Document ID: FERC-2008-0005-0003
Agency: ferc
Document Type: Rule
Title: Pipeline Posting Requirements Under Section 23 of the Natural Gas Act
Posted Date: 2008-12-02T05:00Z

[Federal Register: December 2, 2008 (Volume 73, Number 232)]
[Rules and Regulations]               
[Page 73493-73518]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de08-15]                         

[[Page 73493]]

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Part III

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 284

Pipeline Posting Requirements Under Section 23 of the Natural Gas Act; 
Final Rule

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM08-2-000; Order No. 720]

 
Pipeline Posting Requirements Under Section 23 of the Natural Gas 
Act

November 20, 2008.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: In this Final Rule, the Commission adds regulations to require 
certain major non-interstate natural gas pipelines to post daily 
scheduled volume information and design capacity for certain points. 
The Commission also revises its regulations to require interstate 
natural gas pipelines to post information regarding the provision of 
no-notice service. The posting requirements will facilitate price 
transparency in markets for the sale or transportation of physical 
natural gas in interstate commerce to implement section 23 of the 
Natural Gas Act, 15 U.S.C. 717t-2 (2000 & Supp. V 2005).

DATES: Effective Date: This rule will become effective January 2, 2009.

FOR FURTHER INFORMATION CONTACT: Christopher Ellsworth (Technical), 
Office of Enforcement, Federal Energy Regulatory Commission, 888 First 
Street, NE., Washington, DC 20426, (202) 502-8228, Gabriel Sterling 
(Legal), Office of Enforcement, Federal Energy Regulatory Commission, 
888 First Street, NE., Washington, DC 20426, (202) 502-8891.

SUPPLEMENTARY INFORMATION:

Table of Contents
I. Introduction and Summary
II. Procedural Background
III. Authority for the Rule
    A. Posting NOPR
    B. Comments
    C. Commission Determination
IV. Need for the Rule
    A. Posting NOPR
    B. Comments
    C. Commission Determination
V. Pipeline Posting Requirements
    A. Overview
    B. Definition of Major Non-Interstate Pipeline
    1. Posting NOPR
    2. Comments
    3. Commission Determination
    C. Scheduled Flow Information on Major Non-Interstate Pipelines
    1. Posting NOPR
    2. Comments
    3. Commission Determination
    D. Receipt and Delivery Point Posting for Major Non-Interstate 
Pipelines
    1. Posting NOPR
    2. Comments
    3. Commission Determination
    E. Exemptions to the Major Non-Interstate Pipeline Posting 
Requirements
    1. Non-Interstate Pipelines That Are Upstream of a Processing, 
Treatment, or Dehydration Plant
    2. Non-Interstate Pipelines that Deliver More Than Ninety-Five 
Percent of Volumes to Retail Customers
    3. Non-Interstate Storage Providers
    4. Other Exemptions and Safe Harbor
    F. Posting of No-Notice Service Information by Interstate 
Pipelines
    1. Posting NOPR
    2. Comments
    3. Commission Determination
VI. Effective Date of the Final Rule and Compliance Deadlines
VII. Information Collection Statement
VIII. Environmental Analysis
IX. Regulatory Flexibility Act
X. Document Availability
XI. Effective Date and Congressional Notification

I. Introduction and Summary

    1. This Final Rule implements the Commission's authority under 
section 23 of the Natural Gas Act (NGA),\1\ as added by the Energy 
Policy Act of 2005 (EPAct 2005),\2\ to facilitate transparency in 
markets for the sale or transportation of natural gas in interstate 
commerce by requiring major non-interstate pipelines and interstate 
pipelines to post certain data on their Internet Web sites. 
Specifically, the Final Rule requires major non-interstate pipelines, 
defined as those natural gas pipelines that deliver more than 50 
million MMBtu per year, to post scheduled flow information and to post 
information for each receipt and delivery point with a design capacity 
greater than 15,000 MMBtu per day. The Final Rule also requires that 
interstate pipelines post information regarding no-notice service.
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    \1\ Section 23 of the Natural Gas Act; 15 U.S.C. 717t-2 (2000 & 
Supp. V 2005).
    \2\ Energy Policy Act of 2005, Public Law No. 109-58, sections 
1261 et seq., 119 Stat. 594 (2005).
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    2. The postings required here will increase price transparency in 
the interstate natural gas markets by providing information about the 
supply and demand fundamentals that underlie those markets. In this 
way, the Commission will meet the goal set forth by Congress in section 
23 of the NGA ``to facilitate price transparency in markets for the 
sale or transportation of physical natural gas in interstate 
commerce,'' \3\ and, at the same time, will respond to commenters' 
concerns about the potential cost and burden of posting flow 
information.
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    \3\ Section 23(a)(1) of the NGA; 15 U.S.C. 717t-2(a)(1) (2000 & 
Supp. V 2005).
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II. Procedural Background

    3. The posting requirements adopted here are grounded in the 
Commission's authority under section 23 of the NGA (as added by EPAct 
2005), which directs the Commission, in relevant part, to obtain and 
disseminate ``information about the availability and prices of natural 
gas at wholesale and in interstate commerce.'' \4\ This provision 
enhances the Commission's authority to ensure confidence in the 
nation's natural gas markets. The Commission's market-oriented policies 
for the wholesale natural gas industry require that interested persons 
have broad confidence that reported market prices accurately reflect 
the interplay of legitimate market forces. Without confidence in the 
efficiency of price formation, the true value of transactions is very 
difficult to determine.
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    \4\ Section 23(a)(2) of the NGA, 15 U.S.C. 717t-2(a)(2) (2000 & 
Supp. V 2005).
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    4. On April 19, 2007, the Commission issued a Notice of Proposed 
Rulemaking (Initial NOPR) to explore methods to implement our authority 
under NGA section 23. In the Initial NOPR, the Commission set forth two 
separate proposals. The first proposal addressed an annual reporting 
requirement for certain natural gas market participants and the second 
proposal addressed a daily requirement for intrastate pipelines to post 
flow information.\5\ On December 21, 2007, the Commission bifurcated 
the proceeding into two dockets: The Commission addressed the annual 
reporting requirement in a Final Rule issued in Docket No. RM07-10-
000,\6\ and addressed the daily posting requirement for natural gas 
pipelines in a new Notice of Proposed Rulemaking, in Docket No. RM08-2-
000 (Posting NOPR).
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    \5\ Initial NOPR at P 1-2. In this preamble, we use the term 
``flow information'' generically to include both scheduled volume 
information and actual flow information. We use the term ``scheduled 
volumes'' herein because it is more precise: The terms ``scheduled 
flows'' or ``scheduled flow volumes'' could be confused with the 
term ``actual flows.'' In the Posting NOPR, we used the terms 
``scheduled flows'' and ``scheduled flow volumes.''
    \6\ Transparency Provisions of Section 23 of the Natural Gas 
Act, Order No. 704, 73 FR 1014 (Jan. 4, 2008), FERC Stats. and Regs. 
] 31,260 (2007), order on reh'g, Order No. 704-A, 73 FR 55726 (Sept. 
26, 2008), FERC Stats. & Regs. ] 31,275 (2008) reh'g pending.
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    5. In the Posting NOPR, we proposed to require both interstate and 
certain major non-interstate pipelines to post on public Internet Web 
sites capacity, daily scheduled flow and daily actual flow information. 
The proposal required posting of capacity and daily actual flow 
information by some intrastate pipelines, with some changes relative to

[[Page 73495]]

the Initial NOPR. Under the proposal contained in the Posting NOPR, 
interstate pipelines would be required to post daily actual flow 
information in addition to the currently required posting of capacity 
and daily scheduling information. Major non-interstate pipelines would 
be required to post daily scheduled flow information in addition to 
capacity and daily actual flow information. As explained in the Posting 
NOPR, the Commission believed that the proposal would facilitate price 
transparency in markets for the sale or transportation of physical 
natural gas in interstate commerce.
    6. The Commission issued the Posting NOPR to develop the record 
more fully, particularly as to the proposals regarding interstate 
natural gas pipelines. The Posting NOPR was intended to give interstate 
natural gas pipelines sufficient notice of the changes that seemed 
necessary to implement adequately section 23 of the NGA.\7\ Also, in 
the Posting NOPR, we directed staff to hold a technical conference to 
address implementation issues associated with the proposal, such as 
obtaining and posting actual flow information and obtaining and posting 
information from storage facilities.\8\
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    \7\ Posting NOPR at P 2.
    \8\ Id. at P 8.
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    7. As directed by the Commission, staff held a technical conference 
on April 3, 2008. Comments on the Posting NOPR were due on March 13, 
2008; reply comments on April 14, 2008. The Commission received fifty-
five comments and nineteen reply comments.\9\
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    \9\ A list of commenters and abbreviations for the commenters is 
contained in Appendix A.
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III. Authority for the Rule

A. Posting NOPR

    8. In the Posting NOPR, we provided our interpretation of section 
23 of the NGA and the Commission's authority to enhance transparency in 
the interstate natural gas markets. We concluded that Congress granted 
us broad authority in EPAct 2005, placing non-interstate pipelines 
within the Commission's transparency authority under section 23 of the 
GA in order to ensure--for the entirety of the wholesale, physical 
natural gas market--transparency of price and availability, including 
transparency of market price formation. As we stated in both the 
Initial NOPR and Posting NOPR, ``[w]hile distinctions between 
intrastate and interstate natural gas markets may be meaningful from a 
legal perspective, they are not meaningful from the perspective of 
market price formation.'' \10\
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    \10\ Initial NOPR at P 20; Posting NOPR at P 25.
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B. Comments

    9. Several commenters agree that the Commission has broad 
transparency authority under section 23 of the NGA, including authority 
over non-interstate pipelines.\11\ APGA supports the Commission's 
contention that the statute authorizes obtaining information from ``any 
market participant'' and not just ``natural gas companies'' as ``tacit 
recognition that in order to collect the necessary information about 
the wholesale and interstate market, the Commission might well need to 
collect information from entities not historically subject to FERC 
jurisdiction.'' \12\
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    \11\ APGA Comments at 3-4; TIPRO Comments at 1-2; Yates Comments 
at 4.
    \12\ APGA Comments at 4.
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    10. A significant number of commenters hold a different view, and 
contend that the term ``any market participant,'' contained in section 
23(a)(3)(A) of the NGA, does not include non-interstate pipelines. TPA 
asserts that the term ``any market participant'' is limited to the 
participants in wholesale interstate natural gas markets.\13\ Thus, 
according to TPA, the Commission exceeds its authority under the 
transparency provisions by subjecting ```non-interstate' entities that 
do not participate in interstate sales markets'' to its transparency 
authority.\14\ Further, TPA contends that had ``Congress sought to 
expand the Commission's jurisdiction to entities that do not 
participate in the interstate commerce market, it could have used the 
language `affecting interstate commerce,' which has historically been 
read as a more expansive grant of authority.'' \15\ Similarly, Chevron 
Pipelines contends that because Congress did not expressly include 
intrastate pipelines in section 23, ``one must conclude that the 
Commission's jurisdiction was intended by Congress to be no greater 
following the enactment of section 23 than that which existed prior to 
the passage of that section.'' \16\
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    \13\ TPA Comments at 35.
    \14\ Id. at 36.
    \15\ Id. at 39 (citing City of Centralia v. FERC, 661 F.2d 787 
(9th Cir. 1981) and Columbia Gas Transmission Corp., 3 FERC ] 
61,115, at 61,239 n.1 (1978)).
    \16\ Chevron Pipelines Comments at 9-10.
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    11. Certain commenters assert that, contrary to the Commission's 
conclusions, the de minimis exemption does not aid in the 
interpretation of the term ``any market participant.'' TPA interprets 
the de minimis exemption to mean that ``the Commission should not 
require those with a de minimis presence in the interstate market to be 
subject to an added reported burden.'' \17\
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    \17\ TPA Comments at 44.
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    12. Several commenters argue that section 1 of the NGA bars the 
Commission from obtaining and disseminating information from a non-
interstate pipeline. TPA claims that sections 1(b) and 1(c) of the NGA 
limit the Commission's transparency authority under section 23 of the 
NGA.\18\ TPA also contends that ``extensive case law show[s] that 
Congress has consistently respected the distinction between interstate 
and intrastate sale and transportation of natural gas.'' \19\ 
Similarly, Copano Energy believes that section 1(b) of the NGA 
precludes the Commission from exercising its transparency authority 
over transportation of natural gas wholly in intrastate commerce.\20\ 
In support, Copano Energy points to Union Oil Company of America v. 
FPC,\21\ in which the court stated that the ``Natural Gas Act limits 
the gathering of intrastate data to gathering it from companies falling 
under the Commission's jurisdiction.'' \22\ Commenters argue that 
because Congress did not revise section 1 of the NGA, that section 
precludes the Commission from exercising transparency authority over 
non-interstate pipelines.\23\
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    \18\ Id. at 42.
    \19\ Id. at 43.
    \20\ Copano Energy Comments at 6.
    \21\ 542 F.2d 1036 (9th Cir. 1976).
    \22\ Id. at 1039.
    \23\ See, e.g., Copano Energy Comments at 6.
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    13. Several commenters state that a posting rule on non-interstate 
pipelines would constitute improper regulation of a non-interstate 
pipeline's operations and rates. TPA contends that the pipeline posting 
requirement would ``directly regulate the operations of non-interstate 
pipelines'' because the posting of data regarding mainline segments 
would require many non-interstate pipelines ``to define segments on 
their systems and to install metering equipment to measure gas at those 
segments.'' \24\ Such meters, in turn, would affect the operations of 
pipelines, hinder efficiency and raise prices.\25\ Similarly, DCP 
Midstream holds that a pipeline posting requirement would impermissibly 
interfere with states' regulation of intrastate gas pipelines. DCP 
Midstream reasons that the costs to meet the requirement would be borne 
by intrastate customers and rate payers

[[Page 73496]]

which would encroach upon state ratemaking authority.\26\
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    \24\ TPA Comments at 40.
    \25\ Id.
    \26\ DCP Midstream Comments at 7-8; see also Railroad Commission 
of Texas Comments at 7.
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    14. Other commenters assert that two clauses in section 23 preclude 
the Commission's authority to obtain information about gas that flows 
on a non-interstate pipeline because such gas is sold only in 
intrastate commerce, not in interstate commerce. First, commenters 
contend that the statutory language in subsection (a)(1) ``for the sale 
or transportation of physical natural gas in interstate commerce'' 
limits the type of price transparency that the Commission may 
facilitate.\27\ Second, commenters contend that the statutory language 
in subsection (a)(2), which permits the Commission to issue rules that 
provide for the ``disseminat[ion] * * * [of] information about the 
availability and prices of natural gas sold at wholesale and in 
interstate commerce,'' does not include information about gas that 
flows on a non-interstate pipeline, because it is not ``sold at 
wholesale and in interstate commerce.'' \28\ For instance, TPA argues 
that this language does not authorize the Commission to mandate the 
posting of ``data about transportation of gas that may never be `sold 
at wholesale and in interstate commerce,' '' as it is ``directed at 
increased transparency in sales and transportation in interstate 
commerce.'' \29\
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    \27\ See, e.g., Atmos Comments at 11-12.
    \28\ See, e.g., DCP Midstream Comments at 8-9. See also Atmos 
Comments at 11-12.
    \29\ TPA Comments at 35 (emphasis original).
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C. Commission Determination

    15. Section 23 of the NGA gives the Commission broad authority to 
facilitate price transparency in the interstate natural gas market. For 
that purpose, section 23 further authorizes the Commission to obtain 
and disseminate information. As now explained, the regulations 
promulgated in this Final Rule do not exceed that broad authority.
    16. Section 23(a)(1) of the NGA directs the Commission to: 
``facilitate price transparency in markets for the sale or 
transportation of physical natural gas in interstate commerce, having 
due regard for the public interest, the integrity of those markets, 
fair competition, and the protection of consumers.'' \30\ Congress left 
to the Commission's discretion whether to enact rules to carry out this 
direction and provided that any rules implementing this section provide 
for public dissemination of the information gathered:
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    \30\ 15 U.S.C. 717t-2(a)(1) (2000 & Supp. V 2005).

    The Commission may prescribe such rules as the Commission 
determines necessary and appropriate to carry out the purposes of 
this section. The rules shall provide for the dissemination, on a 
timely basis, of information about the availability and prices of 
natural gas sold at wholesale and in interstate commerce to the 
Commission, State commissions, buyers and sellers of wholesale 
natural gas, and the public.\31\
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    \31\ 15 U.S.C. 717t-2(a)(2) (2000 & Supp. V 2005).

    17. Further, section 23(a)(3)(A) of the NGA allows the Commission 
``to obtain the information * * * from any market participant.'' \32\ 
By using the term ``market participant,'' Congress deliberately 
expanded the universe of entities subject to the Commission's 
transparency authority beyond the entities subject to the Commission's 
traditional rates, terms, and conditions jurisdiction under other 
sections of the NGA. The term ``market participant'' is not defined in 
the NGA and is not on its face limited to otherwise jurisdictional 
entities. As we explained in the Posting NOPR, this authorization is 
expansive. Congress was aware that other sections of the NGA limited 
the scope of entities subject to the Commission's traditional 
regulatory authority to natural gas companies as that term is defined 
in the statute, but chose not to apply this same limitation in section 
23. Congress clearly recognized that the Commission might not obtain 
sufficient price transparency from those ``natural gas companies'' 
subject to our traditional regulatory authority. This is consistent 
with the Commission's findings here that a complete picture of the 
interstate natural gas market and the supply and demand fundamentals 
underlying that market require information from non-interstate natural 
gas pipelines.\33\
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    \32\ Section 23(a)(3)(A) of the NGA; 15 U.S.C. 717t-2(a)(3)(A) 
(2000 & Supp. V 2005).
    \33\ We have recently stated in Order No. 704-A that the term 
``market participant'' in section 23 of the NGA is not limited only 
to natural gas pipelines, but to all relevant segments of the 
natural gas supply and distribution chain. Order No. 704-A at P 37. 
As we discussed in this previous exercise of our authority under 
section 23 of the NGA, the statute grants broad latitude to the 
Commission to effectuate Congressional transparency goals.
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    18. Moreover, the statutory language emphasizes the broad meaning 
of the phrase ``market participant'' by adding ``any'' as a descriptor. 
Our authority attaches not to a subset of market participants (for 
example, only those market participants traditionally subject to our 
regulation), but to any such participant.\34\ Court precedent confirms 
that the word ``any'' gives the term it modifies (in this case, 
``market participant'') an expansive meaning.\35\ We believe that 
Congress used the expansive term ``any market participant'' because it 
intended to provide broad transparency authority to the Commission. By 
this choice, Congress recognized that the Commission may need to obtain 
information from a wide variety of entities in order to facilitate 
transparency.
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    \34\ See Posting NOPR at P 28.
    \35\ Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 31-32 (2004) (the 
word ``any'' gives the word it modifies an expansive reading); 
Dep't. of Housing and Urban Dev. v. Rucker, 535 U.S. 125, 130-31 
(2002); TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (one must give 
effect to each word in a statute so that none is rendered 
superfluous); United States v. Gonzales, 520 U.S. 1, 5 (1997) 
(``any'' is an expansive term, meaning ``one or some 
indiscriminately of whatever kind,''); New York v. EPA, 443 F.3d 
880, 885-87 (DC Cir. 2006) (the word ``any'' is broadly construed to 
reflect Congress' intent that all types of physical changes are 
subject to the Clean Air Act's New Source Review program).
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    19. The Commission disagrees with commenters who argue that section 
1(b) of the NGA precludes the Commission from imposing the daily 
posting requirement on non-interstate pipelines. Section 1(b) of the 
NGA provides that the ``provisions of this chapter * * * shall apply to 
the transportation of natural gas in interstate commerce, to the sale 
in interstate commerce of natural gas for resale * * *'' and that such 
provisions ``shall not apply to any other transportation or sale of 
natural gas.'' \36\ Likewise, we disagree that section 23 has limited 
application only to ``natural gas companies.'' Section 1 is not 
referenced in section 23 and the term ``natural gas company'' is 
nowhere found in the section. Including such a reference would have 
been the simplest way for Congress to demonstrate an intent to limit 
the Commission's transparency authority only to entities which we 
already regulate.
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    \36\ Section 1(b) of the NGA, 15 U.S.C. 717(b).
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    20. We likewise disagree with certain commenters' arguments 
regarding application of pre-EPAct 2005 caselaw in this circumstance. 
The cases cited by commenters apply the jurisdictional limits set forth 
in section 1 of the NGA prior to the enactment of EPAct 2005.\37\ These 
arguments run afoul of the principle of statutory construction that 
``Congress is presumed to be aware of an administrative or judicial 
interpretation of a statute.'' \38\ Thus, Congress was

[[Page 73497]]

presumably aware that prior to the enactment of section 23, the NGA 
could be construed as limiting the Commission's authority to obtain 
data on intrastate natural gas flows to obtaining it from companies 
falling under the Commission's jurisdiction.\39\ In using the term 
``any market participant'' instead of ``natural gas company,'' Congress 
signaled its intent to expand the Commission's transparency authority 
beyond the universe of natural gas companies to which it would 
otherwise be limited. TPA observes that courts have held that the 
Commission cannot exceed its statutory authority.\40\ This is an 
unremarkable and unassailable conclusion, but one that provides no 
guidance where the issue is not whether the Commission may exceed its 
statutory authority but what is the extent of the Commission's 
transparency authority.
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    \37\ See, e.g., Union Oil Co., 542 F.2d at 1039. In a post-EPAct 
2005 case as noted by commenters, Transmission Agency of N. Cal. v. 
FERC, the U.S. Court of Appeals for the DC Circuit discussed the 
limits of the Commission's jurisdiction, but that court was not 
reviewing the NGA, let alone section 23. 495 F.3d 663 (DC Cir. 
2007).
    \38\ Lorillard v. Pons, 434 U.S. 575, 580 (1978) (internal 
citations omitted); accord 2A Norman J. Singer, Sutherland Statutory 
Construction sec. 45.12 (5th ed. 1992) (``legislative language will 
be interpreted on the assumption that the legislature was aware of * 
* * judicial decisions'').
    \39\ Union Oil Co., 542 F.2d at 1039 (Observing that the NGA 
limits the Commission's ``gathering of intrastate data to gathering 
it from companies falling under the Commission's jurisdiction'').
    \40\ Reply Comments of TPA at 16-17 (citing Transmission Agency 
of N. Cal., 495 F.3d 663 and United Distrib. Cos. v. FERC, 88 F.3d 
1105 (DC Cir. 1996)).
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    21. For similar reasons, we do not find persuasive the argument 
that Congress could have expressed its intent to subject non-interstate 
pipelines to the Commission's transparency authority only by revising 
or amending section 1 of the NGA. First, section 1 of the NGA 
delineates the set of entities subject to the Commission's traditional 
ratemaking and certificate authority. If Congress amended section 1 of 
the NGA to apply to a new set of entities, it would have been providing 
the Commission not only a limited grant of transparency authority, but 
the broader grant of authority that section 1 entails. Second, altering 
the exceptions in section 1, as commenters suggested, is not the only 
way to alter the statute to give the Commission transparency authority. 
Section 23 could, and in fact did, confer such authority separately 
from our authority under section 1. Third, if Congress intended to 
exclude non-interstate pipelines from the Commission's authority under 
section 23 of the NGA, it would have used the term ``natural gas 
company'' in section 23, instead of the term ``any market 
participant.''
    22. Nevertheless, while the authority granted to us in section 23 
is broad, we do not mean to imply that the Commission's authority to 
obtain information from ``any market participant'' is plenary. In 
section 23, Congress limited our transparency authority in three 
respects. First, Congress directed the Commission to ``facilitate price 
transparency in markets for the sale or transportation of physical 
natural gas in interstate commerce. * * *'' \41\ Thus, any information 
collected and disseminated must be for the purpose of price 
transparency in those markets. We do not interpret this language to 
limit the Commission to obtaining information only about physical 
natural gas sales or transportation in those markets, however, provided 
that the information obtained and disseminated pertains to price 
transparency in those markets. Second, Congress required that the 
Commission's rules ``provide for the dissemination, on a timely basis, 
of information about the availability and prices of natural gas sold at 
wholesale and in interstate commerce. * * *'' \42\ Again, this language 
does not limit the type of information the Commission could collect to 
implement its mandate, provided that such information is ``about'' 
(i.e., pertains to) the ``availability and prices of natural gas sold 
at wholesale and in interstate commerce.'' Where transportation or 
sales of natural gas are not in interstate commerce, they nonetheless 
fall under the Commission's transparency mandate if they affect the 
availability and prices of natural gas at wholesale and in interstate 
commerce.
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    \41\ Section 23(a)(1) of the NGA; 15 U.S.C. 717t-2(a)(1) (2000 & 
Supp. V 2005).
    \42\ Section 23(a)(2) of the NGA; 15 U.S.C. 717t-2(a)(2) (2000 & 
Supp. V 2005).
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    23. Perhaps the most important limitation on our transparency 
authority is contained in section 23(d)(2) which mandates an exemption 
from any reporting for ``natural gas producers, processors, or users 
who have a de minimis market presence. * * *'' \43\ It is noteworthy 
that this limitation does not exempt all producers and all processors 
from reporting, but exempts only producers that have a de minimis 
market presence and only processors that have a de minimis market 
presence. Section 1(b) of the NGA explicitly excludes these entities 
from the Commission's traditional regulation. If, as some commenters 
assert, Congress did not intend to give the Commission authority over 
any entity excluded by section 1(b) of the NGA, a de minimis exemption 
would have been unnecessary; in other words, section 23(d)(2) would 
have been surplusage. Congress is not presumed to enact surplus 
language.\44\ To avoid this improper result, we interpret section 23 of 
the NGA to give effect to the de minimis language by interpreting the 
term ``any market participant'' to include those entities otherwise 
excluded from the Commission's NGA jurisdiction by section 1(b) of the 
act.
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    \43\ Section 23(d)(2) of the NGA; 15 U.S.C. 717t-2(d)(2) (2000 & 
Supp. V 2005).
    \44\ City of Roseville v. Norton, 348 F.3d 1020, 1028 (DC Cir. 
2003) (citing Babbitt v. Sweet Home Chapter of Cmty. for a Greater 
Oregon, 515 U.S. 687, 698 (1995)).
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    24. The regulations promulgated by this Final Rule reflect 
Congress' limitations on the Commission's authority. The Commission's 
traditional regulatory authority remains limited to ``natural gas 
companies'' under section 1 of the act. Section 23 of the NGA 
authorizes the Commission only to obtain and disseminate information. 
The Commission is not regulating the intrastate operations of non-
interstate pipelines; nor is the Commission regulating the rates or 
terms and conditions of service for non-interstate pipelines. 
Consistent with its limited transparency authority set forth in section 
23 of the NGA, the Commission will require major non-interstate 
pipelines only to post information.
    25. Based upon the text of section 23 of the NGA and the clear 
intent of Congress, we determine that we have ample authority to issue 
this Final Rule, including the promulgation of regulations requiring 
additional posting obligations on both interstate and major non-
interstate pipelines.

IV. Need for the Rule

A. Posting NOPR

    26. As discussed in the Posting NOPR, section 23 of the NGA is a 
clear expression of Congress' belief that the Commission may rightly 
perceive a need ``to facilitate price transparency in markets for the 
sale or transportation of physical natural gas in interstate commerce, 
having due regard for the public interest, the integrity of those 
markets, and the protection of consumers.'' Section 23 further provides 
that the Commission may issue such rules as it deems necessary and 
appropriate to ``provide for the dissemination, on a timely basis, of 
information about the availability and prices of natural gas sold at 
wholesale and interstate commerce to the Commission, State commissions, 
buyers and sellers of wholesale natural gas, and the public.'' The 
Posting NOPR stated that natural gas markets function more efficiently, 
and market problems are more readily identifiable, if participants and 
observers have timely access to

[[Page 73498]]

natural gas transportation data. As we stated in Order No. 636:

    The Commission believes that * * * it is vital to give all gas 
purchasers ([local distribution companies (LDCs)] and end users, 
such as industrials and gas-fired electric generators) the ability 
to make market-driven choices about the price of gas as a commodity 
and about the cost of delivering the gas. Simply put, efficiency in 
the national gas market can be realized only when the purchasers of 
a commodity know, in a timely manner, the prices of the distinct 
elements associated with the full range of services needed to 
purchase and then deliver gas from the wellhead to the burnertip. 
Only then will gas purchasers be able to purchase, based upon their 
needs, the exact services they want with full recognition of the 
prices that they would have to pay. And only then will the 
Commission be assured that all gas is transported to the market 
place on fair terms. What best serves the interests of gas 
purchasers--the ability to make informed choices--is also important 
for gas sellers.\45\
---------------------------------------------------------------------------

    \45\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation; and Regulation of 
Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 
636, FERC Stats. & Regs. ] 30,939, at p. 30,393, 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. United 
Distribution Cos. v. FERC, 88 F.3d 1105 (DC Cir. 1996), order on 
remand, Order No. 636-C, 78 FERC ] 61,186 (1997).

    27. In the Posting NOPR, the Commission proposed that major non-
interstate \46\ natural gas pipelines post information on actual flows 
and scheduled volumes. The Commission defined a ``major non-interstate 
pipeline'' as one that is not a ``natural gas company'' under section 1 
of the NGA\47\ and that flows greater than 10 million (10,000,000) 
MMBtus of natural gas per year. Such a major non-interstate pipeline 
would post daily ``capacity, scheduled flow volumes, and actual flow 
volumes at major points and mainline segments.'' \48\ The Commission 
did not define ``major points and mainline segments.'' The Commission 
proposed two exemptions to the definition of ``major non-interstate 
pipeline.'' First, the Commission proposed to exempt non-interstate 
natural gas pipelines that ``fall entirely upstream of a processing 
plant.'' \49\ Second, the Commission proposed to exempt non-interstate 
natural gas pipelines ``that deliver more than 95 percent of the 
natural gas volumes they flow directly to end-users.'' \50\ The 
Commission also proposed that interstate natural gas pipelines post 
information on actual flows,\51\ in addition to the existing 
requirement to post capacity and scheduled flows.\52\
---------------------------------------------------------------------------

    \46\ In the Initial NOPR, the Commission used the term 
``intrastate pipeline.'' In the Posting NOPR, the Commission used 
the term ``non-interstate pipeline.'' The latter term more 
accurately describes the scope of the rule, which is issued pursuant 
to section 23 of the NGA. This section applies to both interstate 
and non-interstate pipelines and does not use the term ``intrastate 
pipeline.''
    \47\ 15 U.S.C. 717 (2007).
    \48\ Posting NOPR at P 3.
    \49\ Id. at P 4.
    \50\ Id.
    \51\ Id.
    \52\ Id.
---------------------------------------------------------------------------

    28. In the Posting NOPR, the Commission articulated three goals to 
be served by posting of flow information by non-interstate pipelines. 
First, by providing a more complete picture of supply and demand 
fundamentals, these postings would improve market participants' ability 
to assess supply and demand and to price physical natural gas 
transactions. Second, during periods when the United States natural gas 
delivery system is disturbed, for instance due to hurricane damage to 
facilities in the Gulf of Mexico, these postings would provide market 
participants a clearer view of the effects on infrastructure, the 
industry, and the economy as a whole. Finally, these postings would 
allow the Commission and other market observers to identify and remedy 
potentially manipulative activity.\53\
---------------------------------------------------------------------------

    \53\ Id. at P 60.
---------------------------------------------------------------------------

B. Comments

    29. A broad cross-section of the industry, representing producers, 
end-users, LDCs, and information providers, supports the goals of the 
pipeline posting requirement.\54\ In the Posting NOPR, the Commission 
asked for comment on whether the pipeline posting proposal would 
``provide a more complete picture of supply and demand fundamentals and 
improve market participants' ability to assess supply and demand and to 
price physical natural gas transactions.'' \55\ Several commenters 
support posting requirements, particularly for non-interstate 
pipelines, as a means to meet this goal. NGSA states that ``the [ ] 
proposed flow data posting requirement has the potential to provide 
market participants and regulators with additional information 
regarding underlying natural gas supply and demand fundamentals.'' \56\ 
Similarly, APGA supports the Commission's rationale for obtaining daily 
flow information from major non-interstate pipelines.\57\ IPAA also 
supports the posting of flow data from non-interstate pipelines, ``but 
with a close watch on the costs of compliance, as the producer is 
likely to end up bearing much of those costs.'' \58\
---------------------------------------------------------------------------

    \54\ See, e.g., NGSA Reply Comments at 5; TIPRO Comments at 3; 
APGA Comments at 4; Calpine Comments at 2-3; Bentek Comments at 3.
    \55\ Posting NOPR at P 71.
    \56\ NGSA Comments at 14.
    \57\ APGA Comments at 4.
    \58\ IPAA Comments at 1.
---------------------------------------------------------------------------

    30. TIPRO contends that the pipeline posting proposal meets the 
goal of increasing transparency of supplies that affect prices.\59\ 
Bentek, which collects and publishes information based on interstate 
flows, contends that requiring non-interstate pipelines to report daily 
flows and capacity ``will significantly improve industry's ability to 
understand natural gas supply and demand issues throughout the 
country'' making ``the market more transparent, less volatile, more 
reliable, and more efficient.'' \60\
---------------------------------------------------------------------------

    \59\ TIPRO Comments at 3.
    \60\ Bentek Comments at 12.
---------------------------------------------------------------------------

    31. Some commenters argue that the posting proposal, particularly 
regarding non-interstate pipelines, is not justified. Atmos believes 
that the need for the information has not been demonstrated and that 
there is already sufficient price transparency in interstate 
markets.\61\ Chevron Pipelines acknowledge that flow information from 
non-interstate pipelines may provide a more complete picture of supply 
and demand fundamentals, but state that such flow information would 
have a de minimis effect on market participants' assessments of supply 
and demand and pricing of physical natural gas transactions.\62\
---------------------------------------------------------------------------

    \61\ Atmos Comments at 10-11.
    \62\ Chevron Pipelines Comments at 25.
---------------------------------------------------------------------------

    32. Kinder Morgan Intrastate maintains that due to the bundled 
sales function and the highly variable types of services provided by 
intrastate pipelines, a snapshot of available capacity on a given 
pipeline at a given time would not necessarily reflect pricing 
fundamentals. Because Kinder Morgan Intrastate provides no-notice 
service to many industrial users and must reserve physical capacity to 
serve this no-notice service, it asserts that capacity is not available 
for other customers. Thus, it alleges, posted capacity information 
would send the wrong signals to the market because it would reflect the 
complexity of pipeline operations rather than the overall supply 
situation in the market.\63\
---------------------------------------------------------------------------

    \63\ Kinder Morgan Intrastate Comments at 16-17.
---------------------------------------------------------------------------

    33. In the Posting NOPR, the Commission also asked for comment on 
whether the proposal would provide a clearer view of the effects on 
infrastructure, the industry, and the economy during periods when the 
United States natural gas delivery system is disturbed, for instance, 
due to

[[Page 73499]]

hurricane damage to facilities in the Gulf of Mexico. Several 
commenters contend that the posting of flow information by non-
interstate pipelines would support this goal.\64\ Chevron Pipelines 
assert that the requirements on non-interstate natural gas pipelines 
already are sufficient to gain a sense of how a significant disruption 
may affect natural gas pipeline facilities.\65\ TPA believes that 
significant disruptions such as hurricanes would preclude postings by 
non-interstate pipelines and evaluation of the impact of such 
disruptions on pipeline facilities could be obtained through less 
obtrusive means, such as contacting the pipeline.\66\
---------------------------------------------------------------------------

    \64\ Yates Comments at 7; TIPRO Comments at 2; APGA Comments at 
4; Royalty Owners Comments at 2-3.
    \65\ Chevron Pipelines Comments at 25.
    \66\ TPA Comments at 20.
---------------------------------------------------------------------------

    34. Finally, in the Posting NOPR, the Commission asked for comment 
on another goal of the pipeline posting proposal--whether the proposal 
would allow market observers to identify potentially manipulative 
activity. In response, several commenters assert that the posting of 
flow information by non-interstate pipelines would support this 
goal.\67\
---------------------------------------------------------------------------

    \67\ See, e.g., TIPRO Comments at 2; APGA Comments at 4; Royalty 
Owners Comments at 2-3; Yates Comments at 8.
---------------------------------------------------------------------------

    35. By contrast, Chevron Pipelines declare that the information to 
be posted has no relation to pricing decisions, and therefore, the 
potential for misconduct by not making public such information is 
unfounded.\68\ Kinder Morgan Intrastate expresses concern that postings 
by non-interstates pipelines would lead market participants to suspect 
price manipulation where none was occurring. In support, Kinder Morgan 
Intrastate provides the example of a net segment flow of zero due to 
forward-hauls and backhauls canceling each other out.\69\ TPA adds that 
the Commission has not demonstrated how the proposed pipeline posting 
rule could be used to track manipulative behavior.\70\
---------------------------------------------------------------------------

    \68\ Chevron Pipelines Comments at 25.
    \69\ Kinder Morgan Intrastate Comments at 17.
    \70\ TPA Comments at 48.
---------------------------------------------------------------------------

    36. Several commenters contend that there are alternatives 
available to daily posting of flow information by non-interstate 
pipelines. Commenters point to the following information as 
alternatives: Postings of capacity and scheduling data for ``points at 
which intrastate pipelines connect to the interstate grid;'' \71\ 
postings by interstate natural gas pipelines; \72\ Bentek's ``Texas 
Intrastate Report;'' \73\ data ``filed annually by intrastate pipelines 
pursuant to section 311 of the Natural Gas Policy Act;'' \74\ price 
information provided by ``NYMEX, CME, Globex, ICE and voice brokers, as 
well as price index publishers;'' \75\ state commission production 
data; \76\ and information available from the United States Department 
of Energy's Energy Information Administration (EIA).\77\ Genscape 
describes its natural gas pipeline flow monitoring product, which can 
measure flows on pipelines, and which Genscape uses presently to 
``monitor [ ] injections and withdrawals of gas at multiple storage 
facilities in Texas and Louisiana that are connected in whole or in 
part to intrastate pipeline systems.'' \78\
---------------------------------------------------------------------------

    \71\ Id. at 21-22.
    \72\ Id. at 21.
    \73\ Id. at 23.
    \74\ Id. at 22.
    \75\ Id.
    \76\ Id. at 22 n 59.
    \77\ Id. at 22.
    \78\ Reply Comments of Genscape, Inc., at 3, Docket No. AD06-11-
000 (filed Aug. 23, 2007).
---------------------------------------------------------------------------

    37. Commenters argue that a posting requirement on non-interstate 
pipelines would pose a competitive risk for non-interstate pipelines 
and for their customers. Atmos states: ``the public dissemination of 
capacity information could provide competitors with insight into the 
pipeline's ability to continue to provide services to existing and 
prospective customers, which could influence the location of new 
facility construction or how offers are made to prospective 
customers.'' \79\ Atmos describes a possible scenario in which two 
competing pipelines could serve one customer. When publicly 
disseminated information shows that one of those pipelines is at 
capacity, the other would have the opportunity to raise its price.\80\
---------------------------------------------------------------------------

    \79\ Atmos Comments at 9.
    \80\ Id.
---------------------------------------------------------------------------

    38. Calpine, however, supports a posting obligation for non-
interstate pipelines, stating that requiring the same posting 
requirements on both non-interstate and interstate pipelines would 
eliminate an existing competitive advantage for non-interstate 
pipelines.\81\
---------------------------------------------------------------------------

    \81\ Calpine Comments at 5.
---------------------------------------------------------------------------

C. Commission Determination

    39. Based upon the comments received and the input from 
stakeholders at the technical conference, we continue to believe that 
this Final Rule is needed because the information currently provided by 
interstate pipelines presents an incomplete picture of the supply and 
demand fundamentals that underlie the interstate natural gas market. 
While, as discussed above, Congress has given authority to the 
Commission to obtain additional information from market participants to 
increase transparency, we acknowledge that section 23 of the NGA grants 
us discretion as to whether and how to utilize this authority. The 
current picture of the interstate natural gas market derives from 
information on scheduled natural gas volumes and available capacity 
posted by interstate pipelines. In compliance with the regulations 
adopted in Order No. 637,\82\ interstate pipelines currently post daily 
information on the Internet about scheduled natural gas volumes for 
most of the continental United States. Shippers and other market 
participants rely on information posted by interstate pipelines to 
price both transportation and commodity transactions.\83\ As we 
described in the Posting NOPR, market participants retrieve the posted 
information on scheduled volumes from the Web sites of interstate 
natural gas pipelines, which they use to estimate in near real-time a 
variety of supply and demand conditions including geographic and 
industrial sector consumption, storage injections and withdrawals, and 
regional production.\84\ This posted scheduled flow information 
contributes to market transparency by providing information about the 
supply and demand fundamentals that drive price movements.\85\ Further, 
our staff

[[Page 73500]]

relies on this posted information to perform oversight and enforcement 
functions. In sum, the existing posting requirements for interstate 
pipelines provide the Commission, market participants, and other market 
observers with a picture of the availability of natural gas (both the 
commodity and transportation needed to move the commodity to market 
centers).\86\
---------------------------------------------------------------------------

    \82\ Regulation of Short-Term Natural Gas Transportation 
Services and Regulation of Interstate Natural Gas Transportation 
Services, Order No. 637, 65 FR 10,156 (Feb. 25, 2000), FERC Stats. & 
Regs. ] 31,091, at 31,332, clarified, Order No. 637-A, FERC Stats. & 
Regs. ] 31,099, reh'g denied, Order No. 637-B, 92 FERC ] 61,062 
(2000), aff'd in part and remanded in part sub nom. Interstate 
Natural Gas Ass'n of America v. FERC, 285 F.3d 18 (DC Cir. 2002), 
order on remand, 101 FERC ] 61,127 (2002), order on reh'g, 106 FERC 
] 61,088 (2004), aff'd sub nom. American Gas Ass'n v. FERC, 428 F.3d 
255 (DC Cir. 2005).
    \83\ In this regard, we disagree with commenters, such as Atmos, 
that increased transparency would harm competition. Such has not 
been our experience with interstate natural gas pipeline posting 
requirements. To the contrary, increased transparency has allowed 
for more informed decision making by market participants. In the 
scenario posited by Atmos (i.e., two pipelines, one of which is at 
capacity, that could serve a single customer), the posting of 
scheduled flow information at a particular point would typically not 
be sufficient to affect competition. Even if disclosure did have an 
effect, the effect would be to allow all market participants to make 
efficient determinations based upon equal access to relevant 
information.
    \84\ Posting NOPR at P 55. See also Comments of Bentek, Docket 
No. AD06-11-000 (filed Oct. 11, 2006).
    \85\ See, e.g., Comments of Platt's at 11-13, Docket No. AD06-
11-000 (filed Nov. 1, 2006) (information regarding the supply and 
demand of natural gas explains prices and such information is 
available from interstate pipelines, but not intrastate pipelines).
    \86\ See, e.g., id. at 11 (explaining that, to understand 
prices, ``the marketplace must look to * * * information on [the] 
availability of and demand for natural gas. * * *'').
---------------------------------------------------------------------------

    40. Nevertheless, this picture is incomplete. Because the 
Commission's existing pipeline posting regulations do not apply to non-
interstate pipelines, market observers cannot determine the 
availability of natural gas and transportation on a non-interstate 
pipeline to the same extent as they could for an interstate pipeline. 
These gaps in information are significant because, as detailed further 
below, major gas flows between producing basins and interstate markets 
occur on non-interstate pipelines and are thus invisible to the market. 
Often, the availability and price of natural gas on large non-
interstate pipelines affects the availability and price of natural gas 
nation-wide because these pipelines serve as important pricing points 
and gateways for flows to much of the United States. Interstate and 
non-interstate pipeline infrastructure is functionally inter-connected 
in the United States. The gaps in information about non-interstate 
flows result from the limitations on the Commission's authority over 
non-interstate pipelines prior to the enactment of EPAct 2005.
    41. For instance, there is a significant lack of information about 
supply and demand fundamentals in the south-central region of the 
country: Texas, Louisiana, and Oklahoma, and in southern California. As 
we discussed in the Initial and Posting NOPRs, several major United 
States natural gas pricing points sit at the confluence of multiple 
interstate and non-interstate pipelines. A study by EIA identified 
twenty-eight national market centers, of which thirteen are served by a 
combination of interstate and non-interstate pipelines.\87\ The table 
below shows the capacity of interstate and non-interstate pipelines 
connected to each of these thirteen locations. Significantly, as 
relevant here, at nine of these thirteen locations, non-interstate 
capacity is greater than interstate capacity.
---------------------------------------------------------------------------

    \87\ Department of Energy, Energy Information Administration, 
Natural Gas Market Centers and Hubs: A 2003 Update, (Oct. 2003), 
http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/
2003/market_hubs/mkthubs03.pdf.

 Table 1--Inter- and Intrastate Pipeline Delivery Capacity at Selected United States Natural Gas Pricing Points
                                                      \88\
----------------------------------------------------------------------------------------------------------------
                                                                                   Receipt and delivery capacity
                                                                                 -------------------------------
                            Hub name                                   State        Interstate    Non-interstate
                                                                                     pipelines       pipelines
                                                                                     (MMcf/d)        (MMcf/d)
----------------------------------------------------------------------------------------------------------------
Carthage........................................................              TX           1,120           1,355
Henry Hub.......................................................              LA           2,770           1,215
Katy--Enstor....................................................              TX           1,370           3,815
Katy--DEFS......................................................              TX             260           2,360
Mid Continent...................................................              KS           1,112             627
Moss Bluff......................................................              TX           1,050           1,800
Nautilus........................................................              LA           1,200           1,350
Perryville......................................................              LA           3,652             350
Aqua Dulce......................................................              TX             855             835
Waha--Lone Star.................................................              TX             810           1,140
Waha--Encina....................................................              TX             525             800
Waha--El Paso...................................................              TX           1,165           1,660
Waha--DEFS......................................................              TX             300           1,850
----------------------------------------------------------------------------------------------------------------

    42. No place is more indicative of the integration of interstate 
and non-interstate pipelines than Henry Hub in Louisiana. Henry Hub 
acts as an interchange for natural gas, where numerous interstate and 
non-interstate pipelines meet. It serves as the location for delivery 
of natural gas under the New York Mercantile Exchange's (NYMEX) futures 
contract. Monthly settlement of NYMEX's Henry Hub natural gas futures 
contract has become important in determining a variety of monthly index 
prices used to set natural gas prices in a large number of transactions 
in interstate commerce, particularly along the East Coast and Gulf 
Coast of the United States. The nature of this influence is detailed in 
Commission staff's 2006 State of the Markets Report.\89\ Because Henry 
Hub is connected to both interstate and non-interstate pipelines, the 
picture of flows and availability on the pipelines that feed into the 
Henry Hub is incomplete.
---------------------------------------------------------------------------

    \88\ The information on this chart is derived from Table 2 of 
Department of Energy, Energy Information Administration, Natural Gas 
Market Centers and Hubs: A 2003 Update, (Oct. 2003), http://
www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2003/
market_hubs/mkthubs03.pdf). updated utilizing data available from 
EIA for 2005.
    \89\ Federal Energy Regulatory Commission, 2006 State of the 
Markets Report at 48-50 (Jan. 2007), www.ferc.gov/market-oversight/
market-oversight.asp (follow link to the State of the Markets Full 
Report).
---------------------------------------------------------------------------

    43. Figure 1 below demonstrates the integration of interstate and 
non-interstate flows in many of these markets. One cannot understand 
flow patterns on interstate natural gas pipelines nationwide without 
understanding flows on non-interstate pipelines in those areas. Non-
interstate pipelines provide crucial physical links between interstate 
natural gas pipelines (particularly in Texas, Oklahoma, Louisiana, and 
California) as well as links between market hubs. Figure 1 shows major 
East-West flows of natural gas between the major production basins, 
such as Waha production area and major market locations, such as the 
Carthage Hub, but because such flows generally take place on non-
interstate natural gas pipelines, they are invisible to market 
participants and other market observers.

[[Page 73501]]

[GRAPHIC] [TIFF OMITTED] TR02DE08.072

    44. The magnitude of missing market information is indicated in a 
comparison of the types of information available for interstate and 
non-interstate pipelines. Gas delivery data in Texas from interstate 
natural gas pipeline postings show approximately 1 bcf of deliveries to 
Texas end users on any given day in 2006.\90\ EIA shows that total 
average daily consumption of gas in Texas was approximately 9.4 Bcf/day 
in 2006.\91\ This means that delivery information for 90 percent of the 
gas consumed in the state is only provided in the aggregate for all of 
Texas and published monthly with a lag of several months while 10 
percent of the gas delivered is reported daily by receipt and delivery 
point. Therefore, nearly 90 percent of consumption was invisible to 
market participants and other market observers on a daily basis.
---------------------------------------------------------------------------

    \90\ While this EIA data is two years old, based upon our 
experience, we believe that similar circumstances exist in the 
market today.
    \91\ ``EIA Natural Gas Consumption by End Use,'' http://
www.tonto.eia.doe.gov/dnav/ng/ng_cons_sum_a_EPG0_VC0_mmcf_
a.htm. (providing consumption figures by state).
---------------------------------------------------------------------------

    45. Purchasers of natural gas in interstate commerce draw on the 
same sources of supply as users and purchasers of intrastate natural 
gas. Intrastate markets often compete from basin to basin with 
interstate markets. Southern California, for example, competes with 
several large Texas markets for Waha supplies. Interstate/intrastate 
competition is expected to increase. Much of the recent Barnett Shale 
development in the Fort Worth basin in west Texas flows into intrastate 
systems before moving into interstate markets and, recently, two 
pipeline companies announced a major intrastate pipeline project that 
would transport 1 Bcf/day from the Barnett Shale development.\92\ In 
total, slightly more than 40 percent of total on-shore production in 
Texas is connected to interstate natural gas pipelines, close to 60 
percent in Louisiana and almost 80 percent in Oklahoma.\93\ Although 
daily volume scheduled to flow from non-interstate into those 
interstate natural gas pipelines can be observed, the supply dynamics 
that determine the availability of such volumes cannot be observed 
because they occur on non-interstate pipelines. A market participant 
that understands the flows on non-interstate pipelines will better 
understand the availability of supply for the interstate natural gas 
market, thereby, enhancing transparency.
---------------------------------------------------------------------------

    \92\ ``Enbridge, Atmos Energy propose new line to move 1 Bcf/d 
of northern Texas output,'' Inside FERC, Sept. 1, 2008 (``The 
Barnett Intrastate Gas Pipeline would connect Atmos Energy's Line X 
in Johnson Country, Texas, to Enbridge's Double D and Clarity 
Pipelines at Bethel in Anderson County, Texas.'').
    \93\ To derive these figures, Commission staff compared 
information from Bentek on supply scheduled on interstate pipelines 
with EIA information on withdrawals and production. EIA Natural Gas 
Gross Withdrawals and Production for Texas and Oklahoma, http://
www.tonto.eia.doe.gov/dnav/ng/ng_prod_sum_dcu_NUS_m.htm.
---------------------------------------------------------------------------

    46. Taken together, this information shows that market prices of 
physical natural gas in interstate commerce result from the aggregate 
of interstate and non-interstate pipeline flows. Because of this 
relationship, information about the flows on non-interstate pipelines 
would promote price transparency by providing market participants with 
highly relevant information as they make day-to-day economic choices.
    47. Additionally, the proposed pipeline capacity and volume 
postings would provide market participants--and entities charged with 
oversight of the markets--a clearer view of the effects on 
infrastructure, the industry,

[[Page 73502]]

and the economy as a whole during periods when the United States 
natural gas delivery system is disturbed. For example, after the 
landfall of hurricanes Katrina and Rita in late 2005, even the most 
interested of governmental and commercial market observers were not 
able to obtain complete information regarding the output by 
potentially-damaged production facilities.\94\ By monitoring receipt 
and delivery points for production facilities on interstate natural gas 
pipelines, market observers were able to obtain only a limited sense of 
production facility output.\95\ Similarly, market participants, state 
commissions and other market observers were unable to assess effects on 
natural gas availability in the Gulf Coast, including, for instance, 
availability to the petrochemical industry. The significance and 
duration of these effects on this industry--vulnerable to energy price 
and availability disruptions--remain unclear. Regulations promulgated 
by this Final Rule will allow market participants and other market 
observers to gain a much better picture of disruptions in natural gas 
flows in the case of future hurricanes in the Gulf region.\96\
---------------------------------------------------------------------------

    \94\ See, e.g., Comments on Initial NOPR of New York PSC at 2; 
Comments on Initial NOPR of Bentek at 15-16 & 21-22; Comments on 
Initial NOPR of APGA at 3-4; Transcript of the Oct. 13, 2006 
Technical Conference (Tech. Conference Tr.), at 25, Transparency 
Provisions of the Energy Policy Act of 2005, Docket No. AD06-11-000 
(Comments of Sheila Rappazzo, Chief of Policy Section of the Office 
of Gas and Water of the New York PSC).
    \95\ Tech. Conference Tr. at 25 (Comments of Sheila Rappazzo) 
(describing how after the 2005 hurricanes data availability differed 
widely).
    \96\ Along these lines, this Final Rule is consistent with Order 
No. 682 and with a recently developed survey by EIA. In Order No. 
682, the Commission revised its reporting regulations to require 
jurisdictional natural gas companies to report damage to facilities 
due to a natural disaster or terrorist activity that results in a 
reduction in pipeline throughput or storage deliverability. Revision 
of Regulations to Require Reporting of Damage to Natural Gas 
Pipeline Facilities, Order No. 682, 71 FR 51098 (Aug. 29, 2006), 
FERC Stats. and Regs. ] 31,227 (2006), Order No. 682-B order denying 
reh'g, 118 FERC ] 61,188 (2007). Recently, EIA developed Form EIA-
757, ``Survey of Natural Gas Processing Plants'' which is used to 
``collect information on the capacity, status, and operations of 
natural gas processing plants and to monitor constraints of natural 
gas processing plants during periods of supply disruption in areas 
affected by an emergency, such as a hurricane.'' Department of 
Energy, Energy Information Administration, Form EIA-757, ``Survey of 
Natural Gas Processing Plants'', http://www.eia.doe.gov/oil_gas/
natural_gas/survey_forms/drafteia757/ng757_instructions.pdf.
---------------------------------------------------------------------------

    48. Scheduled volume information would be useful whether a 
disruption were major or minor. TPA asserts that because pipeline 
facilities would be inaccessible during a major disruption, a non-
interstate pipeline could not post flow information and, thus, a 
posting requirement would fail to meet this goal.\97\ But, during a 
disruption, the fact that scheduled volumes were not posted, itself, 
would send a signal about the extent and duration of a disruption. It 
would be useful information during and following a disruption to know 
whether some points on a non-interstate were affected but not others. 
For example, following the landfall of hurricanes Gustav and Ike this 
past hurricane season, some pipelines in the affected areas were able 
to post information about flows before actual flows could resume.
---------------------------------------------------------------------------

    \97\ TPA Comments at 20.
---------------------------------------------------------------------------

    49. We also believe that the regulations promulgated in this Final 
Rule will more readily allow the Commission and other market observers 
to identify and remedy potentially manipulative activity. The goal of 
identifying and remedying potential market manipulation conforms to the 
transparency directive in section 23 for the Commission to ``hav[e] due 
regard for the public interest [and] the integrity of those markets. * 
* *'' \98\ By this language, Congress intended that the improvement of 
the Commission's market oversight is a legitimate justification for 
prescribing a transparency rule. Monitoring and preventing manipulative 
or unduly discriminatory activity meets the Commission's responsibility 
for ensuring the integrity of the physical interstate natural gas 
markets.\99\
---------------------------------------------------------------------------

    \98\ Section 23(a)(1) of the NGA; 15 U.S.C. 717t-2(a)(1) (2000 & 
Supp. V 2005).
    \99\ See Prohibition of Energy Market Manipulation, Order No. 
670, FERC Stats. & Regs. ] 31,202, (2006).
---------------------------------------------------------------------------

    50. Information regarding availability on non-interstate pipelines 
could be used to discover potentially manipulative or unduly 
discriminatory behavior in physical natural gas sales or 
transportation. In the Commission's experience, the fact that a price 
for natural gas is not supported by supply and demand fundamentals may 
be an indication that a market participant has violated the NGA's 
prohibitions regarding undue discrimination or market manipulation. On 
a daily basis, as part of its oversight responsibilities, the 
Commission tracks natural gas prices to determine whether they are 
justified by supply and demand fundamentals. To do this, we rely on, 
among other things, the scheduled volume postings by interstate natural 
gas pipelines. This information also serves as an important tool to 
analyze natural gas markets. Similar postings by non-interstate 
pipelines would make this analysis more accurate because it would 
provide additional information currently lacking about supply and 
demand fundamentals, a point discussed above. With information from 
non-interstate pipelines, we can better account for how supply and 
demand fundamentals affect daily changes to physical prices for much of 
the gas transported to key interstate markets. For example, in 
overseeing markets, the Commission routinely checks for unused 
interstate natural gas pipeline capacity between geographically 
distinct markets with substantially different prices as a sign that 
flows may be managed to manipulate prices.
    51. In summary, the posting of scheduled flow information by major 
non-interstate pipelines will increase transparency by meeting the 
three goals set forth in the Posting NOPR. Such postings will: (1) 
Improve market participants' ability to assess supply and demand and to 
price physical natural gas transactions and transportation; (2) provide 
market participants a clearer view of the effects on infrastructure, 
the industry and the economy from disruptions to the United States 
natural gas delivery system, for instance due to hurricane damage to 
facilities in the Gulf of Mexico; and (3) allow the Commission, market 
participants and other market observers to identify potentially 
manipulative activity.\100\ We believe that these are worthy goals.
---------------------------------------------------------------------------

    \100\ Posting NOPR at 60.
---------------------------------------------------------------------------

    52. Further, we do not believe that these transparency goals can be 
met by less intrusive means or through reliance upon existing market 
data. For example, TPA refers to the ``data filed annually by 
intrastate pipelines pursuant to Section 311 of the [Natural Gas Policy 
Act of 1978 (NGPA)]'' as a possible substitute for this Final 
Rule.\101\ Section 284.126(b) of the Commission's regulations requires 
intrastate pipelines providing section 311 transportation to file an 
annual report of volumes of section 311 transportation service, to be 
used to determine the rates applicable to section 311 service.\102\ 
This existing data is inadequate to meet our transparency goals, 
however, because section 311 volumes are only a subset of all volumes 
transported by intrastate pipelines, the information is aggregated and 
is reported annually and, therefore, delayed by at least three months.
---------------------------------------------------------------------------

    \101\ TPA Comments at 22 (citing 15 U.S.C. 717-717z).
    \102\ 18 CFR 284.126(b).
---------------------------------------------------------------------------

    53. TPA also refers to ``additional sources of natural gas price 
information,'' including, for example, ``NYMEX, CME, Globex, ICE and 
voice brokers, as well as price index

[[Page 73503]]

publishers.'' \103\ These sources are not a useful substitute for the 
pipeline posting requirements. They do not provide any scheduled flow 
information and, thus, cannot explain the supply and demand 
fundamentals that underlie the prices in the same way as postings by 
non-interstate pipelines. Additionally, TPA generally refers to state 
commission production data available from Texas, Louisiana, and New 
Mexico.\104\ However, this data includes only production data (and not 
other transportation volumes) and is only available on a monthly basis. 
Similarly, the data from production information Web sites does not 
include transportation volumes.\105\
---------------------------------------------------------------------------

    \103\ TPA Comments at 22.
    \104\ Id. at 22 n. 59.
    \105\ Id. at 22.
---------------------------------------------------------------------------

    54. TPA references various EIA reports as possible replacement 
sources for data regarding pipeline flows,\106\ but none of these 
reports is an adequate substitute for the posting of scheduled volume 
information by major non-interstate pipelines; none of these sources 
provides scheduled pipeline-by-pipeline flow data on a daily basis. EIA 
Monthly Storage Reports provide only information about aggregated 
storage flows on a monthly or weekly basis. EIA Weekly Storage Reports 
provide only storage information, are issued only once each week, and 
provide aggregated data for three regions. Form EIA-895 provides only 
production data aggregated by state. Form EIA-176 does not provide 
daily transportation information, and is significantly lagged and 
aggregated annually and by company. Form EIA-857 provides only ``volume 
and cost data on natural gas delivered to residential, commercial, and 
industrial consumers'' \107\ estimated by reviewing a monthly sample of 
natural gas companies that deliver to consumers in the United States. 
The survey does not report disaggregated daily transactional data at 
receipt and delivery points, but instead only provides partial retail 
sales. While we appreciate the value of EIA's data collection and 
publications, we are not persuaded that these activities are adequate 
substitutes for the daily, point-specific postings required by this 
Final Rule.
---------------------------------------------------------------------------

    \106\ Id. at 22 n. 59.
    \107\ http://www.tonto.eia.doe.gov/dnav/ng/TblDefs/ng_
statdetails.html.
---------------------------------------------------------------------------

    55. As for Genscape's work monitoring flows on pipelines, its 
project does not provide sufficient coverage of non-interstate 
pipelines as it appears limited to storage facilities in Texas and 
Louisiana and some major interstate pipelines. Most importantly, 
Genscape's services are available only for a fee and only to 
subscribers. The Commission's intent in this Final Rule is to increase 
transparency for the public's benefit.
    56. We also believe that the goals of this Final Rule outweigh the 
burdens to be placed upon non-interstate and interstate pipelines. 
Based upon our experience, as a matter of business acumen and good 
operational practice, most if not all of the gas control divisions of 
the affected companies currently have ready access to the information 
captured by this Final Rule. Pipelines already track flows on points 
with a design capacity equal to or greater than 15,000 MMBtu/day to 
ensure the operational integrity of their systems; to plan and schedule 
operations; to monitor and control the pipelines; and to respond to and 
correct abnormal operations. Natural gas pipeline schedulers need this 
information on a daily basis so that they can match supply to nominated 
demand and maintain system balance. Furthermore, some companies that 
own several major non-interstate pipelines also own interstate natural 
gas pipelines, which already post scheduled volume information. For 
such companies, the requirement is a familiar one and they should have 
the infrastructure in place, or easily put in place, to meet the 
requirement on their major non-interstate pipelines.

V. Pipeline Posting Requirements

A. Overview

    57. Based on the comments received and the discussion at the 
technical conference held on April 3, 2008, the Commission will modify 
the proposal in the Posting NOPR in a number of significant ways. We 
have increased the minimum delivery threshold defining major non-
interstate pipelines from 10 to 50 million MMBtu per year. Also, we 
have determined that neither major non-interstate pipelines nor 
interstate pipelines will be required to post actual flow information 
at this time. Instead, the regulations promulgated in this Final Rule 
require major non-interstate pipelines to post scheduled flow 
information at each receipt and delivery point with a design capacity 
greater than 15,000 MMBtu per day, and interstate pipelines to post 
certain information on no-notice service.\108\ Further, we provide for 
a number of exemptions and clarifications of the new posting 
requirements that we believe will further limit the burden on entities 
subject to the Final Rule. We address the salient aspects of the 
regulations in turn, below.
---------------------------------------------------------------------------

    \108\ Under 18 CFR 284.7(a)(4), an interstate natural gas 
pipeline must provide no-notice service, which is defined as ``a 
firm transportation service under which firm shippers may receive 
delivery up to their firm entitlements on a daily basis without 
penalty.''
---------------------------------------------------------------------------

B. Definition of Major Non-Interstate Pipeline

1. Posting NOPR
    58. In the Posting NOPR, the Commission proposed that only major 
non-interstate pipelines would be required to post flow information. 
The Posting NOPR provisionally defined a ``major non-interstate 
pipeline'' as ``a pipeline that fits the following criteria: (1) It is 
not a `natural gas company' under section 1 of the NGA; and (2) it 
flows annually more than 10 million (10,000,000) MMBtu of natural gas 
measured in average receipts or in deliveries for the past 3 years.'' 
\109\ The Commission asked for comment on the proposed 10 million MMBtu 
delivery threshold and whether it should be increased or 
decreased.\110\
---------------------------------------------------------------------------

    \109\ Posting NOPR at P 67.
    \110\ Id.
---------------------------------------------------------------------------

2. Comments
    59. Several commenters support both a delivery threshold approach 
and the 10 million MMBtu delivery threshold proposed in the Posting 
NOPR.\111\ Copano Energy supports a 10 million MMBtu threshold but adds 
that only jurisdictional flows should be counted for that delivery 
threshold.\112\
---------------------------------------------------------------------------

    \111\ Bentek Comments at 6; see also TIPRO Comments at 2.
    \112\ Copano Energy Comments at 10.
---------------------------------------------------------------------------

    60. Several commenters seek an increase in the proposed delivery 
threshold. Contending that a 10 million MMBtu delivery threshold is 
unnecessarily low, NGSA suggests that the delivery threshold should be 
50 million MMBtu.\113\ Relying upon EIA data regarding intrastate 
pipelines, NGSA contends that a 50 million MMBtu delivery threshold 
would capture approximately 90 percent of the intrastate pipeline 
volumes and apply to only 57 intrastate pipelines. By contrast, 
according to NGSA, a 10 million MMBtu threshold would capture 99 
percent of such volumes and apply to approximately 100 intrastate 
pipelines. NGSA contends that the benefit from this increase in 
reported volumes that would result from establishing a lower threshold 
is not sufficient to justify greater costs related to implementation of 
a 10 million MMBtu delivery

[[Page 73504]]

threshold.\114\ Similarly, Chevron Pipelines proposes raising the 
delivery threshold; it proposes a delivery threshold for reporting 
based on daily flows of 100,000 mcf/day (which equates to 36.5 MMBtu/
year).\115\
---------------------------------------------------------------------------

    \113\ NGSA Comments at 5-6.
    \114\ Id. at 5-6.
    \115\ Chevron Pipelines Comments at 23-24.
---------------------------------------------------------------------------

    61. Calpine supports a greater delivery threshold and proposes 
setting out two minimum thresholds based on gross and net throughput 
levels. It would set a de minimis daily volume threshold of 100,000 Dth 
(100,000 MMBtu) of net throughput, net of gas consumed by directly 
connected end-users, or 300,000 Dth (300,000 MMBtu) of gross peak day 
throughput.\116\
---------------------------------------------------------------------------

    \116\ Calpine Comments at 6-7.
---------------------------------------------------------------------------

    62. TPA suggests that the Commission adopt the delivery threshold 
used in FERC Form No. 2, 50 million Dth (50 million MMBtu), so that 
only non-interstate pipelines that transported over 50 million Dth (50 
million MMBtu) in each of the three prior years would be required to 
post.\117\
---------------------------------------------------------------------------

    \117\ TPA Comments at 45; see also Kinder Morgan Intrastate 
Comments at 21; NGSA Comments at 5.
---------------------------------------------------------------------------

    63. Shell seeks clarification regarding the calculation of the 
proposed delivery threshold. It contends that the use of thermal units, 
i.e., MMBtu, is more appropriate than volumetric units, i.e., Bcf. 
Shell suggests that the word ``average'' should be added in front of 
the word ``deliveries'' so the calculation would apply both to average 
receipts and/or deliveries. Shell seeks clarification if the three-year 
average is a rolling average and whether it should be calculated 
annually. It also seeks clarification on whether the delivery threshold 
should be applied on a facility-by-facility basis or corporate 
wide.\118\
---------------------------------------------------------------------------

    \118\ Shell Comments at 27-29.
---------------------------------------------------------------------------

3. Commission Determination
    64. In consideration of the comments filed in this proceeding, the 
Commission will define a major non-interstate pipeline as a pipeline 
that ``(1) is not a `natural gas company' under section 1 of the NGA; 
and (2) delivers annually more than 50 million MMBtu of natural gas 
measured in average receipts or in average deliveries for the past 
three years.'' \119\ The definition adopted in this Final Rule differs 
substantially from that proposed in the Posting NOPR and adopts a five-
fold increase in the delivery threshold. Further, the definition bases 
the threshold on deliveries instead of flows. In addition, the 
definition clarifies that the delivery threshold should be determined 
on a facility-by-facility basis.
---------------------------------------------------------------------------

    \119\ See new section 284.14(a).
---------------------------------------------------------------------------

    65. As an initial matter, we believe that a delivery threshold of 
50 million MMBtu provides sufficient information to meet the 
Commission's goal of tracking daily flows of natural gas adequately 
throughout the United States by providing flow information in areas for 
which interstate natural gas pipeline posting is not adequate. EIA Form 
176 data demonstrates the reach of the 50 million MMBtu threshold. 
Excluding deliveries by interstate natural gas pipelines, pipelines 
that deliver greater than 50 million MMBtu annually account for 75 
percent of total non-interstate volumes delivered in the United 
States.\120\ While the EIA Form 176 categories are not a precise match 
to the data required to be posted by this Final Rule, the categories 
are sufficiently similar to show that the 50 million MMBtu delivery 
threshold will provide a significant amount of flow information to the 
Commission, market participants, and observers and improve the 
understanding of the supply and demand fundamentals affecting 
interstate markets. Assuming this data is representative, capturing 
roughly three-fourths of non-interstate pipelines would be a 
significant stride in filling in the gaps regarding flows in the United 
States.\121\
---------------------------------------------------------------------------

    \120\ Derived from EIA Form 176 data for 2006 based on the ratio 
of non-interstate pipelines reporting deliveries greater than 50 
million MMBtu per year to total deliveries on all non-interstate 
pipelines. NGSA estimates that a 50 million MMBtu threshold would 
capture 90 percent of the relevant intrastate pipeline volumes. NGSA 
comments at 5-6. We have been unable to duplicate NGSA's methodology 
used to derive this figure, although we note that NGSA has included 
certain interstate volumes and excluded some non-interstate volumes 
in its calculations.
    \121\ We believe that a 50 million MMBtu annual threshold for 
``major non-interstate pipelines'' is appropriate since this 
threshold includes almost all non-interstate pipelines that 
interconnect with major hubs. However, experience with pipeline 
postings following implementation of this Final Rule could lead us 
to revisit this determination in the future.
---------------------------------------------------------------------------

    66. The 50 million MMBtu delivery threshold is likewise consistent 
with the threshold used in the Commission's FERC Form No. 2 
requirements. FERC Form No. 2 is a compilation of financial and 
operational information filed by interstate natural gas pipelines. An 
interstate natural gas pipeline must file a FERC Form No. 2 if it 
transports or stores for a fee volumes of natural gas greater than 50 
million Dth.\122\ If an interstate natural gas pipeline transports or 
stores for a fee volumes of natural gas less than 50 million Dth, it is 
not considered a major pipeline and files FERC Form No. 2A, which 
entails a lesser accounting burden.
---------------------------------------------------------------------------

    \122\ 18 CFR 260.1(b).
---------------------------------------------------------------------------

    67. By adopting the significantly higher 50 million MMBtu delivery 
threshold, the Commission also will eliminate compliance burdens on 
many smaller pipelines which may have fewer resources to meet the 
posting requirement. We agree with various commenters that the 10 
million MMBtu delivery threshold in the Posting NOPR would have 
burdened smaller pipelines without providing a proportionate amount of 
useful information. A review of EIA Form 176 data for those pipelines 
that describe themselves to EIA as intrastate pipelines is 
illustrative. Under a 10 million MMBtu delivery threshold, thirty-seven 
of such pipelines would be required to post. In contrast, under a 50 
million MMBtu delivery threshold, only sixteen of such pipelines will 
be required to post.\123\
---------------------------------------------------------------------------

    \123\ Looking at the EIA data another way also supports the 50 
million MMBtu delivery threshold. The 50 million MMBtu threshold 
would capture 85 major non-interstate pipelines that do not qualify 
under the exemptions. These 85 pipelines flow greater than 75 
percent of total non-interstate volumes, according to the EIA Form 
176 data. The Commission's definition of ``major non-interstate'' 
does not match exactly the categories used by EIA. Thus, these 
numbers may differ.
---------------------------------------------------------------------------

    68. Additionally, the Commission clarifies the definition of major 
non-interstate pipeline in a few other respects. The Commission uses 
the term ``deliveries'' instead of ``flows'' for determining the 
threshold. We believe that the term ``deliveries'' is a more precise 
term and is more easily understood by both pipelines and their 
customers. Further, the delivery threshold for defining a ``major non-
interstate pipeline'' must be measured by a non-interstate pipeline's 
average deliveries for the previous three calendar years. If in the 
previous three calendar years, a non-interstate pipeline's deliveries 
averaged greater than 50 million MMBtu then it would be required to 
post the information required under this Final Rule. This approach, 
too, is consistent with the Commission's FERC Form No. 2 
requirements.\124\
---------------------------------------------------------------------------

    \124\ See FERC Form No. 2, Instructions, p. i, http://
www.ferc.gov/docs-filing/eforms/form-2/form-2.pdf (``Each natural 
gas company whose combined gas transported or stored for a fee 
exceed 50 million dekatherms in each of the previous three years 
must submit FERC Form Nos. 2 and 3-Q'').
---------------------------------------------------------------------------

C. Scheduled Flow Information on Major Non-Interstate Pipelines

1. Posting NOPR
    69. In the Posting NOPR, the Commission proposed to require major 
non-interstate pipelines to post information regarding capacity,

[[Page 73505]]

scheduled flow volumes, and actual flow volumes.\125\
---------------------------------------------------------------------------

    \125\ Posting NOPR at P 22 and 49.
---------------------------------------------------------------------------

2. Comments
    70. Several commenters assert that scheduled volume information 
would provide sufficient insight on supply and demand fundamentals to 
meet the Commission's transparency goals. TPA, for example, claims that 
``[t]he use of scheduled volumes is widespread within the natural gas 
industry and is the current standard used by interstate natural gas 
pipelines'' and would provide the transparency that the Commission 
wants at minimal costs.\126\ Similarly, Kinder Morgan Intrastate 
maintains that actual flows do not reflect the actual supply and demand 
picture due to, for instance, back-hauls, operational balancing 
agreements, equipment outages, and other operating conditions.\127\ 
Commenters object to the requirement that non-interstate pipelines post 
actual flows as overly burdensome. For example, Kinder Morgan 
Intrastate objects to the cost of posting scheduled volumes; it 
estimates that the proposal would cost $250,000 for information 
technology modifications to obtain and post scheduled volumes and 
another $250,000 for information technology modifications to obtain and 
post actual flow volumes.\128\ TPA recommends posting of only scheduled 
volumes rather than actual volumes as a way to significantly reduce the 
costs of compliance with the Final Rule.\129\
---------------------------------------------------------------------------

    \126\ TPA Comments at 8.
    \127\ Kinder Morgan Intrastate at 13-14.
    \128\ Kinder Morgan Intrastate at 12. Kinder Morgan estimates 
additional costs for obtaining flow information at segments, which 
is not required in the Final Rule.
    \129\ TPA Comments at 6-7.
---------------------------------------------------------------------------

    71. TIPRO supports the posting of actual flows as a way to verify 
scheduled activity as compared to actual activity, but acknowledges 
that posting of actual flows may not be feasible on a daily basis and 
that should be taken into account in the final rulemaking.\130\
---------------------------------------------------------------------------

    \130\ TIPRO Comments at 4.
---------------------------------------------------------------------------

3. Commission Determination
    72. We will not require major non-interstate pipelines to post 
actual flow information. As noted by Kinder Morgan Intrastate, the 
information gained from requiring non-interstate pipelines to post 
actual flows would not be that much greater than that gained from the 
posting of scheduled volumes, particularly given that non-interstate 
pipelines are not required to provide no-notice service (although some 
do).
    73. We recognize that some non-interstate pipelines will incur 
costs to comply with this rule, including the posting of scheduled 
volumes. However, we believe that the benefits of posting and the need 
for this rule outweigh those costs. In any event, we do not believe 
that the costs are as great as those estimated by commenters. 
Commenters' estimated costs included the cost of metering at segments, 
but posting at segments is not a requirement of this Final Rule.\131\ 
Similarly, commenters' estimated costs include the cost of new metering 
and the posting of actual flow information, but posting actual flow is, 
likewise, not a requirement of this Final Rule. We also disagree with 
Kinder Morgan Intrastate's estimated $250,000 in costs to obtain and 
post volumetric information.\132\ The Commission believes that this 
figure is too great because, as discussed by TPA, ``most of the 
information already collected by intrastate pipelines relates to 
scheduled volumes at receipt and delivery points. * * *'' \133\
---------------------------------------------------------------------------

    \131\ Our decision not to require posting by segment is 
discussed infra.
    \132\ Kinder Morgan Intrastate at 12.
    \133\ Our staff's research indicates that such costs could be 
less than $30,000 for major non-interstate pipelines. The estimate 
includes both the software and labor costs associated with 
implementing the rule. Software costs include a one-time capital 
cost (amortized over ten years) to create a standard informational 
posting Web site for reporting scheduled volumes and the monthly 
fees associated with maintaining this site. In addition, the cost 
factors daily labor costs to upload this information on the Internet 
and to have an attorney or compliance office review these postings 
on a routine basis.
---------------------------------------------------------------------------

D. Receipt and Delivery Point Posting for Major Non-Interstate 
Pipelines

1. Posting NOPR
    74. The Posting NOPR sought comments regarding whether the 
Commission's transparency goals could be sufficiently advanced through 
the posting of flows in and out of major market hubs and, if so, which 
hub-related data should be reported.\134\ The Commission suggested two 
possible approaches to postings by non-interstate pipelines. First, 
under a delivery threshold approach, whether a non-interstate pipeline 
posts flow information depends on the amount of flows or deliveries the 
non-interstate pipeline flows or delivers annually at the hub. Second, 
under a market hub approach, or market hub alternative, whether a non-
interstate pipeline posts flow information depends on whether it 
interconnects to a major market hub. The Commission sought comment on 
adopting a market hub approach, but did not propose a market hub 
approach.
---------------------------------------------------------------------------

    \134\ Posting NOPR at P 75.
---------------------------------------------------------------------------

    75. The Posting NOPR also proposed that non-interstate pipelines 
post flow information for ``major points or segments.'' We did not 
delineate for which ``major points or segments'' a major, non-
interstate pipeline should post but requested comment on the subject. 
The Posting NOPR proposed that non-interstate pipelines post ``on a 
daily basis on an Internet Web site and in downloadable file formats, 
in conformity with section 284.12 of this chapter, equal and timely 
access to'' flow information.\135\
---------------------------------------------------------------------------

    \135\ See new section 284.14(a).
---------------------------------------------------------------------------

2. Comments
    76. Several commenters support a market hub approach (as opposed to 
a points or segment-based approach) for determining which non-
interstate pipelines should post flow information.\136\ Chevron 
Pipelines argue that a market hub approach would ``ensure and 
facilitate more accurate pricing with little loss of meaningful 
information.'' \137\ EOG Resources supports posting at the thirteen 
market hubs referred to in the Initial and Posting NOPRs because it 
would more likely provide meaningful information on flows affecting 
wholesale natural gas markets and would cost less than the proposed 
posting requirement.\138\ Atmos also advocates posting at the thirteen 
hubs because the hubs represent market points where index prices are 
regularly published and the market hubs ``come closer than any other 
points to satisfying the statutory requirement that the information be 
about physical pricing at wholesale and interstate commerce.'' \139\
---------------------------------------------------------------------------

    \136\ See, e.g., National Fuel Distribution Comments at 2.
    \137\ Chevron Pipelines Comments at 27.
    \138\ EOG Resources Comments at 11; see also Oklahoma 
Corporation Commission Comments at 4; Shell Comments at 11-17.
    \139\ Atmos Comments at 7.
---------------------------------------------------------------------------

    77. Yates asserts that a market hub approach would address the lack 
of supply and demand information in production areas because the 
thirteen major market hubs are located in the major production areas in 
Louisiana and Texas.\140\ Supply and demand information, according to 
this commenter, is available for other production areas through 
interstate postings.\141\ Similarly, because the market hub approach 
focuses on the Gulf Coast, Yates claims, it would address the goal of 
understanding the

[[Page 73506]]

effects of a major disruption in that area.\142\
---------------------------------------------------------------------------

    \140\ Yates Comments at 6-8.
    \141\ Yates Comments at 7.
    \142\ Id. at 7-8.
---------------------------------------------------------------------------

    78. Other commenters oppose adoption of a market hub approach. 
Royalty Owners contend that limiting the postings to hubs would exclude 
vast, relevant segments of the intrastate system. For instance, Royalty 
Owners declare that, since Oklahoma does not have one of the thirteen 
market hubs listed in the Posting NOPR, every pipeline in the state 
could be exempt, yet Oklahoma is the third largest producing state with 
approximately 8.8 percent of the nation's total production.\143\ TIPRO 
similarly opposes limiting the proposal to only pipelines that flow in 
and out of major hubs because significant information would be lost and 
the transparency goals would not be met.\144\
---------------------------------------------------------------------------

    \143\ Royalty Owners Comments at 2.
    \144\ TIPRO Comments at 2.
---------------------------------------------------------------------------

    79. Commenters also addressed possible postings by receipt and 
delivery points. Several commenters object to the fact that the Posting 
NOPR did not define the ``major points of receipt and delivery'' at 
which non-interstate pipelines would be required to post flow 
information. Atmos believes that the lack of a definition of major 
points hindered the ability to comment on the burden and costs of the 
proposal.\145\ NGSA suggests requiring the posting of flow information 
at receipt and delivery points that flow on average more than 15 mmcf/
day and at all metered points.\146\ PGC requests that the Final Rule 
exclude posting at points serving private pipelines or LDC bypasses, 
noting the Commission's comments that it was not interested in posting 
for ``extremely small points connected to one or a few customers.'' 
\147\
---------------------------------------------------------------------------

    \145\ Atmos Comments at 5; see also TPA Comments at 32; Calpine 
Comments at 9-11.
    \146\ NGSA Comments at 7-10.
    \147\ PGC Comments at 2.
---------------------------------------------------------------------------

    80. Several commenters express concern that the public posting of 
flow information at receipt and delivery points could result in a 
competitive disadvantage for individual customers.\148\ TPA objects to 
the posting of design capacity for a point as it would allow a 
determination of a non-interstate pipeline's available capacity.\149\ 
Kinder Morgan Intrastate contends that the posting proposal would harm 
its end-use customers by causing the release of confidential 
information.\150\ To avoid this result, Kinder Morgan Intrastate 
suggests that the Commission exempt the reporting of information 
regarding deliveries made to power generators, LDCs and industrial 
customers.\151\ Calpine seeks to keep confidential an individual 
customer's transportation volumes and consumption patterns by excluding 
individual customer laterals and focusing the posting requirement on 
high-volume segments with multiple shippers.\152\ But, as to 
confidentiality, Bentek observes that data for power plants and nearly 
800 industrial facilities that are directly connected to interstate 
natural gas pipelines is posted daily with ``no apparent adverse 
impact.'' \153\ Bentek concludes that the Commission should not 
``protect something in the non-interstate context that is not protected 
in the interstate context.'' \154\
---------------------------------------------------------------------------

    \148\ See, e.g., Atmos Comments at 8.
    \149\ TPA Comments at 16.
    \150\ Kinder Morgan Intrastate Comments at 19.
    \151\ Id. at 22.
    \152\ Calpine Comments at 5.
    \153\ Bentek Comments at 9.
    \154\ Id.
---------------------------------------------------------------------------

    81. Several commenters object to posting information on segments. 
Atmos opposes posting information at segments because it does not 
measure flows at segments.\155\ Atmos also states that it has 1,200 
receipt and delivery points on its system and thousands of minor ones 
resulting in a multitude of possible postings for segments.\156\ PG&E 
urges the Commission to focus on receipt and delivery points on non-
interstate pipelines, rather than on mainline segments because posting 
at segments would not provide any information that is not already 
apparent from posting capacity, scheduled volume and actual flows at 
receipt and delivery points.\157\ In this regard, other commenters 
maintain that the requirement to post flows at segments would create a 
significant burden.\158\ TPA explains that the estimates of costs from 
the proposed requirement to post flow information arises from the 
assumption that the proposal entails reporting at segments:
---------------------------------------------------------------------------

    \155\ Atmos Comments at 5.
    \156\ Id. at 6.
    \157\ PG&E Comments at 5.
    \158\ See, e.g., TPA Comments at 25-26; Atmos Comments at 5.
---------------------------------------------------------------------------

    The burdens and costs associated with the proposed rule would be 
substantially greater than the Commission estimated. A large reason 
for this is that intrastate pipelines do not typically collect 
information related to segment flow--most of the information already 
collected by intrastate pipelines relates to scheduled volumes at 
receipt and delivery points, rather than segments.\159\
---------------------------------------------------------------------------

    \159\ TPA Comments at 25.

For instance, Atmos estimates that determining actual gas flows at 
major pipeline segments would require a capital investment of at least 
$13 million.\160\ Kinder Morgan Intrastate estimates that installing 
meters to measure flow at segments would cost approximately $62.7 
million.\161\ The ONEOK Gathering Companies observe that narrowly 
defining the term ``major point or mainline segment'' in proposed 
section 284.14(a) would reduce the number of new meters that would need 
to be installed, operated and maintained and would thus keep the burden 
to a minimum.\162\ TPA contends that adding segment meters to a 
pipeline would cause a drop in pressure.\163\
---------------------------------------------------------------------------

    \160\ Atmos Comments at 5.
    \161\ Kinder Morgan Intrastate at 11.
    \162\ ONEOK Gathering Companies Comments at 12-13.
    \163\ TPA Comments at 41.
---------------------------------------------------------------------------

3. Commission Determination
    82. The Commission determines that a major non-interstate pipeline 
must post scheduling information for each receipt and delivery point 
with a design capacity of equal to or greater than 15,000 MMBtu/day (a 
point-based delivery threshold). In addition, a non-interstate pipeline 
must post the design capacity for each such point. Specific information 
that is to be posted is discussed below.\164\ Postings at market hubs 
or for segments will not be required.
---------------------------------------------------------------------------

    \164\ We remind pipelines that must comply with this Final Rule 
that the Commission has established a help desk to facilitate 
responses to questions regarding compliance with our regulations. 
See Obtaining Guidance on Regulatory Requirements, 123 FERC ] 61,157 
(2008).
---------------------------------------------------------------------------

a. Posting at Receipt and Delivery Points
    83. The delivery threshold approach adopted herein will provide 
broader, more useful information about the supply and demand 
fundamentals that underlie the interstate natural gas market than a 
hub-based approach and at a cost less than a segment-based approach. 
The delivery threshold approach is not limited to a few market hubs or 
published pricing points. It will provide information about flows that 
either eventually feed into market hubs or that affect pricing at those 
market hubs. Such market hubs or published pricing points are generally 
already relatively liquid--the delivery threshold approach will promote 
transparency at less liquid and currently less transparent points.
    84. Posting points' design capacity will allow the Commission and 
market participants to better determine availability, a key component 
of supply and demand fundamentals. Market observers may estimate 
availability by subtracting scheduled volumes from design capacity. 
Requiring the posting

[[Page 73507]]

of design capacity will allow shippers and other market observers to 
understand the availability of transportation that affects interstate 
wholesale markets. Further, this approach is consistent with the 
Commission's policies for interstate natural gas pipelines. In Order 
No. 637, the Commission stated that interstate natural gas pipelines 
had the option of posting at either (i) receipt and delivery points or 
(ii) segments. It has been our experience that most, but by no means 
all, interstate pipelines elect to post by receipt and delivery point 
and not by segment.
    85. Some commenters object to the threshold approach as not 
advancing transparency in the interstate market because, for example, 
as they claim ``[v]ery few intrastate delivery or receipt points and no 
intrastate segments exist at the same location as published pricing 
indices. If these points do not represent established pricing points 
for the interstate market, there is no advancement of the increased 
price transparency goal from the proposed reporting.'' \165\ This 
criticism assumes that only flow information for a published pricing 
point can promote transparency. First, this assumption is incorrect 
because prices are affected by flows that feed a pricing point or that 
affect the supply available to a pricing point. Second, this assumption 
incorrectly assumes that price transparency is solely about the price 
of natural gas at published price indices. Price transparency also 
includes the price of transportation of natural gas. Congress 
contemplated that this price transparency would be derived from not 
only information about prices but also information about availability. 
Section 23 of the NGA authorizes the Commission to obtain ``information 
about the availability'' of natural gas, in addition to information 
about the ``prices'' of natural gas. Unlike the market hub approaches, 
the delivery threshold approach would obtain information regarding 
availability of transportation broadly which would facilitate price 
transparency of both ``sales and transportation of physical natural gas 
in interstate commerce.* * *'' \166\
---------------------------------------------------------------------------

    \165\ Atmos Comments at 7.
    \166\ Section 23(a)(1) of the NGA; 15 U.S.C. 717t-2(a)(1) (2000 
& Supp. V 2005).
---------------------------------------------------------------------------

    86. We believe that a delivery threshold will be less burdensome 
for major non-interstate pipelines than either a hub-based or segment-
based approach as many such pipelines already collect such information. 
These pipelines may incur some additional costs to comply with the 
Final Rule's posting requirements, however, we believe the substantial 
transparency benefits, discussed above, outweigh those costs. In any 
event, the Commission expects that compliance costs will not be nearly 
as great as those estimated by some commenters. As discussed above, 
most commenters' cost estimates include the cost of metering at 
segments, but posting at segments is not a requirement. Other cost 
estimates include the cost of metering and posting actual flow 
information, but posting actual flow information is, likewise, not a 
requirement.
    87. Only a few commenters provided cost estimates that did not 
assume obtaining and posting flow information for pipeline segments and 
that did not assume obtaining and posting actual flow information. 
Kinder Morgan Intrastate, for example, estimated a cost of $250,000 for 
obtaining and posting scheduled volume information.\167\ The Commission 
believes that this figure is likely exaggerated because, as noted by 
TPA, ``most of the information already collected by intrastate 
pipelines relates to scheduled volumes at receipt and delivery 
points.'' \168\ We believe that the costs of collecting existing 
scheduled volume information and posting it on a Web site is likely to 
be far less.\169\
---------------------------------------------------------------------------

    \167\ Kinder Morgan Intrastate at 12.
    \168\ TPA Comments at 25.
    \169\ As noted above, supra note 130, our staff's research 
indicates that such costs could be less than $30,000 per year.
---------------------------------------------------------------------------

    88. Lastly, we have carefully considered the arguments by some 
commenters that additional pipeline postings could affect the 
competitive position of customers who have a dedicated delivery point 
with a design capacity equal to or greater than 15,000 MMBtu/day on a 
major, non-interstate pipeline. In this respect, the regulations that 
we adopt here may affect ``fair competition, and the protection of 
consumers''--considerations that the Commission must take into account 
pursuant to section 23(a)(1) of the NGA. Nonetheless, information about 
the scheduled volumes to a customer with a delivery point with a 
capacity greater than 15,000 MMBtu/day will provide useful information 
to the Commission, market participants, and other market observers and 
will greatly increase market transparency. We believe that this benefit 
outweighs the concerns about publicly posting information about 
scheduled volumes to such a customer. Further, we understand that such 
customers would be placed in the same situation as customers on 
interstate natural gas pipelines with whom they often compete.\170\ 
Currently, interstate natural gas pipelines post daily scheduled 
volumes for delivery points dedicated to a single customer regardless 
of the size of the meter. There have been no indications that 
competitive balance has been harmed since the interstate requirement to 
post was instituted.
---------------------------------------------------------------------------

    \170\ Those customers whose delivery point has a design capacity 
of less than 15,000 MMBtu/day would not be affected. Those customers 
of non-interstate pipelines that did not flow greater than 50 
million MMBtu per year also would not be affected.
---------------------------------------------------------------------------

    89. The Commission will require all postings to be public; we will 
not provide for posting information to be kept confidential as 
requested by some commenters. In section 23(a)(2) of the NGA, Congress 
called for any transparency rule to provide for the ``dissemination, on 
a timely basis, of information about the availability and prices of 
natural gas sold at wholesale and interstate commerce to the 
Commission, State commissions, buyers and sellers of wholesale natural 
gas, and the public.'' \171\
---------------------------------------------------------------------------

    \171\ Section 23(a)(2) of the NGA; 15 U.S.C. 717t-2(a)(2) (2000 
& Supp. V 2005) (emphasis added).
---------------------------------------------------------------------------

    90. In this Final Rule we determine that each major non-interstate 
pipeline must post information for each receipt or delivery point with 
a design capacity equal to or greater than 15,000 MMBtu/day. We believe 
that this threshold represents significant load at delivery points 
(major pipeline interconnections, substantial industrial use, etc.) and 
major receipt points. However, the 15,000 MMBtu/day threshold should be 
sufficiently large so as to exclude insignificant or minor points on a 
pipeline system. To put this threshold in context, 15,000 MMBtu/day 
corresponds roughly to the gas used by an 85 MW baseload gas fired 
power plant at a relatively efficient heat rate of 7,500 Btu/kWh--a 
facility that could serve over 40,000 households each with a 2 kW load.
    91. The Commission will require posting based on each receipt and 
delivery point's design capacity rather than average flows at a point 
because posting at points based on design capacity should be less 
burdensome for pipelines. The average flows over a receipt or delivery 
point may change from year-to-year and designation of posting points 
based upon fluctuating averages would require pipelines to add and 
subtract points from posting on a rolling basis. By comparison, points' 
design capacities are relatively fixed and lend themselves to stable 
posting requirements.

[[Page 73508]]

    92. In the circumstance where the design capacity of a receipt or 
delivery point could vary according to operational or usage conditions, 
a major non-interstate pipeline must post the design capacity for the 
most common operating conditions of its system during peak periods. 
This guidance is identical to that provided to interstate natural gas 
pipelines in Order No. 637 regarding postings. Also consistent with our 
directives in Order No. 637, a pipeline's posting of the total design 
capacity of a point is not a daily posting requirement, but pipelines 
must update this information from time-to-time as changes in design 
capacity occur.
    93. The Commission will not require major non-interstate pipelines 
to post information for each point that has a meter as suggested by 
NGSA. Such a requirement would not be uniform for each pipeline as some 
systems have significantly more physical meter points than others. 
Further, such a requirement could create a disincentive for a major 
non-interstate pipeline to install new meters.
    94. The Commission will require that a major, non-interstate 
pipeline post the following scheduled volume information for each 
receipt and delivery point that has a design capacity equal to or 
greater than 15,000 MMBtu/day: Transportation Service Provider Name, 
Posting Date, Posting Time, Nomination Cycle, Location Name, Additional 
Location Information if Needed to Distinguish Between Points, Location 
Purpose Description (Receipt, Delivery, or Bilateral), Design Capacity, 
Scheduled Volume, Available Capacity, Measurement Unit (Dth, MMBtu, or 
MCf).
    95. Regarding the timing of postings, the Commission considers that 
scheduled flow information that is not provided on a daily basis is 
simply untimely and of vastly diminished use to market participants. We 
believe that, in this regard, our interstate natural gas pipeline 
postings set an appropriate standard: Postings should occur at least on 
a daily basis. Further, this standard conforms to Congress' direction 
in section 23 of the NGA, which requires that our transparency rules 
``provide for the dissemination, on a timely basis, of information 
about the availability and prices of natural gas. * * *'' \172\
---------------------------------------------------------------------------

    \172\ Section 23(a)(2) of the NGA (emphasis added); 15 U.S.C. 
717t-2(a)(2) (2000 & Supp. V 2005).
---------------------------------------------------------------------------

    96. These postings will provide information comparable to the daily 
postings made by interstate natural gas pipelines. Major non-interstate 
pipelines must post scheduled volumes according to a daily posting 
deadline. Currently, interstate natural gas pipelines must provide at 
least four nomination cycles to their shippers with the following 
nomination: Timely, evening, intra-day 1, and intra-day 2.\173\ Once 
these volumes are scheduled, they must be posted on the public Internet 
under Operationally Available Capacity section of an interstate natural 
gas pipeline's Informational Postings according to the following cycle 
deadlines: Timely (no later than 4:30 p.m. central clock time for the 
day prior to gas flow); evening (no later than 9 p.m. central clock for 
the day prior to gas flow); intra-day 1 (no later than 5 p.m. on flow 
day); and intra-day 2 (no later than 9 p.m. on flow day). Currently, 
major non-interstate pipelines employ a variety of nomination deadlines 
on their systems. Some use the standard North American Energy Standards 
Board (NAESB) guidelines followed by interstate natural gas pipelines; 
others do not have specific nomination deadlines.
---------------------------------------------------------------------------

    \173\ Standard 1.3.2, Nominations Related Standards, North 
American Energy Standards Board, Wholesale Gas Quadrant, July 31, 
2002.
---------------------------------------------------------------------------

    97. The Commission will require that major non-interstate pipelines 
post scheduled volumes no later than 10 p.m. central clock time the day 
prior to gas flow. This deadline occurs after interstate natural gas 
pipelines are required to post their evening cycle schedule 
confirmations by receipt and delivery point. The deadline enables non-
interstate pipelines ample time to review their gas control set-up for 
the next day and limits the burden of posting to a single, daily 
reporting cycle.
    98. Regarding comments made by TPA, the Commission clarifies that 
the pipeline posting regulations do not impose NAESB requirements on 
non-interstate pipelines. Rather, the proposed regulations required a 
major non-interstate pipeline to post daily its scheduled volumes, ``in 
conformity with Sec.  284.12 of this chapter. * * *'' The commenter 
erroneously assumes that this would require a non-interstate pipeline 
to conform to all of section 284.12 instead of to conform with the 
manner of posting set forth in that section. The Commission clarifies 
that posting pipelines need only comply with the manner of posting 
outlined in section 284.12 and need not comply with all other 
requirements of that section.
b. Posting at Market Hubs or by Segment
    99. The Commission identified, in the Initial and Posting NOPRs, 
thirteen market hubs served by both interstate and non-interstate 
pipelines as a way to illustrate and provide examples of the wider 
range of deficient information about the physical natural gas market. 
We asked for comment on whether these thirteen hubs should help 
determine which non-interstate pipelines should post flow 
information.\174\ Some commenters seized on these thirteen market hubs 
as a way to define the particular points at which pipelines that should 
post flow information. While the Commission adopts a posting method 
based upon points of receipt and delivery, the Commission appreciates 
the effort that commenters expended in evaluating the Posting NOPR and 
proposing other alternatives (including posting at market hubs) as well 
as comments on posting by segment. We now explain why we are not 
adopting any of these alternatives.
---------------------------------------------------------------------------

    \174\ Posting NOPR at P 71.
---------------------------------------------------------------------------

    100. The market hub alternatives proposed by NGSA and TPA focus on 
locations which have obvious import to understanding pricing in the 
interstate markets. However, we believe that a hub-based approach would 
be unwieldly at best and would not provide the data needed to meet the 
Commission's transparency goals. The market hub alternatives would 
require posting only by those non-interstate pipelines that connect to 
major market hubs. These alternatives would be quite difficult to 
implement and would provide insufficient information to market 
participants.
    101. The market hub alternatives also present too great a challenge 
in trying to keep up with the constantly changing nature and location 
of market hubs. Even the initial identification of relevant market hubs 
would present a challenge. Market hubs are uniform only in that they 
serve as pricing points; they are not uniform physically. There is a 
wide variety of hub types: pooling points, salt-cavern based storage 
hubs, and pipeline hubs (including one, two, or even three different 
pipelines). In spite of this lack of uniformity, a pipeline posting 
would require physical posting as if every market hub were physically 
the same. In such circumstances, posting information would not be 
comparable among different hubs and the resulting data would be of 
marginal value.
    102. After market hubs were initially determined, ongoing 
challenges would remain. A regulatory listing of market hubs would need 
to be established and maintained, yet trading in the market determines 
which market hubs are, in fact, relevant to the market as a whole. This 
list of relevant market hubs would need to be constantly modified as

[[Page 73509]]

trading trends evolved. For instance, on July 2, 2008, Gas Daily 
reported on numerous changes involving price reporting and the 
establishment of new trading hubs, including El Paso South Mainline. El 
Paso South Mainline is a market hub that, under a market hub approach, 
could be considered as a market hub at which interconnected pipelines 
should post flow information. New pipelines would also change which 
market hubs were important to the overall transparency of the 
market.\175\ The listing of specific hubs could not keep up with this 
constantly changing market, would require the commitment of significant 
Commission resources, and would result in perpetual regulatory 
uncertainty regarding posting obligations. Each time a market hub were 
added to the list of relevant hubs, a new set of pipelines would be 
required to begin posting information.
---------------------------------------------------------------------------

    \175\ IPAA Comments at 3.
---------------------------------------------------------------------------

    103. An additional drawback, particular to NGSA's proposed market 
hub approach, would be determining how far upstream of the market hub a 
non-interstate pipeline should post data. NGSA proposes only postings 
of flow information at the pipeline immediately connected to the market 
hub.\176\ This limitation would result in too little information: It 
would provide flow information only at the immediate interconnecting 
pipeline. The Commission, market participants, and observers would lose 
significant information from a supply-chain standpoint.
---------------------------------------------------------------------------

    \176\ NGSA Reply Comments at 2.
---------------------------------------------------------------------------

    104. The TPA market hub alternative would provide even less 
information and less benefit to market participants and observers. 
Because the TPA market hub alternative would not include points 
upstream of the market hub interconnection, this alternative would 
provide no information about the availability of transportation to the 
market hub. The Commission's experience with postings by interstate 
natural gas pipelines suggests that the value of such posting is to 
understand the availability of supply at different points on a 
pipeline, not just the one point at the interconnection. Further, if 
the market hub interconnection is with an interstate natural gas 
pipeline, the interstate natural gas pipeline already posts scheduled 
volume information for that receipt point, thus rendering the TPA 
proposal redundant for many points.\177\
---------------------------------------------------------------------------

    \177\ The AGA states, in objecting to posting such points for 
local distribution companies, that requiring the posting of ``daily 
information for receipt and delivery points that are 
interconnections with interstate pipelines would be unnecessarily 
redundant and would add no valuable information to the Commission's 
or others' understanding of the supply and demand conditions that 
directly affect the U.S. wholesale gas markets.'' AGA Comments at 
15.
---------------------------------------------------------------------------

    105. Similarly, based upon comments we received in response to the 
Posting NOPR, we will not require posting of data by segment. As noted 
by TPA, ``most of the information already collected by intrastate 
pipelines relates to scheduled volumes at receipt and delivery points, 
rather than segments.'' \178\ Thus, the requirement in the Final Rule 
focuses on obtaining and posting information already collected by 
intrastate pipelines: we will require posting of scheduled volumes and 
posting by receipt and delivery points, rather than segments.\179\
---------------------------------------------------------------------------

    \178\ TPA Comments at 25.
    \179\ We note that some non-interstate pipelines currently post 
data regarding pipeline use and availability by segment. We wish to 
make clear that the Final Rule does not preclude pipelines from 
posting such data. The Final Rule requires the posting of specific 
data by major non-interstate pipelines at certain points of receipt 
and delivery. A pipeline is free to post any additional data (e.g., 
additional points, postings by segment, etc.) that it believes would 
be useful to its customers or as required by other regulatory 
bodies.
---------------------------------------------------------------------------

    106. We also appreciate the burden that would be placed upon major 
non-interstate pipelines if we were to adopt a segment-based posting 
approach. Nearly every commenter that discussed segment-based posting 
acknowledged that the costs of such a methodology would be 
substantial.\180\ We adopt a receipt and delivery point-based approach 
that will capture much of the same data as a segment-based approach, 
but that is less burdensome to implement.
---------------------------------------------------------------------------

    \180\ See, e.g., TPA Comments at 25-26.
---------------------------------------------------------------------------

E. Exemptions to the Major Non-Interstate Pipeline Posting Requirements

    107. In consideration of the comments received in response to the 
Posting NOPR, the Commission adopts three exemptions: for non-
interstate pipelines upstream of a processing plant; for non-interstate 
pipelines that deliver almost exclusively to retail end-users; and for 
storage providers. First, a major non-interstate pipeline will be 
exempt from the posting requirement if it ``fall[s] entirely upstream 
of a processing, treatment or dehydration plant.'' \181\ This language 
excludes from the definition not only non-interstate pipelines located 
upstream of a processing plant but also those located upstream of a 
treatment or dehydration plant. Second, the Commission modifies the 
end-use exemption, excluding a non-interstate pipeline if it delivers 
more than 95 percent of its natural gas volumes directly to retail end-
users.\182\ To determine eligibility for the retail exception, a major 
non-interstate pipeline must measure volumes by ``average deliveries 
over the preceding three calendar years.'' \183\ Third, the Commission 
provides a general exemption for storage providers.\184\
---------------------------------------------------------------------------

    \181\ See new section 284.14(b)(1).
    \182\ See new section 284.14(b)(2).
    \183\ See new section 284.14(b)(4).
    \184\ See new section 284.14(b)(3).
---------------------------------------------------------------------------

1. Non-Interstate Pipelines That Are Upstream of a Processing, 
Treatment, or Dehydration Plant
a. Posting NOPR
    108. In the Posting NOPR, the Commission proposed that non-
interstate pipelines located upstream of a processing plant would be 
exempt from the proposed regulations\185\ and requested comment on this 
proposal.\186\
---------------------------------------------------------------------------

    \185\ Posting NOPR at P 69.
    \186\ Id. at P 68.
---------------------------------------------------------------------------

b. Comments
    109. Commenters generally support the exemption for pipelines 
upstream of the processing plant as price formation relies more on 
flows downstream of the processing plant.\187\ However, several 
commenters seek to clarify and, in some ways, expand the definition of 
processing plant. These commenters request that the exemption be 
expanded to exclude pipelines upstream of a treatment plant.\188\ Dow 
Pipeline seeks to include nitrogen processing in the definition of 
processing.\189\ Regency seeks to expand the exemption to exclude any 
pipeline upstream of a processing, treatment or dehydration plant used 
to remove liquid hydrocarbons or other substances from natural gas to 
meet transmission pipeline quality specifications.\190\ NGSA contends 
that a major non-interstate pipeline that lies upstream from another 
major non-interstate pipeline and delivers solely into a single non-
interstate pipeline should be exempted from the posting requirement 
because its volume will be reported by the downstream pipeline.\191\
---------------------------------------------------------------------------

    \187\ See, e.g., Chevron Pipelines Comments at 22-23; TIPRO 
Comments at 5.
    \188\ Copano Energy Comments at 8-9; ONEOK Gathering Companies 
Comments at 5; TPA Comments at 32.
    \189\ Dow Pipeline Comments at 2-3.
    \190\ Regency Comments at 11-13.
    \191\ NGSA Comments at 6.
---------------------------------------------------------------------------

    110. Several commenters seek an exemption specifically for 
gathering pipelines.\192\ These commenters argue that the exemption for 
pipelines upstream of a processing plant would

[[Page 73510]]

not exclude all gathering pipelines.\193\ They note that the exemption 
for pipelines upstream of a processing plant was justified in part as a 
way to exempt gathering pipelines, but that it does not exempt all 
gathering pipelines.\194\ Shell asserts that a production and/or 
gathering line should not be considered a ``pipeline'' and request that 
the Commission define pipeline.\195\
---------------------------------------------------------------------------

    \192\ Enbridge Comments at 2-4; EOG Resources Comments at 8-10; 
Gas Processors Comments at 3-5; TPA Comments at 30-31.
    \193\ ONEOK Gathering Companies Comments at 5-11; Crosstex 
Comments at 5; Enbridge Comments at 4-6
    \194\ Gas Processors Comments at 3-5.
    \195\ Shell Comments at 18-20.
---------------------------------------------------------------------------

    111. Some commenters assert that if gathering systems were required 
to post at all of their receipt and delivery points, the burden would 
be too great. For instance, Regency, which operates gathering systems, 
estimates that requiring posting of its gathering system would cost $6-
10 million.\196\ These commenters request that the Commission exempt 
gathering pipelines by using the ``primary function test.'' \197\ Dow 
Pipeline argues that, if any portion of a major non-interstate pipeline 
located upstream of a processing plant, the pipeline should be excluded 
from the posting requirement.\198\
---------------------------------------------------------------------------

    \196\ Regency Comments at 8-9.
    \197\ Copano Energy Comments at 8-9; Encana Comments at 5-8; EOG 
Resources Comments at 10-11; Kinder Morgan Intrastate Comments at 
21.
    \198\ Dow Pipeline Comments at 2-3.
---------------------------------------------------------------------------

    112. Several commenters note that many gathering facilities are 
downstream of a processing plant.\199\ For instance, ONEOK Gathering 
Companies maintain that the proposed exemption for a pipeline that lies 
upstream of a processing facility is insufficient to exempt gathering 
facilities because gathering facilities have facilities downstream of a 
processing facility. This fact, ONEOK Gathering Companies describe, is 
recognized in the Commission's primary function test for determining a 
gathering facility in which one factor is the location of the 
processing plant.\200\ The fact that the Commission did not delineate 
for which points a pipeline would post makes such an exemption even 
more necessary, according to ONEOK Gathering Companies, as the burden 
would be too great.\201\
---------------------------------------------------------------------------

    \199\ DCP Midstream Comments at 5.
    \200\ ONEOK Gathering Companies Comments at 7.
    \201\ Id. at 7-9.
---------------------------------------------------------------------------

c. Commission Determination
    113. The Commission adopts an exemption for major non-interstate 
pipelines that lie entirely upstream of a processing, treatment, or 
dehydration plant. The focus of this Final Rule is to make available 
information on flows of gas that may be sold in interstate natural gas 
markets. Prior to processing, treatment, or dehydration, natural gas is 
generally not of sufficient quality to serve as a fungible product to 
use in evaluating supply and demand fundamentals underlying the 
interstate natural gas market. We clarify that nitrogen processing, as 
suggested by Dow Pipeline, would be considered processing at a 
processing plant for purposes of this exemption. Additionally, as 
requested by TPA, the Commission clarifies that a pipeline may be 
upstream of a processing plant if it flows into another line that flows 
into a processing plant.
    114. The Commission will not provide a general exemption for 
gathering pipelines. The increased delivery threshold of 50 million 
MMBtu and the exemption for pipelines that lie entirely upstream of a 
processing, treatment, or dehydration plant should be sufficient to 
exclude most gathering pipelines. Further, these exemptions as written 
will serve as a bright-line test for determining whether a major non-
interstate pipeline should post. This contrasts with the ``primary 
function test'' advocated by some commenters. Adopting an exemption 
based on the ``primary function test'' would require a Commission 
determination of each gathering pipeline's eligibility and would be 
burdensome for pipelines seeking to determine whether they must post 
information. Moreover, the ``primary function test'' is a test adopted 
by the Commission to determine whether a facility would fall outside of 
the scope of our traditional NGA jurisdiction under section 1 of the 
act. Use of this test could further confuse the distinction that the 
Commission makes here between its traditional section 1 and its new 
section 23 jurisdiction.
    115. We also decline to adopt an exemption for pipelines that lie 
partially upstream and partially downstream of a processing, treatment, 
or dehydration plant. Such an accommodation would confuse the exemption 
and create compliance difficulties. In any event, again, we believe 
that the increased threshold mitigates any compliance difficulties 
posed for such pipelines.

2. Non-Interstate Pipelines That Deliver More Than Ninety-Five Percent 
of Volumes to Retail Customers

a. Posting NOPR
    116. In the Posting NOPR, the Commission proposed that major non-
interstate pipelines that deliver 95 percent of their volumes to end-
users would be exempt from the posting requirements and requested 
comment on this proposal.\202\
---------------------------------------------------------------------------

    \202\ Posting NOPR at P 69.
---------------------------------------------------------------------------

b. Comments
    117. Several commenters support an exemption for pipelines 
delivering almost exclusively to end-users contending that it would not 
result in a loss of significant market information.\203\ Indeed, some 
commenters request that a proposed exemption be expanded to include 
non-interstate pipelines that transport 80 percent of flows to end-
users.\204\ Calpine seeks to lower the end-use threshold from 95 
percent to 90 percent and asserts that such pipelines do not have a 
major impact on gas flow. Calpine contends that unforeseen outages of a 
large gas-consuming facility could cause a non-interstate pipeline to 
no longer be eligible for the exemption. Calpine acknowledges that this 
possibility is lessened by averaging deliveries over a three-year 
period as was proposed.\205\
---------------------------------------------------------------------------

    \203\ Dow Chemical Comments at 2; Dow Pipeline Comments at 2-3; 
Chevron Pipelines Comments at 23.
    \204\ ONEOK Gathering Companies Comments at 14-15; TPA Comments 
at 46-47; Kinder Morgan Intrastate Comments at 22-23.
    \205\ Calpine Comments at 7-8.
---------------------------------------------------------------------------

    118. AGA proposes to exempt any pipeline in which flows to non-end-
users amounted to less than 10 million MMBtu. AGA is concerned that 
without its additional exemption, a pipeline that flowed more than the 
delivery threshold of 10 million MMBtu but whose flows to non-end-users 
were more than 500,000 MMBtu would be captured.\206\ Dow Chemical 
requests a categorical exemption for non-interstate pipelines that are 
owned or operated by end-users and that are used to transport natural 
gas for use by such end-users.\207\
---------------------------------------------------------------------------

    \206\ AGA Comments at 2.
    \207\ Dow Chemical Comments at 2.
---------------------------------------------------------------------------

    119. Duke maintains that gas consumed by an LDC in the normal 
course of operations, such as fuel and lost-and-unaccounted for gas, 
should be included in the gas deemed delivered directly to end-users 
for purposes of this exemption.\208\ Duke contends that such gas 
facilitates performance by an LDC of its core function and is not 
pertinent to the United States wholesale market.\209\ Duke also argues 
that deliveries by one LDC to another LDC should be considered 
deliveries to another end-user for the purposes of the exemption.\210\ 
Duke reasons that such gas has left the interstate system.\211\
---------------------------------------------------------------------------

    \208\ Duke Comments at 7; see also AGA Comments at 11.
    \209\ Duke Comments at 7.
    \210\ Id. at 7-8; see also AGA Comments at 13.
    \211\ Duke Comments at 8.

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

[[Page 73511]]

c. Commission Determination
    120. With one substantial modification, the Commission adopts the 
exemption proposed in the Posting NOPR. Major non-interstate pipelines 
that flow greater than 95 percent of their volumes directly to retail 
customers (rather than all end-users) are exempted from the posting 
requirements.\212\
---------------------------------------------------------------------------

    \212\ Dow Intrastate requests clarification for its non-
interstate pipeline that can deliver both to a processing plant and 
an end-user. It seeks to fit the non-interstate pipeline into one of 
the exemptions. The non-interstate pipeline delivers directly into a 
processing plant but can also deliver directly to an end-user. 
According to Dow Intrastate, in those circumstances, a pipeline 
could not qualify for the end-use exemption because 95 percent of 
the gas does not go to an end-user, it is delivered to the 
processing plant. It appears that the pipeline that Dow Intrastate 
describes does not lie entirely upstream of a processing plant. If 
the modified delivery point threshold adopted in this Final Rule 
does not address Dow Intrastate's concern, it may file for a waiver 
of the regulations and the Commission will consider the matter in 
light of the facts presented.
---------------------------------------------------------------------------

    121. Recently, in Order No. 704-A, the Commission held that data 
regarding transactions with consumers at retail would not significantly 
assist us to fulfill our transparency responsibilities under section 23 
of the NGA.\213\ There, we drew a distinction between a broad category 
of end-use transactions and transactions that occur at retail. As we 
discussed in that order, many end-use transactions have substantial 
impact on wholesale energy markets.\214\ For these reasons, we will 
define the exemption in the same terms described in Order No. 704-A and 
exempt pipelines delivering 95 percent of their flow volumes under 
retail transactions (i.e., bundled transactions through an LDC at a 
state-approved tariff rate) to consumers.
---------------------------------------------------------------------------

    \213\ Order No. 704-A at P 40-43.
    \214\ Id. at P 40.
---------------------------------------------------------------------------

    122. In light of the increase in the delivery threshold from 10 to 
50 million MMBtu, we do not adopt the proposal of AGA to further expand 
this exemption. AGA proposes to exempt any pipeline in which flows to 
non-end-users amounted to less than 10 million MMBtu. AGA is concerned 
that without its additional exemption, a pipeline that flowed just more 
than the delivery threshold of 10 million MMBtu but whose flows to non-
end-users were more than 500,000 MMBtu would be required to post.\215\ 
Because the Commission herein increases the delivery threshold proposed 
in the Posting NOPR, AGA's concern is alleviated because such a non-
interstate pipeline would not be required to post.
---------------------------------------------------------------------------

    \215\ AGA Comments at 2.
---------------------------------------------------------------------------

    123. Also, because of the increase in the delivery threshold, we 
will not lower the threshold for this exemption to 80 percent as 
requested by several commenters \216\ or to 90 percent as proposed by 
Calpine. Lowering the retail delivery exemption to 80 or 90 percent 
would allow some major non-interstate pipelines to avoid posting a 
significant amount of receipts and deliveries that are not made to 
consumers, which could result in the loss of a large amount of 
information about the interstate natural gas market. Further, we 
believe that commenters' concerns largely are addressed by the 
increased delivery threshold of 50 million MMBtu and by the requirement 
that the end-use percentages be determined on a three-year average.
---------------------------------------------------------------------------

    \216\ ONEOK Gathering Companies Comments at 14-15; TPA Comments 
at 46-47; Kinder Morgan Intrastate Comments at 22-23.
---------------------------------------------------------------------------

    124. We find Calpine's ``concern[] that the ninety-five (95%) 
volume level is set too high to allow for unforeseen outages that 
affect large gas-consuming facilities'' to be misplaced. Such outages 
could result in gas being redirected away from an end-user to a 
wholesale purchaser. This also could result in the pipeline delivering 
more than 5 percent of its flows to non-end-users therefore triggering 
the posting requirement. In such a circumstance, posting would be 
properly required.
    125. In response to other comments, we clarify that volumes 
transported from one LDC to another should not be deemed deliveries to 
retail consumers for purposes of the end-user exemption.\217\ The 
Commission will not exempt a non-interstate pipeline that delivers 
solely into a single non-interstate pipeline as suggested by NGSA.\218\ 
NGSA reasons that the downstream, non-interstate pipeline would post 
the flows at its receipt point. That may not be the case where the 
downstream, non-interstate pipeline does not meet the delivery 
threshold and is not required to post.
---------------------------------------------------------------------------

    \217\ Duke Comments at 7.
    \218\ NGSA Comments at 6.
---------------------------------------------------------------------------

    126. Natural gas consumed or utilized for operational reasons by 
the posting pipeline (such as for fuel or lost-and-unaccounted for gas) 
is deemed to be gas consumed ``at retail'' for purposes of determining 
whether a pipeline fits within this exemption.
3. Non-Interstate Storage Providers
a. Posting NOPR
    127. In the Posting NOPR, the Commission sought further comment 
from storage providers regarding the effect of the proposed rule on 
their businesses. Specifically, the Commission asked for comment on 
whether storage providers should provide data in aggregate form and 
whether an individual storage facility loses negotiating strength when 
its customers know the supply of available storage capacity.\219\
---------------------------------------------------------------------------

    \219\ Posting NOPR at P 76-77.
---------------------------------------------------------------------------

b. Comments
    128. Some commenters support the proposal.\220\ For example, 
Calpine supports a daily posting requirement for storage providers, 
otherwise ``[t]he supply chain would be incomplete.'' \221\ Calpine 
contends that the information currently available about interstate 
storage facilities is ``often too delayed or too aggregated to provide 
effective daily flow information'' and information about non-interstate 
storage providers is even less useful.\222\
---------------------------------------------------------------------------

    \220\ Calpine Comments at 12.
    \221\ Id. at 13.
    \222\ Id.
---------------------------------------------------------------------------

    129. Storage providers generally object to the proposal, claiming, 
for example, that the proposal is anti-competitive in nature,\223\ the 
information is already available through other means,\224\ or that the 
daily posting requirements would produce distorted aggregate data and 
may yield inaccuracies.\225\ They oppose both (i) the posting of flow 
information by storage providers who qualify as major non-interstate 
pipelines, and; (ii) the posting by a non-interstate pipeline of flow 
information at a receipt or delivery point that serves a storage 
provider.
---------------------------------------------------------------------------

    \223\ Enstor Comments at 3-5; Dow Chemical Comments at 2.
    \224\ See Jefferson Island Comments at 4-6; NISKA Comments at 4-
5; Nisource Comments at 4-5; Williston Basin Comments at 16; 
EnergySouth Comments at 2, 5.
    \225\ Nisource Comments at 5; Total Peaking Comments at 11.
---------------------------------------------------------------------------

    130. In response to the Commission's inquiry regarding the effect 
of the proposal on a storage provider's negotiating position, 
commenters warn that revealing their actual storage position would 
cause them to lose negotiating strength,\226\ which could make the 
storage business less profitable, discourage continued and new storage 
services, lower storage supply and increase prices.\227\ As explained 
by Enstor:
---------------------------------------------------------------------------

    \226\ Williston Basin Comments at 17.
    \227\ EnergySouth Comments at 13.

    A rule that requires [a storage provider] to reveal all daily 
injections and withdrawals into and out of each of its storage 
facilities would, in effect, reveal to the world what [its] storage 
position is on each day in each such storage facility.\228\
---------------------------------------------------------------------------

    \228\ Enstor Comments at 6 n. 22; see also EnergySouth Comments 
at 2 and 11; Jefferson Island Comments at 7-8; NISKA Comments at 6-
8; Nisource Comments at 5 and 7-8; Williston Basin Comments at 17; 
Chevron Pipelines Comments at 32; Enstor Reply Comments at 10.

[[Page 73512]]

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

    131. Similarly, EnergySouth comments that revealing such 
competitively-sensitive information about individual facilities would 
degrade storage providers' competitive abilities and provide ``one-
sided information advantage'' to storage purchasers.\229\ This result, 
storage providers allege, would run contrary to section 23(a)(1) of the 
NGA, which requires the Commission to facilitate price transparency 
``having due regard for * * * fair competition'' among other 
goals.\230\
---------------------------------------------------------------------------

    \229\ EnergySouth Comments at 2, 11-12; see also EnergySouth 
Reply Comments at 1-2.
    \230\ Section 23(a)(1) of the NGA; 15 U.S.C. 717t-2(a)(1) (2000 
& Supp. V 2005).
---------------------------------------------------------------------------

    132. Commenters also claim that the release of flow data from 
individual storage facilities could lead to increased prices.\231\ For 
instance, NiSource asserts that the posting of regionally specific 
storage volumes could result in artificially high prices, particularly 
where storage assets are operated on an integrated basis.\232\ Further, 
commenters suggest that flow information from storage providers would 
not be useful to market participants or the Commission.\233\ National 
Fuel Supply comments that ``information about daily flows at each 
individual field has only operational, not commercial, significance, 
and its disclosure would place a burden on National Fuel Supply and 
other storage providers without facilitating price transparency.'' 
\234\
---------------------------------------------------------------------------

    \231\ See Chevron Pipelines Comments at 32; EnergySouth Comments 
at 2, 13; Nisource Comments at 9.
    \232\ Nisource Comments at 9.
    \233\ Total Peaking Comments at 11; National Fuel Supply 
Comments at 6; Williston Basin Reply Comments at 7.
    \234\ National Fuel Supply Comments at 6; National Fuel Supply 
Reply Comments at 5-6.
---------------------------------------------------------------------------

    133. Several commenters state that the posting for storage 
providers should be done on an aggregated basis rather than on a 
facility-by-facility basis.\235\ Otherwise, NiSource reasons, market 
participants may use daily storage data to artificially increase 
natural gas prices when they believe demand is rising.\236\ Others 
contend that an aggregated posting by storage providers should parallel 
the postings of interstate storage providers. According to Enstor, many 
interstate natural gas pipelines post one aggregated, system-wide 
storage capacity number for all of their storage fields, regardless of 
the number of storage facilities.\237\ Enstor explains that if the 
Commission deems it necessary to require non-interstate storage 
providers to post daily storage capacity and withdrawal and injection 
capacities, the Commission should require all storage providers to 
report this information by specific location rather than by the 
entirety of their systems.\238\
---------------------------------------------------------------------------

    \235\ See Enstor Comments at 5; Nisource Comments at 5; 
EnergySouth Comments at 10-11; Bentek Comments at 10; Comments of 
National Fuel Supply at 6.
    \236\ NiSource Comments at 5.
    \237\ Enstor Comments at 8.
    \238\ Id. at 9.
---------------------------------------------------------------------------

    134. Some commenters request clarification regarding possible 
storage provider postings. PG&E requests that the Commission clarify 
that by requiring storage providers to post ``capacity'' information, 
it would not be requiring storage providers to post inventory 
data.\239\ PG&E does not object to posting information concerning 
injections into and withdrawals from its storage facilities on an 
aggregated basis.\240\
---------------------------------------------------------------------------

    \239\ PG&E Comments at 7; NISKA Comments at 7.
    \240\ PG&E Comments at 7.
---------------------------------------------------------------------------

    135. Commenters propose different ways to limit storage provider 
posting obligations to address the above concerns. They suggest that 
the Commission exempt storage providers providing storage service under 
section 311 of the NGPA under market-based-rates \241\ or allow storage 
providers to post such information on a confidential, non-public 
basis.\242\ EnergySouth comments that ``[m]arket-based rate storage 
providers lacking market power should be regulated under less intrusive 
gas market transparency rules, if under any such rules, than pipelines 
providing transportation services.'' \243\
---------------------------------------------------------------------------

    \241\ See Chevron Pipelines Comments at 29; Jefferson Island 
Comments at 10; NISKA Comments at 4; see also Enstor Comments at 7 
(stating that the Commission should put all storage providers on the 
same playing field and not exempt some operators from posting 
information because it is inherently not fair to entities taking on 
the ``additional burden'').
    \242\ See PG&E Comments at 7; NISKA Comments at 5; Chevron 
Pipelines Comments at 30-31.
    \243\ EnergySouth Reply Comments at 3.
---------------------------------------------------------------------------

c. Commission Determination
    136. In response to the comments received, the Commission will 
exempt non-interstate storage providers from the requirement to post 
information on the Internet.\244\ As discussed above, the Commission 
and other market observers would benefit substantially by increased 
transparency regarding the flow of natural gas on major non-interstate 
pipelines. We agree, however, with certain commenters that the 
Commission's transparency goals may not be substantially enhanced by a 
requirement that non-interstate storage providers separately post flow 
information. The Commission here does not require the posting of 
information regarding natural gas storage inventories for the same 
reason that it does not seek production information. The focus of the 
Final Rule is on the flow, not strictly the supply, of natural gas 
within the United States.
---------------------------------------------------------------------------

    \244\ See new section 284.14(a)(3).
---------------------------------------------------------------------------

    137. Regarding flows into and out of non-interstate storage 
providers, we determine that relevant information is already captured 
by the requirements imposed on non-interstate pipelines in the 
promulgated regulations. That is, a major non-interstate pipeline with 
a receipt or delivery point at a connection with a storage provider is 
required to post scheduled flow data if the point has a design capacity 
greater than 15,000 MMBtu per day. We believe that this posting will be 
sufficient to capture relevant flow information into and out of storage 
facilities. Further, as major non-interstate pipelines are already 
required by this Final Rule to post data for such points, requiring 
similar postings by storage providers would be duplicative and unduly 
burdensome.
    138. We disagree with the concerns raised by certain non-interstate 
storage provider commenters regarding competitive issues related to the 
posting of flow data. First, the Final Rule does not require storage 
providers to post any information. Rather, the information relating to 
flows into and out of storage facilities that the Commission requires 
to be posted is in the control of interconnected non-interstate 
pipelines. Second, the Commission is not requiring the posting of 
inventory or storage capacity data. Under these circumstances, we do 
not believe that the postings required in this Final Rule would have 
any deleterious effect on competition.
4. Other Exemptions and Safe Harbor
a. Posting NOPR
    139. While the Posting NOPR did not specifically suggest additional 
exemptions from the proposed posting requirements, it solicited 
comments from interested entities regarding all aspects of the rule.
b. Comments
    140. Cranberry Pipeline requests an exemption for intrastate 
pipelines, such as itself, with a relatively small Web-like 
configuration rather than a long-line system. Furthermore, Cranberry 
Pipeline requests an exemption for intrastate pipelines that operate in 
concentrated and transparent markets (such as Appalachia) in which 
supply

[[Page 73513]]

and demand information is readily available.\245\
---------------------------------------------------------------------------

    \245\ Cranberry Pipeline Comments at 5-7.
---------------------------------------------------------------------------

    141. Freeport requests that the Commission clarify that the 
definition of ``major non-interstate pipeline'' does not include 
facilities authorized pursuant to section 3 of the NGA that do not 
render stand-alone transportation service.\246\ Freeport asserts that 
because its sendout pipeline is more akin to a production facility than 
to a ``major non-interstate pipeline,'' it should not be subject to a 
posting requirement.\247\
---------------------------------------------------------------------------

    \246\ Freeport Comments at 1.
    \247\ Id. at 4.
---------------------------------------------------------------------------

    142. SEMCO urges the Commission to exempt major non-interstate 
pipelines that sell and transport natural gas in the Alaska natural gas 
market because there are no market hubs in Alaska.\248\ For its part, 
Marathon contends that the Commission does not have jurisdiction over 
Alaskan pipelines and explains that natural gas pipeline activities in 
Alaska do not impact interstate commerce.\249\
---------------------------------------------------------------------------

    \248\ SEMCO Comments at 4-5.
    \249\ Marathon Comments at 2-8.
---------------------------------------------------------------------------

    143. Several commenters advocate for a safe harbor provision for 
good faith compliance.\250\ TPA argues in favor of a safe harbor 
provision.\251\ ONEOK Gathering advocates for ``safe harbor'' 
provisions to ensure upstream pipelines are not unfairly punished if 
posted capacities are based on reasonable assumptions about downstream 
pressures that differ from actual pressures.\252\ OGT explains that 
capacity on upstream pipelines varies due to the pressures of 
downstream pipelines.\253\
---------------------------------------------------------------------------

    \250\ AGA Comments at 18; Atmos Comments at 13; Copano Energy 
Comments at 12.
    \251\ TPA Comments at 33; Crosstex Comments at 33.
    \252\ ONEOK Gathering Comments at 18.
    \253\ Id.
---------------------------------------------------------------------------

    144. In contrast, Royalty Owners state that any Final Rule should 
not contain a safe harbor contending that the Commission should be able 
to accommodate the few instances of honest mistakes--``Penalties are in 
place for a reason.'' \254\
---------------------------------------------------------------------------

    \254\ Royalty Owners Comments at 2.
---------------------------------------------------------------------------

    145. AGA requests that distribution companies with Commission-
approved service area determinations under section 7(f) of the NGA be 
excluded from the Final Rule, as such companies are considered 
``natural gas companies'' under section (2)(6) of the NGA.\255\
---------------------------------------------------------------------------

    \255\ AGA Comments at 6; Louisville Gas and Electric Co. 
Comments at 3-4.
---------------------------------------------------------------------------

    146. Several commenters contend that the Commission should clarify 
that Hinshaw pipelines are not subject to the posting requirements for 
major, non-interstate pipelines. As explained by PSCo, a Hinshaw 
pipeline should not fall within the definition of ``major, non-
interstate pipeline'' under the proposed regulation.\256\ PSCo also 
contends that flow information from a Hinshaw pipeline would not be 
useful in meeting the Commission's goals for the pipeline posting 
requirements.
---------------------------------------------------------------------------

    \256\ PSCo Comments at 3-4; see also AGA Comments at 6-7.
---------------------------------------------------------------------------

c. Commission Determination
    147. The Commission will not provide a separate exemption for 
pipelines in ``concentrated and transparent markets'' as requested by 
Cranberry Pipeline.\257\ The increase in the threshold for the 
definition of major non-interstate pipelines should accommodate 
Cranberry Pipeline's request for an exemption for ``smaller'' 
pipelines. It would be extremely difficult to create a test for what is 
a ``concentrated and transparent'' market. Such a test would create an 
undue burden on a pipeline and an unnecessary administrative burden on 
the Commission.
---------------------------------------------------------------------------

    \257\ Cranberry Pipeline describes these types of entities as 
intrastate pipelines that operate in concentrated and transparent 
markets (such as Appalachia) in which supply and demand information 
is readily available. Cranberry Pipeline Comments at 5-7.
---------------------------------------------------------------------------

    148. Likewise, we decline to provide a separate exemption for 
sendout pipelines covered under section 3 of the NGA as requested by 
Freeport LNG. The flow information from such pipelines, if they were to 
meet the 50 million MMBtu delivery threshold, would provide valuable 
information to market participants, market observers and the 
Commission. Peak sendout at liquefied natural gas facilities may 
represent material volumes of natural gas within a region or trading 
location and, therefore, may significantly explain changes in prices.
    149. Similar reasoning applies to our decision not to categorically 
exclude Hinshaw pipelines or LDCs operating under a section 7(f) 
service area determination from the posting requirements in this Final 
Rule. Hinshaw pipelines and entities that serve an interstate service 
area under NGA section 7(f) that meet or exceed the 50 million MMBtu 
delivery threshold are sizeable entities and flows on these pipelines 
may have substantial effect on the natural gas market, especially 
regionally.
    150. However, we will not impose the requirements of the Final Rule 
on non-interstate pipelines in Alaska. At this time, such pipelines do 
not have a sufficiently significant impact on the interstate natural 
gas market so as to warrant their inclusion in the Final Rule.
    151. The Commission will not adopt a ``safe harbor'' for posting. 
The Commission articulated a safe harbor in the Policy Statement on 
Price Indices,\258\ which grants a data provider that adopts certain 
reporting standards a rebuttable presumption that data submitted to 
index developers is accurate, timely, and submitted in good faith. 
However, a similar perpetual safe harbor is not warranted regarding the 
posting requirements set forth in this Final Rule. The Policy Statement 
on Price Indices sets forth standards that data providers could choose 
to adopt should they voluntarily elect to provide data to price index 
developers. One goal of the Policy Statement on Price Indices was to 
``encourage [industry participants] voluntarily to report energy 
transactions to providers or price indices.'' The safe harbor that we 
adopted in the Policy Statement on Price Indices was a direct extension 
of this policy goal.
---------------------------------------------------------------------------

    \258\ Price Discovery in Natural Gas and Electric Markets; 
Policy Statement on Natural Gas and Electric Price Indices, 104 FERC 
] 61,121 (2003), clarified, 109 FERC ] 61,184 (2004).
---------------------------------------------------------------------------

    152. The posting requirements set forth in this Final Rule are 
mandatory posting requirements adopted consistent with the directives 
of EPAct 2005, not the voluntary reporting of price data to an index 
developer. There is no policy need to provide an incentive for posting 
the information required in this Final Rule similar to the 
encouragement to reporting price data to index developers. Other 
mandatory requirements, such as the filing of FERC Form No. 2, do not 
include such a safe harbor. For this reason, we are not persuaded that 
a perpetual safe harbor is warranted.\259\
---------------------------------------------------------------------------

    \259\ Recently, in Order No. 704-A, the Commission declined to 
adopt a perpetual safe harbor for the annual reporting requirement 
for Form No. 552. FERC Stats. & Regs. ] 31,275 at P 69. While we did 
adopt a one-year safe harbor for 2009 filings of Form No. 552, we 
decline to do so here. As discussed below, interstate pipelines will 
be required to comply with the promulgated posting requirements 
within 60 days of the publication of this Final Rule in the Federal 
Register. Major non-interstate pipelines must comply within 150 days 
of publication. We are confident that pipelines subject to this 
Final Rule will be able to comply with the new regulations in a 
timely manner.
---------------------------------------------------------------------------

F. Posting of No-Notice Service Information by Interstate Pipelines

1. Posting NOPR
    153. The Posting NOPR proposed to require interstate natural gas 
pipelines to post actual flow information within 24 hours of the close 
of the gas day on

[[Page 73514]]

which it flowed.\260\ This proposed requirement, the Commission stated, 
would disseminate information about no-notice service for interstate 
pipelines.\261\ The Commission observed that posting of actual flow 
information could fill the gap between scheduled and actual flows and 
allow market observers to ascribe price behavior with physical changes 
in flows, particularly in the northern tier of the country where no-
notice service is more prevalent.\262\ The Posting NOPR also observed 
that posting of actual flow information could reduce the opportunities 
for market participants to exploit non-public flow information.\263\ We 
sought comments about implementation of the requirement to post actual 
flows on interstate natural gas pipelines in order to better understand 
the costs and benefits of such posting.\264\
---------------------------------------------------------------------------

    \260\ Posting NOPR at P 4.
    \261\ Id. at P 41.
    \262\ Id.
    \263\ Id. at P 42.
    \264\ Id. at P 2, 46.
---------------------------------------------------------------------------

2. Comments

    154. Several commenters oppose the requirement that interstate 
pipelines post actual flow information as too burdensome in relation to 
the minimal information that would be gleaned. For example, INGAA 
contends that information regarding actual flows does not further 
market transparency because they do not reflect ongoing market 
dynamics; rather they trace to transactions that have already been 
completed.\265\ Further, according to INGAA, actual flows are 
independent of the contract paths that INGAA asserts define market 
transactions.\266\ Several commenters contend, without specificity, 
that the posting of actual flows will be costly.\267\
---------------------------------------------------------------------------

    \265\ INGAA Comments at 12; see also Chevron Pipelines Comments 
at 12-13.
    \266\ INGAA Comments at 13.
    \267\ See, e.g., id. at 17-18.
---------------------------------------------------------------------------

    155. Several commenters argue that the current posting of scheduled 
volume information provides sufficient transparency and there is no 
evidence that the posting of actual flows would increase 
transparency.\268\ Spectra states that scheduled volumes postings 
contain better and more timely data for the market than actual flow 
postings would contain.\269\ Spectra also points out that the market 
currently uses scheduled volume data to make decisions, and there is no 
evidence that the market is currently functioning in any way other than 
efficiently.\270\ National Fuel Supply states that no-notice volumes 
are not important to understanding the market and ``the Commission 
should not be concerned that information about no-notice volumes could 
be exploited in a manipulative or discriminatory manner.'' \271\ 
Similarly, Kinder Morgan Interstate maintains that the Commission 
offers no support that the posting of no-notice activity would prevent 
misconduct.\272\
---------------------------------------------------------------------------

    \268\ Id. at 7; National Fuel Supply Comments at 4; Spectra 
Comments at 8; Williston Basin Comments at 3-5.
    \269\ Spectra Comments at 7; see also NiSource Comments at 5.
    \270\ Spectra Comments at 8.
    \271\ National Fuel Supply Comments at 4-5.
    \272\ Id.
---------------------------------------------------------------------------

    156. Several commenters argue that the posting of actual flow 
information could confuse market participants due, for instance, to 
timing differences between when the original imbalances occur and when 
they are cleared.\273\ Commenters object to including actual flow 
information because it would include operational flows, such as flows 
reflecting maintenance activities, line pack management, blending and 
balancing, which are not relevant to the price formation process.\274\ 
Kinder Morgan Interstate contends that no-notice activity is not useful 
in establishing future prices and does not reflect current market 
conditions; thus, it would not enhance price transparency.\275\
---------------------------------------------------------------------------

    \273\ Williston Basin Comments at 3-5.
    \274\ Id. at 5-7; Chevron Pipelines Comments at 16; Total 
Peaking Comments at 12.
    \275\ Kinder Morgan Interstate Comments at 10.
---------------------------------------------------------------------------

    157. On the other hand, some commenters support the posting of 
actual flow information by interstate pipelines. Calpine asserts that 
actual daily flow information would allow an assessment of how 
accurately scheduled volumes reflect the actual volumes associated with 
activities in the real-time market, which ``is especially critical in 
times of constraints caused by unplanned events or outages.'' \276\ 
APGA supports posting of actual flow volume as it would provide market 
observers an important ``missing piece of the puzzle'' to understand 
what is transpiring in the market, both operationally and as to supply 
and demand fundamentals.\277\ The New York PSC supports obtaining 
actual flows from not just interstate pipelines, but also intrastate 
pipelines, as the data would provide market participants with increased 
understanding of daily trends in natural gas markets, including 
regional conditions and pipeline capacity available to resolve regional 
supply/demand imbalances, especially during peak demand or emergency 
conditions.\278\
---------------------------------------------------------------------------

    \276\ Calpine Comments at 4.
    \277\ APGA Comments at 3-4.
    \278\ New York PSC Comments at 1.
---------------------------------------------------------------------------

    158. Bentek's comments suggest that the posting of actual volumes 
is one option to obtain data to ensure that no-notice service is 
transparent on interstate pipelines, but, alternatively, proposed that 
market observers rely on publication of no-notice volumes.\279\
---------------------------------------------------------------------------

    \279\ Bentek Comments at 3-5.
---------------------------------------------------------------------------

    159. Several commenters respond specifically to the Posting NOPR's 
inquiry as to whether no-notice activity is reflected in trading 
activity or storage activity. Chevron Pipelines responds that the only 
no-notice activity that would equate to trading activity is storage 
injections.\280\ Kinder Morgan Interstate contends that no-notice 
activity on their pipelines generally reflect storage withdrawals 
because the trading activity associated with storage withdrawals would 
have already occurred when the gas was purchased and injected into 
storage.\281\ Williston Basin states that on its system no-notice 
volumes are exclusively associated with storage activity.\282\ Chevron 
Pipelines describe no-notice service as commonly associated with two 
types of transactions: Storage injections/withdrawals and imbalance 
management, including balancing under Operating Balancing 
Agreements.\283\
---------------------------------------------------------------------------

    \280\ Chevron Pipelines Comments at 17.
    \281\ Kinder Morgan Interstate Comments at 9.
    \282\ Id.
    \283\ Chevron Pipelines Comments at 13-14.
---------------------------------------------------------------------------

3. Commission Determination
    160. While the Commission will not require interstate natural gas 
pipelines to post information regarding all actual flows, this Final 
Rule requires interstate natural gas pipelines to post the volumes of 
no-notice service flows \284\ at each receipt and delivery point before 
11:30 a.m. central clock time (the timely cycle under NAESB Nomination 
Standard 1.32) three days after the day of gas flow.\285\
---------------------------------------------------------------------------

    \284\ See 18 CFR 284.7(a)(4) (requiring pipelines to provide no-
notice service).
    \285\ Total Peaking, Venice Gathering, and DCP Midstream sought 
in this proceeding to exempt specific interstate natural gas 
pipelines from the existing posting requirement. We believe the 
current posting requirements on interstate pipelines should not be 
reduced at this time and do not adopt any exemptions to that 
requirement. As always, interstate pipelines may request a waiver 
from the requirements.
---------------------------------------------------------------------------

    161. The Commission requires an interstate pipeline to provide no-
notice service if such service was provided as of the effective date of 
Order No. 636.\286\ Accordingly, firm shippers that receive no-notice 
service can receive delivery of

[[Page 73515]]

gas on demand up to their firm entitlements on a daily basis without 
incurring daily balancing and scheduling penalties. No-notice service 
is usually used by shippers when gas load is much higher than has been 
nominated and scheduled the previous day (due, perhaps, to 
unanticipated cold or hot temperatures). However, while Order No. 636 
and its progeny mandated the adoption of no-notice service, the 
Commission has previously not required Internet posting of no-notice 
volumes.
---------------------------------------------------------------------------

    \286\ See Order No. 636-A at p. 30,574.
---------------------------------------------------------------------------

    162. The absence of reporting of no-notice service means that the 
market cannot see large and unexpected increases in gas demand and 
therefore cannot understand price formation during such occasions. 
Information on no-notice volumes is valuable even posted after the no-
notice gas flows because it allows market participants and other market 
observers to understand the historical patterns of flows and will 
enable them to better predict future no-notice flows. Requiring 
interstate pipelines to post no-notice volumes will meet the goals of 
the Commission with less of a burden on interstate natural gas 
pipelines than full posting of actual flows.
    163. The posting of no-notice service will be of particular 
importance in the northern tier of the country during extreme weather 
conditions. As we pointed out in the Posting NOPR, the gap between 
scheduled and actual flows occurs most commonly in this region of the 
country where a pipeline serves a local distribution company with 
significant space heating demand. In such circumstances, market 
observers find it more difficult to ascribe price behavior to physical 
changes in flows. Further, as observed by NGSA, ``[o]n heating season 
peak days or days with wide intra-day weather swings, no-notice volumes 
can be significant; therefore, scheduled volumes are not a proxy for 
physical flow and, thus, do not necessarily provide an accurate picture 
of underlying market fundamentals.'' \287\
---------------------------------------------------------------------------

    \287\ NGSA Comments on the Initial NOPR at 10.
---------------------------------------------------------------------------

    164. The Commission has received many hotline and other informal 
calls from shippers with complaints about available service on 
interstate pipelines. Often, callers indicate confusion regarding 
discrepancies in pipeline postings of scheduled volumes that indicate 
that capacity should be available and a pipeline's refusal to provide 
same-day service on the grounds that there is no capacity available. 
This lack of available capacity is very often due to the use of no-
notice service. Posting information about no-notice service, even after 
the fact, will make availability on interstate natural gas pipelines 
more transparent, consistent with section 23 of the NGA.\288\
---------------------------------------------------------------------------

    \288\ Section 23(a)(2) of the NGA; 15 U.S.C. 717t-2(a)(2) (2000 
& Supp. V 2005).
---------------------------------------------------------------------------

    165. Public posting of no-notice service information could also 
prevent other forms of misconduct with direct effects on natural gas in 
interstate commerce. The lack of public flow information could provide 
the opportunity for parties to engage in manipulative or unduly 
discriminatory behavior. By making major non-interstate pipeline flow 
information public, such transparency could discourage market 
participants from engaging in such activities. Therefore, we disagree 
with commenters that suggest that transparency will not be enhanced via 
the posting of no-notice flows.
    166. We believe this requirement to post no-notice service 
information would not be unduly burdensome for interstate pipelines. An 
interstate natural gas pipeline should already have information on the 
no-notice service it provides. Additionally, pipelines already have the 
existing information technology (i.e., Internet Web sites) for posting 
such information. We further reduce the posting burden for posting no-
notice service by requiring such posts to occur within seventy-two 
hours after the applicable gas day. This compares to a twenty-four hour 
deadline as originally suggested in the Posting NOPR.

VI. Effective Date of the Final Rule and Compliance Deadlines

    167. The Final Rule will become effective 30 days following 
publication in the Federal Register. Interstate pipelines subject to 
these new posting requirements must comply with the regulations 
promulgated herein no later than 60 days following such publication. 
Interstate pipelines already have Internet Web sites in place and 
likely have ready means in-place to capture data necessary to post 
information regarding no-notice service. Under these circumstances, we 
believe that a 60-day deadline is sufficient time for all interstate 
pipelines to comply with the regulations.
    168. While some major non-interstate pipelines have Web sites and 
data collection abilities similar to interstate pipelines, others may 
need additional time to put procedures in place to comply with the 
instant posting requirements. Therefore, we will give major non-
interstate pipelines 150 days following publication of this Final Rule 
to come into compliance with the new regulations. This time will allow 
them sufficient time to update their information technology systems and 
establish an Internet Web site for the postings. This time frame for 
compliance will allow them to complete the current heating season 
without the need to implement new posting procedures while ensuring 
that new postings are available prior to the next heating season. While 
one commenter, Kinder Morgan Intrastate, estimated it would take one 
year ``to complete the necessary IT upgrades and data reorganization,'' 
\289\ that estimate assumed a requirement for obtaining and posting 
both actual flows and scheduled volumes on both mainline segments and 
on receipt and delivery points. As the regulations promulgated here do 
not require obtaining and posting actual flows or obtaining scheduled 
volumes from segments, Kinder Morgan Intrastate's estimate is 
excessive.
---------------------------------------------------------------------------

    \289\ Kinder Morgan Intrastate at 8.
---------------------------------------------------------------------------

VII. Information Collection Statement

    169. The Office of Management and Budget (OMB) regulations require 
it to approve certain reporting and recordkeeping (information 
collection) requirements imposed by an agency.\290\ In this Final Rule, 
the Commission will set forth two requirements for the posting or 
collection of information, one for interstate and one for major non-
interstate pipelines.\291\ The Commission has submitted notification of 
these proposed information collection requirements to OMB for its 
review and approval under section 3507(d) of the Paperwork Reduction 
Act of 1995.\292\
---------------------------------------------------------------------------

    \290\ 5 CFR 1320.11.
    \291\ The OMB regulations cover both the collection of 
information and the posting of information. 5 CFR 1320.3(c). Thus, 
the proposal to post information would create an information 
collection burden.
    \292\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    170. The requirement for interstate natural gas pipelines to post 
information about no-notice service, would impose an additional 
information collection burden on interstate natural gas pipelines. The 
other requirement for major non-interstate pipelines to post scheduled 
volume information would impose an additional information collection 
burden on major non-interstate pipelines. Interstate and major non-
interstate pipelines already collect this information, but do not 
necessarily post it. Certain non-interstate pipelines have asserted in 
comments on the Posting NOPR that costs would be quite

[[Page 73516]]

high if additional equipment were needed to meet quick posting 
deadlines. However, given that this information is used in their 
business, the Commission still believes that the burden that would be 
imposed by this proposed requirement is largely for the collection and 
posting of this information in the required format.\293\ Further, 
certain non-interstate pipelines provide burden estimates based on 
posting for all receipt and delivery points and by mainline segment and 
based on measuring and posting actual flow information. These estimates 
are too high because, as explained in this preamble, the Commission 
will not require posting at mainline segments and does not require 
posting at all receipt and delivery points, rather it will require 
posting at each receipt and delivery point that has a design capacity 
greater than 15,000 MMBtu/day. Finally, the Commission has reduced the 
number of non-interstate pipelines that will be required to post by 
raising the delivery threshold used to define a major non-interstate 
pipeline from 10 million MMBtu per year to 50 million MMBtu per year in 
deliveries. For interstate natural gas pipelines, the Commission 
reduced the burden by not requiring the posting of actual flow 
information; instead, the Commission will require that interstate 
natural gas pipelines post information on no-notice transportation. 
Elsewhere in this preamble, the Commission has further addressed 
comments regarding the burden of the requirements.
---------------------------------------------------------------------------

    \293\ See 5 CFR 1320.3(b)(2) (``The time, effort, and financial 
resources necessary to comply with a collection of information that 
would be incurred by persons in the normal course of their 
activities (e.g., in compiling and maintaining business records) 
will be excluded from the ``burden'' if the agency demonstrates that 
the reporting, recordkeeping, or disclosure activities needed to 
comply are usual and customary.'').
---------------------------------------------------------------------------

    171. OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission 
submitted notification of this rule to OMB.
Public Reporting Burden
    The start-up and annual burden estimates for complying with this 
Final Rule are as follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of       Estimated                       Estimated
                                     Number of    daily postings   annual burden   Total annual      start-up
         Data collection            respondents         per          hours per     hours for all    burden per
                                                    respondent      respondent      respondents     respondent
----------------------------------------------------------------------------------------------------------------
Part 284 FERC-551...............
Major Non-Interstate Pipeline                 80               2             365          29,200              40
 Postings.......................
Additional Interstate Natural                101               1             183          18,433               8
 Gas Pipeline Postings..........
                                 -------------------------------------------------------------------------------
    Total.......................             181  ..............  ..............          47,633  ..............
----------------------------------------------------------------------------------------------------------------

    The total annual hours for collection (including recordkeeping) for 
all respondents is estimated to be 47,633 hours.
    Information Posting Costs: The average annualized cost for each 
respondent is projected to be the following (savings in parenthesis):

----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                                                                     capital/
                                                                   startup costs   Annual costs     Annualized
                                                                     (10 year                       costs total
                                                                   amortization)
----------------------------------------------------------------------------------------------------------------
FERC-551........................................................
Major Non-Interstate Pipeline Postings..........................            $142         $30,000         $30,142
Additional Interstate Natural Gas Pipeline Postings.............               0           5,000           5,000
----------------------------------------------------------------------------------------------------------------

    Title: FERC-551.
    Action: Proposed Information Posting and Information Filing.
    OMB Control No.: 1902-0243.
    Respondents: Business or other for profit.
    Frequency of Responses: Daily posting requirements.
    Necessity of the Information: The daily posting of additional 
information by interstate and major non-interstate pipelines is 
necessary to provide information regarding the price and availability 
of natural gas to market participants, state commissions, the 
Commission and the public. The posting would contribute to market 
transparency by aiding the understanding of the volumetric/availability 
drivers behind price movements; it would provide a better picture of 
disruptions in natural gas flows in the case of disturbances to the 
pipeline system; and it would allow the monitoring of potentially 
manipulative or unduly discriminatory activity.
    Internal Review: The Commission has reviewed the requirements 
pertaining to natural gas pipelines and determined they are necessary 
to provide price and availability information regarding the sale of 
natural gas in interstate markets.

VIII. Environmental Analysis

    172. 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.\294\ The 
actions taken here fall within categorical exclusions in the 
Commission's regulations for information gathering, analysis, and 
dissemination, and for sales, exchange, and transportation of natural 
gas that require no construction of facilities.\295\ Therefore, an 
environmental assessment is unnecessary and has not been prepared in 
this rulemaking.
---------------------------------------------------------------------------

    \294\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. 
& Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \295\ 18 CFR 380.4(a)(5) and (a)(27).
---------------------------------------------------------------------------

IX. Regulatory Flexibility Act

    173. The Regulatory Flexibility Act of 1980 (RFA) \296\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA requires consideration

[[Page 73517]]

of regulatory alternatives that accomplish the stated objectives of a 
proposed rule and that minimize any significant economic impact on such 
entities. The RFA does not, however, mandate any particular outcome in 
a rulemaking. At a minimum, agencies are to consider the following 
alternatives: Establishment of different compliance or reporting 
requirements for small entities or timetables that take into account 
the resources available to small entities; clarification, 
consolidation, or simplification of compliance and reporting 
requirements for small entities; use of performance rather than design 
standards; and exemption for certain or all small entities from 
coverage of the rule, in whole or in part. The proposal to require 
daily postings by interstate and non-interstate pipelines will not 
impact small entities. Natural gas pipelines are classified under NAICS 
code, 486210, Pipeline Transportation of Natural Gas.\297\ A natural 
gas pipeline is considered a small entity for the purposes of the 
Regulatory Flexibility Act if its average annual receipts are less than 
$6.5 million.\298\ The Commission does not believe that any pipeline 
that would be required to post under the proposal in this NOPR has 
receipts less than $6.5 million. Thus, the daily posting proposal will 
not impact small entities. In this Final Rule, the Commission will 
reduce the number of major non-interstate pipelines that will be 
subject to the posting requirements by reducing the delivery threshold 
from 10 million MMBtu/year to 50 million MMBtu/year. Further, the 
Commission as explained above considered alternatives for obtaining and 
disseminating daily the information on scheduled volumes.
---------------------------------------------------------------------------

    \296\ 5 U.S.C. 601-612.
    \297\ This industry comprises establishments primarily engaged 
in the pipeline transportation of natural gas from processing plants 
to local distribution systems. 2002 North American Industry 
Classification System (NAICS) Definitions, http://www.census.gov/
epcd/naics02/def/ND486210.HTM.
    \298\ See U.S. Small Business Administration, Table of Small 
Business Size Standards, http://www.sba.gov/idc/groups/public/
documents/sba_homepage/serv_sstd_tablepdf.pdf (effective July 31, 
2006).
---------------------------------------------------------------------------

X. Document Availability

    174. In addition to publishing the full text of this document in 
the Federal Register, the Commission will provide 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.
    175. 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.
    176. 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.

XI. Effective Date and Congressional Notification

    177. These regulations are effective January 2, 2009. The 
Commission will determine, with the concurrence of the Administrator of 
the Office of Information and Regulatory Affairs of OMB, that this rule 
[is or is not] a ``major rule'' as defined in section 351 of the Small 
Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

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

    By the Commission.
Kimberly D. Bose,
Secretary.

0
In consideration of the foregoing, the Commission amends Part 284, 
Chapter I, Title 18, Code of Federal Regulations, as follows.

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY 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. 7101-7352; 
43 U.S.C. 1331-1356.

0
2. In Sec.  284.1, paragraph (d) is added to read as follows:

Sec.  284.1  Definitions.

* * * * *
    (d) Major non-interstate pipeline means a pipeline that:
    (1) Is not a ``natural gas company'' under section 1 of the Natural 
Gas Act; and
    (2) Delivers annually more than fifty (50) million MMBtu (million 
British thermal units) of natural gas measured in average deliveries 
for the previous three calendar years.

0
3. In Sec.  284.13(d), revise the heading and add two sentences to the 
end of paragraph (d)(1) to read as follows:

Sec.  284.13  Reporting requirements for interstate pipelines.

* * * * *
    (d) Capacity and flow information. (1) An interstate pipeline must 
also provide information about the volumes of no-notice transportation 
provided pursuant to Sec.  284.7(a)(4). This information must be posted 
at each receipt and delivery point before 11:30 a.m. central clock time 
three days after the day of gas flow.
* * * * *

0
4. Section 284.14 is added to read as follows:

Sec.  284.14.  Posting requirements of major non-interstate pipelines.

    (a) Daily posting requirement. A major non-interstate pipeline must 
provide on a daily basis on an Internet Web site and in downloadable 
file formats equal and timely access to information relevant to the 
design capacity of each receipt or delivery point that has a design 
capacity equal to or greater than 15,000 MMBtu/day and the amount 
scheduled at each such point whenever capacity is scheduled. For each 
such point on its system, a major non-interstate pipeline must provide 
the following information: Transportation Service Provider Name, 
Posting Date, Posting Time, Nomination Cycle, Location Name, Additional 
Location Information if Needed to Distinguish Between Points, Location 
Purpose Description (Receipt, Delivery, or Bilateral), Design Capacity, 
Scheduled Volume, Available Capacity, and Measurement Unit (Dth, MMBtu, 
or MCf). The information in this subsection must remain posted for a 
period of one year.
    (b) Exemptions to daily posting requirement. The following 
categories of major non-interstate pipelines are exempt from the 
posting requirement of Sec.  284.14(a):
    (1) Those that fall entirely upstream of a processing, treatment, 
or dehydration plant;
    (2) Those that deliver more than 95 percent of the natural gas 
volumes they flow directly to retail end-users as measured by average 
deliveries over the preceding three calendar years; and,
    (3) Storage providers.

    Note: This Appendix will not appear in the Code of Federal 
Regulations.

[[Page 73518]]

Appendix A: List of Commenters and Abbreviations

----------------------------------------------------------------------------------------------------------------
                  Commenter                                              Abbreviation
----------------------------------------------------------------------------------------------------------------
1. Alliance Pipeline L.P....................  Alliance
2. American Gas Association.................  AGA
3. American Public Gas Association..........  APGA
4. Atmos Pipeline--Texas....................  Atmos
5. Bear Paw Energy LLC and Oneok Field        ONEOK Gathering Companies
 Services Company LLC.
6. BENTEK Energy, LLC.......................  Bentek
7. Bridgeline Holdings, L.P., Chevron         Chevron Pipelines or CVX Pipelines
 Midstream Pipeline LLC, Chevron Keystone
 Gas Storage, LLC, Sabine Pipe Line LLC, and
 Chandeleur Pipe Line Company.
8. Calpine Corporation......................  Calpine
9. Copano Energy, LLC.......................  Copano Energy
10. Cranberry Pipeline Corporation..........  Cranberry Pipeline
11. Crosstex Energy Services, LP............  Crosstex
12. DCP Midstream, LLC......................  DCP Midstream
13. Dow Chemical Company....................  Dow Chemical
14. Dow Interstate Gas Company..............  Dow Interstate
15. Dow Pipeline Company....................  Dow Pipeline
16. EnergySouth, Inc........................  EnergySouth
17. Duke Energy Corporation.................  Duke
18. Enbridge Energy Company, Inc............  Enbridge
19. Encana Oil & Gas (USA) Inc..............  Encana
20. Enstor Operating Company, LLC...........  Enstor
21. EOG Resources, Inc., Pecan Pipeline       EOG Resources
 Company, and Pecan Pipeline (North Dakota),
 Inc.
22. Gas Processors Association..............  Gas Processors
23. Freeport LNG Development, L.P...........  Freeport
24. Independent Petroleum Association of      IPAA
 America.
25. Interstate Natural Gas Association of     INGAA
 America.
26. Jefferson Island Storage & Hub, LLC.....  Jefferson
27. Kinder Morgan Interstate Pipelines......  Kinder Morgan Interstate
28. Kinder Morgan Texas Intrastate Pipeline   Kinder Morgan Intrastate
 Group.
29. LaGrange Acquisition L.P................  LaGrange
30. Liberty Gas Storage, LLC................  Liberty Gas Storage
31. Louisville Gas and Electric Company.....  Louisville Gas and Electric
32. Marathon Oil Company....................  Marathon
33. National Association of Royalty Owners..  Royalty Owners
34. National Fuel Gas Distribution            National Fuel Distribution
 Corporation.
35. National Fuel Gas Supply Corporation....  National Fuel Supply
36. Natural Gas Supply Association..........  NGSA
37. New York Public Service Commission......  New York PSC
38. NISKA Gas Storage LLC...................  NISKA
39. NiSource Gas Transmission & Storage       NiSource
 Companies.
40. NorthWestern Energy Corporation.........  NorthWestern
41. Oklahoma Corporation Commission.........  Oklahoma Corporation Commission
42. Oneok Gas Transportation, LLC, and Oneck  ONEOK Gathering
 Westex Transmission, LLC.
43. Pacific Gas & Electric Company..........  PG&E
44. Process Gas Consumers Group.............  PGC
45. Public Service Company of Colorado......  PSCo
46. Railroad Commission of Texas............  Railroad Commission of Texas
47. Regency Energy Partnership..............  Regency
48. Ryan Cole...............................  Ryan Cole
49. SEMCO Energy Gas Company, Enstar Natural  SEMCO
 Gas Company, and Alaska Pipeline Company.
50. Shell Offshore Inc......................  Shell
51. SPECTRA Energy Transmission, LLC and      Spectra
 Spectra Energy Partners, LP.
52. Texas Independent Producers and Royalty   TIPRO
 Owners.
53. Texas Pipeline Association..............  TPA
54. Total Peaking Services, LLC.............  Total Peaking
55. Venice Gathering System, LLC............  Venice Gathering
56. Williston Basin Interstate Pipeline       Williston Basin
 Company.
57. Yates Petroleum Corporation and Agave     Yates
 Energy Corporation.
----------------------------------------------------------------------------------------------------------------

 [FR Doc. E8-28097 Filed 12-1-08; 8:45 am]

BILLING CODE 6717-01-P