process are prohibited.

IV. Regulatory Requirements

A. Information Collection Statement

    18. Office of Management and Budget (OMB) regulations require OMB 
to approve certain information collection requirements imposed by 
agency rule.\16\ The proposed regulations discussed above do not impose 
reporting or recordkeeping requirements on applicable entities as 
defined by the Paperwork Reduction Act.\17\ As a result, the Commission 
is not submitting this NOPR to OMB for review and approval.
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    \16\ 5 CFR 1320.11 (2010).
    \17\ 44 U.S.C. 3502(2)-(3) (2006).
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B. Environmental Analysis

    19. 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.\18\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\19\ The actions proposed to be taken here fall within 
categorical exclusions in the Commission's regulations for rules that 
are corrective, clarifying or procedural, for information gathering, 
analysis, and dissemination, and for sales, exchange, and 
transportation of natural gas that requires no construction of 
facilities.\20\ Therefore an environmental review is unnecessary and 
has not been prepared in this rulemaking.
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    \18\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
& Regs., Regulation Preambles 1986-1990 ] 30,783 (1987).
    \19\ 18 CFR 380.4 (2010).
    \20\ 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), and 
380.4(a)(27)(2010).

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[[Page 20575]]

C. Regulatory Flexibility Act

    20. The Regulatory Flexibility Act of 1980 (RFA) \21\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The Commission is not required to make such an analysis if proposed 
regulations would not have such an effect.\22\ Most companies regulated 
by the Commission do not fall within the RFA's definition of a small 
entity.\23\
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    \21\ 5 U.S.C. 601-612 (2006).
    \22\ 5 U.S.C. 605(b) (2006).
    \23\ 5 U.S.C. 601(3) (citing section 3 of the Small Business 
Act, 15 U.S.C. 623 (2006)). Section 3 defines a ``small-business 
concern'' as a business which is independently owned and operated 
and which is not dominant in its field of operation.
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    21. The rule proposed herein should have no significant negative 
impact on those entities, be they large or small, subject to the 
Commission's regulatory jurisdiction under the NGA. Most companies to 
which the rules proposed herein, if finalized, would apply, do not fall 
within the RFA's definition of small entities. In addition, the 
proposed rule is only triggered if more than one affiliate of the same 
entity participates in an open season for pipeline capacity in which 
the pipeline may allocate capacity on a pro rata basis, and each 
affiliate does not have an independent business reason for submitting a 
bid. Therefore, the rule would only affect a limited number of small 
entities. The rules proposed herein, if finalized, will not have a 
significant economic effect on these small entities because the rule 
does not impose any reporting or recordkeeping requirements. Therefore, 
the Commission certifies that the proposed rules will not have a 
significant economic effect on a substantial number of small entities.

D. Comment Procedures

    22. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due 45 days from publication in the Federal 
Register. Comments must refer to Docket No. RM11-15-000, and must 
include the commenter's name, the organization they represent, if 
applicable, and their address in their comments.
    23. 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.
    24. Commenters that are not able 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.
    25. 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 on this proposal are 
not required to serve copies of their comments on other commenters.

E. Document Availability

    26. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    27. 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.
    28. 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.

List of Subjects in 18 CFR Part 284

    Continental shelf, Natural gas, Reporting and recordkeeping 
requirements.

    By direction of the Commission.
Kimberly D. Bose,
Secretary.

    In consideration of the foregoing, the Commission proposes to amend 
part 284, Chapter I, Title 18, Code of Federal Regulations, to read as 
follows:

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. 7101-7352; 
43 U.S.C. 1331-1356.

    2. Section 284.15 is added to read as follows.

Sec.  284.15  Bidding by affiliates in open seasons for pipeline 
capacity.

    (a) Multiple affiliates of the same entity may not participate in 
an open season for pipeline capacity conducted by any interstate 
pipeline providing service under subparts B and G of this part, in 
which the pipeline may allocate capacity on a pro rata basis, unless 
each affiliate has an independent business reason for submitting a bid.
    (b) If more than one affiliate of the same entity participates in 
an open season subject to paragraph (a) of this section, none of those 
affiliates may release any capacity obtained in that open season to any 
affiliate, or otherwise allow any affiliate effectively to obtain the 
use of the allocated capacity.
    (c) For purposes of this section, an affiliate is any person that 
satisfies the definition of affiliate in Sec. Sec.  358.3(a)(1) and (3) 
of this chapter with respect to another entity participating in an open 
season subject to paragraph (a) of this section.

[FR Doc. 2011-8915 Filed 4-12-11; 8:45 am]
BILLING CODE 6717-01-P