Document ID: FERC-2013-1542-0001
Agency: ferc
Document Type: Rule
Title: Communication of Operational Information Between Natural Gas Pipelines and Electric Transmission Operators
Posted Date: 2013-11-22T05:00Z

[Federal Register Volume 78, Number 226 (Friday, November 22, 2013)]
[Rules and Regulations]
[Pages 70163-70188]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-28078]

[[Page 70163]]

Vol. 78

Friday,

No. 226

November 22, 2013

Part III

Department of Energy

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

 Federal Energy Regulatory Commission

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

18 CFR Parts 38 and 284

Communication of Operational Information Between Natural Gas Pipelines 
and Electric Transmission Operators; Final Rule

  Federal Register / Vol. 78 , No. 226 / Friday, November 22, 2013 / 
Rules and Regulations  

[[Page 70164]]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 38 and 284

[Docket No. RM13-17-000; Order No. 787]

Communication of Operational Information between Natural Gas 
Pipelines and Electric Transmission Operators

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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

SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission 
(Commission) amends the Commission's regulations to provide explicit 
authority to interstate natural gas pipelines and public utilities that 
own, operate, or control facilities used for the transmission of 
electric energy in interstate commerce to share non-public, operational 
information with each other for the purpose of promoting reliable 
service or operational planning on either the public utility's or 
pipeline's system. The revised regulations will help maintain the 
reliability of pipeline and public utility transmission service by 
permitting transmission operators to share information with each other 
that they deem necessary to promote the reliability and integrity of 
their systems. The Final Rule adopts the regulations proposed in the 
Notice of Proposed Rulemaking without modification.

DATES: This rule is effective December 23, 2013. The incorporation by 
reference of certain publications in this rule is approved by the 
Director of the Federal Register as of December 23, 2013.

FOR FURTHER INFORMATION CONTACT: 
Caroline Daly (Technical Information),
Office of Energy, Policy & Innovation,
888 First Street NE.,
Washington, DC 20426,
(202) 502-8931,
caroline.daly@ferc.gov.
Anna Fernandez (Legal Information),
Office of the General Counsel,
888 First Street NE.,
Washington, DC 20426,
(202) 502-6682,
anna.fernandez@ferc.gov.

SUPPLEMENTARY INFORMATION: 

Order No. 787

Table of Contents

------------------------------------------------------------------------
                                                              Paragraph
                                                               Numbers
------------------------------------------------------------------------
I. Introduction............................................           2.
    A. Background..........................................           2.
    B. NOPR................................................           5.
II. Discussion.............................................           7.
    A. Need For the Rule...................................          18.
        1. NOPR............................................          18.
        2. Comments........................................          20.
        3. Commission Determination........................          27.
    B. Scope of Information................................          33.
        1. NOPR............................................          33.
        2. Comments........................................          35.
        3. Commission Determination........................          41.
    C. Entities Covered Under the Rule.....................          46.
        1. NOPR............................................          46.
        2. Comments........................................          49.
        3. Commission Determination........................          56.
    D. The No-Conduit Rule and Competitive Concerns........          60.
        1. NOPR............................................          60.
        2. Adequacy of No-Conduit Rule to Protect against            65.
         Competitive Harm..................................
        3. Exceptions to the No-Conduit Rule...............          90.
III. Questions Posed by the Commission.....................         100.
    A. Generator to Electric Transmission Operator                  100.
     Communications........................................
        1. NOPR............................................         100.
        2. Comments........................................         101.
        3. Commission Determination........................         105.
    B. Three-Way Communication of Non-Public Operational            106.
     Information...........................................
        1. NOPR............................................         106.
        2. Comments........................................         107.
        3. Commission Determination........................         115.
    C. Examples of Non-Public Operational Information......         117.
        1. NOPR............................................         117.
        2. Comments........................................         119.
        3. Commission Determination........................         123.
IV. Clarification Regarding Table-Top Exercises............         126.
    A. NOPR................................................         126.
    B. Comments............................................         127.
    C. Commission Determination............................         128.
V. Miscellaneous...........................................         131.
    A. Monitoring, Existing Tariff Requirements, Document           131.
     Destruction...........................................
        1. Comments........................................         131.
        2. Commission Determination........................         134.
    B. Costs of Information Sharing........................         137.
        1. Comments........................................         137.
        2. Commission Determination........................         138.
    C. Implementation......................................         139.
        1. Comments........................................         139.
        2. Commission Determination........................         143.
VI. Information Collection Statement.......................         145.
VII. Environmental Analysis................................         152.

[[Page 70165]]

 
VIII. Regulatory Flexibility Act...........................         153.
IX. Document Availability..................................         155.
X. Effective Date and Congressional Notification...........         158.
------------------------------------------------------------------------

Order No. 787

Final Rule

(Issued November 15, 2013)

    1. In this Final Rule, the Federal Energy Regulatory Commission 
revises Parts 38 and 284 of the Commission's regulations to provide 
explicit authority to interstate natural gas pipelines and public 
utilities that own, operate, or control facilities used for the 
transmission of electric energy in interstate commerce to share non-
public, operational information with each other for the purpose of 
promoting reliable service or operational planning on either the public 
utility's or pipeline's system.\1\ The revised regulations will help 
maintain the reliability of pipeline and public utility transmission 
service by permitting transmission operators to share information with 
each other that they deem necessary to promote the reliability and 
integrity of their systems. The Final Rule adopts the regulations 
proposed in the Notice of Proposed Rulemaking without modification.\2\
---------------------------------------------------------------------------

    \1\ In this Final Rule, the Commission refers to interstate 
natural gas pipelines and public utilities that own, operate, or 
control facilities used for the transmission of electric energy in 
interstate commerce collectively as ``transmission operators.''
    \2\ Communication of Operational Information Between Natural Gas 
Pipelines and Electric Transmission Operators, 78 FR 44900 (July 25, 
2013), FERC Stats. & Regs ] 32,699 (2013) (cross-referenced at 144 
FERC ] 61,043 (2013) (NOPR)).
---------------------------------------------------------------------------

I. Introduction

A. Background

    2. In recent years, reliance on natural gas as a fuel for electric 
generation has steadily increased.\3\ This trend is expected to 
continue into the future, resulting in greater interdependence between 
the natural gas and electric industries.\4\ Several events over the 
last few years, such as the Southwest Cold Weather Event,\5\ 
demonstrate the crucial interaction between natural gas pipelines and 
electric transmission systems and the need for robust communication 
between these industry sectors to ensure that both systems operate 
safely and effectively for the benefit of their customers.
---------------------------------------------------------------------------

    \3\ See, e.g., Energy Information Administration, Fuel 
Competition in Power Generation and Elasticities of Substitution 
(June 2012); Richard Smead, All Industry Segments Working for 
Success in Growing Gas-Fired Generation (Nov. 15, 2012); ISO-NE., 
Addressing Gas Dependence at 3 (July 2012) (reliance on natural gas-
fired electricity in the region increased from five percent in 1990 
to 51 percent in 2011).
    \4\ See, e.g., North American Electric Reliability Corporation, 
2013 Special Reliability Assessment: Accommodating an Increased 
Dependence on Natural Gas for Electric Power; Phase II: A 
Vulnerability and Scenario Assessment for the North American Bulk 
Power System at 1 (May 2013) (``Over the past decade, natural gas-
fired generation rose significantly from 17 percent to 25 percent of 
U.S. power generation and is now the largest fuel source for 
generation capacity. Gas use is expected to continue to increase in 
the future, both in absolute terms and as a share of total power 
generation and capacity.''), available at http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_PhaseII_FINAL.pdf; 
Energy Information Administration, Annual Energy Outlook 2013 Early 
Release Overview (2013) (showing electric generation from natural 
gas rising from 13 percent in 1993 to 30 percent in 2040), available 
at http://www.eia.gov/forecasts/aeo/er/early_elecgen.cfm; The New 
England State Committee on Electricity, Natural Gas Infrastructure 
and Electric Generation: A Review of Issues Facing New England (Dec. 
14, 2012), available at http://www.nescoe.com/uploads/Phase_I_Report_12-17-2012_Final.pdf.
    \5\ See FERC/NERC, Report on Outages and Curtailments During the 
Southwest Cold Weather Event of February 1-5, 2011 (2011), available 
at http://www.ferc.gov/legal/staff-reports/08-16-11-report.pdf.
---------------------------------------------------------------------------

    3. Since February 2012, the Commission has requested comment and 
conducted multiple technical conferences on various aspects of gas-
electric interdependence and coordination in order to better understand 
the interface between the electric and natural gas pipeline industries 
and identify areas for improved coordination.\6\ In this proceeding, 
the Commission addresses one aspect of gas-electric interdependence and 
coordination: communication and information-sharing between the natural 
gas and electric industries.
---------------------------------------------------------------------------

    \6\ The NOPR contains a detailed description of the Commission's 
various actions on gas-electric coordination and will not be 
repeated here.
---------------------------------------------------------------------------

    4. On December 7, 2012, the Commission issued a Notice of Request 
for Comments and Technical Conference regarding information sharing and 
communication issues between the natural gas and electricity 
industries.\7\ In response, natural gas and electric industry 
participants described a variety of actions that are currently being 
taken to improve communications and information sharing between the two 
industries. While several entities acknowledged that system reliability 
and contingency planning could be further enhanced by the sharing of 
non-public, operational information directly between transmission 
operators, several transmission operators pointed out that there is 
general reluctance to share such information because of concerns that 
doing so could be a violation of current laws, regulations or tariffs, 
including the Commission's prohibition on undue discrimination. 
Accordingly, multiple industry participants requested that, in order to 
facilitate the exchange of information between transmission operators, 
the Commission should more clearly identify the types of operational 
information that may be shared between transmission operators and 
clarify that the sharing of such information does not violate the 
prohibition against undue discrimination. While electric generators 
generally did not oppose the sharing of such information, they, 
together with other entities, expressed concern about the communication 
of generator-specific information between an electric transmission 
operator and an interstate natural gas pipeline operator without the 
generator's knowledge. Some entities also expressed concern regarding 
the potential harm to industry participants from the improper use of 
commercially sensitive information.\8\
---------------------------------------------------------------------------

    \7\ Coordination between Natural Gas and Electricity Markets, 
Docket No. AD12-12-000 (Dec. 7, 2012) (Notice of Request for 
Comments and Technical Conference) (http://www.ferc.gov/EventCalendar/Files/20121207134434-AD12-12-000TC1.pdf ); 77 FR 74180 
(Dec. 13, 2012) (http://www.gpo.gov/fdsys/pkg/FR-2012-12-13/pdf/2012-30063.pdf ).
    \8\ A summary of these views was presented in the NOPR, and will 
not be repeated in detail here. See NOPR, FERC Stats. & Regs. ] 
32,699 at PP 7-9 (cross-referenced at 144 FERC ] 61,043).
---------------------------------------------------------------------------

B. NOPR

    5. On July 18, 2013, the Commission issued the NOPR, in which it 
proposed to revise Parts 38 and 284 of its regulations to provide 
explicit authority to interstate natural gas pipelines and public 
utilities that own, operate, or control facilities used for the 
transmission of electric energy in interstate commerce to share non-
public, operational information with each other for the purpose of 
promoting reliable service or operational planning on either the public 
utility's or pipeline's system. As a protection against the disclosure 
of non-public,

[[Page 70166]]

operational information, the Commission also proposed a No-Conduit Rule 
that prohibits subsequent disclosure of that information to a marketing 
function employee or to a third party.
    6. Comments on the NOPR were due on August 26, 2013. Thirty-three 
parties filed comments. NGSA filed reply comments on September 30, 
2013. Comments were received from Regional Transmission Organizations 
and Independent System Operators (RTOs/ISOs), electric utilities, 
interstate natural gas pipelines, LDCs, state regulators, generators, 
and other parties. Of these, 30 supported or did not oppose the NOPR 
\9\ and three opposed it.\10\ In general, most commenters support the 
proposed rule to help promote the reliability and efficiency of the 
natural gas and electric systems by eliminating legal uncertainty 
regarding the ability of interstate natural gas pipelines and electric 
transmission operators to exchange non-public, operational information. 
Some commenters request that the Commission modify or clarify the 
proposal in a number of respects.
---------------------------------------------------------------------------

    \9\ American Electric Power Service Corporation (AEP), American 
Gas Association (AGA), American Public Power Association (APPA), 
Boardwalk Pipeline Partners, LP (Boardwalk Pipelines), California 
Independent Operator (CAISO), Duke Energy Corporation (Duke), Edison 
Electric Institute (EEI), Electric Power Supply Association (EPSA), 
Electricity Consumers Resource Council (ELCON), Enable Interstate 
Pipelines (Enable), International Transmission Company (ITC), 
Interstate Natural Gas Association of America (INGAA), ISO New 
England Inc. (ISO-NE), ISO/RTO Council (IRC), Massachusetts 
Municipal Wholesale Electric Company (MMWEC), Midcontinent 
Independent System Operator (MISO), National Rural Electric 
Cooperative Association (NRECA), Natural Gas Supply Association 
(NGSA), New England Natural Gas Industry (NE Gas Industry), New 
England Power Generators Association Inc. (NEPGA), New England 
States Committee on Electricity (NESCOE), New York ISO (NYISO), New 
York Public Service Commission (NYPSC), New York Transmission Owners 
(NYTOs), North American Electric Reliability Corporation (NERC), 
Pacific Gas and Electric Company (PG&E), Process Gas Consumers 
(PGC), Public Utilities Commission of Ohio (PUCO), Tennessee Valley 
Authority (TVA), Washington Gas Light Company (Washington Gas).
    \10\ American Public Gas Association (APGA), Consumers Energy 
Company (Consumers Energy), and New Jersey Board of Public Utilities 
(NJBPU).
---------------------------------------------------------------------------

II. Discussion

    7. In this Final Rule, the Commission is adopting the NOPR as 
proposed. The Commission is modifying Parts 38 and 284 of the 
Commission's regulations to provide explicit authority to interstate 
natural gas pipelines and public utilities that own, operate, or 
control facilities used for the transmission of electric energy in 
interstate commerce to share non-public, operational information with 
each other for the purpose of promoting reliable service or operational 
planning on either the pipeline's or public utility's system. The 
Commission also is adopting a No-Conduit Rule to provide additional 
protections against undue discrimination and ensure that the non-
public, operational information shared under the rule remains 
confidential.
    8. Communications between transmission operators serve a valuable 
and necessary purpose to help ensure reliability on both systems. With 
the increasing reliance on natural gas as a fuel for electric 
generation, ensuring robust communications between the transmission 
operators in the electric and natural gas industries is valuable to the 
ability of both systems to operate reliably and effectively. Electric 
transmission operators are continuously and near instantaneously 
balancing supply and demand to ensure the system remains in 
equilibrium.\11\ In contrast, due to the physical characteristics of 
interstate natural gas pipelines, the pipelines require advance 
nominations to ensure they have sufficient line pack and storage 
available to meet scheduled daily load of all their customers, 
including the gas-fired generators, which may constitute significant 
load for a pipeline and which generally rely on a just-in-time natural 
gas supply and pipeline delivery. While pipeline line pack and storage 
provide some operational flexibility to pipelines to accommodate load 
swings throughout the day, short term swings in demand by gas-fired 
electric generators resulting from redispatch by electric transmission 
operators may be difficult to manage, particularly during times of 
coincident peak loads on interstate natural gas pipelines and electric 
transmission systems, such as during unusual cold weather events when 
end-use customers may rely on both natural gas and electricity. 
Communication between interstate natural gas pipelines and electric 
transmission operators can be invaluable to help ensure that electric 
transmission operators maintain grid reliability and that interstate 
natural gas pipelines can meet contractual and operational obligations 
to all of their shippers.
---------------------------------------------------------------------------

    \11\ Electric transmission systems currently have limited 
electric storage capabilities.
---------------------------------------------------------------------------

    9. Currently, interstate natural gas pipelines and electric 
transmission operators share non-public information with other 
transportation or transmission operators. For example, interstate 
natural gas pipeline operators routinely exchange nomination and 
scheduling information with other interstate natural gas pipeline 
operators and with upstream and downstream entities to confirm 
transportation nomination requests and to coordinate flows between the 
parties.\12\ Transmitting electric utilities similarly coordinate the 
sharing of non-public interchange schedule information on a routine 
basis through mechanisms such as, for example, e-Tags.\13\ This 
coordination helps ensure the safe and reliable transmission of 
electric power across a region.
---------------------------------------------------------------------------

    \12\ The nomination process initiates the flow of gas with the 
natural gas transportation service provider. The natural gas 
transportation service provider then confirms the flow of natural 
gas with the corresponding upstream and downstream entities. Once 
the natural gas quantities are confirmed, the natural gas 
transportation service provider sends the scheduled quantities 
information to the shipper. See 18 CFR 284.12(a)(1)(1), NAESB 
Nomination Standard 1.3.2 (establishing the standards governing 
pipeline confirmations with upstream and downstream parties).
    \13\ e-Tags are used by applicable Balancing Authorities, 
Reliability Coordinators, Interchange Authorities, Transmission 
Service Providers, Purchasing-Selling Entities, Generator-Providing 
Entities, and Load-Serving Entities to coordinate interchange 
schedules. See, e.g., NAESB Wholesale Electric Quadrant (WEQ) 
Business Practice Standards (Coordinate Interchange) requirement 
004-2 (``Until other means are adopted by NAESB, the primary method 
of submitting the RFI [Request for Interchange] shall be an e-Tag 
communicated to and managed by the Sink BA's [Balancing Authority] 
registered e-Tag authority service using protocols compliant with 
the Version 1.8.1 Electronic Tagging Functional Specification.'') 
and applicability section (``The Coordinate Interchange Business 
Practice Standards apply to BA [Balancing Authority], RC 
[Reliability Coordinator], IA [Interchange Authority], Transmission 
Service Provider, PSE [Purchasing-Selling Entity], GPE [Generator-
Providing Entity], Load-Serving Entity [LSE], and any TPSE [a PSE 
whose transmission approval rights are cited].'') NAESB WEQ Business 
Practice Standards (Version 003), published July 31, 2012.
---------------------------------------------------------------------------

    10. In Order No. 698, the Commission recognized the need for inter-
industry communications by adopting industry-developed standards 
requiring the exchange of operational information between the natural 
gas and electric industries.\14\ These standards require a generator 
and its directly connected natural gas pipeline(s) to ``establish 
procedures to communicate material changes in circumstances that may 
impact hourly flow rates.'' \15\ In

[[Page 70167]]

addition, these standards ensure that interstate natural gas pipelines 
have relevant planning information to assist in maintaining the 
operational integrity and reliability of pipeline service, as well as 
to provide gas-fired generator operators with information as to whether 
hourly flow deviations can be honored. NAESB Wholesale Electric 
Quadrant (WEQ) Standard 011-1.6, also incorporated in the Commission's 
regulations,\16\ requires that ISOs, RTOs, and other independent system 
operators establish written operational communication procedures with 
an appropriate interstate natural gas pipeline to be implemented when 
an extreme condition occurs.
---------------------------------------------------------------------------

    \14\ Standards for Business Practices for Interstate Natural Gas 
Pipelines; Standards for Business Practices for Public Utilities, 
Order No. 698, FERC Stats. & Regs. ] 31,251 (2007), order on 
clarification and reh'g, Order No. 698-A, 121 FERC ] 61,264 (2007). 
In Order No. 698, the Commission incorporated by reference NAESB WGQ 
Standard 0.3.12 into its regulations and NAESB WEQ Standard 011.
    \15\ NAESB WGQ Version 2.0 Business Practice Standard 0.3.12. 
See also Standards for Business Practices for Interstate Natural Gas 
Pipelines, Order No. 587-V, FERC Stats. & Regs. ] 31,332 (2012) 
(cross-referenced at 140 FERC ] 61,036) (2012), (incorporating by 
reference the Version 2.0 WGQ Business Practice Standards). See also 
18 CFR 284.12(a) (2013).
    \16\ 18 CFR Part 38 (2013).
---------------------------------------------------------------------------

    11. Sharing of operational information between interstate natural 
gas pipelines and electric transmission operators is akin to the 
sharing of operational information among interconnected parties. Both 
interstate natural gas pipelines and electric transmission operators 
could benefit from information regarding whether scheduled transactions 
on the others' systems will be carried out because of the potential 
effect on reliable service and operational planning. In many cases, 
gas-fired generators do not take natural gas at a uniform flow rate 
over a 24 hour period, and the electric transmission operator may find 
it valuable to know whether the interstate natural gas pipeline will be 
able to provide a non-uniform flow rate to meet the demands on the 
electric system. By the same token, it may be valuable to an interstate 
natural gas pipeline to know the demands that may be placed on its 
transportation system by gas-fired generators and whether such demands 
may cause a problem with its ability to deliver gas to other customers. 
Similarly, a disruption on an electric transmission line may force the 
electric transmission operator to shut down a gas-fired generator, 
which could cause increased gas pressure on an interstate natural gas 
pipeline forced to terminate gas deliveries to that generator.
    12. Commenters participating in the Commission staff technical 
conferences, as well as comments to this rulemaking, expressed concern 
that, without further clarification of the ability of interstate 
natural gas pipelines and electric transmission operators to exchange 
information, necessary communications may not take place. Comments have 
focused on the applicability of both the statutory prohibitions on 
undue discrimination and the Standards of Conduct. Both interstate 
natural gas pipelines and electric transmission operators have stated 
that clarification of their ability to exchange non-public information 
would assist them in efficiently and reliably planning the operations 
of their respective systems and addressing emergencies. The Commission 
provides the requested clarification in this Final Rule. Sharing of 
information valuable to reliable operations between transmission 
operations is not the type of preferential treatment the Federal Power 
Act (FPA) and Natural Gas Act (NGA) are intended to restrict. We find, 
as discussed below, that the FPA and NGA provisions regarding undue 
discrimination or unjust and unreasonable acts and practices do not 
prevent the exchange of information between operators of interstate 
natural gas pipeline transportation systems and electric transmission 
operators provided for in this Final Rule.
    13. Both the FPA and the comparable provisions of the NGA prohibit 
undue discrimination or preference.\17\ However, FPA section 205(b) and 
NGA section 4(b) do not forbid preferences, advantages and prejudices 
per se.\18\ Rather, FPA section 205(b) and NGA section 4(b) prohibit 
``undue'' preferences, advantages and prejudices.\19\ A difference in 
treatment is not unduly discriminatory when the difference is 
justified.\20\ In interpreting FPA section 205(b) and NGA section 4(b), 
the courts have held that transmission providers cannot treat similarly 
situated customers differently \21\ and that the disparate treatment of 
two customer classes does not in and of itself result in an undue 
preference or advantage or in an unreasonable difference in service if 
the customer classes are not similarly situated.\22\ Whether a 
preference is ``undue'' depends on the specific facts of the behavior 
and the circumstances to determine whether disparities exist and 
whether those disparities are rationally justified.\23\
---------------------------------------------------------------------------

    \17\ 16 U.S.C. 824d(b) (2012); 15 U.S.C. 717c(b) (2012).
    \18\ See, e.g., Cities of Bethany v. FERC, 727 F.2d 1131, 1139 
(D.C. Cir.), cert. denied, 469 U.S. 917, 105 S.Ct. 293, 83 L.Ed.2d 
229 (1984).
    \19\ See, e.g., Boroughs of Chambersburg v. FERC, 580 F.2d 573, 
577 (D.C. Cir. 1978).
    \20\ See Metropolitan Edison Co. v. FERC, 595 F.2d 851, 857 
(D.C. Cir. 1979). See also Transmission Agency of N. California v. 
FERC, 628 F.3d 538, 549 (D.C. Cir. 2010) (citing Ark. Elec. Energy 
Consumers v. FERC, 290 F.3d 362, 367 (D.C. Cir. 2002) and Elec. 
Consumers Res. Council v. FERC, 747 F.2d 1511, 1515 (D.C. Cir. 
1984)).
    \21\ See Transmission Agency of N. California v. FERC, 628 F.3d 
at 549 (citing Sacramento Mun. Util. Dist. v. FERC, 474 F.3d 797, 
802 (D.C. Cir. 2007)).
    \22\ See, e.g., Sw. Elec. Coop., Inc. v. FERC, 347 F.3d 975, 981 
(D.C. Cir. 2003). See also Michigan Consolidated Gas Co. v. FPC, 203 
F.2d 895, 901 (3d Cir. 1953) and Complex Consol. Edison Co. of New 
York, Inc. v. FERC, 165 F.3d 992, 1012 (D.C. Cir. 1999).
    \23\ See St. Michaels Utilities Comm'n v. Fed. Power Comm'n, 377 
F.2d 912, 915 (4th Cir. 1967).
---------------------------------------------------------------------------

    14. We find that the sharing of non-public, operational information 
between public utilities that own, operate, or control facilities used 
for the transmission of electric energy in interstate commerce and 
interstate natural gas pipelines for the purpose of promoting reliable 
service or operational planning is reasonable and not unduly 
discriminatory or preferential. Undue discrimination provisions apply 
to ensure that similarly situated customers are not subject to 
disparate rates or terms and conditions of service. As noted above, 
transmission operators are not similarly situated to other customers 
because they require access to non-public scheduling and other types of 
information from a variety of sources to help them maintain the 
reliability and integrity of the transportation and transmission 
systems. In addition, interstate natural gas pipelines are generally 
not wholesale customers of electric transmission operators. Likewise, 
RTOs/ISOs are not shippers on pipelines. Thus, we find that it is 
appropriate and necessary, with adequate safeguards, to expressly 
permit the sharing of non-public, operational information between 
transmission operators.\24\
---------------------------------------------------------------------------

    \24\ The Commission recognizes that some vertically-integrated 
transmission operators may have marketing function employees or 
affiliates, such as generators or local distribution companies that 
handle gas transactions. The Commission addresses concerns infra 
with respect to potential access and misuse of information shared 
pursuant to this Final Rule in the subsection entitled Adequacy of 
No-Conduit Rule to Protect against Competitive Harm.
---------------------------------------------------------------------------

    15. To protect against the potential for undue discrimination, the 
Commission is relying on existing safeguards as well as the adoption of 
a No-Conduit Rule. First, while non-public, operational information may 
be useful for planning, transmission operators cannot deviate from the 
terms of their tariffs, and cannot operate in an unduly discriminatory 
manner.\25\ Transmission operators are also subject to the same 
limitations on sharing information with their marketing function 
employees as provided under the Standards of Conduct.\26\ The 
Commission's Standards of Conduct were adopted with respect to one 
aspect of potentially

[[Page 70168]]

undue discrimination which may occur through exchanges of information 
between transmission providers and their marketing functions in certain 
situations.
---------------------------------------------------------------------------

    \25\ See, e.g., ISO New England Inc., 142 FERC ] 61,058, at P 23 
(2013) (available capacity must be dispatched ``consistent with the 
pipeline's tariff'' and ``[t]he pipelines are required to allocate 
available capacity on a not unduly discriminatory basis among the 
various requestors of capacity.'').
    \26\ 18 CFR 358.6 and 358.7 (2013).
---------------------------------------------------------------------------

    16. Second, the No-Conduit Rule included in the Final Rule will 
serve as an additional safeguard to ensure that transmission operators 
comply with the prohibitions against undue discrimination or preference 
with respect to their marketing function employees and third parties. 
The No-Conduit Rule prohibits recipients of non-public, operational 
information pursuant to the Final Rule from subsequently disclosing 
that information to a third party or a marketing function employee, as 
that term is defined in section 358.3(d) of the Commission's 
regulations. As discussed below, adoption of this No-Conduit Rule 
addresses many of the concerns regarding the sharing of commercially 
sensitive, customer-specific information among transmission 
operators.\27\
---------------------------------------------------------------------------

    \27\ As discussed further below, this No-Conduit Rule applies 
only to the information the interstate natural gas pipeline and 
electric transmission operator exchange pursuant to this Final Rule. 
It does not otherwise affect the ability of interstate natural gas 
pipelines and local distribution companies (LDCs) to exchange 
operational information regarding actual or potential pipeline or 
distribution system operational conditions affecting the gas flow 
between these physically interconnected parties. Nor does it affect 
the ability of an electric transmission operator to share its own 
information with an LDC, if otherwise permitted under its tariff. 
This Final Rule also does not prohibit electric transmission 
operators from sharing non-public, operational information received 
from a pipeline pursuant to this rule with LDCs, if otherwise 
provided for in tariff provisions approved by the Commission.
---------------------------------------------------------------------------

    17. Based on the potential need for the exchange of information to 
promote the reliability and operational integrity of the transmission 
and transportation systems the Commission regulates, and the 
protections against undue discrimination, the Commission finds that the 
exchange of non-public, operational information between transmission 
operators does not violate the statutory prohibitions on undue 
discrimination or preference as discussed herein. As discussed in more 
detail infra, to the extent that an electric transmission operator or 
interstate natural gas pipeline has a tariff provision which precludes 
a communication that would otherwise be authorized under the Final 
Rule, it will have to make a filing under section 205 of the FPA or 
section 4 of the NGA to revise that tariff provision to allow the 
exchanges of information permitted by this Final Rule. Below, the 
Commission will address the comments received on the NOPR.

A. Need For the Rule

1. NOPR
    18. In the NOPR, the Commission pointed out that, while several 
entities acknowledged that system reliability and contingency planning 
could be further enhanced by the sharing of non-public, operational 
information directly between transmission operators, several 
transmission operators pointed out that there is general reluctance to 
share such information because of concerns that doing so could be a 
violation of current laws, regulations or tariffs.\28\ Accordingly, 
several entities, including interstate natural gas pipelines and 
electric transmission operators, requested that, in order to facilitate 
the exchange of information between transmission operators, the 
Commission should more clearly identify the types of operational 
information that may be shared between transmission operators and 
clarify that the sharing of such information does not violate the 
prohibition against undue discrimination.
---------------------------------------------------------------------------

    \28\ NOPR, FERC Stats. & Regs. ] 32,699 at P 7 (cross-referenced 
at 144 FERC ] 61,043).
---------------------------------------------------------------------------

    19. In an effort to provide certainty to the industry and remove 
barriers--real or perceived--to the sharing of non-public, operational 
information, the Commission proposed to revise its regulations to 
authorize expressly the exchange of non-public, operational information 
between electric transmission operators and interstate natural gas 
pipelines. In consideration of the concerns regarding the exchange of 
non-public operational information, the Commission also proposed to 
adopt a No-Conduit Rule which prohibits recipients of the non-public, 
operational information from subsequently disclosing or being a conduit 
for subsequently disclosing that information to third parties or 
marketing function employees.
2. Comments
    20. The large majority of commenters generally support or do not 
oppose the NOPR. Many commenters generally agree that the rule is 
needed to provide certainty to interstate natural gas pipelines and 
electric transmission operators so that they may exchange information 
needed to promote reliable service and operational planning. They also 
generally support the proposed scope of information that may be shared 
under the rule, as well as the limitations on disclosures of such 
information via the No-Conduit Rule.
    21. For example, NERC states that, based on its extensive study of 
both industries and stakeholder discussions with electric and natural 
gas operators, transmission operators could make better informed 
operating decisions, particularly during seasonal peak electric system 
conditions, if they have the ability to obtain information about 
interstate natural gas pipeline flows and pipeline system 
conditions.\29\ NESCOE states that the implementation of these 
revisions in the near-term would provide regions like New England with 
certainty and flexibility to put in place what has the strong potential 
to be an effective and low cost reliability measure.\30\ INGAA states 
that the proposed scope of information transmission operators may share 
under the proposed regulations is appropriate and provides sufficient 
flexibility and guidance.\31\
---------------------------------------------------------------------------

    \29\ NERC Comments at 5-6.
    \30\ NESCOE Comments at 7.
    \31\ INGAA Comments at 2.
---------------------------------------------------------------------------

    22. Three commenters, APGA, Consumers Energy, and NJBPU, oppose the 
Commission's proposed rulemaking.
    23. As a general matter, APGA believes that the proposed 
regulations in the NOPR open the door to the release of commercially 
sensitive, non-public information without adequate support for such 
action and without adequate guidelines for such release.\32\ First, 
APGA contends that interstate natural gas pipelines have made clear 
that they do not need additional information to operate reliably and 
that they already make a significant amount of operational data 
available to the public on a non-discriminatory basis.\33\ Second, APGA 
contends that most electric transmission operators are not experiencing 
reliability problems related to inadequate access to non-public, gas-
related information and that much of the operational data electric 
transmission operators say they would like to have is already publicly 
available.\34\ APGA contends that the other data electric transmission 
operators say they would like to have, such as confidential gas 
availability information indicating whether a specific generator can be 
dispatched reliably, is information that the interstate natural gas 
pipelines simply do not have. Third, APGA states that generators may be 
harmed by secret communications between transmission operators 
regarding whether a given generation facility may or may not have 
adequate gas supplies to operate because interstate natural gas 
pipelines do not have sufficient information to

[[Page 70169]]

answer that question accurately. APGA argues that, given that the 
record fails to support a finding of a critical need for the exchange 
of non-public information to foster reliability and due to the 
importance of not permitting the sharing of confidential, non-public 
data absent a showing that such sharing would be beneficial, the NOPR 
should be abandoned.\35\
---------------------------------------------------------------------------

    \32\ APGA Comments at 1.
    \33\ Id. at 4.
    \34\ Id. at 4-5.
    \35\ Id. at 7.
---------------------------------------------------------------------------

    24. Instead, APGA argues that the Commission should conduct a case-
by-case evaluation of what non-public information specific interstate 
natural gas pipelines and electric transmission operators may release 
and under what circumstances, rather than the sweeping rule proposed in 
the NOPR.\36\ APGA also states that the real issue is the lack of 
interstate natural gas pipeline capacity to meet peak demand from 
electric generators resulting from electric generators' failure to 
subscribe to adequate firm transportation service.\37\
---------------------------------------------------------------------------

    \36\ Id. at 8 and 11.
    \37\ Id. at 11 & n.28.
---------------------------------------------------------------------------

    25. Similar to APGA, NJBPU is concerned about the potential for 
harm to industry participants, as well as the potential for improper 
use of non-public, operational information.\38\ NJBPU does not believe 
that the Commission's proposed No-Conduit Rule adequately responds to 
the concerns of NJBPU and various others. NJBPU states that, while the 
proposed No-Conduit Rule may address subsequent disclosure to an 
affiliate or third party, it does not address the problem of abuse, 
gaming, and market manipulation by an initial recipient of non-public, 
operational information.
---------------------------------------------------------------------------

    \38\ NJBPU Comments at 3.
---------------------------------------------------------------------------

    26. Consumers Energy argues that the proposed rule would do little 
to help ensure reliable service.\39\ Consumers Energy points out that 
there has never been an attempt to incent discussion by or between coal 
producers, rail or barge transporters under the guise of increasing 
electric transmission reliability. Consumers Energy asserts that 
transmission operators can and will address reliability through the use 
of tariffs and contracts. Consumers Energy believes contractually 
specified flow rates and nominations limitations have provided and can 
continue to provide the information that is necessary to ensure a 
continued high level of reliability of interstate natural gas pipelines 
and that this will, in turn, ensure a continued high level of 
reliability of the electric transmission grid.\40\ Consumers Energy 
further contends that RTOs' resource adequacy-related tariff provisions 
adequately inform them as to the availability of resources under their 
dispatch. Lastly, Consumers Energy states that, rather than permitting 
the communication of non-public, operational information between 
transmission operators to ensure service reliability, the appropriate 
solution to the problem of ensuring service reliability in the face of 
increased reliance on natural gas as a fuel for electric generation is 
to recognize the true cost of such reliability.\41\ This, Consumers 
Energy contends, will serve to increase investment in the interstate 
natural gas pipeline and LDC infrastructure that will be needed to 
serve this expanding load.
---------------------------------------------------------------------------

    \39\ Consumers Energy Comments at 3.
    \40\ Id. at 4.
    \41\ Id. at 5.
---------------------------------------------------------------------------

3. Commission Determination
    27. We conclude that we need to revise our existing regulations to 
provide greater certainty to electric transmission operators and 
interstate natural gas pipelines regarding the permissibility of 
sharing non-public, operational information, including customer-
specific information, for the purpose of promoting reliable service or 
operational planning. As discussed above, the record and the 
operational realities of the two industries show that the exchange of 
non-public, operational information would be valuable to foster 
reliability. While interstate natural gas pipelines and electric 
transmission operators publicly post a significant amount of important 
information needed by interstate natural gas pipeline shippers and 
electric transmission customers, interstate natural gas pipelines and 
electric transmission operators need other operational information, 
including non-public information, in order to reliably manage the 
operations of these systems. Interstate natural gas pipelines already 
provide non-public operational information to other interconnected 
physical parties to ensure accurate scheduling of flows on their 
systems. Electric transmission operators similarly communicate non-
public interchange scheduling information and other information among 
themselves and with Balancing Authorities. Permitting interstate 
natural gas pipelines and electric transmission operators to exchange 
non-public, operational information with each other will help them 
better plan for day-to-day operations as well as better manage their 
respective system needs during potential coincident peaks that may 
limit the flexibility of both systems.
    28. Further, the adoption of a No-Conduit Rule, together with 
existing safeguards, reasonably addresses the concerns around the 
improper use of non-public, operational information.\42\
---------------------------------------------------------------------------

    \42\ As discussed earlier, interstate natural gas pipelines and 
electric transmission operators are not similarly situated to other 
customers since they (1) are not typically customers of each other; 
and (2) operate physical systems and require information about 
physically interconnected and interdependent systems in order to 
maintain efficient and reliable service to their customers.
---------------------------------------------------------------------------

    29. We disagree with APGA's characterization that the proposed rule 
lacks value. The majority of commenters expressly support the rule and 
in many of their comments they affirm that the rule would promote 
reliable service. We are persuaded by these comments that argue that 
expressly permitting the sharing of non-public, operational information 
will promote reliable service and operational planning. For example, 
representatives and members of the interstate natural gas pipeline 
industry, including INGAA and Boardwalk Pipelines, are among the many 
commenters that expressly support the rule. Also, several entities, 
including electric transmission operators, have specifically identified 
non-public information that they would like to receive from or share 
with interstate natural gas pipelines under the rule because they 
believe it would promote reliable service or operational planning on 
both systems. Such information includes real-time pipeline flow 
information, generator service nominations and priority, and generator 
outage information. Improved reliability and operational planning 
amongst transmission operators will benefit both electric and natural 
gas industries as well as ultimate consumers.
    30. We do not agree with Consumers Energy and APGA that this rule 
is unnecessary because the exchange of information can be achieved 
solely through the use of tariffs and contracts or through a case-by-
case evaluation. As explained above, interstate natural gas pipelines 
and electric transmission operators may need a variety of information 
from each other depending on individual circumstances and may not be in 
a position to anticipate in advance exactly what information needs to 
be exchanged. Despite this need, these transmission operators have 
expressed concerns that the Commission's current regulations and 
uncertainty over their ability to share non-public, operational 
information acts as an impediment to exchange of this information. 
Adopting regulations that

[[Page 70170]]

eliminate transmission operator concerns about such exchanges will 
provide the flexibility that they require.
    31. APGA also suggests that the real issue is the lack of pipeline 
capacity resulting from generators' failure to subscribe to adequate 
firm transportation service. That does not diminish the need for 
transmission operators to be able to exchange non-public, operational 
information. No one disputes that the electric industry has become 
increasingly dependent on gas-fired generation and coordination is 
integral to promoting reliable service. Natural gas and electric 
coordination has many facets including communications, scheduling, and 
capacity release.\43\ In this Final Rule, the Commission is focused 
solely on communications.
---------------------------------------------------------------------------

    \43\ Coordination between Natural Gas and Electricity Markets, 
Docket No. AD12-12-000 (July 5, 2012) (Notice of Technical 
Conferences) (available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13023450); 77 FR 41184 (July 12, 2012) (available 
at http://www.gpo.gov/fdsys/pkg/FR-2012-07-12/pdf/2012-16997.pdf); 
Coordination between Natural Gas and Electricity Markets, Docket No. 
AD12-12-000 (Dec. 7, 2012) (Notice Of Request for Comments and 
Technical Conference) (http://www.ferc.gov/EventCalendar/Files/20121207134434-AD12-12-000TC1.pdf); 77 FR 74180 (Dec. 13, 2012) 
(http://www.gpo.gov/fdsys/pkg/FR-2012-12-13/pdf/2012-30063.pdf); 
Coordination between Natural Gas and Electricity Markets, Docket No. 
AD12-12-000 (Mar. 5, 2013) (Notice of Technical Conference).
---------------------------------------------------------------------------

    32. The Commission also finds that existing safeguards, together 
with the adoption of a No-Conduit Rule, reasonably address APGA's and 
NJBPU's concerns regarding the improper use of non-public, operational 
information, whether by an initial recipient of non-public, operational 
information or in a subsequent disclosure. In addition, the 
Commission's regulations expressly preclude the type of abuse, gaming, 
and market manipulation that NJBPU warns against.\44\ As we have noted, 
both interstate pipelines and electric transmission operators must 
comply with their tariffs and applicable Commission regulations when 
making capacity allocation and other operational determinations.\45\ 
Moreover, under the Standards of Conduct and the No-Conduit Rule 
adopted in this proceeding, interstate natural gas pipelines and 
electric transmission operators cannot share this information with 
their marketing function employees.\46\ Nor can they provide this 
information to third-parties. While any exchange of non-public 
information may pose some disclosure risks, we find that, on balance, 
the regulations adopted here, including the No-Conduit Rule, 
appropriately balance the significant benefits to be gained by robust 
information exchange among interdependent transmission operators 
against the potential risks from disclosure of non-public information.
---------------------------------------------------------------------------

    \44\ The Commission would have jurisdiction to pursue violations 
of the Commission's Anti-Manipulation Rule, 18 CFR 1c (2013) if an 
entity (including a non-jurisdictional entity) uses a fraudulent 
scheme or makes a material misrepresentation that would operate as a 
fraud or deceit upon any entity or market; has the requisite 
scienter; and in connection with a transaction subject to the 
Commission's jurisdiction.
    \45\ See ISO New England Inc., 142 FERC ] 61,058, at P 23 (2013) 
(available capacity must be dispatched ``consistent with the 
pipeline's tariff'' and ``[t]he pipelines are required to allocate 
available capacity on a not unduly discriminatory basis among the 
various requestors of capacity.'')
    \46\ See 18 CFR 358.6 and 358.7 (2013).
---------------------------------------------------------------------------

B. Scope of Information

1. NOPR

    33. In the NOPR, the Commission proposed to authorize public 
utilities providing transmission service and interstate natural gas 
pipelines to share non-public, operational information when such 
information is for the purpose of promoting reliable service or 
operational planning. The Commission stated that the term ``non-public, 
operational information'' is information that is not publicly posted, 
yet helps transmission operators to operate and maintain either a 
reliable pipeline system or a reliable electric transmission system on 
a day-to-day basis, as well as during emergency conditions or for 
operational planning. The NOPR stated that non-public, operational 
information may also include generator, pipeline, or transmission-
specific information. In using the term ``non-public, operational 
information,'' the Commission intends that transmission operators would 
be permitted to share information dealing with actual, anticipated, or 
potential effects on the ability to provide electric and gas service 
based on the respective operator's experience and understanding of the 
operational capability and customer demands on their respective 
systems.
    34. The NOPR sought comment on the scope of the non-public, 
operational information that transmission operators may share under the 
proposed regulations.\47\ The Commission stated that the proposed 
regulations were structured to provide significant flexibility to 
individual transmission operators--who have the most insight and 
knowledge of their systems--to determine what non-public operational 
information, if any, would promote reliable service on their systems, 
without fear of violating the Commission's prohibitions on undue 
discrimination and undue preference or such an exchange being 
considered an unjust or unreasonable practice.\48\ In proposing the 
regulations, the Commission stated its intent to remove barriers to the 
sharing of non-public, operational information, not just during 
emergencies, but also for day-to-day operations, planned outages, and 
scheduled maintenance.\49\
---------------------------------------------------------------------------

    \47\ NOPR, FERC Stats. & Regs. ] 32,699 at P 24 (cross-
referenced at 144 FERC ] 61,043).
    \48\ Id. P 11.
    \49\ Id. P 10.
---------------------------------------------------------------------------

2. Comments
    35. Several commenters express support for allowing transmission 
operators to determine the specific non-public, operational information 
to share, as opposed to the Commission providing a prescriptive, 
exhaustive list of information that may be shared.\50\ In supporting 
the NOPR's proposed scope, these commenters state that the proposed 
rule would permit flexible communications that are appropriately suited 
to the differences in information needs of each region. For example, 
NEPGA states that the NOPR provides for an appropriate amount of 
deference by defining the categories and scope of information that may 
be shared without narrowly defining each type of information.\51\
---------------------------------------------------------------------------

    \50\ MMWEC Comments at 4; NEPGA Comments at 3; PG&E Comments at 
4 and 5; TVA Comments at 2; NYTOs Comments at 7; MISO Comments at 3; 
INGAA Comments at 2 and 4; Enable Comments at 1; APPA Comments at 5; 
PUCO Comments at 6; NRECA Comments at 7; CAISO Comments at 3; and 
EEI Comments at 4 and 5.
    \51\ NEPGA Comments at 3.
---------------------------------------------------------------------------

    36. AGA agrees with the Commission that the proposed communications 
are important not only during emergencies or critical situations, but 
also when conditions, or emerging conditions, could lead to events on 
either system that have the potential to threaten the integrity or 
reliability of one or both of the systems.\52\ NERC contends that the 
exchange and availability of real-time, day-ahead, and season-ahead gas 
flow information and data to transmission system operators will best 
address electric vulnerabilities related to natural gas fuel 
disruptions.\53\
---------------------------------------------------------------------------

    \52\ AGA Comments at 5.
    \53\ NERC Comments at 6.
---------------------------------------------------------------------------

    37. Beyond supporting the approach proposed in this rulemaking, 
some commenters warned of the dangers of trying to develop an 
exhaustive list of the permitted communications. For example, MMWEC 
expressed concern about the chilling effect on system operators that 
would result if the Commission issued a specific list of information 
permitted to be shared.

[[Page 70171]]

MMWEC states that under such a proscriptive approach, operators would 
be wary of violating Commission rules by sharing information not 
specifically identified.\54\ MMWEC further argues that it is better to 
encourage a broad range of information sharing rather than a 
restrictive approach considering the critical situation in New 
England.\55\ PG&E notes that the use of a specific list of information 
may also impede communications should such a list exclude a key type of 
information.\56\
---------------------------------------------------------------------------

    \54\ MMWEC Comments at 4.
    \55\ Id.
    \56\ PG&E Comments at 5.
---------------------------------------------------------------------------

    38. A few commenters, however, oppose the generality of the 
proposed scope of communications permitted in the NOPR and request 
greater specificity of the non-public, operational information that may 
be shared between transmission operators.\57\ For example, NGSA 
contends that the lack of specific parameters on what information 
sharing is acceptable creates further uncertainty and concern for 
market participants.\58\ NGSA argues that the scope of the NOPR, which 
allows the sharing of any information for the purpose of promoting 
reliable service and operational planning, is overly broad and could 
allow operators to share commercially sensitive information.\59\ NGSA 
proposes that the Commission limit interstate natural gas pipeline and 
electric transmission operators' ability to share non-public 
information by setting parameters for what information is acceptable 
for operators to share.\60\ NGSA contends that providing parameters for 
what information can be shared would reduce confusion and give industry 
greater confidence that commercially sensitive information was not 
being disclosed without companies' knowledge. NJBPU states that the 
Commission should provide clear and explicit limits as to what 
information should be kept confidential and what information may be 
disclosed.\61\
---------------------------------------------------------------------------

    \57\ AEP Comments at 4; NGSA Comments at 6-9; and NJBPU Comments 
at 3.
    \58\ NGSA Comments at 6.
    \59\ Id. at 7.
    \60\ Id. at 8.
    \61\ NJBPU Comments at 3.
---------------------------------------------------------------------------

    39. Consumers Energy is concerned that because the proposed rule 
does not provide a specific list of non-public, operational information 
that can be shared, the proposal raises the potential for compliance 
issues related to interpreting what information may and may not 
permissibly be shared.\62\ Consumers Energy is also concerned with the 
potential consequences for unknowingly receiving information that could 
not permissibly be shared and the consequences of taking action, or 
failing to act, based on the receipt of such information.
---------------------------------------------------------------------------

    \62\ Consumers Energy Comments at 5.
---------------------------------------------------------------------------

    40. In addition, some commenters believe that the sharing of non-
public, operational information should be limited to emergencies. In 
particular, ELCON urges the Commission to emphasize that the central 
purpose of information sharing between interstate natural gas pipelines 
and electric transmission operators is to address system reliability 
and information sharing and, therefore, should focus on unusual non-
routine circumstances and not on normal day-to-day operations.\63\ 
ELCON states that outages, potential delivery restrictions, or 
curtailments that could occur during extreme weather events are 
examples of such unusual circumstances that would warrant the 
information sharing between operators. NE Gas Industry states that the 
proposed communications are critical in emergency situations of 
imminent reliability concerns when the communications can have the most 
immediate and positive impact, but should not be relied upon by the 
RTOs/ISOs on a day-to-day basis in ensuring the reliability of the 
natural gas-fired generators in their service territories.\64\
---------------------------------------------------------------------------

    \63\ ELCON Comments at 2.
    \64\ NE Gas Industry Comments at 8.
---------------------------------------------------------------------------

3. Commission Determination
    41. The Commission adopts the NOPR proposal to provide explicit 
authority to transmission operators to share non-public, operational 
information with each other for the purpose of promoting reliable 
service or operational planning on either the public utility or 
interstate natural gas pipeline's system. In adopting the NOPR 
proposal, the Commission is intentionally permitting the communication 
of a broad range of non-public, operational information to provide 
flexibility to individual transmission operators, who have the most 
insight and knowledge of their systems, to share that information which 
they deem necessary to promote reliable service on their system. The 
Commission is not persuaded by the requests of NGSA, AEP, and NJBPU 
that the Commission specify the communications that transmission 
operators may share under the rule. As described above, the exchange of 
non-public, operational information between transmission operators 
would be to promote the reliability and operational integrity of both 
the electric transmission and pipeline systems. Given the wide variety 
of non-public operational information that may be needed for this 
purpose both now and in the future, it is not practicable to develop a 
specific and exhaustive list defining the permissible 
communications.\65\ The Commission finds that the inclusion of such a 
list in the regulations would unreasonably limit the flexibility of 
transmission operators to determine what information they need based 
upon the individual circumstances of their systems.
---------------------------------------------------------------------------

    \65\ Below in section III.C we address comments regarding the 
examples of non-public operational information included in the NOPR.
---------------------------------------------------------------------------

    42. In addition, the Commission recognizes that the informational 
needs of system operators vary by region and, therefore, a specific and 
exhaustive list of permissive communications that may be relevant in 
one region may not address the communications and operational needs of 
transmission operators in another region. The Commission also 
recognizes that the informational needs of transmission operators may 
evolve over time as the generation mix in regions change and as 
transmission operators develop further insight into, and gain 
additional experience with, gas and electric coordination issues. In 
response to Consumers Energy's concern about what information may 
permissibly be shared, to the extent that a transmission operator is 
uncertain as to what information may and may not permissibly be shared, 
the Commission's compliance help desk is available to industry for 
informal guidance.\66\
---------------------------------------------------------------------------

    \66\ The Compliance Help Desk is available for persons seeking 
technical assistance involving compliance with the statutes, rules, 
regulations, and tariffs administered by the Commission. See http://www.ferc.gov/contact-us/compliance-help-desk/compliance-help-desk.asp.
---------------------------------------------------------------------------

    43. The Commission reaffirms its intention, as stated in the NOPR, 
to remove barriers to the sharing of non-public, operational 
information between transmission operators not just during emergencies, 
but also for day-to-day operations, planned outages, and scheduled 
maintenance. The communication of non-public, operational information 
permitted under this Final Rule will be applicable in all operational 
situations, that is, during both emergency and non-emergency 
situations. While communications permitted under the rule will be 
especially valuable in emergency situations, transmission operators 
should feel confident in their ability to engage in robust 
communications with each other, subject to the No-Conduit Rule,

[[Page 70172]]

whenever necessary to promote reliable service, including on a day-to-
day basis.
    44. The Commission disagrees with ELCON that information sharing 
permitted under the rule should focus on unusual, non-routine 
circumstances such as outages during extreme weather events. The 
Commission's intent in providing explicit authority to transmission 
operators to share non-public, operational information with each other 
is to provide certainty. In part, the rule is designed to permit 
exchanges of information that may limit or prevent extreme weather 
events from having the impacts about which ELCON is concerned. It could 
create further confusion or complexity to require transmission 
operators to decipher whether system conditions have risen to the level 
of unusual or non-routine before they engage in communications that 
promote reliable service or operational planning. Therefore, the 
Commission declines to limit communications or to create a new 
definition of what constitutes an emergency for the purpose of 
expressly authorizing communications under this rule.
    45. In order to maintain reliability, it will be important for 
transmission operators to coordinate planned outages and scheduled 
maintenance on both natural gas and electric systems so that any 
potential challenges may be identified more quickly, thus allowing more 
time to develop reliable solutions. The Commission is encouraged by the 
ongoing efforts regions are undertaking to improve coordination of 
scheduled maintenance and planned outages, and is hopeful that this 
Final Rule will allow for greater collaboration between the industries. 
The Commission re-emphasizes that communications for both electric 
transmission operators and interstate natural gas pipelines are 
voluntary, and encourages regions to develop the communications 
processes or protocols appropriately tailored to the needs of 
transmission operators in each individual region.

C. Entities Covered Under the Rule

1. NOPR
    46. In the NOPR, the Commission proposed to provide explicit 
authority to interstate natural gas pipelines and public utilities that 
own, operate, or control facilities used for the transmission of 
electric energy in interstate commerce to share non-public, operational 
information with each other for the purpose of promoting reliable 
service or operational planning on either the public utility's or 
pipeline's system.
    47. The NOPR recognized the existing exchanges of information among 
pipelines and among electric transmission operators that promote 
reliable service or operational planning. It also noted that, while the 
Commission regulates interstate service provided by intrastate 
pipelines, Hinshaw pipelines, and LDCs, the companies themselves are 
subject to state regulation and may exchange information subject to any 
state regulations that govern their operations.
    48. It was also noted in the NOPR that communications between 
transmission operators and generators are not covered by the proposed 
rule, but that transmission operators may always discuss generator-
specific information with the relevant generator.
2. Comments
    49. AGA and Duke urge the Commission to clarify that public 
utilities and interstate natural gas pipelines may share non-public, 
operational information with intrastate pipelines and LDCs for the 
purpose of promoting reliable service or operational planning.\67\ In 
its reply comments, NGSA states that, to the extent that LDCs, 
intrastate pipelines, gatherers and generators are allowed to 
communicate with interstate natural gas pipelines and electric 
transmission operators, the Commission should require that the No-
Conduit Rule be extended to them as a measure of protection for any 
non-public information that may have been inadvertently conveyed. 
Applying the No-Conduit Rule to all entities that are allowed to 
communicate under the proposed rule, NGSA asserts, could help protect 
commercially sensitive information.\68\
---------------------------------------------------------------------------

    \67\ AGA Comments at 5-6, 8; Duke Comments at 3.
    \68\ NGSA Reply Comments at 4-5.
---------------------------------------------------------------------------

    50. The NYTOs urge the Commission to make clear in the Final Rule 
that transmission operators may share non-public, operational 
information with LDCs on a confidential basis.\69\ While the NYISO is 
aware that state regulations govern the operations of intrastate 
pipelines, Hinshaw pipelines, and LDCs,\70\ the NYISO states that 
receiving information from intrastate and LDC pipelines would be 
helpful and urges the Commission to encourage the same shared 
communication between these entities and transmission operators.\71\ 
The NYTOs state that, like transmission operators, LDCs are not 
similarly situated to other customers because they require access to 
non-public information from a variety of sources to assist in ensuring 
the reliability and integrity of their systems.\72\ Further, the NYTOs 
state that LDCs are not generally customers of electric system 
operators and RTOs/ISOs are not customers of LDCs. The NYTOs state 
that, while LDCs are shippers on interstate natural gas pipelines, for 
the purposes of maintaining reliability and operational planning, LDCs' 
actions are more akin to a system operator than a gas customer--
especially when evaluating fuel security risks for gas-fired generation 
located behind their city-gates.
---------------------------------------------------------------------------

    \69\ NYTOs Comments at 6.
    \70\ NYISO Comments at 3.
    \71\ Id. at 2-3. NYISO asserts that the majority of New York 
Control Area gas-fired generators are located behind an LDC, as 
opposed to directly connected to the interstate pipelines.
    \72\ NYTOs Comments at 6.
---------------------------------------------------------------------------

    51. AGA asserts that LDC employees directly responsible for 
operating the local gas system need access to such non-public, 
operational information to assist in ensuring the integrity of their 
system. Moreover, AGA believes that such communications are not 
currently prohibited under the NGA or the Commission's Standards of 
Conduct.\73\
---------------------------------------------------------------------------

    \73\ AGA Comments at 6.
---------------------------------------------------------------------------

    52. Further, AGA states that the Commission's proposed revisions 
are unclear with respect to LDCs.\74\ AGA states that proposed sections 
38.2 and 284.12 refer to pipelines covered by section 284.12(b)(4) of 
the Commission's regulations as entities authorized to receive non-
public, operational information for the purposes of promoting reliable 
service or operational planning. AGA states that it is unclear whether 
the term ``pipelines'' in that context is limited to interstate natural 
gas companies subject to the Commission's jurisdiction under section 
1(b) of the NGA or includes any pipeline providing service under the 
Commission's Part 284 regulations implementing the Natural Gas Policy 
Act of 1978. AGA states that, if the former, LDCs would not be 
considered pipelines authorized to receive non-public, operational 
information and, if the latter, an LDC would only be considered a 
pipeline authorized to receive non-public, operational information to 
the extent the LDC provides interstate transportation or storage 
service under Part 284, Subpart C or G. AGA states that LDCs in their 
traditional role as bundled retail sales or gas service providers would 
not be considered ``pipelines'' under the Commission's proposal.\75\ 
AGA,

[[Page 70173]]

therefore, recommends that the Commission clarify that public utilities 
and interstate natural gas pipelines may share non-public, operational 
information with LDCs for the purpose of promoting reliable service or 
operational planning.\76\
---------------------------------------------------------------------------

    \74\ Id. at 7.
    \75\ Id. at 7-8.
    \76\ Id. at 8.
---------------------------------------------------------------------------

    53. As a separate issue, AGA is also concerned that ``the 
interpretation that `pipelines' under proposed sections 38.2 and 
284.12(b)(4) would include an intrastate or Hinshaw pipeline providing 
interstate transportation or storage service under Part 284, Subpart C 
or G, may impose new obligations on LDCs contrary to the Commission's 
permissive approach in this proceeding.'' \77\ AGA states that, 
currently, the Commission's Standards of Conduct apply to interstate 
natural gas pipelines and impose no regulatory obligations directly on 
LDCs. AGA further states that, if an intrastate or Hinshaw pipeline 
were to be considered a ``pipeline'' subject to revised section 
284.12(b)(4), questions arise regarding whether and how it must comply 
with the proposed No-Conduit Rules, which prohibit disclosure to 
marketing function employees as defined in section 358.3(d). In light 
of the potential ambiguity, AGA urges the Commission to ``reiterate its 
intent not to impose new regulatory obligations in this proceeding and 
clarify that an intrastate or Hinshaw pipeline providing interstate 
service under Part 284 of the Commission's regulations is not a 
`pipeline' for purposes of proposed section 284.12(b)(4).'' \78\
---------------------------------------------------------------------------

    \77\ Id.
    \78\ Id.
---------------------------------------------------------------------------

    54. EEI and Duke Energy request confirmation that otherwise 
permissible communications will not be impacted by the NOPR.\79\ 
Specifically, EEI requests that the Final Rule include regulatory text 
that expressly states that its scope does not and is not intended to 
prohibit otherwise permissible communication between market 
participants.\80\ EEI states that this would include, for example, 
communications between: public utilities and their customers; 
interstate natural gas pipelines and their customers; interstate 
natural gas pipelines and LDCs; and LDCs and generators, as there are 
many generation units that are served by LDCs behind the city gate.
---------------------------------------------------------------------------

    \79\ Duke Comments at 2; EEI Comments at 3.
    \80\ EEI Comments at 3-4.
---------------------------------------------------------------------------

    55. Similarly, Duke Energy requests that the Commission clarify 
that communication between interstate natural gas pipelines and LDCs, 
and LDCs and generators (served behind the city gate), as well as 
communications among the pipelines, transmission operators, generators 
being served by the interstate natural gas pipeline and transmission 
operator, and other non-marketing employees of the transmission 
operator, are not prohibited, provided that the Standards of Conduct 
No-Conduit Rule is followed and non-public transmission or customer 
information is not shared with marketing function employees.\81\
---------------------------------------------------------------------------

    \81\ Duke Comments at 2.
---------------------------------------------------------------------------

3. Commission Determination
    56. In this Final Rule, the Commission adopts proposed sections 
38.2 and 284.12(b)(4) as proposed in the NOPR. The Commission finds 
that the nature and scope of non-public, operational information that 
may expressly be shared under the rule, including commercially 
sensitive, customer-specific information, warrants limiting the blanket 
authorization of the exchange of such information granted herein to 
interstate natural gas pipelines and public utilities that own, 
operate, or control facilities used for the transmission of electric 
energy in interstate commerce subject to the Commission's 
jurisdiction.\82\ As discussed below, we decline to authorize in this 
Final Rule the disclosure of non-public, operational information, which 
may include commercially sensitive, customer specific information, to 
LDCs, intrastate pipelines, or gatherers. However, we clarify that the 
No-Conduit Rule adopted in this Final Rule only applies to the non-
public, operational information an electric transmission operator 
provides to the interstate pipeline pursuant to this rule or vice 
versa. Therefore, the No-Conduit Rule adopted in this Final Rule does 
not otherwise affect the ability of interstate natural gas pipelines to 
exchange operational information among themselves or with LDCs 
regarding actual or potential pipeline or distribution system 
operational conditions affecting the gas flow between these physically 
interconnected parties. Nor does it affect the ability of an electric 
transmission operator to share its own information with an LDC, if 
otherwise permitted under its tariff. Similarly, the No-Conduit Rule 
does not otherwise affect the ability of interstate natural gas 
pipelines and intrastate natural gas pipelines and gatherers to 
exchange operational information regarding operational conditions 
affecting the gas flows between these physically interconnected 
parties. Moreover, this Final Rule does not prohibit electric 
transmission operators from sharing non-public, operational information 
received from a pipeline pursuant to this Final Rule with LDCs, if the 
information sharing and appropriate safeguards to prevent inappropriate 
use or disclosure of shared information is separately authorized by the 
Commission, for example pursuant to a FPA section 205 tariff filing by 
an ISO or RTO.
---------------------------------------------------------------------------

    \82\ Wholesale Competition in Regions with Organized Electric 
Markets, Order No. 719, FERC Stats. & Regs. ] 31,281 at P 423 (2008) 
(cross-referenced at 125 FERC ] 61,071 (2008)) (Commission 
determined that it was necessary to retain the practice of masking 
the identity of participants when releasing offer and bid data).
---------------------------------------------------------------------------

    57. We recognize that LDCs and other parties do have a significant 
role to play in maintaining reliability of both interstate natural gas 
pipeline transportation systems and electric transmission systems, as 
the commenters point out, particularly since many electric generators 
take service from LDCs, rather than directly from interstate pipelines. 
However, because the Commission generally does not have jurisdiction 
over LDCs, and because the scope of the authorized non-public, 
operational information exchange between interstate natural gas 
pipelines and electric transmission operators under this Final Rule is 
broad, we are reluctant to authorize blanket authority for interstate 
natural gas pipelines or electric transmission operators to pass such 
information to non-jurisdictional LDCs. Instead, we prefer to proceed 
on a case-by-case basis with respect to electric transmission operators 
sharing non-public, operational information received from a pipeline 
pursuant to this Final Rule with LDCs. Electric transmission operators 
that see the need for such communication given the circumstances on 
their systems may develop tariff provisions that establish acceptable 
procedures for the handling and protection from inappropriate 
disclosure or use of such information.\83\
---------------------------------------------------------------------------

    \83\ For example, such tariff conditions might require the LDC 
to enter into a non-disclosure agreement (NDA).
---------------------------------------------------------------------------

    58. For example, in a recent, unprotested tariff filing by the 
California Independent System Operator (CAISO),\84\ CAISO amended its 
tariff to specifically authorize the CAISO to share, under a non-
disclosure agreement, outage information with natural gas transmission 
and distribution utilities operating interstate and/or intrastate 
natural gas pipelines

[[Page 70174]]

that serve natural gas-fired generation resources within the CAISO 
Balancing Authority Area, with or without notice to the affected market 
participant. The information CAISO may share includes, but is not 
limited to, the identity of individual natural gas-fired generation 
resources that are needed to support reliability of the CAISO Balancing 
Authority Area in the event of a natural gas shortage, natural gas 
pipeline testing and maintenance, or other curtailment of natural gas 
supplies. If they believe it necessary or appropriate, other electric 
transmission operators may make similar FPA section 205 tariff filings 
to facilitate greater sharing of non-public, operational information 
received from a pipeline pursuant to this Final Rule with entities such 
as LDCs. We encourage those electric transmission operators that are 
concerned about generators that are located behind an LDC to consider 
developing such tariff revisions.
---------------------------------------------------------------------------

    \84\ Cal. Indep. Sys. Operator Corp., Docket No. ER12-278-000 
(Dec. 8, 2011) (delegated letter order).
---------------------------------------------------------------------------

    59. AGA requests clarification as to the whether the term pipeline 
includes intrastate pipelines. The Commission clarifies that the term 
``pipeline'' in section 284.12(b)(4) adopted in this Final Rule refers 
to interstate natural gas pipelines that transport gas under subparts B 
or G of Part 284.\85\ Section 284.12(b)(4) is a new subsection of 
existing section 284.12(b). The first sentence of that section makes 
clear that the word ``pipeline'' as used throughout section 284.12(b) 
refers only to ``an interstate pipeline that transports gas under 
subparts B or G of this part.'' Thus, an intrastate or Hinshaw pipeline 
providing interstate service under Part 284 of the Commission's 
regulations is not a ``pipeline'' for purposes of section 284.12(b)(4).
---------------------------------------------------------------------------

    \85\ See 18 CFR 284.12(b) (2013).
---------------------------------------------------------------------------

D. The No-Conduit Rule and Competitive Concerns

1. NOPR
    60. In the NOPR, the Commission proposed to adopt a No-Conduit Rule 
that would prohibit all public utilities and interstate natural gas 
pipelines, as well as their employees, contractors, consultants, or 
agents, from disclosing, or using anyone as a conduit for the 
disclosure of, non-public, operational information they receive under 
this rule to a third party or to its marketing function employees, as 
that term is defined in section 358.3 of the Commission's regulations. 
The Commission stated that the No-Conduit Rule, in addition to 
protections already in place, would ensure that any non-public, 
operational information shared under the proposed regulations remains 
confidential and is shared among transmission operators in a manner 
that is consistent with the prohibition on undue discrimination.\86\
---------------------------------------------------------------------------

    \86\ NOPR, FERC Stats. & Regs. ] 32,699 at P 26 (cross-
referenced at144 FERC ] 61,043).
---------------------------------------------------------------------------

    61. In describing the need for the No-Conduit Rule, the Commission 
explained that the existing No-Conduit Rule under the Standards of 
Conduct would not sufficiently limit the disclosure of the information 
received under this proposed rule.\87\ Therefore, the Commission 
proposed a No-Conduit Rule tailored to the entities and information 
covered by the proposed rule and extends the disclosure prohibition to 
non-affiliates.
---------------------------------------------------------------------------

    \87\ Id. P 26 & n. 50.
---------------------------------------------------------------------------

    62. The Commission also noted the concerns expressed by some 
entities that generator-specific, non-public information provided to a 
pipeline by an electric transmission operator could provide the 
pipeline with a competitive advantage over the generator in pricing 
transportation services.\88\ The Commission found no need to propose 
additional protections regarding interstate natural gas pipeline 
transportation. The Commission reasoned that interstate pipelines are 
required to allocate service, on a not unduly discriminatory basis, 
based on their tariffs, at a rate not exceeding the just and reasonable 
rate on file. The Commission also explained that pipelines are not 
required to discount services, and if they choose to discount, are 
permitted to obtain information from any source to demonstrate that the 
shipper requesting the discount has competitive alternatives.\89\
---------------------------------------------------------------------------

    \88\ Id. P 27.
    \89\ Id.
---------------------------------------------------------------------------

    63. The Commission stated that unauthorized disclosure of any non-
public, operational information may subject the entity or individual 
making the prohibited disclosure to the enforcement provisions of the 
FPA and NGA, including potential civil penalties.\90\
---------------------------------------------------------------------------

    \90\ Id. P 26 & n. 52 (citing section 22 of the NGA, 15 U.S.C. 
717t2-1 (2012), and section 316A of the FPA, 16 U.S.C. 825o-1 
(2012)).
---------------------------------------------------------------------------

    64. Thirteen commenters filed in support of the proposed No-Conduit 
Rule.\91\ Arguing that the No-Conduit Rule was either too strict or not 
strict enough, several commenters proposed modifications to or 
requested clarifications of the No-Conduit Rule. Those comments are 
discussed below.
---------------------------------------------------------------------------

    \91\ AEP Comments at 5-6; CAISO Comments at 5; Duke Energy 
Comments at 3; ELCON Comments at 3; EPSA Comments at 7; MISO 
Comments at 2; MMWEC Comments at 5; NESCOE Comments at 4,6; NRECA 
Comments at 5; NYTOs Comments at 1; PG&E Comments at 2-3; PUCO 
Comments at 5; TVA Comments at 3.
---------------------------------------------------------------------------

2. Adequacy of No-Conduit Rule To Protect Against Competitive Harm
a. Comments
    65. Several commenters are concerned that the proposed No-Conduit 
Rule is inadequate to prevent the misuse of non-public, operational 
information exchanged between electric transmission operators and 
pipelines and protect against competitive harm to generators, natural 
gas marketers, and others. These commenters recommend that the 
Commission adopt various modifications to the No-Conduit Rule or place 
additional limits on the information which transmission operators may 
share, as discussed below.\92\
---------------------------------------------------------------------------

    \92\ AEP Comments at 6; APGA Comments at 2-3; Duke Comments at 
3; NGSA Comments at 2-3; and PUCO Comments at 7.
---------------------------------------------------------------------------

    66. EPSA and NGSA seek clarification that the No-Conduit Rule 
covers non-operational interstate natural gas pipeline employees that 
market transportation capacity.\93\ NGSA states that giving access to 
non-public, operational information to pipeline capacity marketing 
employees that negotiate shipper discounts could be problematic.\94\ 
NGSA states that, for example, a pipeline capacity marketing employee 
could decide not to discount interruptible capacity because they have 
prior knowledge of a transmission operator's intent to ramp up gas-
fired generators, increasing demand on the pipeline. Or, the pipeline 
capacity marketing employee could use knowledge of upcoming generator 
outages to lower interruptible prices for a period to compete with 
capacity releases. NGSA states that, while the Commission correctly 
notes that its non-discrimination rules already forbid any 
discriminatory behavior, it still would seem prudent to limit access to 
non-public, operational information for pipeline transportation 
capacity sellers.\95\
---------------------------------------------------------------------------

    \93\ EPSA Comments at 4; NGSA Comments at 4-6.
    \94\ NGSA Comments at 4.
    \95\ Id. at 5.
---------------------------------------------------------------------------

    67. Washington Gas is concerned that the NOPR does not explain how 
information can or cannot be shared within a public utility that 
receives non-public operating information.\96\ Washington Gas contends 
that if the generator employees only serve the function of purchasing 
gas--rather than selling energy at wholesale--they may not come within 
the definition of

[[Page 70175]]

``marketing function employees'' because the currently effective 
Standards of Conduct do not consider gas purchasing to be a marketing 
function activity. Washington Gas argues, if non-public information is 
shared within a public utility, it would create a preference for public 
utility-owned generation over independent generators because 
independent generators would be ``third parties'' prohibited from 
information sharing. Washington Gas concludes that, if the Commission 
relies on a No-Conduit Rule to protect information from reaching beyond 
transmission function employees, the Commission should provide detailed 
examples of exactly how the No-Conduit Rule will be implemented to 
protect the fairness of the market and assure that no shipper is 
afforded an undue preference.\97\
---------------------------------------------------------------------------

    \96\ Washington Gas Comments at 10.
    \97\ Id. at 11.
---------------------------------------------------------------------------

    68. Washington Gas claims that the best way to resolve the tension 
between information sharing and market fairness is to continue to make 
critical operating information public. Washington Gas contends that 
certain of the examples of ``non-public, operational information'' 
listed in the NOPR should never be considered non-public, operational 
information.\98\ Rather, Washington Gas contends, this information 
should be considered public information to be promptly posted. 
Washington Gas believes that the only information properly shared on a 
non-public basis would be transaction-specific information.\99\ 
Accordingly, Washington Gas urges the Commission to clarify that all 
pipeline facility outage and maintenance information needs to be made 
public and posted on the pipeline's internet Web site and to establish 
clear instructions as to what exact information must be posted and what 
can be shared voluntarily in a non-public way.\100\
---------------------------------------------------------------------------

    \98\ Id. at 3.
    \99\ Id. at 4.
    \100\ Id. at 3-4.
---------------------------------------------------------------------------

    69. Similar to Washington Gas, AGA states that it assumes that the 
Commission would continue to require interstate pipelines to provide 
all shippers with equal access to information regarding system 
conditions, maintenance schedules and outages, and available capacity 
so as not to create competitive advantages for certain shippers.\101\
---------------------------------------------------------------------------

    \101\ AGA Comments at 5 & n. 14.
---------------------------------------------------------------------------

    70. PUCO supports the proposed No-Conduit Rule, but contends that 
proposed section 38.2 should be modified to include additional language 
to require that no non-public information be shared with any person or 
company affiliate except to ensure the reliable and efficient 
operations of the pipeline, transmission grid, and the delivery of 
generation service.\102\
---------------------------------------------------------------------------

    \102\ PUCO Comments at 5.
---------------------------------------------------------------------------

    71. Duke Energy notes that there are a number of small public 
utilities who currently have waivers of the requirement to abide by the 
Standards of Conduct or are otherwise not subject to the Standards of 
Conduct. Duke Energy requests that the Commission address its concern 
that these entities could receive commercially sensitive and non-public 
transmission information under the NOPR which could potentially give 
them an unfair advantage.\103\
---------------------------------------------------------------------------

    \103\ Duke Energy Comments at 3.
---------------------------------------------------------------------------

    72. To alleviate concerns of confidential information disclosure, 
TVA recommends that, in addition to the No-Conduit Rule, the Commission 
should encourage and support the execution of confidentiality 
agreements between electric transmission operators and natural gas 
pipelines relative to these discussions.\104\
---------------------------------------------------------------------------

    \104\ TVA Comments at 3-4.
---------------------------------------------------------------------------

    73. ELCON proposes two modifications to the No-Conduit Rule. First, 
ELCON asserts that the Commission should require electric transmission 
operators and interstate natural gas pipelines to submit an annual 
filing with the Commission listing entities with whom they have entered 
into information sharing arrangements and further certify that they 
acknowledge and comply with the No-Conduit Rule. Second, ELCON argues 
that the Commission should require electric transmission operators and 
pipelines to maintain and implement a written compliance policy.\105\
---------------------------------------------------------------------------

    \105\ ELCON Comments at 3.
---------------------------------------------------------------------------

    74. PUCO also maintains that the Commission should, via an 
expansion of the instant proceeding, arrive at the appropriate 
requisite sanctions for the inappropriate sharing of potentially 
commercially sensitive, non-public information in violation of the No-
Conduit Rule.\106\
---------------------------------------------------------------------------

    \106\ PUCO Comments at 5.
---------------------------------------------------------------------------

    75. Some commenters expressed concern about the scope of the non-
public, operational information to be shared under the rule based on 
competitive concerns about the use of that information. NGSA is also 
concerned that the NOPR could allow transmission operators to share 
commercially sensitive information that could harm producers and 
marketers by revealing their positions in the market to outside 
parties.\107\ NGSA states, for example, that a marketer's commercial 
strategy could be revealed if the confidential details of the 
scheduling priorities it has contracted with its clients were 
shared.\108\ NGSA further contends that while it may be useful for 
utility operators to share information on overall pipeline capacity, 
sharing commercially sensitive information such as individual shipper 
nominations offers little insight into the reliability of deliveries 
and could cause significant harm to some market participants.\109\
---------------------------------------------------------------------------

    \107\ NGSA Comments at 7.
    \108\ Id.
    \109\ Id.
---------------------------------------------------------------------------

    76. Along the same lines, PUCO argues that electric transmission 
operators should be required to furnish pipelines with aggregated, non-
unit specific generation data to ensure against inadvertently providing 
pipelines with confidential or proprietary information that could 
result in a competitive advantage concerning the pricing of gas to that 
facility.\110\
---------------------------------------------------------------------------

    \110\ PUCO Comments at 7.
---------------------------------------------------------------------------

b. Commission Determination
    77. In this Final Rule, the Commission adopts the proposed No-
Conduit Rule as set forth in sections 38.2(b) and 284.12(b)(4)(ii) of 
the NOPR, without modification. The No-Conduit Rule prohibits all 
public utilities and interstate natural gas pipelines, as well as their 
employees, contractors, consultants, or agents, from disclosing, or 
using anyone as a conduit for the disclosure of, non-public, 
operational information they receive under this rule to a third party 
or to its marketing function employees, as that term is defined in 
Sec.  358.3 of the Commission's regulations. The Commission concludes 
that the No-Conduit Rule, as proposed, is necessary to ensure that any 
non-public, operational information shared under the regulations in 
this Final Rule remains confidential and is shared among transmission 
operators in a manner that is consistent with the prohibition on undue 
discrimination. As several commenters, including generators, pointed 
out, the No-Conduit Rule addresses many of the concerns over the 
sharing of commercially sensitive, customer-specific information among 
transmission operators.
    78. At this time, we do not see the need to expand the No-Conduit 
Rule to explicitly prohibit disclosures to other employees or entities. 
We believe that, through this Final Rule and other Commission rules and 
regulations, we have adequate safeguards in place. In

[[Page 70176]]

response to the comments received, we take this opportunity to explain 
the Commission's requirements associated with the sharing of 
information and remind industry of the information already made 
available by the Commission's regulations.
    79. Washington Gas, NGSA, and EPSA assert that certain employees 
may fall outside the Standards of Conduct definition of ``marketing 
function employees'' and therefore may receive information under this 
Final Rule, and be in a position to use that information to provide an 
undue preference.
    80. First, Washington Gas expresses concern that the proposed rule 
does not explain how non-public, operational information received by a 
public utility can or cannot be shared within that public utility, 
including with employees that fall outside the definition of 
``marketing function employee,'' in particular, public utility 
employees that purchase gas. In Order Nos. 717 and 717-A, the 
Commission restricted its affiliate rule to cover only those employees 
that participate in electric sales markets and eliminated or rejected 
proposals that would have expanded the rule to cover other 
employees.\111\ The Commission explained:
---------------------------------------------------------------------------

    \111\ See Standards of Conduct for Transmission Providers, Order 
No. 717, FERC Stats. & Regs. ] 31,280 at PP 77, 103 (cross-
referenced at 125 FERC ] 61,064 (2008)); Order No. 717-A, FERC 
Stats. & Regs. ] 31,297 at P 35 (cross-referenced at 129 FERC ] 
61,043 (2009)).

    The Commission agrees that restricting the definition of 
marketing functions to include only sales, rather than purchases, 
more closely matches the statutory prohibitions against undue 
preferences. Furthermore, the removal of purchases from the 
definition of marketing functions frees companies to conduct the 
informational exchanges necessary to engage in integrated resource 
planning . . . .\112\
---------------------------------------------------------------------------

    \112\ Order No. 717, FERC Stats. & Regs ] 31,280 at P 77 (cross-
referenced at 129 FERC ] 61,043 (footnotes omitted). See also Order 
No. 717-A, FERC Stats. & Regs. ] 31,297 at P 35 (cross-referenced at 
129 FERC ] 61,043) (explaining that restricting the definition of 
marketing function to include only sales more closely matches the 
statutory prohibitions against undue preference. Specifically, 
sections 205 and 206 of the Federal Power Act prohibit undue 
preference or advantage to any person with respect to ``any 
transmission or sale subject to the jurisdiction of the Commission. 
. . .'' Similarly, sections 4 and 5 of the Natural Gas Act prohibit 
undue preference with respect to ``any transportation or sale of 
natural gas subject to the jurisdiction of the Commission.).

    For similar reasons, the Final Rule is limited and therefore we 
find it is not appropriate to expand the No-Conduit Rule adopted here 
to include employees who are not ``marketing function employees,'' such 
as gas purchasing employees.
    81. In addition, Washington Gas has not provided sufficient reason 
to expand the No-Conduit Rule to gas purchasing employees or other 
employees of the public utility who are not marketing function 
employees. In this Final Rule the Commission's intent is to remove 
barriers to the sharing of non-public, operational information between 
transmission operators for the purpose of promoting reliable service 
and operational planning. While certain gas purchasing employees may 
fall outside the definition of marketing function employees, within a 
vertically integrated utility, it may be necessary for an electric 
transmission operator, based on information received by an interstate 
natural gas pipeline, to inform its gas purchasers that it needs 
additional natural gas at another generating unit. Restricting such 
internal disclosure may limit the effectiveness of any such 
communication in responding to operational problems.
    82. Moreover, under section 284.13(d) of the Commission 
regulations,\113\ pipelines are already required to post important 
capacity and outage information at each scheduling opportunity. This 
includes ``equal and timely access to information relevant to the 
availability of all transportation services whenever capacity is 
scheduled, including, but not limited to, the availability of capacity 
at receipt points, on the mainline, at delivery points, and in storage 
fields; whether the capacity is available directly from the pipeline or 
through capacity release; the total design capacity of each point or 
segment on the system; the amount scheduled at each point or segment 
whenever capacity is scheduled; and all planned and actual service 
outages or reductions in service capacity.'' Washington Gas has not 
provided sufficient justification that, given the extent of these 
posting requirements, the potential risks it identifies associated with 
permitting the exchange of non-public, operational information between 
transmission operators, outweighs the efficiency and reliability 
benefits of permitting such communications.
---------------------------------------------------------------------------

    \113\ 18 CFR 284.13(d) (2013).
---------------------------------------------------------------------------

    83. While non-public, operational information falls outside of the 
posting requirements, we are not convinced such information needs to be 
disclosed to all shippers. For example, certain information may be 
relevant only to the operations of the public utility and may not need 
to be disclosed to all shippers.
    84. We also deny EPSA's and NGSA's requests to expand the No-
Conduit Rule to prohibit disclosures to interstate natural gas pipeline 
employees who market pipeline capacity, as well as PUCO's request to 
require electric transmission operators to furnish pipelines 
aggregated, non-unit specific generation data to ensure against 
providing pipelines with confidential or proprietary information that 
could result in a competitive advantage concerning the pricing of gas 
to that facility. The Commission agrees with NGSA that ``marketing 
function employees,'' as that termed is defined in the Standard of 
Conduct, does not include employees that market transportation 
capacity. However, EPSA and NGSA have not shown that employees who 
market pipeline capacity can use non-public, operational information 
shared under this Final Rule to provide an undue preference or unduly 
discriminate in a manner inconsistent with the Commission's policies or 
regulations. NGSA's specific concern is that employees who market 
transportation capacity could use non-public, operational information 
shared under this rule to discriminate in their allocation or pricing 
of capacity. In response, we note that interstate natural pipelines are 
required by the NGA and their tariffs to allocate service on a not 
unduly discriminatory basis at a rate not exceeding the just and 
reasonable rate on file. Further, the Commission does not require 
pipelines to discount services below the pipeline's maximum tariff 
rate, which the Commission has found just and reasonable. If a pipeline 
chooses to provide selective discounts based on the elasticity of 
demand of its customers,\114\ the pipeline needs to obtain information 
to demonstrate that a shipper requesting a discount does have 
competitive alternatives justifying the discount in order to ensure 
that it treats all similarly situated customers on a comparable 
basis.\115\
---------------------------------------------------------------------------

    \114\ See Associated Gas Distributors v. FERC, 824 F.2d 981 
(D.C. Cir. 1987) (permitting selective discounting only when 
justified by competitive alternatives and elastic demand 
conditions); Williston Basin Interstate Pipeline Co., 85 FERC ] 
61,247 (1998) (finding that a pipeline does not necessarily have to 
offer the same discount to all customers at a point when the 
pipeline knows, if some customers at the point have elastic demand, 
while others have inelastic demand).
    \115\ See, e.g., Panhandle Eastern Pipe Line Co., Opinion No. 
395, 71 FERC ] 61,228, at 61,867 (1995) (Commission cited to 
pipeline's policy of requiring documentation from its customers 
detailing the competitive circumstances justifying their need for a 
discount, such as potentially sensitive information concerning the 
end use customer for whom the gas will be transported, and 
competitive energy supplies, including the customer's source and 
cost of alternative natural gas supplies or the type and cost of 
alternative fuels); Panhandle Eastern Pipe Line Co., Opinion No. 
404, 74 FERC ] 61,109, at 61,405 (1996).

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

[[Page 70177]]

    85. We also deny PUCO's request to expand the No-Conduit Rule to 
require that non-public, operational information not be shared with any 
person or company affiliate except to ensure the reliable and efficient 
operations of the pipeline, transmission grid, and the delivery of 
generation service. As we explain elsewhere in this Final Rule, the 
Commission is concerned that adding further qualifiers to the 
definition of operational information will restrict the flexibility of 
transmission operators to determine what information it must share to 
promote reliable service and engage in effective operational planning. 
Moreover, adding further qualifiers is unnecessary, given our 
conclusion that the existing safeguards (e.g., the Standards of 
Conduct, prohibition against undue discrimination or preference, 
prohibition on market manipulation) together with the third-party 
limitation in the No-Conduit Rule we are putting in place are 
sufficient to protect against unnecessary disclosure.
    86. TVA proposes that, in addition to the No-Conduit Rule, the 
Commission require confidentiality agreements, while ELCON proposes 
that the Commission also require annual filings and written compliance 
procedures. Under this Final Rule, communication and sharing of non-
public, operational information is voluntary. While the Commission will 
not embed such a requirement in its regulations, we note that CAISO and 
ISO-NE have both adopted such practices, and this Final Rule does not 
prescribe the mechanics of how voluntary sharing will be conducted. To 
the extent a transmission operator has a need for additional or changed 
information sharing procedures such as confidentiality agreements, the 
Commission will evaluate such requests on a case-by-case basis. With 
respect to PUCO's comments regarding sanctions, the Commission 
reiterates that unauthorized disclosure of any non-public, operational 
information may subject the entity or individual making the prohibited 
disclosure to the enforcement provisions of the FPA and NGA, including 
potential civil penalties.\116\ The Commission declines to further 
delineate the specific sanctions that might apply in the event of an 
unauthorized disclosure, as any sanctions would need to be tailored to 
the facts and circumstances of the disclosure at issue.
---------------------------------------------------------------------------

    \116\ See Section 22 of the NGA, 15 U.S.C. 717t2-1 (2012), and 
section 316A of the FPA, 16 U.S.C. 825o-1 (2012).
---------------------------------------------------------------------------

    87. Duke argues that some small public utilities that currently 
have waivers of the requirement to abide by the Standards of Conduct 
could be given an unfair advantage if they receive commercially 
sensitive and non-public transmission information under the Final Rule. 
The Commission clarifies that existing waivers from the Standards of 
Conduct do not automatically apply to the No-Conduit Rule adopted in 
this Final Rule. That is, an existing waiver of the Standards of 
Conduct does not waive the No-Conduit Rule adopted here. In this Final 
Rule, the Commission is expressly authorizing the exchange of non-
public, operational information that could include commercially 
sensitive, customer-specific information. The No-Conduit Rule was 
developed to address concerns that broadly sharing this kind of 
information with marketing function employees or third parties could 
cause competitive harm. Given that the information covered by this rule 
is potentially commercially sensitive, the Commission finds that a 
determination as to whether a waiver of the No-Conduit Rule adopted 
here is appropriate is best made on an individual basis, pursuant to a 
filing under FPA section 205 or NGA section 4.
    88. In response to comments raising general concerns about the 
competitive impact of the use of non-public, operational information 
exchanged under this rule, the Commission finds that the No-Conduit 
Rule is sufficient to address these concerns. For example, NGSA asserts 
that a natural gas marketer's commercial strategy could be revealed if 
the confidential details of the scheduling priorities it has contracted 
with its clients are revealed. While the Commission recognizes that a 
natural gas marketer's scheduling priorities for its downstream clients 
are commercially sensitive, the No-Conduit Rule should ensure that the 
electric transmission operators, with whom pipelines may share such 
information, do not disclose that information to third party 
participants in the natural gas sales market. NGSA has not explained 
how a pipeline's sharing of a natural gas marketer's nominations with 
an electric transmission operator would cause competitive harm to the 
natural gas marketer, so long as the electric transmission operator 
complies with the No-Conduit Rule.
    89. The Commission similarly is not persuaded by PUCO's concern 
that an electric transmission operator's sharing of confidential unit-
specific generator information with interstate pipeline providers could 
result in ``a competitive advantage concerning the pricing of gas to 
that facility.'' \117\ Interstate natural gas pipelines only provide 
unbundled transportation service and do not sell gas except for 
incidental sales required for the conduct of their transportation 
service. As discussed above, there are protections already in place to 
prevent undue discrimination or preference in the pipeline's sale of 
transportation service.\118\ Given the protections already in place, we 
see no need to propose additional protections regarding pipeline 
transportation at this time.
---------------------------------------------------------------------------

    \117\ PUCO Comments at 7.
    \118\ See, e.g., 18 CFR 284.286 (2013).
---------------------------------------------------------------------------

3. Exceptions to the No-Conduit Rule
a. Comments
    90. Several parties contend that the No-Conduit Rule is too 
restrictive and recommend that the Commission adopt various 
modifications, as discussed below. For example, NE Gas Industry and 
INGAA request that the proposed No-Conduit Rule be modified in the 
Final Rule to include an exception to allow sharing of non-public, 
operational information between all relevant industry participants in 
an emergency.\119\ INGAA, for example, states that there should be no 
limit on sharing of non-public, operational information between 
transmission operators during an emergency, including communications 
between third parties, subject to a record of the exchange as soon as 
practicable after the fact.\120\ NE Gas Industry and INGAA propose that 
communications in such emergencies could include RTOs and ISOs, 
interstate natural gas pipelines, generators of all fuel types, LDCs, 
liquefied natural gas suppliers, producers, marketers, asset managers, 
and other relevant participants in the energy industry.\121\ 
Alternatively, NE Gas Industry requests that the Commission clarify 
that the No-Conduit Rule does not prohibit such larger group 
discussions and apart from the Final Rule, pipelines and public 
utilities are permitted to share non-public, operational information 
with all relevant entities as necessary to mitigate or solve an 
emergency that threatens the reliability of electric or natural gas 
service.
---------------------------------------------------------------------------

    \119\ NE Gas Industry at 3-4, INGAA Comments at 7. NE Gas 
Industry states that existing focus groups and joint industry task 
forces in New England can serve as the mechanisms to facilitate such 
open communication in times of emergency.
    \120\ INGAA Comments at 7.
    \121\ NE Gas Industry Comments at 5; INGAA Comments at 7.
---------------------------------------------------------------------------

    91. In its reply comments, NGSA states that the Commission should 
deny requests to suspend the communications rules during emergencies or 
clearly define what

[[Page 70178]]

constitutes an emergency.\122\ NGSA is concerned that identifying what 
situations constitute an emergency can be subjective. NGSA states that 
at a minimum, the Commission should strictly maintain the No-Conduit 
Rule, restricting communications to operational (i.e. non-marketing) 
employees, at all times, regardless of any relaxation of the associated 
communications rules.
---------------------------------------------------------------------------

    \122\ NGSA Reply Comments at 5.
---------------------------------------------------------------------------

    92. Enable contends that the Commission should adopt a modified 
version of the No-Conduit Rule that allows interstate pipelines to 
share non-public, operational information with non-marketing function 
employee third parties for the purpose of promoting reliable service 
and operational planning.\123\ Enable asserts that the NOPR provides no 
rational basis for distinguishing between (A) ``non-public, operational 
information'' received from electric public utilities through this new 
regime, which interstate natural gas pipelines are barred from 
disclosing to anyone, and (B) general ``non-public, operational 
information,'' which pipelines may share with non-marketing function 
employees for operational reasons.\124\ Enable asserts that currently, 
interstate pipelines receive non-public, operational information from a 
variety of sources and the NOPR sets forth no evidence that such 
information, when received from public utilities, would not be 
sufficiently protected by the current No-Conduit Rule as stated in the 
Standards of Conduct or by a less restrictive No-Conduit Rule.\125\ 
Enable states that the NOPR gives interstate gas pipelines access to 
information from electric public utilities for the purpose of improving 
reliability, but at the same time bars those pipelines from sharing 
such information with third parties with whom they would normally share 
operational information for that purpose (e.g., interconnected 
intrastate and gathering lines).\126\
---------------------------------------------------------------------------

    \123\ Enable Comments at 9-10.
    \124\ Id. at 6.
    \125\ Id.
    \126\ Id.
---------------------------------------------------------------------------

    93. Enable also contends that the NOPR's No-Conduit Rule creates 
two classifications of ``non-public, operational information'' and 
different rules regarding interstate pipelines' sharing of each, 
thereby imposing significant administrative burdens and compliance 
challenges on the pipelines.\127\ Enable states that under the current 
rules, interstate pipelines may exchange information with employees of 
their intrastate pipeline and gathering affiliates, provided those 
employees are not marketing function employees. Enable states that the 
proposed No-Conduit Rule creates an inconsistency and potential 
compliance difficulty because these employees of the non-jurisdictional 
affiliates would be allowed to receive some operational information but 
not the new category of non-public information received from electric 
public utilities.\128\ Enable states that the proposed No-Conduit Rule 
renders impractical--if not impossible--interstate pipelines' 
otherwise-appropriate sharing of non-marketing function employees with 
affiliated intrastate pipelines and gatherers.\129\ Additionally, 
Enable states that interstate pipelines will need to implement two 
separate compliance walls regarding operational information: one wall 
to prevent the disclosure of non-public transmission function 
information or customer information (directly or through a conduit) to 
the pipeline's marketing function employees; and another wall to 
prevent the disclosure of non-public, operational information received 
from public utilities to the pipeline's marketing function employees or 
to any third party (including the pipeline's own intrastate pipeline 
and gathering affiliates).\130\
---------------------------------------------------------------------------

    \127\ Id. at 7.
    \128\ Id.
    \129\ Id. at 8.
    \130\ Id.
---------------------------------------------------------------------------

    94. Enable maintains that the NOPR does not identify a need for the 
absolute prohibition against interstate pipelines' disclosure of 
operational information to non- marketing function employee third 
parties for the purpose of system reliability.\131\ Enable argues that 
the NOPR points only to the theoretical threat of harmful disclosure of 
the electric public utility's non-public information and undue 
discrimination or preference and provides no explanation of how the 
potential danger of improper disclosure by interstate pipelines, 
unsupported by a record of abuse, justifies such a broad and burdensome 
prophylactic rule.
---------------------------------------------------------------------------

    \131\ Id. at 9 (citing National Fuel Gas Supply Corp. v. FERC, 
468 F.3d 831, 844 (D.C. Cir. 2006) (indicating that FERC must supply 
a factual basis for its administrative actions or, in the absence of 
such a basis, explain how potential dangers, unsupported by a record 
of abuse, justifies costly rules); 5 U.S.C. 553(c) (``After 
consideration of the relevant matter presented [through notice and 
comment], the agency shall incorporate in the rules adopted a 
concise general statement of their basis and purpose.''); Motor 
Vehicle Mfrs. Ass'n of U.S, Inc. v. State Farm Mut. Auto. Ins. Co., 
463 U.S. 29, 56 (1983) (requiring agency to explain reasons for 
decision); St. James Hosp. v. Heckler, 760 F.2d 1460, 1469 (7th Cir. 
1985) (finding explanation for rule not adequately supported by 
evidence offered as justification)).
---------------------------------------------------------------------------

    95. AGA and Duke Energy express concern that the proposed No-
Conduit Rule could be interpreted to prohibit communications that are 
currently permitted under the Standards of Conduct.\132\ Specifically, 
AGA and Duke maintain the rule should not prevent a public utility or 
interstate pipeline from disclosing non-public, operational information 
to a third-party LDC, especially where such information would promote 
reliable service or operational planning with regard to gas-fired 
generators located on an LDC's system.
---------------------------------------------------------------------------

    \132\ AGA Comments at 7, Duke Energy Comments at 3.
---------------------------------------------------------------------------

b. Commission Determination
    96. As stated above, the Commission adopts the No-Conduit Rule as 
set forth in the NOPR, without modification. The non-public, 
operational information permitted to be shared under this Final Rule 
could include the exchange of confidential generator information, and 
as explained below, the scope of the information allowed to be shared 
under this Final Rule warrants the restrictions in the No-Conduit Rule, 
as proposed.
    97. AGA, Duke Energy and Enable request exceptions to the third 
party restriction in the No-Conduit Rule. The Commission denies these 
requests. As stated earlier, the No-Conduit Rule does not prohibit 
transmission operators from sharing their own operational information 
with other interconnecting entities involved in ensuring the 
reliability of system operations, such as LDCs, intrastate pipelines or 
gathering facilities. The No-Conduit Rule only applies to the 
subsequent disclosure of non-public, operational information, including 
commercially sensitive, customer-specific information, received by an 
interstate natural gas pipeline or electric transmission operator under 
the rule and does not otherwise affect the ability of an interstate 
natural gas pipeline or electric transmission operator to exchange 
operational information about its own system with its customers/
stakeholders or members under the same rules and conditions as it 
currently does. Moreover, the information that may permissibly be 
shared under this rule is not limited to ``transmission function'' 
information covered under the Standards of Conduct. The scope of 
information that transmission operators may permissibly share under 
this rule is broader than transmission function information and, as a 
result therefore warrants the restriction on disclosure to third 
parties,

[[Page 70179]]

as well as marketing function employees, via the No-Conduit Rule.
    98. The Commission similarly denies NE Gas Industry's and INGAA's 
requests that, if the Commission does not eliminate the third-party 
prohibition, the Commission at least include an exception to permit 
sharing of non-public, operational information between all relevant 
industry participants during emergencies. We see little reason to 
create an emergency exception since, as we explained, the Final Rule 
does not otherwise affect the ability of an interstate natural gas 
pipeline or electric transmission operator to exchange operational 
information about its own system with its customers/stakeholders or 
members under the same rules and conditions as it is currently does, 
including during an emergency. In addition, the Commission clarifies 
that the proposed No-Conduit Rule does not prohibit, either during 
routine or emergency circumstances, electric transmission or interstate 
natural gas pipeline operators from jointly and simultaneously 
communicating non-public, operational transmission or transportation 
information (except for customer-specific information) with all market 
participants. Because such information is being shared 
contemporaneously with all market participants, it would not be 
considered non-public and its disclosure would not be unduly 
preferential or discriminatory. Undue discrimination concerns only 
arise when communications take place with some, but not all, market 
participants.
    99. Enable is concerned that the proposed No-Conduit Rule creates a 
new compliance issue for pipeline companies that have operational 
personnel who are involved in operational planning for an interstate 
pipeline and affiliated gathering facilities or intrastate pipelines. 
While the No-Conduit Rule would prohibit such disclosures to the 
employees shared with the affiliated gathering facilities or intrastate 
pipeline, we do not find that a broad exemption for communication of 
the non-public, operational information is warranted. To the extent 
that interstate natural gas pipelines share operational employees with 
LDCs or other affiliates, which makes compliance with the No-Conduit 
Rule difficult, the interstate natural gas pipelines can seek a waiver 
of this Final Rule's No-Conduit Rule.

III. Questions Posed by the Commission

A. Generator to Electric Transmission Operator Communications

1. NOPR
    100. In the NOPR, the Commission recognized that although the 
proposal applies only to communications between interstate natural gas 
pipelines and electric transmission operators, natural gas-fired 
generators may have relevant information regarding their own 
capabilities to acquire natural gas (or other fuels) not available to 
the interstate natural gas pipeline serving the generator.\133\ 
Therefore, the Commission sought comments on whether additional 
regulations were needed to require a generator to inform its electric 
transmission operator of the possibility its natural gas service may be 
disrupted. As an example, the Commission asked whether a generator 
should be required, at the request of the electric transmission 
operator, to provide its electric transmission operator with 
information pertaining to any communications received from an 
interstate natural gas pipeline regarding potential failures by the 
generator to conform to flow rates or nominations.
---------------------------------------------------------------------------

    \133\ NOPR, FERC Stats. & Regs. ] 32,699 at P 25 (cross-
referenced at 144 FERC ] 61,043).
---------------------------------------------------------------------------

2. Comments
    101. EEI, EPSA, MISO, MMWEC, NEPGA, NRECA, and PG&E believe that 
additional regulations requiring information sharing between generators 
and electric transmission operators are not necessary.\134\ On the 
other hand, the IRC, ISO-NE., NYISO, and NYPSC support additional 
regulations requiring generators to share information regarding their 
fuel status with an electric transmission operator.\135\ Likewise, in 
the absence of cooperative information sharing, APPA, MMWEC, NRECA and 
the NE Gas Industry believe that additional regulations should be 
implemented to ensure information sharing.\136\
---------------------------------------------------------------------------

    \134\ EEI Comments at 5-6; EPSA Comments at 4-5; MISO Comments 
at 4; MMWEC Comments at 4; NEPGA Comments at 4-5; NRECA Comments at 
8; PG&E Comments at 5.
    \135\ IRC Comments at 4, ISO-NE Comments at 8-9, NYISO Comments 
at 2; NYPSC Comments at 5. NYPSC states that if the Commission 
requires a generator to provide its electric transmission operator 
communications received from a natural gas pipeline, the NYPSC would 
also include communications from the LDC. NYPSC at 4-5.
    \136\ APPA Comments at 7, NRECA Comments at 8, NE Gas Industry 
Comments at 9; MMWEC at 4.
---------------------------------------------------------------------------

    102. Along the same lines, TVA and Ohio PUC believe that electric 
transmission operators should be allowed to require any critical 
information that may impact electric reliability.\137\
---------------------------------------------------------------------------

    \137\ TVA Comments at 3; Ohio PUC Comments at 7.
---------------------------------------------------------------------------

    103. In support of such a requirement, NYISO states that, while it 
expects that its generators will react to fuel availability concerns by 
derating their capacity when circumstances dictate, additional detailed 
information, particularly during cold weather events, is 
desirable.\138\ Similarly, ISO-NE states that although it often learns 
about gas interruptions only after a generator is offline, it 
understands that information regarding potential interruptions due to 
insufficient gas supply is available much earlier.\139\
---------------------------------------------------------------------------

    \138\ NYISO Comments at 4.
    \139\ ISO-NE Comments at 8-9.
---------------------------------------------------------------------------

    104. CAISO and EEI point out that some electric transmission 
operators already have the ability to work with their stakeholders and/
or to file tariff changes that may be necessary to require generators 
to provide this information.\140\ CAISO, EEI, EPSA, IRC, MISO, and 
NEPGA also point out that some electric transmission operators already 
require generators to share this type of information.\141\ EEI, for 
example, states that PJM Interconnection L.L.C. (PJM) already requires 
capacity resources to report fuel data to enable PJM to assist the 
market in providing solutions in emergency situations.\142\ NEPGA 
stated that, under the ISO-NE tariff, generators have an existing 
obligation to report to ISO-NE when they are unable to operate due to 
pipeline disruptions or otherwise.\143\ Similarly, MISO states that in 
its markets, generator owners and/or operators are required to notify 
MISO of anticipated fuel supply disruptions.\144\ CAISO states that its 
tariff currently requires generators to inform it of any change or 
potential change in the generators status, including any fuel supply 
concerns of which the generator is aware.\145\ EPSA asserts that each 
transmission operator already has rules regarding communication between 
the transmission operator and generators which obligates generators to 
provide the type of information discussed in the NOPR.\146\ IRC notes 
that providing electric transmission operators with timely information 
regarding a

[[Page 70180]]

generator's fuel status is consistent with existing reliability 
standards.\147\ CAISO states that, if the Commission adopts a 
regulation applicable to generators, it should apply that requirement 
across all fuel types.\148\
---------------------------------------------------------------------------

    \140\ EEI Comments at 5-6.
    \141\ EEI Comments at 5-6, EPSA Comments at 4; NEPGA Comments at 
4-5, MISO Comments at 4; CAISO Comments at 4.
    \142\ EEI Comments at 5 (citing PJM Manual 13, Emergency 
Operations, Section 6.4 Fuel Limitation Reporting. Effective date 
June 1, 2013).
    \143\ NEPGA Comments at 4.
    \144\ MISO Comments at 4.
    \145\ CAISO Comments at 4.
    \146\ EPSA Comments at 5.
    \147\ IRC Comments at n.7 (citing reliability standards EOP-001, 
EOP-004, IRO-010, and TOP-002).
    \148\ CAISO Comments at 4.
---------------------------------------------------------------------------

3. Commission Determination
    105. Based upon the comments received, the Commission finds that it 
is unnecessary in this proceeding to require a generator to notify its 
electric transmission operator that its natural gas service may be 
disrupted. However, to the extent they do not already exist, electric 
transmission operators may file tariff provisions pursuant to FPA 
section 205 to require generators to notify electric transmission 
operators of information they require to maintain reliable service, 
such as anticipated fuel supply disruptions. As noted by several 
commenters, some electric transmission operator tariffs require 
generators to notify electric transmission operators of anticipated 
fuel supply disruptions. While some entities would prefer that the 
Commission adopt generic regulations requiring the provision of this 
type of information from a generator to an electric transmission 
operator, those entities do not explain why current tariff requirements 
are, or new tariff requirements would be, inadequate. Consistent with 
the Final Rule, this approach would give electric transmission 
operators significant flexibility to determine what information they 
require from generators to promote reliable service on their systems.

B. Three-Way Communication of Non-Public Operational Information

1. NOPR
    106. In the NOPR, the Commission sought comments on whether the 
proposed rule should require transmission operators to include the 
customer as part of a three-way communication to the extent the non-
public, operational information exchanged between transmission 
operators involves customer-specific information (such as information 
about individual generators) and if so, how such a requirement could be 
implemented.\149\
---------------------------------------------------------------------------

    \149\ NOPR, FERC Stats. & Regs. ] 32,699 at P 25 (cross-
referenced at 144 FERC ] 61,043).
---------------------------------------------------------------------------

2. Comments
    107. Commenters were split on this issue, with slightly more 
commenters opposed to requiring three-way communications when customer-
specific information is shared. AEP, APPA, Duke, EEI, EPSA, MMWEC, 
NERC, NEGPA, and NRECA support requiring three-way communications,\150\ 
while CAISO, INGAA, ISO-NE, IRC, MISO, NE Gas Industry, NYISO, NYTO, 
PG&E and Washington Gas oppose such a requirement.\151\
---------------------------------------------------------------------------

    \150\ AEP Comments at 5-6; APPA Comments at 6-7; Duke Comments 
at 4; EEI Comments at 6; EPSA Comments at 6-7; MMWEC Comments at 5; 
NERC Comments at 8; NEGPA Comments at 5-6; NRECA Comments at 5-6.
    \151\ CAISO Comments at 4-5; INGAA Comments at 5; ISO-NE 
Comments at 9-10; IRC Comments at 5; MISO Comments at 4-5; NE 
Natural Gas Industry Comments at 9; NYISO Comments at 4; NYTO 
Comments at 8-9; PG&E Comments at 5-6, and Washington Gas Comments 
at 9.
---------------------------------------------------------------------------

    108. Many of the commenters that support such a requirement contend 
that including the relevant customer or generator would prove more 
efficient, as well as ensure the accuracy of the communications. NEPGA 
contends that generator access to these communications is vital to 
allow the generator to guarantee that the transmission operator does 
not take dispatch actions based on incomplete information held by 
either the interstate natural gas pipeline or electric transmission 
operator.\152\ EEI, for example, notes that a public utility would not 
know if a generator has back-up supply or other fuel arrangements 
without contacting the generator.\153\ NRECA states that involving 
individual customers could prove more efficient than excluding them 
from the sharing of their information because individual customers and 
generators can have information relevant to operations that 
transmission operators do not have or do not have available as early in 
time as the individual customers and generators.\154\ Duke and EPSA 
believe that, in the event transmission operators cannot contact the 
customer prior to sharing customer-specific information, the 
transmission operators must inform the generator of what information 
was shared so that the generator can respond to or correct any 
misinformation.\155\ AEP argues that a stakeholder's non-public data 
should only be shared with the explicit consent of that 
stakeholder.\156\
---------------------------------------------------------------------------

    \152\ NEPGA Comments at 5.
    \153\ EEI Comments at 6.
    \154\ NRECA Comments at 6.
    \155\ Duke Comments at 4; EPSA Comments at 6-7.
    \156\ AEP Comments at 5.
---------------------------------------------------------------------------

    109. Many of the commenters that oppose such a requirement maintain 
that requiring three-way communications would prove impracticable and 
hamper reliability. The IRC and ISO-NE express concern that including 
generators in the discussions with pipelines and electric transmission 
operators would be inappropriate and difficult to implement for real-
time operations when decisions need to be made quickly.\157\ The IRC 
and ISO-NE also state that gas and electric system contingencies 
usually affect multiple generators receiving gas from one interstate 
natural gas pipeline that are competitors with each other. They argue 
that it may not be practical in real-time to schedule separate 
discussions with each generator and to the extent discussions involved 
multiple generators, it would be inappropriate to discuss confidential, 
generator-specific information with other generators.\158\ INGAA and 
the NE Gas Industry believe that such a requirement would serve to 
limit conversations and have a chilling effect on communications the 
Commission intends to foster through the proposed regulations.\159\
---------------------------------------------------------------------------

    \157\ ISO-NE Comments at 9; IRC Comments at 5.
    \158\ ISO-NE Comments at 9-10; IRC Comments at 5.
    \159\ INGAA Comments at 5; NE Gas Industry Comments at 9.
---------------------------------------------------------------------------

    110. Likewise, PG&E states that its gas transmission operators 
already communicate daily with CAISO and incorporating every individual 
customer into these calls would be logistically difficult and hamper 
effective communications with CAISO.\160\ PG&E also asserts that such 
communications may be unnecessary, as their gas transmission operators 
already communicate daily with their generation customers and as a 
result, those customers are frequently informed regarding relevant non-
public, operational information.
---------------------------------------------------------------------------

    \160\ PG&E Comments at 5-6.
---------------------------------------------------------------------------

    111. The NYTOs are also concerned that such three-way conversations 
may unnecessarily result in the disclosure of market sensitive 
information to generators or fuel managers.\161\ Similarly, Washington 
Gas argues that the NOPR has not made a convincing case for giving one 
class of shipper preferential access to non-public pipeline information 
in a three-way meeting.\162\ Washington Gas argues that if a need 
exists for three-party communications, the pipeline could arrange ``all 
shipper'' meetings, which have been used for the release of critical 
information since open access and are often supplemented by handouts

[[Page 70181]]

simultaneously posted on electronic bulletin boards (EBBs).
---------------------------------------------------------------------------

    \161\ NYTOs Comments at 9.
    \162\ Washington Gas Comments at 9.
---------------------------------------------------------------------------

    112. Several commenters, including MISO, NYISO, NYTO, INGAA and NE 
Gas Industry, oppose a mandatory three-way communication rule but 
acknowledge the value of three-way communication in some situations and 
thus, support a permissive approach to three-way communications.\163\ 
For instance, the NYISO states that it may be appropriate to have 
three-way communications regarding the availability of gas transmission 
capability, particularly if the generator's dispatch is critical to 
reliability, but stresses that transmission operators need flexibility 
in deciding whether to include generators in different 
circumstances.\164\ The NYTOs believe that electric generators and 
their fuel managers are the sole source of reliable information about 
many fuel-related concerns and should be permitted to participate in 
three-way communications involving those concerns, especially during 
emergency conditions. However, the NYTOs state there is the potential 
for misuse of non-public, operational information to the extent it is 
shared as part of three-way communications since generators and their 
fuel managers are merchant entities in New York. Thus, the NYTOs 
maintain that the NOPR's proposed No-Conduit Rule should be extended to 
the generator and fuel manager in those instances and the Commission 
should clarify that the generator and fuel manager may not enter into 
unrelated transactions based upon such information.\165\ NE Gas 
Industry argues that generators should be included in broader industry 
communications in the event of an emergency.\166\ MISO suggests that, 
rather than require mandatory three-way communications, necessary 
information could be shared through alternate means such as through a 
designated representative or EBB.\167\ WGL suggests that rather than 
engage in three-way communications, all shippers could be given the 
opportunity to receive critical information simultaneously either by 
phone, webcast or in person.\168\
---------------------------------------------------------------------------

    \163\ NYISO Comments at 4; NE Gas Industry Comments at 9; NYTOs 
at 9; and INGAA Comments at 5.
    \164\ NYISO Comments at 4.
    \165\ NYTO Comments at 8-9.
    \166\ NE Gas Industry Comments at 9.
    \167\ MISO Comments at 5.
    \168\ WGL Comments at 9.
---------------------------------------------------------------------------

    113. Regarding implementation of a requirement for three-way 
communications, commenters suggest various approaches. EEI suggests 
that public utilities and pipelines should discuss with stakeholders 
the best way to enact such a requirement in the various regions.\169\ 
TVA suggests that NERC and NAESB standards could serve as 
implementation mechanisms with allowances for regional differences 
through organized market rules.\170\
---------------------------------------------------------------------------

    \169\ EEI Comments at 6.
    \170\ TVA Comments at 3.
---------------------------------------------------------------------------

    114. AEP recommends the use of three-party confidentiality 
agreements that include the electric generators, interstate natural gas 
pipelines and electric transmission operators or, in lieu of a 
confidentiality agreement, commercially sensitive data should be 
handled in a manner in which the generator is the central point of 
contact, i.e., only the generator would have ``all of the information 
regarding commercially sensitive fuel supply options, gas 
transportation contracts, power obligations, etc.'' \171\ NRECA 
suggests that either electric transmission operators have in place a 
non-disclosure agreement, through which customers could pre-approve 
timely sharing of their non-public information provided they are made 
aware of the disclosure within a reasonable period of time, or the 
adoption of notice provisions by electric transmission operators and 
pipelines, ``whereby disclosure will not be made until the customer is 
provided with notice and opportunity to oppose the release (e.g., 5 
days).'' \172\
---------------------------------------------------------------------------

    \171\ AEP Comments at 6.
    \172\ NRECA Comments at 5-6.
---------------------------------------------------------------------------

3. Commission Determination
    115. The Commission will not require three-way communications when 
customer-specific information is shared between electric transmission 
owners and interstate natural gas pipelines. The Commission is 
concerned that implementing such a requirement would prove 
impracticable and could discourage interstate natural gas pipelines and 
electric transmission operators from sharing valuable information. 
Moreover, the inclusion of the No-Conduit Rule in this Final Rule 
should ensure that any customer-specific information shared between 
transmission operators is not disclosed to other market participants, 
addressing many of the concerns of those commenters supporting a three-
way communication requirement.
    116. The Commission is also concerned that three-way communications 
conducted with one customer could result in the electric transmission 
operator or interstate natural gas pipeline inadvertently sharing non-
public, operational information with only that customer. Selectively 
sharing information with a limited class of shippers or market 
participants without a rational justification could be characterized as 
permitting a public utility or interstate natural gas pipeline to make 
or grant an undue preference. Further, as noted in the NOPR, 
transmission operators may always discuss customer-specific information 
with the relevant customer and transmission operators but cannot 
deviate from the terms of their tariffs and cannot operate in an unduly 
discriminatory manner.

C. Examples of Non-Public Operational Information

1. NOPR
    117. In the NOPR, the Commission stated that the term ``non-public, 
operational information'' is information that is not publicly posted, 
yet helps transmission operators to operate and maintain either a 
reliable pipeline system or a reliable electric transmission 
system.\173\ The Commission noted that non-public, operational 
information may also include generator, pipeline, or transmission-
specific information. The Commission further stated that, in using the 
term ``non-public, operational information,'' the Commission intended 
that transmission operators would be permitted to share information 
dealing with actual, anticipated, or potential effects on the ability 
to provide electric and gas service based on the respective operator's 
experience and understanding of the operational capability and customer 
demands on their respective systems.
---------------------------------------------------------------------------

    \173\ NOPR, FERC Stats. & Regs. ] 32,699 at P 23 (cross-
referenced at144 FERC ] 61,043).
---------------------------------------------------------------------------

    118. The Commission provided examples of the types of information 
that non-public, operational information could include, but emphasized 
in the NOPR that the Commission was not proposing a specific list of 
information that can be shared in order to provide flexibility to 
individual operators. Examples of such information included, but were 
not limited to, the following types of information:
     Real-time and anticipated system conditions that have or 
are anticipated to impact natural gas transportation by changing near 
term gas flows;
     Actual and anticipated electric service interruptions to 
gas compressor locations;
     Verification that there is sufficient pipeline operational 
capability available at a specific delivery point to change the 
quantity of natural gas delivered to the generator as identified by the 
electric transmission operator;

[[Page 70182]]

     Actual and projected gas transportation restrictions to 
electric generators;
     Real-time actual flow and operational capacity data at all 
receipt and delivery points; real-time pipeline pressure at all receipt 
and delivery points;
     Nominated and scheduled quantities of shippers who are or 
who supply gas-fired generators; and,
     scheduled dates and duration of generator, pipeline, and 
transmission maintenance and planned outages.
    The Commission sought comment on the specific categories of 
information identified.
2. Comments
    119. EEI, NERC, NYISO, CAISO, APPA and IRC support the examples of 
non-public, operational information provided in the NOPR.\174\ IRC 
states that, as a general matter, the more information that interstate 
natural gas pipelines can provide the electric transmission operator 
regarding pipeline system conditions, the better position the electric 
transmission operator will be in to use that information to address 
system contingencies.\175\ EEI states that the NOPR's general 
definition and examples of non-public, operational information provide 
sufficient guidance to public utilities and interstate natural gas 
pipelines as to the types of information that the Commission 
contemplates could be conveyed under the proposal.\176\
---------------------------------------------------------------------------

    \174\ EEI Comments at 4-5; NERC Comments at 7; NYISO Comments at 
3; CAISO Comments at 3; APPA Comments at 5; and IRC Comments at 3.
    \175\ IRC Comments at 3.
    \176\ EEI Comments at 4-5.
---------------------------------------------------------------------------

    120. Some commenters provide comments specific to the examples 
included in the NOPR and describe in detail the importance of 
particular categories of information for promoting reliable service or 
operational planning.\177\ Other commenters express concern with some 
of the examples of non-public, operational information provided in the 
NOPR.\178\ Some commenters also recommend that other types of 
information be shared in addition to the examples listed in the 
NOPR.\179\
---------------------------------------------------------------------------

    \177\ See e.g., ISO-NE Comments at 5-8; ITC Comments at 4; NERC 
Comments at 7; NYISO Comments at 3; ISO-NE Comments at 4-8; 
Washington Gas Comments at; and NGSA Comments at 6-7.
    \178\ See, e.g., NE Gas Industry Comments at 8; NGSA Comments at 
7.
    \179\ ITC Comments at 4; NYISO Comments at 3-4; NYPSC Comments 
at 6.
---------------------------------------------------------------------------

    121. A few commenters request clarification regarding the list of 
examples in the NOPR, or propose modifications to the list of examples 
in the NOPR.\180\ The NYTOs, for example, request that the Commission 
clarify that RTOs and ISOs are permitted to share unit-specific, 
generator dispatch schedules with interstate natural gas pipelines (and 
LDCs) for the purpose of promoting reliable service or operational 
planning, subject to the No-Conduit Rule.\181\ In addition, INGAA seeks 
further clarification regarding what non-public, operational 
information regarding future ``operational planning'' transmission 
operators may share under the proposed rule.\182\
---------------------------------------------------------------------------

    \180\ NERC Comments at 7; NYPSC Comments at 4.
    \181\ NYTOs Comments at 7-8.
    \182\ INGAA Comments at 4.
---------------------------------------------------------------------------

    122. Finally, PGC and Washington Gas state that many of the 
examples of information proposed to be shared between pipelines and 
transmission operators could be made public and shared with all market 
participants.\183\
---------------------------------------------------------------------------

    \183\ PGC Comments at 3 and 4; Washington Gas Comments at 2-4.
---------------------------------------------------------------------------

3. Commission Determination
    123. The Commission finds that the term ``non-public, operational 
information'' is sufficiently clear to describe the information that 
may be shared under this Final Rule. The examples provide guidance to 
public utilities and interstate natural gas pipelines as to the types 
of information that may be communicated under the rule. In general, we 
respond to comments regarding the specific list of examples provided in 
the NOPR with the guidance that we expect transmission operators to 
exchange that information which they find relevant to promote reliable 
service or operational planning on their systems. As explained in the 
NOPR, and reaffirmed here, the Commission is providing flexibility to 
transmission operators--who have the most insight and knowledge of 
their systems--to determine what non-public, operational information, 
if any, they deem valuable to maintain the reliability and integrity of 
their systems.
    124. Regarding concerns of onerous requests by one transmission 
operator to another, we reiterate that the communications permitted 
under the Final Rule are voluntary and to the extent a transmission 
operator chooses not to share the requested non-public, operational 
information, the transmission operator is free to do so. For example, 
the Commission does not anticipate that an interstate natural gas 
pipeline will automatically share with an electric transmission 
operator all of the pipeline's non-public operational information in 
its possession. Rather, the interstate natural gas pipeline will share 
non-public operational information as necessary to promote reliable 
service and operational planning.
    125. In response to PGC and Washington Gas, the Commission 
disagrees that the non-public, operational information transmission 
operators are permitted to share with one another should generally be 
made public. The Commission is providing explicit authority to 
transmission operators to exchange confidential and potentially 
commercially sensitive information, including generator-specific 
information, with one another for the purpose of promoting reliable 
service or operational planning. As discussed in more detail infra, the 
Commission is adopting a No-Conduit Rule due to concerns regarding the 
improper use of such information if disclosed to a third party or to a 
transmission operator's marketing function employees.

IV. Clarification Regarding Table-Top Exercises

A. NOPR

    126. In the NOPR, the Commission provided clarification of the 
applicability of the Standards of Conduct and statutory prohibition 
against undue discrimination to exchanges of information with regard to 
table-top exercises involving market affiliates of transmission 
providers and inter-industry participants.\184\ The Commission 
clarified that, under the Standards of Conduct, marketing function 
employees may participate in table-top exercises that include a wide 
range of industry participants who will have equal access to non-public 
transmission information. However, the Commission re-emphasized that 
non-public transmission information cannot be provided during private 
table-top exercises involving only the transmission provider and 
marketing function employees since they would receive preferential 
access to non-public transmission information or preferential access to 
transmission facilities.
---------------------------------------------------------------------------

    \184\ NOPR, FERC Stats. & Regs. ] 32,699 at PP 20-21 (cross-
referenced at 144 FERC ] 61,043).
---------------------------------------------------------------------------

B. Comments

    127. EEI and NGSA request that the Commission clarify the meaning 
of a ``tabletop exercise.'' \185\ EEI also requests that the Commission 
clarify that marketing function employees can continue to participate 
in these

[[Page 70183]]

exercises without violating the No-Conduit Rule in the NOPR.\186\ NGSA 
also requests that the Commission clarify that commercially sensitive 
information should not be disclosed at these events without consent of 
the relevant companies.\187\
---------------------------------------------------------------------------

    \185\ EEI Comments at 7; NGSA Comments at 11.
    \186\ EEI Comments at 7.
    \187\ NGSA Comments at 11.
---------------------------------------------------------------------------

C. Commission Determination

    128. As used in the NOPR, the term ``table-top exercise'' refers to 
an exercise used to assess inter- or intra-industry coordination and 
communications, usually during an emergency situation. For example, the 
NYTOs stated in earlier comments that the electric and gas industries 
in New York regularly participate in separate ``tabletop'' reliability 
drills. They stated that the NYISO and NYTOs conduct drills prior to 
each summer season to simulate the restoration of service after a gas 
supply-related outage and the Northeast Gas Association holds annual 
emergency communications exercises among gas utilities and interstate 
pipelines serving the northeast that simulate conditions following 
major system emergencies.\188\
---------------------------------------------------------------------------

    \188\ NYTOs Comments, Docket No. AD12-12-000, at 5 (filed Jan. 
7, 2013).
---------------------------------------------------------------------------

    129. As requested by EEI, we clarify that under the Standards of 
Conduct and under the Final Rule, marketing function employees may 
participate in table-top exercises that include a wide range of 
industry participants who will have equal access to non-public 
transmission or operational information. However, non-public 
transmission or operational information cannot be provided during 
private table-top exercises involving only the transmission provider or 
operator and marketing function employees since they would receive 
preferential access to non-public transmission or operational 
information or preferential access to transmission facilities.
    130. The Commission also clarifies that, under the Standards of 
Conduct and the Final Rule, the disclosure of commercially sensitive, 
customer-specific information at these events is not permitted without 
the consent of the relevant entities.

V. Miscellaneous

A. Monitoring, Existing Tariff Requirements, Document Destruction

1. Comments
    131. AEP requests that the Commission designate an entity to ensure 
that reliability and market protections are in place because of the 
potential for disagreement between the two industries with regard to 
confidential information sharing.\189\
---------------------------------------------------------------------------

    \189\ AEP Comments at 7.
---------------------------------------------------------------------------

    132. NRECA states that the Commission should maintain in the Final 
Rule the explicit requirement that ``to the extent that an electric 
transmission operator or interstate natural gas pipeline has a tariff 
provision which precludes a communication that would otherwise be 
authorized under the proposed regulations, it [must] make a filing 
under the FPA or NGA to revise that provision to permit such exchanges 
of information.'' \190\ However, NRECA states that the Commission 
should clarify that to the extent market participants' confidential 
information is required by tariff to be protected from public 
disclosure, the Final Rule in this proceeding cannot be deemed to 
supersede those tariff provisions.\191\ NRECA states that in addition 
to protecting against disclosure of confidential information which is 
subject to existing tariff provisions, the Final Rule should also 
provide assurance that existing notice provisions regarding disclosure 
of confidential information will be followed for sharing of non-pubic 
operational information.\192\ NRECA states that the Final Rule should 
adopt the Commission's proposal to clarify that existing tariffs must 
be complied with absent a Commission-approved revision.
---------------------------------------------------------------------------

    \190\ NRECA Comments at 5 (citing NOPR, FERC Stats. & Regs. ] 
32,699 at P 10 (cross-referenced at 144 FERC ] 61,043).
    \191\ NRECA provides as an example PJM's Amended and Restated 
Operating Agreement which prohibits disclosure of confidential 
information except in defined circumstances, including to NERC and 
applicable regional entities for reliability.
    \192\ NRECA states that PJM's Operating Agreement requires 
notice to the affected Member before PJM can make any disclosure of 
confidential information if required by law.
---------------------------------------------------------------------------

    133. NEPGA asserts that the Commission should establish rules for 
the destruction or return of written or recorded information within six 
months to protect generators' commercial interests.\193\ NEPGA contends 
that this requirement is an important protection against the 
potentially harmful effects of the distribution of generator-specific, 
commercially sensitive information.
---------------------------------------------------------------------------

    \193\ NEPGA Comments at 3-4.
---------------------------------------------------------------------------

2. Commission Determination
    134. In response to AEP, the Commission reaffirms that the 
communications permitted under the Final Rule are voluntary and that to 
the extent a transmission operator chooses not to share the requested 
non-public, operational information, the transmission operator is free 
to do so. To the extent this voluntary approach proves inadequate to 
promote reliable service or operational planning, the Commission may 
revisit the need to require certain communications or information 
sharing between transmission operators in the future. However, the 
Commission finds that providing explicit authority to transmission 
operators--who have the most insight and knowledge of their systems--to 
share non-public, operational information with each other will promote 
reliable service or operational planning on both the public utility's 
and pipeline's system. Furthermore, the Commission declines to adopt 
AEP's proposal to designate an entity to supervise interstate natural 
gas pipeline-electric transmission operator communications. We see no 
need for such supervision of this voluntary information sharing program 
at this time. With regard to requests for added market protections, as 
discussed above, we conclude that the No-Conduit Rule, together with 
the requirements that natural gas pipelines and electric transmission 
operators abide by their tariffs, provides a reasonable balance between 
the exchange of important information and protection against the 
disclosure of non-public operational information, including 
confidential information.
    135. In response to NRECA's comments regarding the relationship of 
this Final Rule to existing tariff provisions, we note that this Final 
Rule does not supersede any existing tariff provisions.\194\ Thus, to 
the extent an electric transmission operator or interstate natural gas 
pipeline has an existing tariff provision that precludes a 
communication that would otherwise be authorized under the regulations 
adopted here, before it may share such precluded information under the 
express authorization provided in this Final Rule, it must make a 
filing under the FPA or NGA to revise that provision to permit such 
exchanges of information. In short, if a transmission operator wants to 
take advantage of the explicit authority provided by the Commission 
under the Final Rule, and that transmission operator has tariff 
provisions prohibiting the communications permitted under this rule, it 
must make a filing with the Commission to revise the relevant tariff 
provisions to permit such exchanges of information. Similarly, we 
clarify that any existing tariff provisions requiring

[[Page 70184]]

notice regarding the disclosure of confidential information, including 
the non-public, operational information at issue here, remain in place 
unless proposed revisions to those tariffs are approved by the 
Commission.
---------------------------------------------------------------------------

    \194\ Regulation of Short-Term Natural Gas Transportation 
Services, and Regulation of Interstate Natural Gas Transportation 
Services, 101 FERC ] 61,127, at P 36 (2002).
---------------------------------------------------------------------------

    136. In response to NEPGA, the Commission declines to generically 
establish rules for the destruction or return of written or recorded 
information within six months to protect generator's commercial 
interests. As discussed previously, the Commission is adopting a No-
Conduit Rule which, together with the requirements that natural gas 
pipelines and electric transmission operators abide by their tariffs, 
should adequately protect against the harmful disclosure or 
distribution of non-public operational information, including 
generator-specific, commercially sensitive information.

B. Costs of Information Sharing

1. Comments
    137. ELCON suggests that Commission require natural gas pipelines 
and electric transmission operators to account for the costs of 
information sharing.\195\ ELCON requests that the Commission direct 
natural gas pipelines and electric transmission operators to not incur 
costs that are not commensurate with an identified benefit. ELCON 
suggests that the NOPR's flexibility and non-binding examples of 
information sharing raise the specter that the Commission contemplates 
implementation of extensive information sharing systems whose costs 
outweigh the benefits to system reliability and contingency planning. 
ELCON requests that the Commission explicitly state that it is not 
intending to encourage the development and implementation of 
information sharing systems whose costs are not commensurate with their 
benefits.\196\
---------------------------------------------------------------------------

    \195\ ELCON Comments at 2-3.
    \196\ Id.
---------------------------------------------------------------------------

2. Commission Determination
    138. The Commission finds that ELCON's request for transmission 
operators to account for the costs of information sharing are premature 
and outside the scope of this Final Rule. In this Final Rule, the 
Commission is providing explicit authority for transmission operators 
to share non-public, operational information with each other for the 
purpose of promoting reliable service or operational planning. In 
addition, the Commission reiterates that in adopting the proposed 
regulations, the Commission is providing flexibility to individual 
transmission operators--who have the most insight and knowledge of 
their systems--to share that information which they deem necessary to 
promote reliable service and operational planning on their system. 
Issues related to the costs of systems or procedures developed to allow 
for the information sharing permitted by this Final Rule may be 
appropriately raised in other proceedings, including transmission 
operators' rate cases.

C. Implementation

1. Comments
    139. NGSA suggests that the Commission implement its proposed rule 
on an interim basis and reassess the impacts of allowing the proposed 
communication between utilities after some experience under the new 
communications regime. NGSA states that this approach would be similar 
to past rulemaking proceedings such as the natural gas capacity release 
rulemaking.\197\ NGSA proposes that after an interim period of one 
year, transmission operators should report to the Commission what 
information was shared and how this information sharing promoted 
reliable service or operational planning.\198\ NGSA suggests that the 
information would need to be provided in a manner that protects 
confidential or proprietary data. After the interim period, 
transmission operators would also report what actions were taken based 
on information exchanges to allow the Commission to more accurately 
assess the benefits of increased communications. NGSA also suggests 
that the Commission release a report summarizing the impacts of this 
information sharing rule and hold a technical conference for industry 
to assess the impacts of the rule. NGSA states that at the technical 
conference, the Commission and industry should assess whether: (1) The 
scope of allowed communications should be narrowe; (2) additional 
protections are needed to ensure commercially sensitive information is 
not released; and (3) transmission operators should be required to 
publicly post shared information that is not commercially 
sensitive.\199\
---------------------------------------------------------------------------

    \197\ NGSA Comments at 9-10 (citing Regulation of Short-Term 
Natural Gas Transportation Services and Regulation of Interstate 
Natural Gas Transportation Services, Order No. 637, FERC Stats. & 
Regs. ] 31,091 (2000) (cross-referenced at 90 FERC ] 61,109 
(2000))).
    \198\ Id. at 10.
    \199\ Id. at 10-11.
---------------------------------------------------------------------------

    140. NGSA suggests that the assessment and technical conference 
would allow the Commission to determine whether further improvements to 
the communications rules are needed. After receiving reports from 
transmission operators and pipelines, the Commission could consider 
whether some publicly available and not commercially sensitive 
communications should be publicly posted, for example, on a pipeline 
EBB. NGSA contends that the Commission could also determine whether 
market participants' information is sufficiently protected under the 
proposed rule. NGSA suggests that requiring pipelines and transmission 
operators to report what information they communicated during an 
interim test period will allow the Commission and industry to determine 
what additional protections might be needed. NGSA suggests that market 
participants would have greater confidence in expanded communications 
knowing that there would be an opportunity to learn what information 
was shared and that the Commission would make changes to the rule if 
needed.\200\
---------------------------------------------------------------------------

    \200\ NGSA Comments at 11.

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

[[Page 70185]]

    141. NRECA suggests that the Commission require ``status report'' 
filings by transmission operators to explain progress made in the 
sharing of non-public, operational information.\201\ NRECA states that 
the reports could be part of a comprehensive submission to be submitted 
at regular intervals (e.g., quarterly or semi-annually), similar to the 
reports required by RTOs and ISOs on gas-electric coordination issues, 
or could focus only on implementation of the Final Rule in this 
proceeding. Either way, NRECA suggests that the Final Rule include a 
mechanism for the Commission to gauge response and outcome of the Final 
Rule, and its impact on gas-electric coordination efforts.\202\
---------------------------------------------------------------------------

    \201\ NRECA Comments at 5.
    \202\ Id.
---------------------------------------------------------------------------

    142. APPA suggests that, after a period of time, the Commission 
could revisit its revised regulations in this area to determine whether 
it needs to further define the term ``non-public, operational 
information'' and to evaluate how the voluntary approach is 
working.\203\ PUCO also states that it would be appropriate for the 
Commission to periodically review which non-public information is 
shared and whether that exchange of information is adequate to maintain 
reliability.\204\ PUCO further states that because different regions 
will have diverse practices concerning the level and type of non-public 
information shared, the Commission should use the collection of such 
data to arrive at a proposed best practices solution that is most 
effective to ensure efficient operations and to promote reliability. 
NESCOE also encourages the Commission to undertake periodic assessments 
of the efficacy of the changes made in the Final Rule, the extent to 
which impediments to communications and information sharing remain, and 
consider additional actions if needed. \205\
---------------------------------------------------------------------------

    \203\ APPA Comment at 5.
    \204\ PUCO Comments at 6.
    \205\ NESCOE Comments at 6.
---------------------------------------------------------------------------

2. Commission Determination
    143. The Commission will not adopt NGSA's suggestion of 
implementing the proposed rule on an interim basis. The Commission is 
concerned that existing barriers--real or perceived--to the sharing of 
non-public, operational information could impede transmission 
operators' ability to reliably manage the operation of interstate 
natural gas pipeline and electric transmission systems. Therefore, the 
Commission is taking action to ensure that transmission operators 
covered by this rule may communicate non-public, operational 
information, subject to the No-Conduit Rule.
    144. The Commission declines to adopt the suggestion of NRECA, 
APPA, PUCO and NESCO that transmission operators submit status report 
filings describing progress made in the sharing of non-public, 
operational information. We fully expect market participants in both 
industries, as they experience the communications contemplated by this 
Final Rule, to keep the Commission informed about progress, issues and 
areas of possible improvement. We see no reason to impose a requirement 
for status reports at this time.

VI. Information Collection Statement

    145. The collection of information contained in this Final Rule is 
being submitted to the Office of Management and Budget (OMB) for review 
under Section 3507(d) of the Paperwork Reduction Act of 1995 
(PRA).\206\ OMB's regulations require approval of certain information 
collection requirements imposed by agency rule.\207\ Upon approval of a 
collection of information, OMB will assign an OMB control number and an 
expiration date. Respondents subject to the filing requirements of a 
rule will not be penalized for failing to respond to this collection of 
information if the collection of information does not display a valid 
OMB control number.
---------------------------------------------------------------------------

    \206\ 44 U.S.C. 3507(d) (2012).
    \207\ 5 CFR 1320.
---------------------------------------------------------------------------

    146. Public Reporting Burden: The communications and information 
sharing (described in new 18 CFR 38.2 and 18 CFR 284.12(b)(4)) are 
voluntary, take place between various industry entities (and are not 
submitted to the Commission), and are intended to promote reliable 
service or operational planning. In the NOPR, the Commission solicited 
comments on the need for this information and the frequency of 
providing it (number of responses per respondent). No filed comments 
addressed the proposed Information Collection Statement, including the 
estimated public reporting burden, or the proposed Regulatory 
Flexibility Act Certification, including the estimated impact on small 
entities. Commenters acknowledged that reliability and operational 
planning on interstate natural gas pipelines and electric transmission 
systems could be further enhanced by information sharing. While the 
extent of such communications likely will vary significantly across the 
country, the annual estimates represent an expected average and reflect 
the burden for operational planning and emergencies.
    147. In the Final Rule, the Commission explains that to the extent 
an electric transmission operator or interstate natural gas pipeline 
has a tariff provision which precludes a communication that would 
otherwise be authorized under the proposed regulations, it must make a 
filing under section 205 of the FPA or section 4 of the NGA to revise 
that provision to permit such exchanges of information.
    148. The reporting requirements in the Final Rule include: the 
voluntary communication of non-public, operational information among 
interstate natural gas pipelines and electric transmission operators, 
and possibly necessary tariff filings by electric transmission 
operators and natural gas pipelines. The additional estimated annual 
burden and cost follow.

[[Page 70186]]

 FERC-923, Communication of Operational Information Between Natural Gas Pipelines and Electric Transmission Operators, Final Rule in Docket No. RM13-17
                                                                          \208\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Number of        Number of      Average burden    Total annual     Total annual
                        Type of entity  (1)                            respondents     responses per      hours per       burden hours   cost ($) (5)*($/
                                                                           (2)        respondent  (3)   response  (4)   (2)*(3)*(4)=(5)   hr)=(6) \209\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Utility Transmission Operator, communications...............        \210\ 167         \211\ 12             0.50             1002          $60,531
Interstate Natural Gas Pipelines, communications...................        \212\ 137               12             0.50              822           49,657
Public Utility Transmission Operator (tariff change)...............          \213\ 4                2          \214\ 8               64            2,832
Interstate Natural Gas Pipelines (tariff change)...................          \215\ 4                1          \216\ 8               32            1,416
                                                                    ------------------------------------------------------------------------------------
    Total..........................................................  ...............  ...............  ...............            1,920          114,436
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Title: FERC-923, ``Communication of Operational Information between 
Natural Gas Pipelines, and Electric Transmission Operators.''
---------------------------------------------------------------------------

    \208\ Columns 5 and 6 are rounded.
    \209\ For communications, the estimated hourly cost (for salary 
plus benefits) is $60.41; estimated annual costs are $125,647 (based 
on 2,080 hours per year). It is based on data from the Bureau of 
Labor Statistics Occupational Outlook Handbook, 2012-2013 edition 
for the top 10% of ``Power Plant Operators, Distributors, and 
Dispatchers'' (at http://www.bls.gov/ooh/).
    For tariff filings, the average hourly cost (for salary plus 
benefits) is $44.25. This hourly estimate will be used for public 
utility transmission operators and interstate natural gas pipelines. 
It is based on data provided by the Bureau of Labor Statistics 
Occupational Outlook Handbook, 2012--2013 edition for the median for 
``Lawyers,'' ``Paralegal and Legal Assistants,'' and ``Secretaries 
and Administrative Support'' (at http://www.bls.gov/ooh/). The 
estimated annual costs (salary plus benefits) for Lawyers, Paralegal 
and Legal Assistance, and Secretaries and Administrative Support are 
$160,398, $66,401, and $49,303, respectively. The hourly cost (based 
on 2080 hours per year) is $77.11, $31.92 and $23.70 for the three 
occupations, respectively.
    For the estimate of the benefits component, see http://www.bls.gov/news.release/ecec.nr0.htm.
    \210\ The estimate for the number of respondents is based on the 
North American Electric Reliability Corporation (NERC) Compliance 
Registry as of April 30, 2013, minus the Transmission Operators 
within ERCOT. Using the Small Business Administration (SBA) 
definition, 31 of the 167 Public Utility Transmission Operators are 
considered ``small.''
    \211\ The Commission estimates an annual average per entity of 
12 responses (including electric and gas emergency and/or 
operational contacts).
    \212\ The 2012 filings of the FERC Forms 2 and 2A indicated that 
there are 137 interstate natural gas pipelines. Of those pipelines, 
eight (8) are considered small using the definition of the Small 
Business Administration (at 13 CFR 121.301), including the 
affiliates.
    \213\ Of the 167 Public Utility Transmission Operators, the 
Commission estimates that four will make tariff filings.
    \214\ The Commission estimates that the public utility 
transmission operator will require eight work hours to file the 
amendment to the tariff from a team that consists of a ``Lawyer,'' a 
``Paralegal and Legal Assistant,'' and a ``Secretary and 
Administrative Support.''
    \215\ Of the 137 interstate natural gas pipelines, the 
Commission estimates that four will make tariff filings.
    \216\ The Commission estimates that an interstate natural gas 
pipeline will require eight work hours to file the amendment to the 
tariff from a team that consists of a ``Lawyer,'' a ``Paralegal and 
Legal Assistant,'' and a ``Secretary and Administrative Support.''
---------------------------------------------------------------------------

    Action: Proposed FERC-923.
    OMB Control Nos.: 1902-0265 (FERC-923).
    Respondents: Public utility transmission operators and interstate 
natural gas pipelines.
    Frequency of Responses: FERC-923, as needed.
    Necessity of the Information: In this Final Rule, the Commission is 
revising Parts 38 and 284 of the Commission's regulations to authorize 
interstate natural gas pipelines and public utilities that own, 
operate, or control facilities used for the transmission of electric 
energy in interstate commerce to share non-public, operational 
information for the purpose of promoting reliable service and 
operational planning on either the public utility's or pipeline's 
system. Such sharing is voluntary.
    149. The revised regulations will help promote the reliability of 
pipeline and public utility transmission service by permitting 
transmission operators to share information that they deem necessary to 
promote the reliability and integrity of their systems with each other.
    150. Internal Review: The Commission has reviewed the requirements 
and determined that the proposed amendments are necessary. These 
requirements conform to the Commission's need for efficient information 
collection, communication, and management within the energy industry. 
The Commission has assured itself, by means of internal review, that 
there is specific, objective support for the burden estimates 
associated with the information collection requirements. Interested 
persons may obtain information on the reporting requirements by 
contacting the following: Federal Energy Regulatory Commission, 888 
First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office 
of the Executive Director, email: DataClearance@ferc.gov, phone: (202) 
502-8663, fax: (202) 273-0873].
    151. Please send comments concerning the collection of information 
and the associated burden estimates to the Commission, and to the 
Office of Management and Budget, Office of Information and Regulatory 
Affairs, Washington, DC 20503 [Attention: Desk Officer for the Federal 
Energy Regulatory Commission, phone: (202) 395-4638, fax: (202) 395-
7285]. For security reasons, comments to OMB should be submitted by 
email to: oira_submission@omb.eop.gov. Comments submitted to OMB 
should include Docket Number RM13-17-000, FERC-923 (OMB Control No. 
1902-0268).

VII. Environmental Analysis

    152. 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.\217\ The 
Commission concludes that neither an Environmental Assessment nor an 
Environmental Impact Statement is required for this Final Rule under 
section 380.4(a)(2)(ii) of the Commission's regulations, which provides 
a categorical exemption for proposals for legislation and promulgation 
of rules that are clarifying, corrective, or procedural, or that do not 
substantively change the effect of legislation or regulations being 
amended.\218\
---------------------------------------------------------------------------

    \217\ 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).
    \218\ 18 CFR 380.4(a)(2)(ii) (2013).
---------------------------------------------------------------------------

VIII. Regulatory Flexibility Act

    153. The Regulatory Flexibility Act of 1980 (RFA) \219\ generally 
requires a description and analysis of rules that will have significant 
economic impact on a substantial number of small entities. The RFA 
mandates

[[Page 70187]]

consideration of regulatory alternatives that accomplish the stated 
objectives of a rule and that minimize any significant economic impact 
on a substantial number of small entities. The Small Business 
Administration's (SBA's) Office of Size Standards develops the 
numerical definition of a small business.\220\ The SBA has established 
a size standard, for electric utilities, electric power distribution, 
and electric bulk power transmission and control, stating that a firm 
is small if, including its affiliates, it is primarily engaged in the 
transmission, generation and/or distribution of electric energy for 
sale and its total electric output for the preceding fiscal year did 
not exceed four million megawatt hours.\221\ For pipeline 
transportation of natural gas, the SBA defines a small entity as having 
a maximum annual receipt of $25.5 million dollars.\222\ For a ``Natural 
Gas Distribution'' company, the SBA defines a small entity as having 
less than 500 employees.\223\
---------------------------------------------------------------------------

    \219\ 5 U.S.C. 601-612 (2012).
    \220\ 13 CFR 121.101 (2012).
    \221\ 13 CFR 121.201, Sector 22, Subsector 221, Utilities & n.1.
    \222\ Based on 13 CFR 121.201, Sectors 48-49, Subsector 486, 
Pipeline Transportation, the annual receipts indicate the maximum 
allowed for a concern and its affiliates to be considered ``small.''
    \223\ 13 CFR 121.201, Sector 22, Subsector 221, Utilities, NAICS 
code 221210.
---------------------------------------------------------------------------

    154. The Commission estimates a total of 39 ``small'' entities 
\224\ (or 12.8 percent of the total of 304 entities), and an average 
annual cost for each entity of $376.\225\ This proposal will enable 
entities of all sizes to communicate voluntarily and to share non-
public, operational information for the purpose of promoting reliable 
service or operational planning, thereby easing and improving the 
normal business process. Accordingly, the Commission certifies that 
this rule will not have a significant impact on a substantial number of 
small entities and no regulatory flexibility analysis is required.
---------------------------------------------------------------------------

    \224\ Based on the SBA definitions and including affiliates, the 
number of ``small'' entities is estimated to be: (1) for public 
utility transmission operators, 31 small public utilities; and (2) 
for interstate natural gas pipelines, eight small interstate natural 
gas pipelines.
    \225\ The information sharing and communications permitted in 
this Final Rule are voluntary. For small entities which do not serve 
or take service from natural gas-fired electric generators, no such 
communications are necessary or required and their burden will 
effectively be zero. For small entities which do not wish to 
participate in communications among transmission operators serving 
or being served by natural gas-fired electric generators, their 
burden is also zero.
---------------------------------------------------------------------------

IX. Document Availability

    155. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5:00 
p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 
20426.
    156. 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.
    157. 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 email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

X. Effective Date and Congressional Notification

    158. These regulations are effective December 23, 2013. The 
incorporation by reference of certain publications in this rule is 
approved by the Director of the Federal Register as of December 23, 
2013. The Commission has determined, with the concurrence of the 
Administrator of the Office of Information and Regulatory Affairs of 
OMB, that this rule is not a ``major rule'' as defined in section 351 
of the Small Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects

18 CFR Part 38

    Conflict of interests, Electric power plants, Electric utilities, 
Incorporation by reference, Reporting and recordkeeping requirements.

18 CFR Part 284

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    In consideration of the foregoing, the Commission amends Part 38 
and Part 284, Chapter I, Title 18, Code of Federal Regulations, as 
follows:

PART 38--STANDARDS FOR PUBLIC UTILITY BUSINESS OPERATIONS AND 
COMMUNICATIONS

0
1. The authority citation for Part 38 continues to read as follows:

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

0
2. The heading of Part 38 is revised to read as set forth above:

Sec.  38.1  [Removed]

0
3. Remove Sec.  38.1.

Sec.  38.2  [Redesignated as Sec.  38.1]

0
4. Redesignate Sec.  38.2 as Sec.  38.1

0
5. In newly redesignated Sec.  38.1, paragraph (a) is revised to read 
as follows:

Sec.  38.1  Incorporation by reference of North American Energy 
Standards Board Wholesale Electric Quadrant standards.

    (a) Any public utility that owns, operates, or controls facilities 
used for the transmission of electric energy in interstate commerce or 
for the sale of electric energy at wholesale in interstate commerce and 
any non-public utility that seeks voluntary compliance with 
jurisdictional transmission tariff reciprocity conditions must comply 
with the following business practice and electronic communication 
standards promulgated by the North American Energy Standards Board 
Wholesale Electric Quadrant, which are incorporated herein by 
reference:
* * * * *

0
6. New Sec.  38.2 is added to read as follows:

Sec.  38.2  Communication and information sharing among public 
utilities and pipelines.

    (a) Any public utility that owns, operates, or controls facilities 
used for the transmission of electric energy in interstate commerce is 
authorized to share non-public, operational information with a 
pipeline, as defined in Sec.  284.12(b)(4) of this chapter, or another 
public utility covered by this section for the purpose of promoting 
reliable service or operational planning.
    (b) Except as permitted in paragraph (a) of this section, a public 
utility, as defined in this section, and its employees, contractors, 
consultants, and agents are prohibited from disclosing, or using anyone 
as a conduit for the disclosure of, non-public, operational information 
received from a pipeline pursuant to Sec.  284.12(b)(4) of this chapter 
to a third party or to its marketing function employees as that term is 
defined in Sec.  358.3(d) of this chapter.

[[Page 70188]]

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

0
7. The authority citation for Part 284 continues to read as follows:

    Authority:  15 U.S.C. 717-717z, 3301-3432; 42 U.S.C. 7101-7352; 
43 U.S.C. 1331-1356.
0
8. In Sec.  284.12, paragraph (b)(4) is added to read as follows:

Sec.  284.12  Standards for pipeline business operations and 
communications.

* * * * *
    (b) * * *
    (4) Communication and information sharing among pipelines and 
public utilities. (i) A pipeline is authorized to share non-public, 
operational information with a public utility, as defined in Sec.  
38.2(a) of this chapter or another pipeline covered by this section, 
for the purpose of promoting reliable service or operational planning.
    (ii) Except as permitted in paragraph (b)(4)(i) of this section, a 
pipeline and its employees, contractors, consultants, and agents are 
prohibited from disclosing, or using anyone as a conduit for the 
disclosure of, non-public, operational information received from a 
public utility pursuant to Sec.  38.2 of this chapter to a third party 
or to its marketing function employees as that term is defined in Sec.  
358.3(d) of this chapter.

[FR Doc. 2013-28078 Filed 11-21-13; 8:45 am]
BILLING CODE 6717-01-P