Document ID: FERC-2009-1609-0001
Agency: ferc
Document Type: Rule
Title: Standards of Conduct for Transmission Providers
Posted Date: 2009-10-22T04:00Z

[Federal Register: October 22, 2009 (Volume 74, Number 203)]
[Rules and Regulations]               
[Page 54463-54482]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22oc09-7]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 358

[Docket No. RM07-1-001; Order No. 717-A]

 
Standards of Conduct for Transmission Providers

Issued October 15, 2009.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule; order on rehearing and clarification.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) 
generally reaffirms its determinations in Order No. 717, but grants 
rehearing on and clarifies certain provisions. Order No. 717-A aims to 
make the Standards of Conduct clearer and to refocus the rules on the 
areas where there is the greatest potential for abuse. The order 
addresses requests for rehearing and clarification of the following 
issues: Applicability of the Standards of Conduct to transmission 
owners with no marketing affiliate transactions; whether the 
Independent Functioning Rule applies to balancing authority employees; 
which activities of transmission function employees or marketing 
function employees are subject to the Independent Functioning Rule; 
whether local distribution companies making off-system sales on 
nonaffiliated pipelines are subject to the Standards of Conduct; 
whether the Standards of Conduct apply to a pipeline's sale of its own 
production; applicability of the Standards of Conduct to asset 
management agreements; whether incidental purchases to remain in 
balance or sales of unneeded gas supply subject the company to the 
Standards of Conduct; applicability of the No Conduit Rule to certain 
situations; and applicability of the Transparency Rule to certain 
situations.

DATES: Effective Date: This rule will become effective November 23, 
2009.

FOR FURTHER INFORMATION CONTACT: Leonard Tao, Office of the General 
Counsel--Energy Markets, Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426, (202) 502-8214.

SUPPLEMENTARY INFORMATION:

[[Page 54464]]

                            Table of Contents

                                                              Paragraph
                                                                 Nos.

I. Introduction............................................            1
II. Background.............................................            2
III. Discussion............................................            6
    A. Jurisdiction and Applicability of the Standards:                6
     Applicability to Transmission Providers With No
     Marketing Affiliate Transactions......................
    B. Independent Functioning Rule........................           19
        1. Transmission Function...........................           22
        2. Transmission Function Employees.................           25
        3. Marketing Functions.............................           28
            a. Electric Industry...........................           30
            b. Natural Gas Industry........................           41
                (i) Off-System Sales by LDCs...............           42
                (ii) Sales From Own Production.............           50
                (iii) Asset Management Agreements..........           60
                (iv) Balancing.............................           64
                (v) Other..................................           70
        4. Marketing Function Employees....................           77
        5. Long-Range Planning, Procurement and Other                 84
         Interactions......................................
    C. The No Conduit Rule.................................           93
    D. Transparency Rule...................................           99
    E. Other Definitions--Transmission Function Information          126
    F. Training Requirements...............................          137
    G. Miscellaneous Matters...............................          143
IV. Document Availability..................................          151
V. Effective Date..........................................          154

Before Commissioners: Jon Wellinghoff, Chairman; Suedeen G. Kelly, 
Marc Spitzer, and Philip D. Moeller.

I. Introduction

    1. On October 16, 2008, the Commission issued Order No. 717 
amending the Standards of Conduct for Transmission Providers (the 
Standards of Conduct or the Standards) to make them clearer and to 
refocus the rules on the areas where there is the greatest potential 
for abuse.\1\ In this order, the Commission addresses requests for 
rehearing and clarification of Order No. 717.
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    \1\ Standards of Conduct for Transmission Providers, Order No. 
717, 73 FR 63796 (Oct. 27, 2008), FERC Stats. & Regs. ] 31,280 
(2008) (Order No. 717).
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II. Background

    2. The Commission first adopted the Standards of Conduct in 1988, 
in Order No. 497.\2\ The Commission adopted similar Standards for the 
electric industry in 1996, in Order No. 889,\3\ prohibiting public 
utilities from giving undue preferences to their marketing affiliates 
or wholesale merchant functions. Both the electric and gas Standards 
sought to deter undue preferences by (i) separating a transmission 
provider's employees engaged in transmission services from those 
engaged in its marketing services, and (ii) requiring that all 
transmission customers, affiliated and non-affiliated, be treated on a 
non-discriminatory basis.
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    \2\ Inquiry Into Alleged Anticompetitive Practices Related to 
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR 
22139 (Jun. 14, 1988), FERC Stats. & Regs., Regulations Preambles 
1986-1990 ] 30,820 (1988); Order No. 497-A, order on rehearing, 54 
FR 52781 (Dec. 22, 1989), FERC Stats. & Regs., Regulations Preambles 
1986-1990 ] 30,868 (1989); Order No. 497-B, order extending sunset 
date, 55 FR 53291 (Dec. 28, 1990), FERC Stats. & Regs., Regulations 
Preambles 1986-1990 ] 30,908 (1990); Order No. 497-C, order 
extending sunset date, 57 FR 9 (Jan. 2, 1992), FERC Stats. & Regs., 
Regulations Preambles January 1991-June 1996 ] 30,934 (1991), 
rehearing denied, 57 FR 5815 (Feb. 18, 1992), 58 FERC ] 61,139 
(1992); aff'd in part and remanded in part sub nom. Tenneco Gas v. 
FERC, 969 F.2d 1187 (D.C. Cir. 1992) (Tenneco) (collectively, Order 
No. 497).
    \3\ Open Access Same-Time Information System (Formerly Real-Time 
Information Network) and Standards of Conduct, Order No. 889, 61 FR 
21737 (May 10, 1996), FERC Stats. & Regs., Regulations Preambles 
January 1991-June 1996 ] 31,035 (1996); Order No. 889-A, order on 
reh'g, 62 FR 12484 (Mar. 14, 1997), FERC Stats. & Regs., Regulations 
Preambles July 1996-December 2000 ] 31,049 (1997); Order No. 889-B, 
reh'g denied, 62 FR 64715 (Dec. 9, 1997), 81 FERC ] 61,253 (1997) 
(collectively, Order No. 889).
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    3. In 2003, the Commission issued Order No. 2004,\4\ which 
broadened the Standards to include a new category of affiliate, the 
energy affiliate.\5\ The new Standards were made applicable to both the 
electric and gas industries, and provided that the transmission 
employees of a transmission provider \6\ must function independently 
not only from the company's marketing affiliates but from its energy 
affiliates as well, and that transmission providers may not treat 
either their energy affiliates or their marketing affiliates on a 
preferential basis. Order No. 2004 also imposed requirements to 
publicly post information concerning a transmission provider's energy 
affiliates. On appeal, the U.S. Court of Appeals for the D.C.

[[Page 54465]]

Circuit overturned the Standards as applied to gas transmission 
providers, on the grounds that the evidence of energy affiliate abuse 
cited by the Commission was not in the record.\7\
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    \4\ Standards of Conduct for Transmission Providers, Order No. 
2004, FERC Stats. & Regs. ] 31,155 (2003), order on rehearing, Order 
No. 2004-A, FERC Stats. & Regs. ] 31,161, order on rehearing, Order 
No. 2004-B, FERC Stats. & Regs. ] 31,166, order on rehearing, Order 
No. 2004-C, FERC Stats. & Regs. ] 31,172 (2004), order on rehearing, 
Order No. 2004-D, 110 FERC ] 61,320 (2005), vacated and remanded as 
it applies to natural gas pipelines sub nom. National Fuel Gas 
Supply Corp. v. FERC, 468 F.3d 831 (D.C. Cir. 2006) (National Fuel); 
see Standards of Conduct for Transmission Providers, Order No. 690, 
FERC Stats. & Regs. ] 31,237, order on rehearing, Order No. 690-A, 
FERC Stats. & Regs. ] 31,243 (2007); see also Standards of Conduct 
for Transmission Providers, Notice of Proposed Rulemaking, FERC 
Stats. & Regs. ] 32,611 (2007); Notice of Proposed Rulemaking, FERC 
Stats. & Regs. ] 32,630 (2008).
    \5\ The Order 2004 standards of conduct defined an energy 
affiliate as an affiliate of a transmission provider that (1) 
engages in or is involved in transmission transactions in U.S. 
energy or transmission markets; (2) manages or controls transmission 
capacity of a transmission provider in U.S. energy or transmission 
markets; (3) buys, sells, trades or administers natural gas or 
electric energy in U.S. energy or transmission markets; or (4) 
engages in financial transactions relating to the sale or 
transmission of natural gas or electric energy in U.S. energy or 
transmission markets. Order No. 2004, FERC Stats. & Regs. ] 31,155 
at P 40; see also 18 CFR 358.3(d). Certain categories of entities 
were excluded from this definition in subsequent subsections of the 
regulations.
    \6\ A transmission provider was defined as (1) any public 
utility that owns, operates or controls facilities used for 
transmission of electric energy in interstate commerce; or (2) any 
interstate natural gas pipeline that transports gas for others 
pursuant to subpart A of part 157 or subparts B or G of part 284 of 
the same chapter of the regulations. Order No. 2004, FERC Stats. & 
Regs. ] 31,155 at P 33-34; see also 18 CFR 358.3(a).
    \7\ National Fuel, 468 F.3d at 841.
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    4. The Commission issued an Interim Rule on January 9, 2007,\8\ 
which repromulgated the portions of the Standards not challenged in 
National Fuel as applied to natural gas transmission providers. On 
January 18, 2007, the Commission issued its initial notice of proposed 
rulemaking (NOPR),\9\ requesting comment on a variety of issues, 
including whether the concept of energy affiliates should be retained 
for the electric industry. Following consideration of the comments 
filed and the Commission's own experience in administering the 
Standards, the Commission modified the approach advanced in the initial 
NOPR. The Commission issued a second NOPR on March 21, 2008,\10\ and 
invited comment both on its general approach and on its specific 
provisions. In the second NOPR, the Commission proposed to return to 
the approach of separating by function transmission personnel from 
marketing personnel, an approach that had been adopted in Order Nos. 
497 and 889. The Commission also proposed to clarify and streamline the 
Standards in order to enhance compliance and enforcement, and to 
increase transparency in the area of transmission/affiliate 
interactions to aid in the detection of any undue discrimination.
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    \8\ Standards of Conduct for Transmission Providers, Order No. 
690, 72 FR 2427 (Jan. 19, 2007); FERC Stats. & Regs. ] 31,237 (2007) 
(Interim Rule); clarified by, Standards of Conduct for Transmission 
Providers, Order No. 690-A, 72 FR 14235 (Mar. 27, 2007); FERC Stats. 
& Regs. ] 31,243 (2007) .
    \9\ Standards of Conduct for Transmission Providers, 72 FR 3958 
(Jan. 29, 2007), FERC Stats. & Regs. ] 32,611 (2007).
    \10\ Standards of Conduct for Transmission Providers, 73 FR 
16228 (Mar. 27, 2008), FERC Stats. & Regs. ] 32,630 (2008).
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    5. The reforms adopted in Order No. 717 were intended to eliminate 
the elements that have rendered the Standards difficult to enforce and 
apply. They combined the best elements of Order No. 2004 (especially 
the integration of gas and electric Standards, an element not contested 
in National Fuel) with those of the Standards originally adopted for 
the gas industry in Order No. 497 and for the electric industry in 
Order No. 889. Specifically, Order No. 717 (i) eliminated the concept 
of energy affiliates and (ii) eliminated the corporate separation 
approach in favor of the employee functional approach used in Order 
Nos. 497 and 889. In addition, the reforms adopted in Order No. 717 
conformed the Standards with the National Fuel opinion.

III. Discussion

A. Jurisdiction and Applicability of the Standards: Applicability to 
Transmission Providers With No Marketing Affiliate Transactions

    6. In Order No. 717, we addressed the question of whether the 
Standards' applicability to interstate pipelines in Sec.  358.1(a) 
should parallel the Standards' applicability to the electric industry 
in Sec.  358.1(b). Section 358.1(a) generally states that part 358 
applies to any interstate pipeline that transports gas for others and 
conducts transmission transactions with an affiliate that engages in 
marketing functions.\11\ In contrast, the NOPR proposed that Sec.  
358.1(b) should state only that this part applies to any public utility 
that owns, operates, or controls facilities used for the transmission 
of electric energy in interstate commerce. The specific question 
addressed in Order No. 717 concerned the phrase ``and conducts 
transmission transactions with an affiliate that engages in marketing 
functions'' and whether this language should be retained in Sec.  
358.1(a).\12\
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    \11\ 18 CFR 358.1(a) (2009).
    \12\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 16.
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    7. We determined that the language in Sec.  358.1(a) should 
parallel the language in Sec.  358.1(b) since there was no evidence in 
the record that pipelines that do not conduct transmission transactions 
with an affiliate engaged in marketing functions are in a position to 
engage in the type of affiliate abuse to which the Standards are 
directed.\13\ We concluded that rather than remove the phrase in 
question from Sec.  358.1(a), this provision should be added to Sec.  
358.1(b) so that the limitation would apply to public utilities as well 
as pipelines.\14\ We found that a public utility or a pipeline that 
does not engage in any transmission transactions with a marketing 
affiliate should be excluded from the Standards coverage.
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    \13\ Id. P 20.
    \14\ Id. P 23.
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Requests for Rehearing and Clarification
    8. Several parties raise the issue of the applicability of the 
Standards to marketing function employees of affiliates that do not 
conduct transmission transactions with affiliated transmission 
providers. For example, the Electric Power Supply Association (EPSA) 
interprets these provisions as applying the Standards only to 
transmission companies that conduct transactions with their marketing 
affiliates. According to EPSA, some pipeline/transmission providers 
have multiple marketing affiliates and these providers do not engage in 
transactions with all of their affiliates.\15\ EPSA states that it is 
unclear whether that pipeline or transmission provider is subject to 
the Standards with all of its marketing affiliates, or just those with 
which it conducts transactions.\16\ EPSA argues that the Independent 
Functioning Rule in Sec.  358.5 should only apply to the relationship 
between the transmission function employees and the marketing function 
employees of those marketing affiliates with which the provider 
conducts transactions.\17\
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    \15\ EPSA Nov. 17, 2008 Request for Clarification at 2.
    \16\ Id. at 3.
    \17\ Id. at 4.
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    9. The Interstate Natural Gas Association of America (INGAA), 
MidAmerican Energy Holdings Company (MidAmerican), and the Edison 
Electric Institute (EEI) also interpret the Standards as not extending 
to employees of affiliates that do not conduct transmission 
transactions with the pipeline or public utility transmission 
provider.\18\ INGAA states that it is unclear how the regulations apply 
where a pipeline has at least one affiliate engaged in marketing 
functions that conducts transmission transactions on the pipeline, but 
has other affiliates that do not. INGAA argues that the Standards 
cannot lawfully be applied to marketing function employees of 
affiliates that do not conduct transmission transactions with the 
affiliated pipeline.\19\ INGAA contends that if the Standards are 
intended to apply to the relationship between a pipeline and the 
marketing function employees of affiliates that do not conduct 
transmission transactions on that affiliated pipeline, the Commission 
has exceeded its authority.\20\
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    \18\ INGAA Nov. 17, 2008 Request for Clarification and Rehearing 
at 4; MidAmerican Nov. 17, 2008 Request for Rehearing or 
Clarification at 5; EEI Nov. 17, 2008 Request for Clarification at 
12-13.
    \19\ INGAA at 7-9.
    \20\ Id.
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    10. MidAmerican argues that when an affiliate does not engage in 
transmission transactions on an affiliated transmission provider's 
system, there is little or no potential for affiliate abuse, and to the 
extent that there could be inappropriate interaction with affiliates, 
such conduct is already proscribed by the No Conduit Rule in Sec.  
358.6 and the Transparency Rule in Sec.  358.7.\21\
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    \21\ MidAmerican at 5.

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[[Page 54466]]

    11. MidAmerican is concerned that paragraph 104 of Order No. 717 
suggests that all marketing function employees within a corporate 
holding company structure are to be considered marketing function 
employees of all affiliated transmission providers.\22\ MidAmerican 
contends that employees of an affiliate who engage in marketing 
functions are not likely to be privy to non-public transmission 
function information of an affiliated transmission provider unless the 
affiliate engages in transmission transactions with that transmission 
provider.\23\ MidAmerican further argues that to the extent that an 
employee of an affiliate engaged in marketing functions became privy to 
non-public transmission function information about another affiliated 
transmission provider's system, he or she is still proscribed from 
being a conduit for that information under the Standards and the 
transmission provider would also have the obligation to post the 
disclosed information pursuant to the Transparency Rule.\24\
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    \22\ Id. at 7.
    \23\ Id. at 7-11.
    \24\ Id. at 8.
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    12. EEI requests clarification that, regardless of whether a 
corporate family owns electric transmission providers, gas transmission 
providers, or both, that the Standards of Conduct apply only (a) 
between transmission function employees of a gas transmission provider 
and employees within the corporate family engaged in gas marketing 
functions, and (b) between transmission function employees of an 
electric transmission provider and employees within the corporate 
family engaged in electric marketing functions.\25\ EEI contends that 
it would be unfair to subject companies with both gas and electric 
transmission providers to restrictions on relationships that do not 
apply to the same relationships in companies that have only gas or only 
electric transmission providers.\26\
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    \25\ EEI at 12.
    \26\ Id.
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    13. EEI states that paragraphs 16-23 of Order No. 717 indicate that 
the rules only apply between transmission function employees and those 
marketing function employees who are employed by a company that 
conducts transmission transactions with the transmission provider. EEI 
requests clarification as to whether this interpretation is 
accurate.\27\
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    \27\ Id. at 13.
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    14. Under EEI's interpretation of these provisions, an employee 
that makes sales of electric energy is performing a marketing function 
only if that employee works for a public utility transmission provider 
or a company that is affiliated with such a provider.\28\ EEI requests 
confirmation of this interpretation.
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    \28\ Id. at 11-12.
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    15. The Transmission Access Policy Study Group (TAPS) argues that 
the Commission should either eliminate the exemption for electric 
transmission providers that do not conduct transmission transactions 
with marketing affiliates, or clarify that transmission owners in 
regional transmission organizations (RTOs) remain subject to the 
Standards absent a waiver.\29\ TAPS contends that if this exemption is 
not eliminated for the electric transmission providers, transmission 
owners in RTO regions may interpret Sec.  358.1(b) as exempting them 
from the Standards regardless of whether they have sought and obtained 
a waiver.\30\ Specifically, TAPS argues that the Commission should 
expand upon ``conduct transmission transactions with an affiliate that 
engages in marketing functions.'' \31\ According to TAPS, transmission 
owners within an RTO may argue that only the RTO conducts transmission 
transactions with market participants and thus these transmission 
owners would be exempt from the Standards.\32\ Alternatively, TAPS asks 
that the Commission clarify that the new language in Sec.  358.1(b) 
does not exempt transmission owners in RTO regions who conduct 
marketing activities (or who have affiliates that are engaged in 
marketing activities) in the RTO market.\33\
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    \29\ TAPS Nov. 17, 2008 Petition for Rehearing or Clarification 
at 29.
    \30\ Id. at 30.
    \31\ Id. at 31.
    \32\ Id.
    \33\ Id. at 33.
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Commission Determination
    16. Consistent with our findings in Order No. 717 that a public 
utility or interstate natural gas pipeline that does not engage in any 
transmission transactions with a marketing affiliate should be excluded 
from the Standards' coverage,\34\ we clarify that the term ``marketing 
function employee'' of a transmission provider, as defined in Sec.  
358.3(d), does not include an employee of an affiliate that does not 
engage in transmission transactions on the affiliated transmission 
provider's transmission system. Furthermore, we note that Sec.  
358.1(a) and (b) generally limit the applicability of the Standards of 
Conduct to transmission providers that conduct transmission 
transactions with an affiliate that engages in marketing functions.
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    \34\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 20 and P 
23.
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    17. In response to EEI, we confirm that an employee who makes sales 
of electric energy is performing a marketing function only if the 
employee works for a public utility transmission provider or a company 
affiliated with such a provider.
    18. We deny TAPS' request that we eliminate the exemption for 
electric transmission providers that do not conduct transmission 
transactions with marketing affiliates. As described above, the 
Commission determined in Order No. 717 that ``a public utility that 
does not engage in any transmission transactions with a marketing 
affiliate should be excluded from the Standards' coverage'' \35\ 
because there is no evidence that this type of relationship triggers 
concerns that the public utility will engage in undue preference in 
favor of an affiliate. However, we clarify that a public utility 
transmission owner that is in a Commission-approved RTO or that is part 
of a Commission-approved independent system operator (ISO) and has 
access to non-public transmission function information remains subject 
to the Standards of Conduct unless it has obtained a waiver.
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    \35\ Id. P 23.
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B. Independent Functioning Rule

    19. In Order No. 717, we continued the policy of requiring 
transmission function employees of a transmission provider to function 
independently of the marketing function employees of the transmission 
provider. This policy is referred to as the Independent Functioning 
Rule. The relevant consideration for purposes of applying the 
Independent Functioning Rule is the function performed by the employee 
himself. To implement this approach, we defined several key terms, 
including ``transmission functions'' (Sec.  358.3(h)), ``marketing 
functions'' (Sec.  358.3(c)), and ``transmission function employees'' 
(Sec.  358.3(i)).
    20. We defined ``transmission functions'' as ``the planning, 
directing, organizing or carrying out of day-to-day transmission 
operations, including the granting and denying of transmission service 
requests.'' \36\ Through this definition, we intended to focus on 
``those areas most susceptible to affiliate abuse,'' which we 
identified as ``short-term real time operations, including those 
decisions made in advance of real

[[Page 54467]]

time but directed at real time operations.'' \37\
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    \36\ Id. P 40.
    \37\ Id.
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    21. With regard to the definition of transmission function 
employee, we agreed that field, maintenance and construction workers, 
as well as engineers and clerical workers, are not normally involved in 
the day-to-day operations of the transmission system. Thus, in general 
they would not fall within the scope of the definition of transmission 
function employee.\38\ However, we declined to add a further exclusion 
in the definition for de minimis involvement.\39\ We also found that 
the question of whether balancing authority personnel are included in 
the definition of transmission function employee depends on the 
circumstances. If the transmission provider also serves as a balancing 
authority and an employee's duties encompass both transmission provider 
and balancing authority activities, the employee is a transmission 
function employee.\40\ We also provided several examples of what 
activities constitute the day-to-day operation of the transmission 
system. Included in these examples was balancing load with energy or 
capacity.\41\
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    \38\ Id. P 46.
    \39\ Id. P 47.
    \40\ Id. P 48.
    \41\ Id. P 122.
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1. Transmission Function
    22. Both Wisconsin Electric Power Company (Wisconsin Electric) and 
EEI request further clarification of whether personnel that balance 
load with energy or capacity are considered ``transmission function 
employees'' under the Standards.\42\ EEI contends that economic 
decisions regarding the source of energy or capacity to be used to 
balance load may be made by marketing function employees and requests 
that the Commission affirmatively find that such activities are not 
transmission functions.\43\ Wisconsin Electric argues that the 
Commission's statement in paragraph 122 of Order No. 717 that balancing 
load with energy or capacity is among the day-to-day operations of the 
transmission system is inconsistent with the Commission's statement in 
paragraph 48 of Order No. 717 that excluded a balancing authority from 
the definition of a ``transmission function employee'' where the 
balancing authority and transmission functions are separate, and the 
employee performs no duties outside of those specific to a balancing 
authority employee.\44\
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    \42\ Wisconsin Electric Nov. 17, 2008 Request for Clarification 
at 3; EEI at 7.
    \43\ EEI at 7.
    \44\ Wisconsin Electric at 4.
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    23. Wisconsin Electric requests that the Commission clarify that a 
balancing area employee who balances load with generation (including 
scheduled interchange) and performs no other transmission functions is 
not a ``transmission function employee'' for purposes of the 
Standards.\45\ If the Commission intends that balancing load with 
energy or capacity is a transmission function, then Wisconsin Electric 
requests that the Commission clarify and identify which of the other 
balancing authority requirements under the NERC Reliability Standards 
are also transmission functions and which are not.\46\
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    \45\ Id.
    \46\ Id. at 5.
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Commission Determination
    24. We clarify that paragraph 122 of Order No. 717 incorrectly 
included ``balancing load with energy or capacity'' as an example of 
what is included in the day-to-day operation of the transmission 
system. As we stated in Order No. 717, ``[i]f the transmission provider 
also serves as a balancing authority, and an employee's duties 
encompass both transmission provider and balancing authority 
activities, such an employee would be a transmission function employee 
(provided his or her duties are encompassed by the definition of 
transmission function employee). If, however, the two functions are 
separate, and the employee performs no duties outside of those specific 
to a balancing authority employee, he or she would not be considered a 
transmission function employee.'' \47\ Thus, personnel who balance load 
with energy or generating capacity are not considered ``transmission 
function employee[s]'' under the Standards where the balancing 
authority and transmission functions are separate, and the employee 
does not perform duties or tasks of a transmission function 
employee.\48\
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    \47\ Order No. 717 at P 48.
    \48\ We reiterate that the No Conduit Rule still applies and 
would prohibit the transmission provider from using personnel who 
balance load with energy or generating capacity as conduits for the 
disclosure of non-public transmission information to marketing 
function employees.
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2. Transmission Function Employees
    25. TAPS is concerned that the transmission function definition 
places too much emphasis on short-term or real-time operations in an 
effort to exclude long-term planning employees from the transmission 
function and that this emphasis might be misconstrued.\49\ 
Specifically, TAPS is concerned that the short-term focus might be 
misinterpreted as limiting the Commission's determination that 
employees engaged in the ``granting and denying of transmission service 
requests'' are transmission function employees.\50\ TAPS asks the 
Commission to clarify that personnel engaged in ``granting or denying 
transmission service requests'' are transmission function employees 
regardless of the duration of service requested.\51\
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    \49\ TAPS at 41.
    \50\ Id.
    \51\ Id.
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    26. TAPS also asks the Commission to clarify that the transmission 
function includes not just the employees who post on the OASIS that a 
particular request has been granted or denied but, also, the employees 
who are responsible for performing the underlying system impact studies 
or otherwise determining whether the transmission system can support 
the requested services.\52\ TAPS asserts that engineers who make 
engineering decisions regarding the operation and maintenance of 
transmission facilities and engineers who determine whether 
transmission requests can be accommodated by the existing transmission 
system are clearly performing activities that are integral to a 
transmission provider's administration of its tariff and are central to 
the ``planning, directing, organizing or carrying out of day-to-day 
transmission operations, including the granting and denying of 
transmission service requests.'' \53\
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    \52\ Id. at 42-43.
    \53\ Id. at 42-43 (citing 18 CFR 358.3(h)).
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Commission Determination
    27. The Commission clarifies that personnel engaged in ``granting 
or denying transmission service requests'' are transmission function 
employees regardless of the duration of service requested. We find that 
granting or denying of transmission service requests is an integral 
part of ``planning, directing, organizing or carrying out of day-to-day 
transmission operations.'' \54\ The Commission also clarifies that 
``transmission function employee'' includes an employee responsible for 
performing system impact studies or determining whether the 
transmission system can support the requested services as this type of 
employee is planning, directing, organizing or

[[Page 54468]]

carrying out the day-to-day transmission operations.
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    \54\ 18 CFR 258.3(h).
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3. Marketing Functions
    28. In Order No. 717, we made the Standards applicable to ``any 
public utility that owns, operates, or controls facilities used for the 
transmission of electric energy in interstate commerce and conducts 
transmission transactions with an affiliate that engages in marketing 
functions'' \55\ and also any interstate natural gas pipeline that 
transports gas for others and ``conducts transmission transactions with 
an affiliate that engages in marketing functions.'' \56\
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    \55\ 18 CFR 358.1(b).
    \56\ 18 CFR 358.1(a).
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    29. As noted above, we defined several terms in the order. 
Marketing functions include ``in the case of public utilities and their 
affiliates, the sale for resale in interstate commerce, or the 
submission of offers to sell in interstate commerce, of * * * financial 
or physical transmission rights.'' \57\ We adopted the following 
definition of marketing functions for pipelines and their affiliates: 
``The sale for resale in interstate commerce, or the submission of 
offers to sell in interstate commerce, natural gas, subject to the 
following exclusions: (i) Bundled retail sales, (ii) Incidental 
purchases or sales of natural gas to operate interstate natural gas 
pipeline transmission facilities, (iii) Sales of natural gas solely 
from a seller's own production, (iv) Sales of natural gas solely from a 
seller's own gathering or processing facilities, and (v) Sales by an 
intrastate natural gas pipeline, by a Hinshaw pipeline exempt from the 
Natural Gas Act (NGA), or by a local distribution company making an on-
system sale.'' \58\ We also defined a marketing function employee as 
``an employee, contractor, consultant or agent of a transmission 
provider or of an affiliate of a transmission provider who actively and 
personally engages on a day-to-day basis in marketing functions.''
---------------------------------------------------------------------------

    \57\ 18 CFR 358.3(c)(1).
    \58\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 83.
---------------------------------------------------------------------------

a. Electric Industry
    30. EEI seeks clarification as to which sales of transmission 
rights are marketing functions, and which sales are transmission 
functions.\59\ EEI suggests that as a general rule, any sale of 
transmission service under an open access transmission service or a 
pre-Order No. 888 grandfathered agreement be considered a transmission 
function, while any resale or reassignment of such service should be 
considered a marketing function.\60\ EEI also suggests that the rule 
must allow the limited sorts of ``resale'' that occur from a facility 
that has been leased, or when transmission is being provided on a back-
to-back basis, to be treated as transmission functions, not marketing 
functions.\61\
---------------------------------------------------------------------------

    \59\ EEI at 14-15.
    \60\ Id.
    \61\ Id.
---------------------------------------------------------------------------

    31. TAPS requests that the Commission restore (1) the Order 889-era 
separation of transmission function employees from employees engaged in 
purchases for wholesale sales; \62\ and (2) Order 2004's required 
separation of transmission function personnel from employees making 
purchases for retail load.\63\ TAPS also contends that the Commission 
should require the separation of transmission function personnel from 
employees making bundled retail sales.\64\ TAPS argues that the 
marketing definition should be revised to include bids to buy products 
traded in organized markets, particularly financial transmission 
rights.\65\ Finally, TAPS requests reconsideration of the Commission's 
decision to exempt from the marketing definition retail sales by a 
provider of last resort (POLR).\66\
---------------------------------------------------------------------------

    \62\ TAPS at 13-22.
    \63\ Id. at 22-26.
    \64\ Id. at 26-29.
    \65\ Id. at 33-36.
    \66\ Id. at 37-40.
---------------------------------------------------------------------------

    32. Transmission Dependent Utility Systems (TDUS) asks that the 
Commission exclude from the definition of marketing functions sales by 
generation and transmission cooperatives to their members.\67\ 
According to TDUS, Order No. 717 eliminated purchasing-related 
activities from coverage under the Standards.\68\ TDUS states that 
under the new Standards, employees of generation and transmission 
cooperatives will not be subject to the Standards due to their 
purchasing activities alone.\69\ However, TDUS believes that there is a 
question left as to whether such employees' involvement in sales of 
power to members will subject them to the Standards and asserts that it 
should not.\70\ TDUS asserts that because the generation and 
transmission cooperative's role with respect to its member load is 
nearly identical to that of a vertically integrated investor-owned 
utility's role with respect to its retail load, employees of generation 
and transmission cooperatives should have the same access to generation 
and transmission function information as the employees of investor-
owned utilities.\71\
---------------------------------------------------------------------------

    \67\ TDUS Nov. 17, 2008 Request for Clarification or Rehearing 
at 2-3.
    \68\ Id. at 2.
    \69\ Id.
    \70\ Id.
    \71\ Id. at 3.
---------------------------------------------------------------------------

Commission Determination
    33. We grant EEI's request for clarification that any sale of 
transmission service under an open access transmission service or a 
pre-Order No. 888 grandfathered agreement be considered a transmission 
function, while any resale or reassignment of such service be 
considered a marketing function. Under Order No. 890, a transmission 
customer may sell all or a portion of its transmission rights to an 
eligible customer (i.e., an assignee). When this type of transaction 
occurs, the transmission customer becomes a reseller and the assignee 
must sign a service agreement with the transmission provider. The 
transmission provider is obligated to credit or charge the reseller for 
any difference in price between the assignee's agreement and the 
reseller's original agreement.\72\ Thus, the transmission provider 
continues in the role of providing transmission service and makes the 
payments to both the reseller and its customer. However, the resale or 
reassignment between the reseller and the assignee is a marketing 
function.
---------------------------------------------------------------------------

    \72\ Preventing Undue Discrimination and Preference in 
Transmission Service, Order No. 890, FERC Stats. & Regs. ] 31,241, 
order on rehearing, Order No. 890-A, FERC Stats. & Regs. ] 31,261 
(2007), order on rehearing, Order No. 890-B, 123 FERC ] 61,299 
(2008) order on rehearing, Order No. 890-C, 126 FERC ] 61,228 
(2009).
---------------------------------------------------------------------------

    34. While we grant EEI's requested clarification as discussed 
above, we reject its suggestion that limited sorts of ``resale'' that 
occur from a facility being leased, or transmission that is provided on 
a back-to-back basis, be treated as transmission functions. We deny 
this clarification because EEI has failed to adequately support or 
explain its request. We note, however, that EEI appears to be 
describing a narrow set of circumstances that may be more suitable for 
a waiver request.
    35. We deny TAPS' request for rehearing that the marketing function 
definition be amended to include purchases as well as sales. As we 
noted in Order No. 717, restricting the definition of marketing 
function to include only sales more closely matches the statutory 
prohibitions against undue preference.\73\ Specifically, sections 205 
and 206 of the Federal Power Act prohibit undue preference or advantage

[[Page 54469]]

to any person with respect to ``any transmission or sale subject to the 
jurisdiction of the Commission * * *.'' \74\ 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 * * *.'' \75\ Because the Commission's authority to 
impose the Standards of Conduct to prevent undue preference is rooted 
in these sections, we find that TAPS' request to expand the marketing 
function definition to include purchases to be inconsistent with our 
statutory authority.
---------------------------------------------------------------------------

    \73\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 77.
    \74\ 16 U.S.C. 824d(b) and 16 U.S.C. 824e(a) (emphasis added).
    \75\ 15 U.S.C. 717c(b) and 15 U.S.C. 717d(a) (emphasis added).
---------------------------------------------------------------------------

    36. In response to the TAPS statement that excluding employees 
responsible for purchases from the reach of the Standards of Conduct 
alters the Commission's approach in Order No. 889, we note that in 
Order No. 717 the Commission found that the removal of purchases from 
the definition of marketing function ``frees companies to conduct the 
informational exchanges necessary to engage in integrated resource 
planning, and eliminates the difficulties which might otherwise be 
experienced by executive personnel who have overall procurement 
responsibilities that include both transmission and marketing. At the 
same time, it preserves the protection against affiliate abuse, as it 
is those employees who are making wholesale sales of electricity, not 
purchases, who can improperly benefit from transmission function 
information obtained from the affiliated transmission provider.'' \76\ 
Given these findings and the Commission's consideration of its more 
than decade-long experience implementing the Order No. 889 provisions, 
we reiterate that there is no need to include purchases in the 
marketing function definition as a means of preventing undue 
preference.\77\ For these same reasons, we also deny TAPS' request that 
we require the separation of transmission function employees from those 
employees making purchases for retail load and its request that we 
include bids to buy products within the definition of marketing 
function.
---------------------------------------------------------------------------

    \76\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 77 
(footnote omitted).
    \77\ We note that the courts have held that an agency may alter 
its past interpretation in light of reconsideration of relevant 
facts and its mandate. American Trucking Ass'n v. Atchison, Topeka & 
Santa Fe Ry., 387 U.S. 397, 416 (1967). See also Hatch v. FERC, 654 
F.2d 825, 834 (D.C. Cir. 1981). See also New York v. FERC, 535 U.S. 
1 at 28 (2002) (The Commission's choice not to assert jurisdiction 
represents a statutorily permissible policy choice).
---------------------------------------------------------------------------

    37. Similarly, we reject TAPS' request that employees making 
bundled retail sales \78\ be included in the definition of marketing 
function. In Order No. 888, the Commission stated that it had exclusive 
jurisdiction over the rates, terms and conditions of unbundled retail 
transmission in interstate commerce.\79\ However, the Commission 
declined to assert jurisdiction over bundled retail transmission, 
reasoning that ``when transmission is sold at retail as part and parcel 
of the delivered product called electric energy, the transaction is a 
sale of electric energy at retail.'' \80\ The U.S. Supreme Court 
affirmed the Commission's decision to assert jurisdiction over 
unbundled but not bundled retail transmission, finding that the 
Commission made a statutorily permissible choice.\81\ TAPS essentially 
is asking us to end this long-standing jurisdictional divide, at least 
with regard to the Standards. We decline to do so.
---------------------------------------------------------------------------

    \78\ The term ``bundled retail sales employees'' means those 
employees of the public utility transmission provider or its 
affiliates who market or sell the bundled electric energy product 
(including generation, transmission, and distribution) delivered to 
the transmission provider's firm and non-firm retail customers. 
Order No. 2004-A, FERC Stats. & Regs. ] 31,161 at P 119 n.80.
    \79\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery 
of Stranded Costs by Public Utilities and Transmitting Utilities, 
Order No. 888, FERC Stats. & Regs. ] 31,036, 31,781 (1996), order on 
reh'g, Order No. 888-A, FERC Stats. & Regs. ] 31,048 (1997), order 
on reh'g, Order No. 888-B, 81 FERC ] 61,248, order on reh'g, Order 
No. 888-C, 82 FERC ] 61,046 (1998), aff'd in relevant part sub nom. 
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. 
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
    \80\ Id.
    \81\ New York v. FERC, 535 U.S. 1 at 28.
---------------------------------------------------------------------------

    38. We also deny TAPS' request that we reconsider the decision to 
exempt retail sales by a POLR from the definition of marketing 
functions. TAPS asserts that POLR service constitutes unbundled retail 
sales.\82\ However, the Commission stated in Order No. 2004 that POLR 
sales could be accorded treatment equivalent to that accorded to 
bundled retail sales.\83\ Bundled retail sales are sales where the 
power and transmission components associated with the sale of electric 
energy to retail customers are provided together in a single bundled 
package.\84\ The important distinction between unbundled and retail 
sales is that the generation component may be purchased separately in 
unbundled service.\85\ Under POLR service the generation offered can 
only be purchased through the regulated public utility as a part of the 
``bundled'' package of transmission, distribution and generation. 
Generally, POLR service is offered in states that permit retail 
competition. POLR service is also generally state-mandated with either 
state-approved rates or a part of a state-approved and regulated 
process for deriving the generation price. The POLR service is provided 
to retail customers on a default basis and POLR employees do not market 
POLR service.
---------------------------------------------------------------------------

    \82\ TAPS at 39-40.
    \83\ See Order No. 2004-A, FERC Stats. & Regs. ] 31,161 at P 
127.
    \84\ See, e.g., Revision of Annual Charges Assessed to Public 
Utilities, 94 FERC ] 61,290, at 62,037 (2001). We note that the 
Supreme Court has described ``bundled'' as meaning that consumers 
pay a single charge that includes both the cost of electric energy 
and the cost of its delivery. New York v. FERC, 535 U.S. 1, 5 
(2002).
    \85\ We note that even if the rates or prices for components are 
separately stated, or itemized, on the end users' bills this does 
not render the POLR service ``unbundled.'' See, e.g., Northern 
Natural Gas Co., v. FERC, 929 F.2d 1261, 1273 (8th Cir. 1991). 
(Stating a rate separately from the related jurisdictional rate does 
not ``magically unbundle'' the activity).
---------------------------------------------------------------------------

    39. Previously, we declined to accord POLR service the same 
exemption as other bundled retail sales, opting instead to consider its 
status on a case-by-case basis.\86\ The Commission has granted past 
waivers based on the fact that POLR employees do not market POLR 
service, do not engage in competitive functions and do not schedule or 
reserve transmission service.\87\ This experience with waiver requests 
has led us to the conclusion that no justification exists for treating 
POLR sales differently than other bundled retail sales. Therefore, we 
will deny TAPS' request for rehearing concerning POLR.
---------------------------------------------------------------------------

    \86\ TAPS' reliance on the few cases in which we denied a waiver 
request is misplaced. None of the denials were based on the risk of 
abuse being too great. For example, in Allegheny Power Service 
Corp., 85 FERC ] 61,390 (1998), Allegheny requested a waiver of the 
functional unbundling requirement with regard to employees who made 
wholesale purchases for unbundled retail sales. Thus, this decision 
does not constitute precedent regarding a request for a bundled 
retail sales waiver. See also, PECO, 89 FERC ] 61,014 (1999). 
(PECO's Supply Acquisition unit performed unbundled retail merchant 
services and thus the Standards applied).
    \87\ See, e.g., High Island Offshore System, 116 FERC ] 61,047 
(2006).
---------------------------------------------------------------------------

    40. Finally, as TDUS requests, we clarify that if an employee of a 
generation and transmission cooperative simply serves retail load and 
does not engage in activities included in the ``marketing functions'' 
definition in Sec.  358.3, then this employee is not a ``marketing 
function employee.''

[[Page 54470]]

b. Natural Gas Industry
    41. We noted in Order No. 717 that if a local distribution company 
(LDC) does not conduct transmission transactions with an affiliated 
pipeline, its off-system sales on non-affiliated pipelines are 
irrelevant as far as the Standards are concerned.\88\ However, there 
may be situations where an affiliated LDC, an intrastate pipeline, and 
a Hinshaw pipeline could be subject to the Standards of Conduct, such 
as when one of these affiliates engages in off-system sales of gas that 
has been transported on the affiliated pipeline. In such a case, the 
pipeline and the affiliate (which is engaging in marketing functions) 
will be required to observe the Standards of Conduct by, among other 
things, having the marketing function employees function independently 
from the transmission function employees.
---------------------------------------------------------------------------

    \88\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 91.
---------------------------------------------------------------------------

(i) Off-System Sales by LDCs
    42. The American Gas Association (AGA), Duke Energy Corporation 
(Duke), National Fuel Gas Distribution Corporation and National Fuel 
Gas Supply Corporation (National Fuel), the New York Public Service 
Commission (NYPSC), and Southwest Gas Corporation (Southwest Gas) all 
ask the Commission to clarify that an LDC may make off-system sales on 
non-affiliated pipelines without being subject to the Standards.\89\ 
Specifically, the concern raised is whether an LDC that makes off-
system sales on non-affiliated pipelines would be subject to the 
Standards for those sales because it also conducts transmission 
transactions with an affiliated interstate pipeline for the purpose of 
making bundled retail sales or on-system sales.\90\ These parties all 
rely on Order No. 497 and National Fuel Gas Supply Corp.\91\ to support 
their contention that the Commission should find that the Standards do 
not apply in this instance. \92\
---------------------------------------------------------------------------

    \89\ AGA Nov. 17, 2008 Request for Clarification or Rehearing at 
8; Duke Nov. 17, 2008 Request for Rehearing or Clarification at 4; 
National Fuel Nov. 17, 2008 Motion for Clarification or Rehearing 
or, in the Alternative, Request for Limited Waiver at 7-8; NYPSC 
Nov. 17, 2008 Request for Rehearing or Clarification at 3-4; and 
Southwest Gas at 9-10.
    \90\ See, e.g., AGA Request at 4.
    \91\ 64 FERC ] 61,192 (1993).
    \92\ See, e.g., AGA at 9 (citing National Fuel Gas Supply 
Corp.).
---------------------------------------------------------------------------

    43. The parties argue that failing to make this clarification will 
have effectively expanded the Standards beyond those adopted under 
Order No. 497 to encompass all of an LDC's off-system sales for resale 
including those sales where the gas was not transported on the 
affiliated interstate pipeline.\93\ To resolve this matter, Duke 
suggests that the Commission either (1) revise the definition of 
``marketing function'' in Sec.  358.3(c)(2) of the regulations to 
exempt off-system sales by an LDC that do not involve the use of 
transmission capacity of an affiliated transmission provider; or (2) 
revise the applicability language of Sec.  358.1(a) to make clear that 
the Standards of Conduct do not apply to an interstate pipeline's 
transportation of gas for an affiliate, if it ``does not involve 
transportation of gas for the affiliate's marketing function.'' \94\
---------------------------------------------------------------------------

    \93\ See, e.g., id. at 11.
    \94\ Duke Request at 3.
---------------------------------------------------------------------------

    44. Southwest Gas contends that both Order Nos. 497 and 690 
excluded LDC sales from the definition of ``marketing'' if the gas was 
sold on-system to retail end-users, as well as if the gas was sold 
outside of its service territory as long as none of the gas sold off-
system was also transported by an affiliated interstate pipeline.\95\ 
Southwest Gas states that an LDC's sale of gas outside its retail 
service area in a transaction that does not involve the affiliated 
pipeline should not trigger the Standards nor should they be triggered 
if the LDC ships gas on an affiliated pipeline in other transactions 
for sale within the LDC's retail service territory.\96\
---------------------------------------------------------------------------

    \95\ Southwest Gas at 9-10.
    \96\ Id. at 11-12. Southwest Gas also states in its pleading 
that there is no evidence that regulated LDCs could abuse their 
relationship with an affiliated pipeline if the LDC sells gas 
outside its retail service area and none of the off-system gas is 
transported on an affiliated pipeline. Southwest Gas at 2. Southwest 
Gas argues that Order No. 717 improperly expands the applicability 
criteria from those in effect under Order No. 497 to cover any 
transportation by a pipeline for an affiliate that engages in 
marketing functions even if none of those transactions involved 
transportation by the affiliate pipeline. Id.
---------------------------------------------------------------------------

    45. If the Commission denies the request for clarification or 
rehearing, National Fuel requests a waiver of the Standards necessary 
for National Fuel Distribution Corporation to conduct off-system sales 
that do not involve its affiliated pipeline.\97\ Similarly, the NYPSC 
seeks clarification that the waiver previously granted to National Fuel 
remains in effect pursuant to the Commission's related determination 
that all existing waivers relating to the Standards remain in full 
force and effect.\98\
---------------------------------------------------------------------------

    \97\ National Fuel at 31. National Fuel also requests a waiver 
of the Standards as they may pertain to de minimis sales necessary 
to remain in balance. This waiver request is addressed infra.
    \98\ NYPSC at 7. The NYPSC disputes the interpretation of 
National Fuel Gas Supply Corp., 64 FERC ] 61,192 (1993), as the 
granting of a waiver request. However, if the Commission concludes 
that a waiver was granted in that proceeding, the NYPSC contends 
that the waiver should be continued.
---------------------------------------------------------------------------

    46. Finally, AGA states that in Order No. 717, the Commission 
exempted from the definition of ``marketing functions'' as applied to 
natural gas pipelines ``sales by an intrastate natural gas pipeline, by 
a Hinshaw interstate pipeline exempt from the Natural Gas Act, or by a 
local distribution company making an on-system sale.'' \99\ AGA states 
that the comma placements in separating each entity suggests that only 
an LDC's on-system sales are exempt and that all of a Hinshaw 
pipeline's sales are exempt.\100\ AGA requests that the Commission 
clarify whether it intended to exempt all of a Hinshaw pipeline's sales 
or only its on-system sales.\101\
---------------------------------------------------------------------------

    \99\ AGA Request for Clarification or Rehearing at 14 (quoting 
18 CFR 358.3(c)(2)(v)).
    \100\ Id. at 14.
    \101\ Id.
---------------------------------------------------------------------------

Commission Determination
    47. In Order No. 717, the Commission stated that if a pipeline does 
not conduct transmission transactions with an affiliate that engages in 
marketing functions, it is not subject to the Standards under Sec.  
358.1(a).\102\ We further explained that if an LDC does not conduct 
transmission transactions with an affiliated interstate pipeline, its 
off-system sales on an unaffiliated pipeline are irrelevant insofar as 
the Standards are concerned.\103\
---------------------------------------------------------------------------

    \102\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 91.
    \103\ Id.
---------------------------------------------------------------------------

    48. Consistent with National Fuel Gas Supply Corp.,\104\ we further 
clarify that an LDC making off-system sales of gas that has been 
transported on non-affiliated pipelines is not subject to the Standards 
of Conduct if it conducts transmission transactions with an affiliated 
interstate pipeline for the purpose of making bundled retail sales or 
on-system sales. In light of this clarification we reject Duke Energy's 
suggested amendments to the Standards. We also reject National Fuel's 
request for a waiver of the Standards because it has been rendered 
moot.
---------------------------------------------------------------------------

    \104\ 64 FERC ] 61,192 (1993).
---------------------------------------------------------------------------

    49. We agree with AGA that the comma placements separating each 
entity in the definition of ``marketing functions'' in Sec.  358.3(c) 
creates confusion. The Commission clarifies that we intended to exempt 
all on-system sales by an intrastate natural gas pipeline, by a Hinshaw 
interstate pipeline exempt from the NGA, or by a local distribution 
company and we will accordingly revise Sec.  358.3(c)(2)(v).\105\
---------------------------------------------------------------------------

    \105\ The change to include a local distribution company 
operating under section 7(f) of the Natural Gas Act in 18 CFR 
358.3(c)(2)(v) is discussed infra.

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

[[Page 54471]]

(ii) Sales From Own Production
    50. The American Public Gas Association (APGA) objects to the 
Commission's determination to exclude from the definition of 
``marketing functions'' the sale of natural gas from a seller's own 
production and from a seller's own gathering or processing 
facilities.\106\ APGA states that there is no logical, legal or factual 
basis for including within the Standards affiliated sellers of third 
party gas, but excluding from the rule the pipeline itself and 
affiliated sellers where they are selling from their own 
production.\107\
---------------------------------------------------------------------------

    \106\ APGA Nov. 17, 2009 Request for Rehearing at 4.
    \107\ Id. at 5.
---------------------------------------------------------------------------

    51. APGA argues that because the Commission has adopted an employee 
functional approach, the available evidence of actual abuse between 
sales employees and affiliated transmission providers fully supports a 
rule requiring their separation.\108\ APGA states that while these 
cases may not have been sufficient under the corporate separation 
approach to the Standards under Order No. 2004 and that the court 
reviewed in National Fuel, under the employee functional approach, 
certain cases of abuse support the discrete proposition that all 
employees who actively and personally engage on a day-to-day basis in 
natural gas sales should be prohibited from obtaining non-public 
information about the day-to-day transmission operations of affiliated 
pipelines. APGA asserts that the origin of the natural gas involved 
should have no bearing on the issue whatsoever.\109\
---------------------------------------------------------------------------

    \108\ Id. at 6.
    \109\ Id.
---------------------------------------------------------------------------

    52. Calypso U.S. Pipeline LLC and Calypso LNG LLC (Calypso) ask the 
Commission to further clarify the term ``seller's own production'' in 
Sec.  358.3(c)(3). Specifically, Calypso contends that the exemption 
should encompass foreign-sourced gas regardless of whether the 
transmission provider owns the mineral rights at the foreign wellhead 
or acquires ownership of the gas at the outlet of the liquefaction 
facility, or on board a liquefied natural gas (LNG) vessel, so long as 
it owns the gas when it is introduced into the transmission provider's 
facilities as the only gas that the transmission provider is 
transporting.\110\ Calypso interprets the term ``own production'' to 
mean gas owned by the transmission provider's marketing affiliate 
rather than gas that was owned when still in the ground or was 
extracted by the transmission provider (or its marketing 
affiliate).\111\
---------------------------------------------------------------------------

    \110\ Calypso Nov. 17, 2009 Request for Clarification or 
Rehearing at 4.
    \111\ Id.
---------------------------------------------------------------------------

    53. To the extent that the Commission intended to confine the 
exemption to foreign-sourced gas that was owned by the transmission 
provider's marketing affiliate at the foreign wellhead or some other 
point upstream being introduced into the transmission provider's 
facilities, then Calypso seeks rehearing on this point.\112\ Calypso 
asserts that when the only gas the transmission provider transports is 
owned by the transmission provider's marketing affiliate, the 
transmission provider should be exempt from the requirement that its 
transmission function employees function independently from its 
marketing function employees. Calypso argues that this result would be 
the same as the case where the only gas flowing was the domestic 
production of the transmission provider.\113\
---------------------------------------------------------------------------

    \112\ Id. at 5.
    \113\ Id.
---------------------------------------------------------------------------

    54. Calypso states that the key factor in applying this exemption 
is not ownership at the wellhead, but rather (i) the absence of someone 
against whom the transmission provider can discriminate, and (ii) the 
proposition that the Commission ``cannot impede vertical integration 
between a pipeline and its affiliates without `adequate justification.' 
'' \114\
---------------------------------------------------------------------------

    \114\ Id. at 7.
---------------------------------------------------------------------------

Commission Determination
    55. We deny APGA's request for rehearing concerning the 
Commission's determination to exclude from the definition of 
``marketing functions'' the sale of natural gas from a seller's own 
production and from a seller's own gathering and processing facilities. 
In Order No. 497-A, the Commission excluded from the scope of the rule 
``[p]roducers, gatherers or processors, acting in their traditional 
roles, that sell gas solely from their own production, gathering, or 
processing facilities.'' \115\ In excluding these sellers of gas from 
the scope of the rule, the Commission explained that these entities do 
not act within the scope of the term ``marketing'' as it is used in the 
rule because these ``entities are acting in the roles that their names 
imply'' \116\ rather than engaging in ``marketing functions.'' We do 
not see, nor has APGA demonstrated, how these entities' roles have 
changed since Order No. 497 that would require the Commission to now 
conclude that they are engaging in marketing functions for the purposes 
of the Standards of Conduct.
---------------------------------------------------------------------------

    \115\ Order No. 497-A, FERC Stats. & Regs. ] 30,868 at P 12 
(footnotes omitted).
    \116\ Id.
---------------------------------------------------------------------------

    56. In Order No. 2004-A, the Commission also found that the roles 
of gatherers or processors did not support their inclusion as energy 
affiliates subject to the standards of conduct. Specifically, the 
Commission stated in Order No. 2004-A that if a gatherer or processor 
merely provides gathering or processing services, only purchases 
natural gas to supply operational needs, and does not engage in other 
transmission-related activities, then it is not an energy affiliate 
subject to the standards of conduct.\117\ Moreover, we found that 
``when gatherers and processors engage only in gathering and 
processing, they provide services to wholesale market participants but 
do not compete with them.'' \118\
---------------------------------------------------------------------------

    \117\ Order No. 2004-A, FERC Stats. & Regs. ] 31,161 at P 97.
    \118\ Id.; see also Order No. 2004-B, FERC Stats. & Regs. ] 
31,166 at P 77.
---------------------------------------------------------------------------

    57. We also do not agree with APGA that the adoption in Order No. 
717 of an employee functional approach from a corporate functional 
approach dictates that we eliminate these exclusions from the 
definition of ``marketing functions.'' The adoption of the employee 
functional approach in Order No. 717 is simply a reversion to the 
employee functional approach in effect under Order No. 497. Over the 
Commission's decades-long experience implementing standards of conduct, 
the Commission has not found a pattern of abuse concerning sales of 
natural gas solely from a seller's own production or a seller's own 
gathering and processing facilities that would necessitate a change to 
this exclusion to the ``marketing functions'' definition, even under 
the employee functional approach.\119\ The Commission has addressed 
through its enforcement actions, including civil penalties, the few 
cases of sales personnel and affiliate transmission providers 
improperly sharing non-public transmission function information.\120\
---------------------------------------------------------------------------

    \119\ The Commission has not found evidence of undue preference 
that was exclusively a result of sales of natural gas solely from a 
seller's own production or its own gathering or processing 
facilities.
    \120\ See, e.g., Dominion Resources, Inc., 108 FERC ] 61,110 
(2004) (Hackberry); The Williams Companies, Inc., 111 FERC ] 61,392 
(2005); Idaho Power Co.,103 FERC ] 61,182 (2003); Cleco Corp., 104 
FERC ] 61,125 (2003); and Transcontinental Gas Pipe Line Corp., 102 
FERC ] 61,302 (2003).
---------------------------------------------------------------------------

    58. Notwithstanding the fact that the Standards of Conduct do not 
govern the relationship between a transmission provider and producers, 
gatherers or processors, acting in their traditional roles, that sell 
gas solely from their own

[[Page 54472]]

production, gathering, or processing facilities, we note that section 4 
of the Natural Gas Act prohibits a pipeline from granting any undue 
preference or advantage to any person or subjecting any person to any 
undue prejudice or disadvantage.\121\ For all of the above reasons, we 
deny APGA's request to change the ``marketing functions'' exclusions in 
Sec.  358.3(c)(2).
---------------------------------------------------------------------------

    \121\ 15 U.S.C. 717b-1.
---------------------------------------------------------------------------

    59. We grant Calypso's request that we clarify the term ``seller's 
own production'' in Sec.  358.3(c)(3). In Hackberry, we adopted a 
light-handed regulatory approach to LNG terminals,\122\ viewing LNG 
import terminals as analogous to production facilities.\123\ This 
revised approach to LNG regulation was subsequently reflected in EPAct 
2005.\124\ In light of our view that LNG import terminals are analogous 
to production facilities, we clarify that the exemption encompasses 
foreign sourced gas regardless of whether the seller owns the mineral 
rights at the foreign wellhead or acquires ownership on board an LNG 
vessel, so long as it owns the gas before it enters the transmission 
provider's transmission facilities and the gas is the only gas the 
transmission provider is transporting. In this scenario, there is no 
one for the transmission provider to discriminate against.
---------------------------------------------------------------------------

    \122\ Hackberry LNG Terminal L.L.C., 101 FERC ] 61,294 (2002), 
order issuing certificates and granting rehearing, 104 FERC ] 61,269 
(2003). Some LNG terminals continue to allow open access service 
pursuant to Part 284.
    \123\ See Hackberry, 101 FERC ] 61,294 at P 27.
    \124\ See 15 U.S.C. 717b.
---------------------------------------------------------------------------

(iii) Asset Management Agreements
    60. Southwest Gas asserts that the Commission failed to address (1) 
the applicability of the Standards to pipelines affiliated with 
shippers releasing capacity to asset managers under asset management 
agreements, and (2) the question of whether NGA section 7(f) companies 
are within the scope of the LDC exemption.\125\ Southwest Gas seeks 
clarification that where a party releases capacity to an asset manager 
under an asset management agreement where there is also an assignment 
of gas supply, the releasing party under the asset management agreement 
does not engage in a marketing function and its affiliated pipelines 
are not subject to the Standards.\126\
---------------------------------------------------------------------------

    \125\ Southwest Gas at 5.
    \126\ Id. at 6.
---------------------------------------------------------------------------

    61. Southwest Gas contends that even where a party to an asset 
management agreement assigns gas supply, there is no basis for the 
party's participation in the asset management agreement to trigger the 
Standards for a pipeline affiliated with that releasing party.\127\ 
Southwest Gas further asserts that there is ``no record evidence or a 
demonstrated theoretical threat to bring releasing parties under an 
asset management agreement and their affiliated pipelines within the 
scope of the Standards merely by virtue of their participation in an 
asset management agreement.'' \128\
---------------------------------------------------------------------------

    \127\ Id. at 8.
    \128\ Id. at 9.
---------------------------------------------------------------------------

Commission Determination
    62. In Order Nos. 712 and 712-A,\129\ the Commission revised its 
capacity release regulations to facilitate the use of asset management 
agreements. The Commission found that these agreements were in the 
public interest because they are beneficial to numerous market 
participants and to the market in general.\130\ In the asset management 
agreement context, the releasing shipper is not releasing unneeded 
capacity but capacity it needs to serve its own supply function. 
Releasing shippers are thus releasing capacity for the primary purpose 
of transferring the capacity to entities that they perceive as having 
greater skill and expertise in both purchasing low cost gas supplies 
and maximizing the value of the capacity when it is not needed to meet 
the releasing shipper's gas supply needs. Essentially, asset management 
agreements entail a releasing shipper transferring capacity to a third 
party expert who will perform the functions that the releasing shipper 
would normally have to do itself, i.e. purchase gas supplies and 
releasing capacity or making bundled sales when the releasing shipper 
does not need the capacity to satisfy its own needs.\131\
---------------------------------------------------------------------------

    \129\ Promotion of a More Efficient Capacity Release Market, 
Order No. 712, 73 FR 37058 (June 30, 2008), FERC Stats. & Regs. ] 
31,271 (2008), order on rehearing, Order No. 712-A, 73 FR 72692 
(Dec. 1, 2008), FERC Stats. & Regs. ] 31,284 (2008).
    \130\ Order No. 712-A, FERC Stats. & Regs. ] 31,284 at P 68 and 
P 71.
    \131\ Id. P 70.
---------------------------------------------------------------------------

    63. In Order No. 717, we clarified that under the Independent 
Functioning Rule and the No Conduit Rule, it would be the employees of 
the asset manager acting as agents or contractors for the pipeline or 
LDC, who would qualify as marketing function employees after the asset 
management arrangement was concluded and not the employees of the 
releasing party.\132\ Therefore, we grant Southwest Gas' request for 
clarification and find that the releasing shipper is not performing a 
marketing function when it assigns gas supply pursuant to an asset 
management agreement. However, if the specific asset management 
agreement leaves the releasing shipper any ability to conduct sales for 
resale or provides that the releasing shipper is to retain control of 
the transactions entered into by the asset manager, the releasing 
shipper would remain subject to the Independent Functioning Rule with 
regard to that specific agreement.
---------------------------------------------------------------------------

    \132\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 97.
---------------------------------------------------------------------------

(iv) Balancing
    64. In Order No. 717, the Commission exempted from the definition 
of marketing functions incidental purchases or sales of natural gas to 
operate interstate natural gas pipeline transmission facilities. AGA 
requests that the Commission clarify that an affiliate of an interstate 
pipeline is not engaged in ``marketing functions'' under Sec.  
358.3(c)(2)(ii) to the extent that such affiliate makes incidental 
purchases or sales of natural gas to remain in balance under applicable 
pipeline tariffs.\133\ AGA believes that the scope of the exemption 
should not be limited to the pipeline itself because there is a 
counterparty (often a shipper) for each sale and purchase the pipeline 
makes to keep its system in balance.\134\ AGA contends that such 
purchases and sales do not present any significant opportunity for a 
pipeline to unduly discriminate in favor of an affiliate because the 
affiliate must follow the pipeline's cash-out and balancing tariff 
provisions.
---------------------------------------------------------------------------

    \133\ AGA at 13. As noted above, we defined marketing functions 
for pipelines and their affiliate as ``the sale for resale in 
interstate commerce, or the submission of offers to sell in 
interstate commerce, of natural gas,'' subject to several exclusions 
including an exclusion for incidental purchases or sales of natural 
gas to operate interstate natural gas pipeline transmission 
facilities. See Order No. 717, FERC Stats. & Regs. ] 31,280 at P 83.
    \134\ AGA at 13.
---------------------------------------------------------------------------

    65. Both National Fuel and INGAA request that the Commission 
clarify that de minimis off-system sales that are related to an LDC's 
balancing requirements are not captured in the definition of marketing 
function.\135\ INGAA requests that the Commission either reestablish 
the separate exemption for sales by an affiliate that are made in order 
to remain in balance under a pipeline tariff or operational balancing 
agreement, or explicitly clarify that Sec.  358.3(c)(2)(ii) covers such 
exemptions.\136\ In the alternative, National Fuel requests rehearing 
to revise the regulations to provide specifically that de minimis off-
system sales that are in connection with the resolution of the LDC's 
inadvertent

[[Page 54473]]

imbalances pursuant to pipeline tariffs, do not fit within the 
definition of ``marketing function.'' \137\
---------------------------------------------------------------------------

    \135\ National Fuel at 11-12.
    \136\ INGAA at 12.
    \137\ National Fuel at 25.
---------------------------------------------------------------------------

    66. INGAA also requests clarification that the Sec.  
358.3(c)(2)(ii) incidental exemption applies to LNG terminals.\138\ 
INGAA states that the same general reasoning that justifies the 
operational sales exemption for pipelines and their affiliates should 
apply to LNG terminals.\139\
---------------------------------------------------------------------------

    \138\ INGAA at 13.
    \139\ Id.
---------------------------------------------------------------------------

Commission Determination
    67. We clarify that an affiliate of an interstate pipeline is not 
engaged in ``marketing functions'' under Sec.  358.3(c)(2)(ii) to the 
extent that such affiliate makes incidental purchases or sales of 
natural gas to remain in balance under applicable pipeline tariffs. We 
agree with AGA that these transactions do not present a significant 
opportunity for undue discrimination. This clarification is consistent 
with our finding in Order No. 717 that, in the case of interstate 
pipelines and their affiliates, incidental purchases or sales of 
natural gas to operate interstate natural gas pipeline transmission 
facilities do not constitute a marketing function.\140\ Furthermore, we 
note that under the previous regulations adopted in Order No. 2004, we 
found that an energy affiliate did not include an interstate pipeline 
that makes incidental purchases or sales of de minimis volumes of 
natural gas to remain in balance under applicable pipeline tariff 
requirements.\141\
---------------------------------------------------------------------------

    \140\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 83.
    \141\ Order No. 2004, FERC Stats. & Regs. ] 31,155 at P 77.
---------------------------------------------------------------------------

    68. In response to National Fuel and INGAA, the Commission 
clarifies that de minimis off-system sales that are related to an LDC's 
balancing requirements are not included in the definition of marketing 
function. As we stated in Order No. 2004-A, ``an LDC serving only its 
on-system customers must comply with pipeline balancing requirements 
and may be required to buy or sell de minimus [sic] quantities of 
natural gas in the wholesale commodity market, purchase short-term park 
and loan and storage services, buy or sell imbalances in the pipeline's 
cash out mechanism, or take other steps to meet pipeline tariff 
balancing tolerances on a daily or monthly basis. LDCs with limited 
participation in wholesale markets to satisfy these needs will continue 
to be exempt from the definition of Energy Affiliate as long as they 
are not participating in the other activities described in Sec.  
358.3(d)'' \142\ i.e. marketing activities. While the Commission has 
eliminated the concept of an energy affiliate, the rationale and its 
application to marketing activities of LDCs remain unchanged. 
Accordingly, we clarify that the exclusion in Sec.  358.3(c)(2)(ii) 
includes de minimis off-system sales that are related to an LDC's 
balancing requirements under interstate pipeline tariffs.
---------------------------------------------------------------------------

    \142\ Order No. 2004-A, FERC Stats. & Regs. ] 31,161 at P 61.
---------------------------------------------------------------------------

    69. We deny INGAA's request for clarification regarding LNG 
terminals and the ``incidental exemption.'' INGAA has not explained how 
an incidental exemption would be applied to an LNG facility.
(v) Other
    70. MidAmerican asks the Commission to clarify that employees of an 
electric public utility purchasing and selling natural gas for 
generation or local distribution company functions are not marketing 
function employees of the electric public utility.\143\ The Commission 
addressed this issue in Order No. 717, finding that the question was 
rendered moot by the exclusion of purchases of gas from the definition 
of marketing function.\144\ However, MidAmerican states that gas 
acquisition at retail for generation usually involves incidental sales 
of unneeded gas supply and therefore, the Commission must address this 
issue directly.\145\ MidAmerican states that while an LDC employee may 
not be considered to engage in a marketing function at a pipeline if 
the LDC is excluded by Sec.  358.3(c)(2), there is no similar exemption 
of LDCs under the definition of the electric marketing function and 
there is no evidence to suggest that a gas acquisition employee is 
privy to electric transmission function information.\146\
---------------------------------------------------------------------------

    \143\ MidAmerican Request for Rehearing or Clarification at 15.
    \144\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 103.
    \145\ MidAmerican at 15.
    \146\ Id. at 16.
---------------------------------------------------------------------------

    71. Southwest Gas requests that the Commission clarify the phrase 
``the submission of offers to sell in interstate commerce'' in the 
definition of natural gas marketing function activities.\147\ Southwest 
Gas explains that the submission of an offer sweeps within its scope 
not only sales of natural gas in interstate commerce but also activity 
between market participants prior to the actual sales agreement 
becoming effective. Southwest Gas believes that in application 
``submission of offers'' is unclear.\148\ Southwest Gas requests 
clarification of the definition of ``marketing functions'' to reflect 
only the sale of gas in interstate commerce.\149\
---------------------------------------------------------------------------

    \147\ Southwest Gas at 13.
    \148\ Id.
    \149\ Id.
---------------------------------------------------------------------------

    72. The Williams Companies, Inc. (Williams) request clarification 
that the exclusion in Sec.  358.3(c)(2)(iii) for ``sales of natural gas 
solely from a seller's own production'' will be interpreted consistent 
with the similar exclusion adopted in Order No. 497-A as including 
``situations in which a producer is selling gas that it owns or is 
selling gas of other interest owners in the same well and reservoir to 
the extent that the producer has contractual authority to sell such 
gas.'' \150\ Williams states that this clarification is consistent with 
the Commission's intent, as expressed in Order No. 690-A, to ``track 
the scope of the standards of conduct requirements for natural gas 
transmission providers in Order No. 497'' \151\ and to carry forward 
the historical exclusions in Order No. 717.\152\
---------------------------------------------------------------------------

    \150\ Williams Nov. 17, 2009 Request for Clarification or 
Rehearing at 7.
    \151\ Standards of Conduct for Transmission Providers, Order No. 
690-A, order on clarifications and rehearing, FERC Stats. & Regs. ] 
31,243, at P 13 (2007).
    \152\ Standards of Conduct for Transmission Providers, FERC 
Stats. & Regs. ] 32,630, at P 36 (2008).
---------------------------------------------------------------------------

    73. Alternatively, should the Commission choose not to clarify the 
exclusion in Sec.  358.3(c)(iii) as described above, Williams requests 
rehearing, and claims that the Commission has provided no rationale to 
support interpreting the exclusion in a manner differently from that 
which was in effect under Order No. 497-A.\153\ Williams argues that 
the Commission should, therefore, grant rehearing and provide that the 
exclusion in Sec.  358.3(c)(2)(iii) includes sales of gas of other 
interest owners in the same well and reservoir to the extent that the 
producer has contractual authority to sell such gas.\154\
---------------------------------------------------------------------------

    \153\ Williams at 8-9.
    \154\ Id. at 9.
---------------------------------------------------------------------------

Commission Determination
    74. We deny MidAmerican's request for clarification regarding 
electric public utility employees selling unneeded natural gas supply 
originally purchased for generation or local distribution company 
functions. MidAmerican asks that these employees not be considered 
marketing function employees. However, MidAmerican does not provide 
adequate support for the broad exemption requested. Moreover, 
MidAmerican does not explain the

[[Page 54474]]

circumstances under which the exemption should apply. For example, 
MidAmerican does not explain how ``unneeded'' should be defined.
    75. We deny the request for clarification by Southwest Gas to 
remove ``the submission of offers to sell in interstate commerce'' from 
the definition of natural gas marketing function activities so that it 
reflects only the sale of gas in interstate commerce. The submission of 
an offer to sell is an indication that a party intends to sell. As 
such, marketing function employees should not be in contact with 
transmission function employees once they have submitted offers to 
sell.
    76. The Commission grants the request for clarification by Williams 
and states that the exclusion in Sec.  358.3(c)(2)(iii) for ``sales of 
natural gas solely from a seller's own production'' is consistent with 
the similar exclusion adopted in Order No. 497-A that includes 
``situations in which a producer is selling gas that it owns or is 
selling gas of other interest owners in the same well and reservoir to 
the extent that the producer has contractual authority to sell such 
gas.'' \155\ As we stated in Order No. 497-A, this does not mean that 
such entities can never be considered to be marketers of gas as the 
term is used in the Standards of Conduct. If a producer sells gas that 
was produced by another, it is acting as a marketer of the gas.\156\ 
Furthermore, a gatherer or processor that sells gas from facilities 
other than its own is a marketer.\157\
---------------------------------------------------------------------------

    \155\ Order No. 497-A, FERC Stats. & Regs. ] 30,868 at 31,591 
n.19.
    \156\ Id. at 31,591-2.
    \157\ Id.
---------------------------------------------------------------------------

4. Marketing Function Employees
    77. Wisconsin Electric seeks clarification as to whether an 
employee in the legal, finance or regulatory division of a 
jurisdictional entity, whose intermittent day-to-day duties include the 
drafting and redrafting of non-price terms and conditions of, or 
exemptions to, umbrella agreements would be considered a ``marketing 
function employee'' under the standards.\158\
---------------------------------------------------------------------------

    \158\ Wisconsin Electric Nov. 17, 2009 Request for Clarification 
at 6.
---------------------------------------------------------------------------

    78. Wisconsin Electric asks the Commission to provide guidance with 
respect to which types of activities it considers to be ``day-to-day'' 
activities of a marketing function employee.\159\ Specifically, 
Wisconsin Electric requests that the Commission clarify whether 
individuals responsible for contract administration are ``marketing 
function employees'' under the rule and whether the preparation of 
monthly or annual requests for financial transmission rights and 
auction revenue rights constitutes ``day-to-day'' activities pursuant 
to the rule.\160\
---------------------------------------------------------------------------

    \159\ Id. at 7.
    \160\ Id. at 8.
---------------------------------------------------------------------------

    79. EEI understands that an officer may disapprove a power sales 
contract without becoming a marketing function employee.\161\ However, 
EEI requests clarification as to whether the officer is permitted to 
explain why a contract is being disapproved.\162\ EEI argues that the 
ability to provide such overall feedback, which may effectively become 
general parameters for contract renegotiation, is important for 
efficient discharge of fiduciary duties and an important part of 
corporate governance.\163\
---------------------------------------------------------------------------

    \161\ EEI at 9-10.
    \162\ Id.
    \163\ Id.
---------------------------------------------------------------------------

Commission Determination
    80. The Commission clarifies that an employee in the legal, finance 
or regulatory division of a jurisdictional entity, whose intermittent 
day-to-day duties include the drafting and redrafting of non-price 
terms and conditions of, or exemptions to, umbrella agreements is a 
``marketing function employee.'' ``Marketing functions'' are not 
limited to only price terms and conditions of a contract, because non-
price terms and conditions of a contract could contain information that 
an affiliate could use to its advantage. For example, delivery or hub 
locations in a contract are non-price terms that could be used to favor 
an affiliate. In addition, negotiated terms and conditions could affect 
the substantive rights of the parties. For this reason, we decline to 
make a generic finding to limit ``marketing functions'' to only price 
terms and conditions, but will consider waiver requests concerning an 
employee whose intermittent duties involve drafting non-price terms and 
conditions.
    81. Wisconsin Electric requests that the Commission clarify whether 
individuals responsible for contract administration are ``marketing 
function employees'' under the rule. As stated in Order No. 717, the 
``development of general negotiating parameters for wholesale 
contracts'' is not considered a ``day-to-day'' activity that 
characterizes a transmission function or the duties of a marketing 
function employee.\164\ However, if the employee responsible for 
contract administration ``regularly carries out or supervises * * * or 
is actively and personally engaged'' in the negotiation of the 
contracts, then he or she is considered a marketing function 
employee.\165\ Because Wisconsin Electric has not provided any 
information about the duties of its employee responsible for contract 
administration, the Commission is unable to provide any further 
clarification.
---------------------------------------------------------------------------

    \164\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 122.
    \165\ See id. P 117.
---------------------------------------------------------------------------

    82. Wisconsin Electric also requests clarification concerning 
employees who prepare monthly or annual requests for financial 
transmission rights and auction revenue rights allocations to hedge the 
costs of serving load. The Commission states that if these employees 
are not actively and personally engaged in sales for resale of these 
products, but only involved in purchases through requests for financial 
transmission rights and auction revenue rights allocations, then they 
are not marketing function employees.
    83. EEI requests that we clarify that a supervisor is not engaged 
in a marketing function when that supervisor explains why a contract is 
being disapproved. As stated in Order No. 717, a supervisor is not 
engaged in the marketing function activity, if that supervisor is 
``simply signing off on a deal negotiated or proposed by someone else, 
and is not providing input into the negotiations.'' \166\ Similarly, we 
clarify that as long as the supervisor is not actively and personally 
engaged on a day-to-day basis in the contract negotiations and is 
simply providing an explanation concerning the disapproval of a 
contract, the supervisor is not engaged in a marketing function. 
However, in this scenario, the supervisor remains subject to the No 
Conduit Rule.
---------------------------------------------------------------------------

    \166\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 119.
---------------------------------------------------------------------------

5. Long-Range Planning, Procurement and Other Interactions
    84. MidAmerican asks the Commission to delete the communication 
bars and acknowledge that communications between marketing and 
transmission function employees are permitted, but must comply with the 
Standards.\167\ MidAmerican argues that the Commission has too narrowly 
described and too broadly restricted communications between 
transmission and marketing function employees.\168\ MidAmerican asserts 
that there are circumstances that may give rise to a need for business 
communication

[[Page 54475]]

between these groups that would not in any way impute restricted non-
public transmission function information such as human resources 
matters.\169\
---------------------------------------------------------------------------

    \167\ MidAmerican at 14.
    \168\ Id.
    \169\ Id.
---------------------------------------------------------------------------

    85. EEI notes that there is a range of business-related activities 
that have nothing to do with transmission or marketing functions, such 
as meetings to discuss long term strategic corporate goals, benefit 
options, safety training, leadership development, and charity 
drives.\170\ EEI requests clarification that the scope of permitted 
interactions extends to these types of activities.\171\ EEI requests 
clarification that meetings that include transmission function and 
marketing function employees, but do not relate to transmission or 
marketing functions, are not barred under the Standards, but remain 
subject to the No Conduit Rule.\172\
---------------------------------------------------------------------------

    \170\ EEI at 7.
    \171\ Id. at 8.
    \172\ Id.
---------------------------------------------------------------------------

    86. EEI suggests that there are other areas that may relate 
tangentially to transmission or marketing functions for which meetings 
should be allowed.\173\ These include design and implementation of FERC 
or other compliance programs, and investigation and remediation of 
potential violations.\174\ Accordingly, EEI requests clarification that 
joint participation in public or quasi-public meetings is permitted, 
and that joint meetings regarding legal, regulatory, rate, compliance, 
enforcement, or other corporate or business matters are permitted, 
subject to the No Conduit Rule.\175\
---------------------------------------------------------------------------

    \173\ Id.
    \174\ Id.
    \175\ Id. at 9.
---------------------------------------------------------------------------

    87. Western Utilities Compliance Group (Western Utilities) \176\ 
also seeks clarification that certain joint meetings and communications 
between marketing function employees and transmission function 
employees are permissible. Specifically, Western Utilities requests 
that we clarify that the Standards do not prohibit joint meetings and 
communications that do not violate the separation of functions 
requirement provided in 18 CFR 358.5(b) and that do not include any 
disclosure of non-public transmission function information to marketing 
function employees.\177\ Western Utilities contends that previously 
only joint meetings and communications about transmission related 
matters were prohibited and that it has established safeguards and 
procedures to ensure that no sharing of non-public transmission 
function information occurs at these meetings.\178\ According to 
Western Utilities, examples of the types of joint meetings and 
communications that should be permitted under the Standards include 
corporate meetings and training,\179\ the development process for 
reliability standards, ISO/RTO issues, disaster/outage preparedness 
training,\180\ and joint participation in FERC and State regulatory and 
compliance functions.\181\
---------------------------------------------------------------------------

    \176\ Western Utilities is comprised of Arizona Public Service 
Company, Avista Corporation, El Paso Electric Company, Idaho Power 
Company, Pacific Gas and Electric Company, PacifiCorp, Portland 
General Electric Company, Puget Sound Energy, Southern California 
Edison Company, and Tucson Electric Power Company.
    \177\ Western Utilities at 5. INGAA supports this request for 
clarification. See INGAA August 4, 2009 Answer at 4.
    \178\ Id. at 6.
    \179\ Id. at 8. These include award ceremonies, community 
service activities, training on leadership, EEO safety and ethics as 
well as utility-wide management meetings. INGAA states that this 
category of meetings would also apply to interstate pipelines. INGAA 
Answer at 4.
    \180\ Id. at 9. Essentially, Western Utilities' question is 
whether these meetings and communications would be permitted under 
the exception regarding meetings ``to maintain or restore operation 
of the transmission system or generating units.'' See 18 CFR 
358.7(h)(2).
    \181\ Id. INGAA states that this category of meetings also would 
apply to interstate pipelines. INGAA Answer at 4.
---------------------------------------------------------------------------

    88. INGAA also discusses a variety of other examples of the types 
of joint meetings that should be permitted under the Standards, 
including affiliate participation in regulatory or industry proceedings 
or conferences; \182\ pipeline sponsored meetings with customers; \183\ 
and pipeline marketing.\184\ AGA also believes the Independent 
Functioning Rule of the Standards of Conduct should not be interpreted 
to preclude business-related meetings and discussions between 
transmission function employees and marketing function employees where 
non-public transmission function information will not be 
disclosed.\185\
---------------------------------------------------------------------------

    \182\ INGAA Answer at 7.
    \183\ Id. INGAA provided examples of the topics at such meetings 
including changes to business processes, an upcoming tariff filing 
or the status of on-going regulatory proceedings.
    \184\ Id. at 8. According to INGAA, this involves marketing the 
pipeline's services, not gas marketing. These meetings would include 
discussions of the affiliate's own contracts, sales presentations 
involving posted available capacity or expansion projects and 
services.
    \185\ AGA Sept. 11, 2009 Supplemental Comments at 4.
---------------------------------------------------------------------------

Commission Determination
    89. The Commission clarifies that certain communications between 
marketing and transmission function employees are permitted. 
Specifically, the Commission clarifies that meetings including both 
transmission function and marketing function employees are not barred 
under the Standards of Conduct as long as the meetings do not relate to 
transmission or marketing functions. However, the No Conduit Rule still 
applies to these meetings.
    90. We decline to provide a generic clarification regarding EEI's 
request that we allow meetings that ``relate tangentially to 
transmission or marketing functions,'' as this phrase is too nebulous 
for us to determine the extent to which non-public transmission 
function information might be disclosed at these meetings. However, we 
do clarify that so long as non-public transmission function information 
is not disclosed between transmission and marketing function employees 
as part of the development process for reliability standards, then 
joint meetings including both transmission and marketing function 
employees are permissible. Similarly, joint meetings including both 
transmission and marketing function employees to discuss RTO and ISO 
issues are permissible if non-public transmission function information 
is not disclosed between transmission and marketing function employees. 
Furthermore, we clarify that transmission function employees and 
marketing function employees may jointly participate in regulatory and 
compliance functions, including Federal Energy Regulatory Commission 
compliance activities, as long as these discussions do not include any 
disclosure of non-public transmission function information.
    91. However, we decline the Western Utilities' request that we find 
that joint meetings for disaster/outage preparedness training fit 
within the permitted interactions ``to maintain or restore operation of 
the transmission system or generating units, * * *'' as described in 
Sec.  358.7(h)(2). The exclusion described in Sec.  358.7(h)(2) is 
limited to true emergency situations, rather than preparation for a 
disaster. However, we clarify that joint meetings including both 
transmission and marketing function employees for disaster/outage 
preparedness training are permissible as long as these employees do not 
share non-public transmission function information. Furthermore, the 
Commission will consider on a case-by-case basis requests for waiver of 
this prohibition against joint meetings for disaster/outage 
preparedness training during which non-public transmission function 
information will be discussed.

[[Page 54476]]

    92. With regard to the examples of joint meetings suggested by 
INGAA, we reiterate that so long as non-public transmission function 
information is not disclosed between transmission and marketing 
function employees, the meetings are permissible. If INGAA or another 
entity has a concern about whether the meeting would run afoul of the 
Standards of Conduct, then the entity should apply for a waiver in 
advance.

C. The No Conduit Rule

    93. In Order No. 717, we continued the no conduit prohibition of 
the then existing Standards, but modified the rule to encompass only 
marketing function employees. The No Conduit Rule prohibits employees 
of a transmission provider from disclosing non-public transmission 
function information to the transmission provider's marketing function 
employees.\186\ Contractors, consultants, agents, marketing function 
employees of an affiliate are covered by this prohibition.\187\
---------------------------------------------------------------------------

    \186\ See 18 U.S.C. 358.6.
    \187\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 201-02.
---------------------------------------------------------------------------

    94. Wisconsin Electric states that as currently written, the text 
of Sec.  358.6 prohibits the disclosure of non-public transmission 
function information to any of the transmission provider's ``marketing 
function employees.'' \188\ Wisconsin Electric contends that the 
Standards of Conduct do not extend the prohibition to the ``marketing 
function employees'' of the transmission provider's affiliate.\189\ 
Wisconsin Electric requests that the Commission clarify that this 
omission was intentional.\190\
---------------------------------------------------------------------------

    \188\ Wisconsin Electric at 8.
    \189\ Id.
    \190\ Id.
---------------------------------------------------------------------------

    95. Wisconsin Electric further states that it is unclear whether 
the Commission intended the No Conduit Rule in Sec.  358.6(b) to 
require that the employees, contractors, consultants or agents of an 
affiliate of a transmission provider that is engaged in marketing 
functions be prohibited from disclosing non-public transmission 
function information to any of the transmission provider's ``marketing 
function employees'' or whether the Commission intended only to 
proscribe the activities of employees, contractors, consultants or 
agents of an affiliate of a transmission provider that are engaged in 
transmission functions from disclosing non-public transmission function 
information to any of the transmission provider's ``marketing function 
employees.'' \191\
---------------------------------------------------------------------------

    \191\ Id.
---------------------------------------------------------------------------

    96. Additionally, Wisconsin Electric notes that Sec.  358.8(b)(2) 
does not extend the requirement to distribute the written procedures in 
Sec.  358.7(d) to the transmission provider's affiliates.\192\ 
Wisconsin Electric requests clarification that the omission was 
intentional.\193\
---------------------------------------------------------------------------

    \192\ Id. at 8-9.
    \193\ Id. at 9.
---------------------------------------------------------------------------

Commission Determination
    97. Wisconsin Electric contends that as currently written, the No 
Conduit Rule does not prohibit employees of a transmission provider 
from disclosing non-public transmission function information to 
marketing function employees of a transmission provider's affiliate. 
That is not the case. The No Conduit Rule prohibits disclosure of non-
public transmission function information to any of the ``marketing 
function employee[s]'' of the transmission provider or its affiliate. 
As previously stated in Order No. 717, ``[m]arketing function employees 
are defined in Sec.  358.3(d) to include employees, contractors, 
consultants or agents not only of the transmission provider, but also 
of an affiliate of the transmission provider.'' \194\ Therefore, the No 
Conduit Rule extends to ``marketing function employee[s]'' of the 
transmission provider's affiliate. For this same reason, Wisconsin 
Electric misunderstands the scope of the Implementation Requirements in 
Sec.  358.8(b)(2). Because ``marketing function employee'' includes an 
employee of ``an affiliate of a transmission provider,'' the 
Implementation Requirements in Sec.  358.8(b)(2) extend its 
distribution requirement to include marketing function employees of the 
transmission provider's affiliate.
---------------------------------------------------------------------------

    \194\ Order No. 717, FERC Stats. & Regs. ] 61,280 at P 202. See 
also 18 CFR 358.3(d) (Marketing function employee includes an 
affiliate of a transmission provider).
---------------------------------------------------------------------------

    98. Wisconsin Electric asks whether the Commission intended the No 
Conduit Rule to prohibit employees, contractors, consultants or agents 
of an affiliate of a transmission provider that are engaged in 
transmission functions from acting as a conduit to disclose non-public 
transmission function information to any of the transmission provider's 
``marketing function employees.'' Wisconsin Electric's requested 
clarification to the No Conduit Rule would prohibit only transmission 
function employees from acting as a conduit. However, the No Conduit 
Rule generally states that a transmission provider is prohibited from 
using anyone as a conduit to disclose non-public transmission function 
information to the transmission provider's marketing function 
employees. The No Conduit Rule is not simply limited to transmission 
function employees from acting as a conduit. Because Wisconsin 
Electric's clarification request would defeat the purpose of the No 
Conduit Rule, we decline to change the meaning of this section.

D. Transparency Rule

    99. In Order No. 717, we also adopted a Transparency Rule, the 
provisions of which are designed to alert interested persons and the 
Commission to potential acts of undue preference. The previously 
existing posting requirements were moved to this section.\195\
---------------------------------------------------------------------------

    \195\ Order No. 717, FERC Stats. & Regs. ] 61,280 at P 205.
---------------------------------------------------------------------------

    100. MidAmerican states that the rules should recognize that 
support employees may be employed by one transmission provider but 
assist other transmission providers in the same holding company without 
triggering a requirement for equal access to non-public transmission 
function information used in their jobs.\196\ While MidAmerican does 
not suggest revival of the concept of shared employees, it suggests a 
change to the language in Sec.  358.2(d) to clarify that transmission 
providers within the same holding company may have shared business 
functions that may exchange non-public transmission function 
information without the need for disclosure.\197\
---------------------------------------------------------------------------

    \196\ MidAmerican at 11.
    \197\ Id. at 12.
---------------------------------------------------------------------------

    101. INGAA urges the Commission to delete, or in the alternative, 
amend the ``General Principle'' stated in Sec.  358.2(d) that ``[a] 
transmission provider must provide equal access to non-public 
transmission function information to all its transmission function 
customers, affiliated and non-affiliated, except in the case of 
confidential customer information or Critical Energy Infrastructure 
information'' so that it conforms to the transparency rules under Sec.  
358.7.\198\ INGAA believes that Sec.  358.2(d) fails to recognize the 
disclosure exemption for specific requests for transmission service. 
INGAA points out that Sec.  358.7(b) indicates that there is no 
obligation to disclose a marketing function employee's specific request 
for transmission service.\199\ INGAA asserts

[[Page 54477]]

that Sec.  358.2(d) can be read broadly to suggest that all discussion 
between a transmission function employee and an employee of an 
affiliate who is not a marketing function employee must be disclosed if 
it is non-public transmission function information.\200\
---------------------------------------------------------------------------

    \198\ INGAA at 9.
    \199\ Id.
    \200\ Id.
---------------------------------------------------------------------------

    102. National Fuel asks that the Commission remove or modify the 
new ``equal access'' principle set out at Sec.  358.2(d) by limiting 
its scope to non-public transmission information provided to marketing 
function employees, and eliminating its confusing partial list of 
exceptions.\201\ National Fuel argues that because its applicability is 
not limited to non-public transmission function information provided to 
marketing function employees, Sec.  358.2(d) is far broader than the 
Transparency Rule it attempts to summarize.\202\ National Fuel further 
asserts that another problem with Sec.  358.2(d) is that, unlike the 
Standards of Conduct's other principles, this principle includes 
specific exceptions, but in so doing implicitly excludes mention of 
other exceptions contained in the Transparency Rule.\203\ National Fuel 
contends that reference to specific regulatory exceptions in a 
statement of general principle should be unnecessary and reference to 
some but not all of the specific regulatory exceptions creates 
confusion in the regulations.\204\
---------------------------------------------------------------------------

    \201\ National Fuel at 34.
    \202\ Id. at 33-34.
    \203\ Id. at 34.
    \204\ Id.
---------------------------------------------------------------------------

    103. AGA notes that pipelines are no longer required to post on the 
Internet within 24 hours each emergency that resulted in a deviation 
from the Standards, as Sec.  358.4(a)(2) had required pipelines to do 
prior to Order No. 717.\205\ However, AGA notes that Sec.  358.7(h) 
retains the requirement that a transmission provider make available to 
the Commission upon request the record of certain non-public 
transmission function information exchanges between transmission 
function employees and marketing function employees. AGA requests that 
the Commission clearly define a process by which interested persons may 
obtain from the Commission the records it receives from pipelines 
regarding emergency deviations from the Standards, and a process by 
which interested persons may request that the Commission seek such 
records for a pipeline.\206\
---------------------------------------------------------------------------

    \205\ AGA at 16.
    \206\ AGA at 15-16.
---------------------------------------------------------------------------

    104. EEI requests clarification that the ``internet Web site'' 
posting requirements can be met by posting information on publicly 
accessible portions of OASIS.\207\
---------------------------------------------------------------------------

    \207\ EEI at 13.
---------------------------------------------------------------------------

    105. The Natural Gas Supply Association (NGSA) argues that the 
Commission erred by removing the discount posting provision from the 
Standards as proposed in the NOPR.\208\ Specifically, NGSA contends 
that the reporting requirement under 18 CFR 284.13(b)(1)(iii) is not 
sufficient to satisfy the transparency goals of the Standards.\209\ 
NGSA remarks that the Commission failed to notice the distinction 
between the timing of the posting required under 18 CFR 
284.13(b)(1)(iii) and that required under the Standards. The former 
provision requires postings no later than the first nomination under a 
transaction whereas the Standards would have required a contemporaneous 
posting had the language been adopted as proposed in the NOPR.\210\ 
NGSA requests that the Commission adopt the discount posting provisions 
in the Standards of Conduct as proposed in the NOPR in order to retain 
the contemporaneous timing of posting.
---------------------------------------------------------------------------

    \208\ NGSA Nov. 17, 2008 Request for Clarification or Rehearing 
at 5.
    \209\ Id. at 6.
    \210\ Id.
---------------------------------------------------------------------------

    106. NGSA also argues that the Commission erred by eliminating the 
requirement of posting tariff waivers for non-affiliates.\211\ NGSA 
argues that the complete elimination of the requirement to post when a 
pipeline waives its filed tariff in favor of a non-affiliate shields 
such actions from disclosure, thereby making it impossible for pipeline 
shippers to determine whether they are being treated comparably and not 
in an unduly discriminatory manner.\212\ NGSA requests that the 
Commission require that the waiver posting apply to all waivers granted 
and not only those granted to an affiliate.\213\
---------------------------------------------------------------------------

    \211\ Id. at 8.
    \212\ Id. at 9.
    \213\ Id.
---------------------------------------------------------------------------

    107. NGSA also contends that the Commission erred by eliminating 
all posting requirements with respect to exercises of discretion 
provided for in the pipeline's tariff.\214\ NGSA argues that the simple 
fact that certain acts are permitted under a pipeline's tariff is not 
sufficient reason to eliminate posting requirements because exercises 
of discretion can still result in discriminatory behavior.\215\ NGSA 
notes that discounting rates is an act of discretion that is 
nonetheless subject to posting because it allows others to monitor 
whether they are being treated similarly or not.\216\ NGSA claims that 
there is no reason for the Commission to treat other acts of discretion 
any differently.\217\ NGSA asserts that the Commission should adopt a 
rule of thumb whereby a pipeline would post individual acts of 
discretion that are not generic in application, which are not available 
to all shippers and that cannot be denied when requested.\218\
---------------------------------------------------------------------------

    \214\ Id. at 11.
    \215\ Id. at 12.
    \216\ Id.
    \217\ Id.
    \218\ Id.
---------------------------------------------------------------------------

    108. NGSA requests that the Commission clarify that (1) a marketing 
function employee who believes that he may have received non-public 
transmission function information must notify the transmission provider 
regardless of how such information was obtained and (2) if the 
transmission provider determines that the information disclosed to the 
marketing function employee was, in fact, a violation, it must post the 
disclosed information.\219\ NGSA states that Order No. 717 eliminates 
the proposal for transmission providers to post non-public information 
disclosed to a marketing affiliate by a third party.\220\ NGSA contends 
that the Commission went from proposing to bar marketing function 
employees from receiving non-public transmission function information 
from any source, and requiring posting of such information if received, 
to a final rule that eliminates both of these requirements and requests 
the clarification as a middle ground.\221\
---------------------------------------------------------------------------

    \219\ Id. at 15.
    \220\ Id.
    \221\ Id. at 16.
---------------------------------------------------------------------------

    109. TAPS contends that the Commission should require transmission 
providers to identify their marketing function employees by name, job 
title and description, and position in the chain of command on their 
websites.\222\ TAPS argues that this requirement would facilitate 
monitoring of compliance with the Independent Functioning Rule and help 
employees comply with the No Conduit Rule by providing a centralized 
and authoritative list of the employees to whom employees may not 
provide non-public transmission function information.\223\
---------------------------------------------------------------------------

    \222\ TAPS at 45.
    \223\ Id. at 46.
---------------------------------------------------------------------------

    110. EEI requests clarification that transmission providers are not 
required to post the names of transmission function employees on the 
Internet.\224\

[[Page 54478]]

EEI states that the regulatory text makes no mention of posting of 
names, but paragraph 246 of Order No. 717 does make reference to 
``section 358.7(f)(1) covering the posting of job titles and names of 
transmission function employees.'' \225\
---------------------------------------------------------------------------

    \224\ EEI at 18.
    \225\ Id.
---------------------------------------------------------------------------

    111. EEI notes that Order No. 717 retains the concept that an 
``affiliate'' can include a ``functional unit'' of a transmission 
provider and that the rules also require that a transmission provider 
maintain its books of account and records separately from its 
affiliates that employ or retain marketing function employees.\226\ EEI 
requests clarification that a ``functional unit'' of a transmission 
provider that performs marketing functions is not required to keep its 
books separately from those of the transmission provider.\227\
---------------------------------------------------------------------------

    \226\ EEI at 17.
    \227\ EEI at 17.
---------------------------------------------------------------------------

    112. National Fuel contends that the language in Sec.  358.7(b) 
regarding the transaction specific exemption is unduly narrow and 
should be refined.\228\ National Fuel argues that the regulation should 
encompass communications related to transportation agreements (not 
merely service requests) and those concerning requests for 
interconnections and new infrastructure.\229\
---------------------------------------------------------------------------

    \228\ National Fuel at 36-37.
    \229\ Id.
---------------------------------------------------------------------------

Commission Determination
    113. We grant the clarification requested by MidAmerican to clarify 
one of the General Principles in Sec.  358.2(d) so that it is 
consistent with other sections of part 358. Specifically, we clarify 
that transmission providers may allow their transmission function 
employees to exchange non-public transmission function information to 
non-marketing function employees without the need for disclosure. While 
we do not revive the concept of shared employees, we agree with 
MidAmerican that the language in Sec.  358.2(d) needs to be clarified 
so as not to imply that transmission providers would have to provide 
equal access to non-public transmission function information to all 
customers following disclosure of non-public transmission function 
information to non-marketing function employees. For example, if a unit 
of one transmission provider provides information technology support 
for other transmission providers in a holding company system, these 
non-marketing function employees may become privy to non-public 
transmission function information. However, we note that these 
employees remain obligated to abide by the No Conduit Rule. We will 
revise the language in Sec.  358.2(d) to reflect this clarification.
    114. The Commission agrees with INGAA and National Fuel that the 
``General Principle'' in Sec.  358.2(d) does not identify the 
disclosure exemption for specific requests for transmission service 
under Sec.  358.7. While we agree with National Fuel that Sec.  
358.2(d) applies to non-public information provided to marketing 
function employees, it was not the Commission's intention to have the 
``General Principle'' describe all exemptions more fully described in 
subsequent sections of the Standards of Conduct. However, to alleviate 
any confusion surrounding the scope of the ``General Principle,'' we 
will revise the language in Sec.  358.2(a), Sec.  358.2(b), Sec.  
358.2(c), and Sec.  358.2(d) as noted herein.
    115. We deny AGA's request that the Commission define a process by 
which interested persons may obtain from the Commission the records it 
receives from pipelines regarding emergency deviations from the 
Standards, and a process by which interested persons may request that 
the Commission seek such records for a pipeline. Under Sec.  
358.7(h)(1), a transmission provider's transmission function employees 
are allowed to exchange certain non-public transmission function 
information with marketing function employees as necessary to maintain 
or restore operation of the transmission system and according to the 
requirements in Sec.  358.7(h)(2) without making a contemporaneous 
record of the exchange during emergency situations. For these emergency 
situations, a record must be made as soon as practicable following the 
emergency and must be made available to the Commission upon request.
    116. The Commission has never required the information exchanged 
under this emergency exception be made publicly available and declines 
to create such a process here or to create a process for an entity to 
ask the Commission to exercise its discretion in requesting such 
records. The Independent Functioning Rule in former Sec.  358.4(a)(2) 
only required posting of a notice of an emergency, not posting of any 
information exchanged. As we stated in the NOPR with respect to 
employee interactions regarding reliability functions, ``it [is] the 
first order of business on the part of a transmission provider to 
ensure reliability of operations.'' \230\ We therefore provided this 
exception to the Independent Functioning Rule to ensure that an entity 
can focus on responding to the emergency without concern for 
contemporaneous recordkeeping.\231\
---------------------------------------------------------------------------

    \230\ NOPR, FERC Stats. & Regs. ] 32,630 at P 33.
    \231\ Id.
---------------------------------------------------------------------------

    117. We grant EEI's request and provide confirmation for purposes 
of compliance with the Internet posting requirements under the 
Standards of Conduct that it is acceptable to post information on a 
publicly accessible portion of OASIS that can be reached from a 
transmission provider's Web site by Internet link. As we noted in Order 
No. 717, some transmission owners who are members of RTOs or ISOs may 
not have their own OASIS \232\ and this clarification ensures that 
information will be accessible to all interested entities.
---------------------------------------------------------------------------

    \232\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 247.
---------------------------------------------------------------------------

    118. The Commission denies NGSA's request to adopt the discount 
posting provisions in the Standards of Conduct as proposed in the NOPR. 
Posting no later than the first nomination is consistent with how all 
other shippers are treated and provides the necessary transparency.
    119. We deny NGSA's request to require that the waiver posting 
requirement apply to all waivers granted and not only those granted to 
an affiliate. Section 284.13(b)(1)(viii) already requires posting of 
all instances where a transportation contract deviates from the 
pipeline's tariff, and the Standards of Conduct are not intended to be 
duplicative of the panoply of pipeline-specific posting requirements. 
Rather, the gravamen of the abuse targeted by the Standards is undue 
preference to affiliates. And, as Order No. 717 stated, a blanket 
requirement to post all waivers and exercises of discretion goes beyond 
what is needed to alert customers and others to possible acts of undue 
discrimination or preferences in favor of an affiliate.\233\ 
Furthermore, we note that if a tariff does not permit a particular 
waiver, a pipeline must come to the Commission to request a waiver, 
which would provide notice of the request. If the tariff gives the 
pipeline discretion to waive provisions, then the Commission would have 
already considered whether notice was necessary for that particular 
waiver provision after the pipeline first proposed such tariff 
language. In many cases such tariff provisions require the pipeline to 
provide some sort of notice. Because NGSA has not shown a need for a 
blanket posting requirement applicable to all tariff waivers granted to

[[Page 54479]]

non-affiliates, we decline to grant NGSA's request for rehearing.\234\
---------------------------------------------------------------------------

    \233\ Id. P 214.
    \234\ See, e.g., Norstar Operating LLC. v. Columbia Gas 
Transmission Corp., 118 FERC ] 61,221, at P 147 (2007) (tariff 
requires posting of waiver of gas quality provision).
---------------------------------------------------------------------------

    120. The Commission denies NGSA's request to adopt a rule of thumb 
whereby a pipeline would post individual acts of discretion that are 
not generic in application, which are not available to all shippers and 
that cannot be denied when requested. As we stated in support of our 
determination in Order No. 717, an act of discretion occurs when the 
specific tariff provision involves an exercise of judgment on the part 
of the transmission provider, e.g., which type of credit is acceptable. 
When a pipeline submits a specific tariff provision that allows the 
pipeline to exercise discretion to the Commission for review and 
approval, the pipeline also serves copies of the filing on its 
customers. The Commission also provides notice of the filing and the 
opportunity for comments, as such, the Commission considers customers 
to have had notice that the pipeline could exercise discretion under 
that particular tariff provision. Transmission providers exercise their 
discretion and make judgment calls on an ongoing basis and recording 
all of these matters would place a substantial administrative burden on 
them when the customers have already had notice that the pipeline can 
exercise such discretion for a specific tariff provision.\235\ 
Furthermore, audits would reveal acts of discriminatory discounting.
---------------------------------------------------------------------------

    \235\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 216.
---------------------------------------------------------------------------

    121. The Commission denies NGSA's request for clarification that 
marketing function employees be required to report any disclosure of 
non-public transmission function information to the transmission 
provider. The No Conduit Rule will continue to prohibit a transmission 
provider from using anyone as a conduit for disclosure of non-public 
transmission function information to a marketing function employee 
including an employee, contractor, consultant or agent of an affiliate 
of a transmission provider that is engaged in marketing functions. As 
we stated in Order No. 717, we eliminated the prohibition in proposed 
section 358.6(a)(2), which would have prohibited marketing function 
employees from receiving non-public transmission function information 
from any source because of the difficulties in determining whether a 
marketing function employee may have willingly and knowingly or 
inadvertently received such information.\236\ However, we reiterate, as 
we said in Order No. 717, that ``if a transmission provider uses anyone 
as a conduit for improper disclosures, such an event would be 
considered an improper disclosure and should be posted.'' \237\ We also 
noted in Order No. 717 in discussing Standards of Conduct training that 
transmission function employees and marketing function employees are 
the two core categories of employees that should be most cognizant of 
the rules. Although we deleted the prohibition against marketing 
function employees receiving transmission function information due to 
the possibility such receipt could be inadvertent, ``it is expected 
that if someone attempted to pass such information to a marketing 
function employee, the marketing function employee would not only 
refuse it but would report the individual to the company's chief 
compliance officer or other appropriate individual.'' \238\
---------------------------------------------------------------------------

    \236\ Id. P 200-01.
    \237\ Id. P 236.
    \238\ Id. P 306.
---------------------------------------------------------------------------

    122. The Commission denies TAPS' request that we require 
transmission providers to identify their marketing function employees 
by name, job title and description, and position in the chain of 
command on their Web sites. Specifically, we find no basis for TAPS' 
contention that names of marketing function employees and their 
position in the chain of command are necessary for either monitoring a 
transmission provider's compliance with the Independent Functioning 
Rule or facilitating employee compliance with the No Conduit Rule. 
Based on our past experience, we find that a listing of job title and 
description is sufficient for Standards of Conduct compliance. 
Furthermore, any benefit that would result from a listing of names and 
an explanation of the chain of command would be marginal at best.
    123. We grant EEI's clarification request with regard to posting of 
names of transmission function employees on the Internet. We clarify 
that transmission providers are not required to post the names of 
transmission function employees on the Internet. Order No. 717 
incorrectly mentioned ``names'' in explaining the requirement in Sec.  
358.7(f)(1) in P 246.
    124. We will also grant EEI's request and clarify that a 
``functional unit'' of a transmission provider that performs marketing 
functions is not required to keep its books separately from those of 
the transmission provider. However, we note that the No Conduit Rule 
prohibits a transmission provider from allowing non-public transmission 
function information to be disclosed to marketing function employees 
through a joint set of books and records.
    125. The Commission denies National Fuel's request to revise Sec.  
358.7(b) to encompass communications related to transportation 
agreements and those concerning requests for interconnections and new 
infrastructure. However, we clarify that the transaction specific 
exemption is not limited to communications concerning requests for 
transmission service. The transaction specific exemption includes 
communications related to transportation agreements, specific 
interconnections and new infrastructure needed for the specific 
request.

E. Other Definitions--Transmission Function Information

    126. EEI seeks clarification that information needed to make 
economic decisions affecting generation dispatch, such as unit 
commitment, purchase and sale decisions, should not be classified as 
non-public transmission function information and is thus not subject to 
the recordation requirement in 18 CFR 358.7(h).\239\ Western Utilities 
agrees with EEI's contention that information related to generation 
dispatch should not be considered non-public transmission function 
information.\240\ Western Utilities argues that this exception should 
be expanded to include unit commitment.
---------------------------------------------------------------------------

    \239\ EEI at 1-2.
    \240\ Western Utilities at 12. See also EEI at 6.
---------------------------------------------------------------------------

    127. EEI notes that the regulatory text adopted by Order No. 717 
provides that ``a transmission provider's transmission function 
employees and marketing function employees may exchange certain non-
public transmission function information * * * in which case the 
transmission provider must make and retain a contemporaneous record of 
all such exchanges except in emergency circumstances'' and therefore by 
its terms applies only to exchanges of non-public transmission function 
information.\241\ EEI further states that the types of information that 
may be exchanged subject to this recordation process include 
``[i]nformation necessary to maintain or restore operation of the 
transmission system or generating units, or that may affect the 
dispatch of generating units.'' \242\ EEI notes that the confusion 
surrounds whether the new exclusion, and its recordation process, is 
intended to apply to all information used in

[[Page 54480]]

generation dispatch.\243\ EEI requests clarification concerning whether 
information about a company's own generation and load, such as the type 
of information discussed in Indianapolis Power & Light Co., 90 FERC ] 
61,174 at 61, 575-76 and Indianapolis Power & Light Co., 92 FERC ] 
61,002 at 61,003, may be provided to marketing function employees 
without being subject to the recordation requirement.\244\
---------------------------------------------------------------------------

    \241\ EEI at 5 (citing 18 CFR 358.7(h)(1)).
    \242\ Id. (citing 18 CFR 358.7(h)(2)).
    \243\ Id. at 5.
    \244\ Id. at 6.
---------------------------------------------------------------------------

    128. EEI also requests clarification that the other categories of 
information identified in Sec.  358.7(h)(2)--i.e., information 
pertaining to compliance with Reliability Standards and information 
necessary to maintain or restore operation of the transmission system 
or generating units--are not per se deemed transmission function 
information subject to the recordation requirement.\245\ Western 
Utilities also requests clarification of this subsection, arguing that 
Sec.  358.7(h)(2)(i) creates two types of information subject to the 
exclusion, information pertaining to compliance with Reliability 
Standards as well as information necessary to maintain or restore 
operations.\246\ Similarly, MidAmerican requests that the Commission 
clarify that not all information involving reliability and generation 
dispatch is non-public transmission function information.\247\ For 
example, MidAmerican notes that while unit economics or rail outage may 
affect the dispatch of generating units, this type of information does 
not fall within the scope of non-public transmission function 
information.\248\
---------------------------------------------------------------------------

    \245\ Id.
    \246\ Western Utilities at 8.
    \247\ MidAmerican at 16.
    \248\ MidAmerican at 16-17.
---------------------------------------------------------------------------

    129. EEI also requests further specificity on the content required 
for records for purposes of ensuring compliance with the recordation 
requirement.\249\ EEI believes that a record of the names of employees 
participating, the date, time, duration, and subject matters discussed 
should be sufficient and asks the Commission to confirm this 
interpretation.\250\
---------------------------------------------------------------------------

    \249\ EEI at 6.
    \250\ Id.
---------------------------------------------------------------------------

    130. EEI requests clarification regarding the treatment of 
information that is not close in time to current day-to-day 
transmission operations.\251\ Specifically, EEI requests clarification 
as to (i) whether information that was transmission function 
information in real-time is no longer transmission function information 
when the events in question have passed, and if so, how much time 
should pass before information is no longer regarded as transmission 
function information, and (ii) whether information about future 
occurrences, such as a transmission outage planned thirteen months in 
the future, is transmission function information, and again, where the 
line is drawn.\252\
---------------------------------------------------------------------------

    \251\ Id. at 16.
    \252\ Id.
---------------------------------------------------------------------------

Commission Determination
    131. We clarify for EEI that certain types of information about a 
company's own generation, load, and generation dispatch are not subject 
to the recordation requirement in Sec.  358.7(h). Section 358.3(j) 
defines ``transmission function information'' as ``information relating 
to transmission functions.'' Section 358.3(h) defines ``transmission 
function'' as ``the planning, directing, organizing, or carrying out of 
day-to-day transmission operations, including the granting and denying 
of transmission service requests.'' To the extent that information 
concerning a company's own generation, load, and generation dispatch is 
not ``transmission function information'' as defined in Sec.  358.3(j), 
then this information may be provided to marketing function employees 
without being subject to the recordation requirement.
    132. We grant EEI's clarification request and clarify that the 
other categories of information identified in Sec.  358.7(h)(2) are not 
per se transmission function information subject to the recordation 
requirement, but could be if the information falls within the 
definition of transmission function information in Sec.  358.3. In 
response to EEI and Western Utilities, we also clarify that information 
related to unit commitment is not ``non-public transmission function 
information'' per se. However, should transmission function employees 
inadvertently provide ``non-public transmission function information'' 
to the marketing function employees, as transmission function employees 
work with marketing function employees to develop the unit commitment 
and dispatch plan, we remind transmission providers that Sec.  358.7(h) 
would require recordation of this inadvertent disclosure.
    133. In response to Western Utilities' request regarding 
information subject to the exclusion in Sec.  358.7(h)(2), we clarify 
that the ``and'' is intended to mean that there are two types of 
information subject to the exclusion. The regulatory text in Sec.  
358.7(h)(2) is simply a list.
    134. We grant EEI's request for more specificity on the content 
required for records for purposes of ensuring compliance with the 
recordation requirement. We agree that names, date, time, duration, and 
subject matter are sufficient content for purposes of the records. When 
recording the subject matter, transmission providers should record 
details that are clear enough to allow the Commission to determine what 
non-public information was exchanged and why this exchange of 
information was necessary.
    135. We grant EEI's clarification request in part and deny it in 
part regarding the treatment of information that is not close in time 
to current day-to-day transmission operations, whether the events are 
past or future. Given the differences in how various entities operate, 
we decline to create a general rule regarding the staleness of non-
public transmission function information. Individual waivers may be 
sought from the Commission for those instances in which an entity 
desires to share non-public transmission function information otherwise 
prohibited by the Standards of Conduct. However, we clarify that 
information about a planned transmission outage is always transmission 
function information no matter how far in the future the planned 
transmission outage will occur.
    136. The Commission clarifies that not all generation dispatch and 
reliability information is non-public transmission function 
information. MidAmerican states that unit economics or rail outage may 
affect the dispatch of generating units, but that this type of 
information does not fall within the scope of non-public transmission 
function information. We agree with its statement and so clarify.

F. Training Requirements

    137. EEI states that if read literally, the training requirements 
could suggest that all supervisory employees within the company require 
training. EEI requests clarification as to whether the training 
requirements apply to all supervisory employees within the company or 
just those supervisors who are likely to become privy to transmission 
function information themselves or who supervise the other employees 
subject to the Standards.\253\
---------------------------------------------------------------------------

    \253\ EEI at 16.
---------------------------------------------------------------------------

    138. MidAmerican believes that the requirements in Sec.  
358.8(b)(2) are adequate to ensure that employees with the greatest 
potential to provide undue preference to marketing function personnel 
have received information and training on the Standards. MidAmerican 
argues that Sec.  358.8(b)(1) is unnecessary and inconsistent with

[[Page 54481]]

Sec.  358.8(2).\254\ MidAmerican states that by using the term 
``affiliates'' in Sec.  358.8(b)(1), the Commission appears to be 
requiring transmission providers to somehow provide Standards 
information to all of their affiliates' employees, including, 
potentially, non-energy companies, foreign companies and companies that 
would not have any understanding of the Commission.\255\ MidAmerican 
also argues that this obligation is inconsistent with Sec.  
358.8(b)(2), which limits the distribution of written procedures to 
transmission provider employees likely to become privy to transmission 
function information.\256\
---------------------------------------------------------------------------

    \254\ MidAmerican at 13-14.
    \255\ Id. at 13.
    \256\ Id.
---------------------------------------------------------------------------

    139. Western Utilities claims that the Commission's explanation of 
how often employees must be trained conflicts with Sec.  358.8(c)(1). 
In Order No. 717, the Commission stated the following:

    Furthermore, it is not necessary for the transmission provider 
to track annual dates for each employee; if the transmission 
provider prefers, it may train all its employees, or all its 
employees in a given category, at a certain time each year. New 
employees, after their initial training, can be fit within this 
schedule. However, the employee should not go longer than a year 
without participating in training.\257\
---------------------------------------------------------------------------

    \257\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 309 
(emphasis added).

    However, Sec.  358.8(c)(1) provides that a transmission provider 
``must provide annual training.'' Western Utilities requests that the 
Commission clarify that ``a year'' refers to a calendar year, not 365 
days.\258\ Western Utilities contends that if training must occur every 
365 days, each new employee will need to be on an individual schedule 
rather than simply fitting into the company's regular training 
schedule.
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    \258\ Western Utilities at 14.
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Commission Determination
    140. The Commission grants clarification regarding which 
supervisory employees are subject to the training requirements. In 
Order No. 717, we stated that there is a clear need for officers, 
directors, and supervisory employees to have an understanding of the 
Standards since they will ``be in a position to interact with both 
transmission function employees and marketing function employees, or be 
responsible for responding to any questions or concerns about the 
Standards from the employees who report to them.'' \259\ We clarify in 
response to EEI that the training requirement applies to supervisory 
employees who supervise other employees subject to the Standards or who 
may come in contact with non-public transmission function information.
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    \259\ Order No. 717, FERC Stats. & Regs. ] 31,280 at P 307.
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    141. The Commission disagrees with MidAmerican that Sec.  
358.8(b)(1) is unnecessary and inconsistent with Sec.  358.8(b)(2) and 
denies its request to delete Sec.  358.8(b)(1). Section 358.8(b)(1) is 
a general requirement that a transmission provider have measures in 
place to ensure that the Independent Functioning Rule and the No 
Conduit Rule are observed by its employees and those of its affiliates. 
While the number of employees subject to the Independent Functioning 
Rule may be smaller, the No Conduit Rule prohibits a transmission 
provider from using anyone as a conduit. Therefore, a transmission 
provider must have measures in place to ensure that these requirements 
are followed. It is up to the transmission provider to design and 
implement those measures. However, in Sec.  358.8(b)(2) we specifically 
require that transmission providers distribute written procedures to 
those employees likely to become privy to transmission function 
information.
    142. We clarify in response to Western Utilities that we intended 
``a year'' to mean a calendar year and not ``365 days'' in our 
explanation of how often employees must be trained in Order No. 717.

G. Miscellaneous Matters

    143. EEI notes that Sec.  358.2(d) uses the term ``transmission 
function customers'' and recommends that this undefined term be changed 
to ``transmission customers.'' \260\
---------------------------------------------------------------------------

    \260\ EEI at 18.
---------------------------------------------------------------------------

    144. EEI requests clarification that the NAESB requirements that 
have been rendered obsolete by Order No. 717 may be disregarded.\261\ 
Specifically, EEI refers to Business Practices for OASIS Standards and 
Communication Protocols (WEQ-002), which provides requirements for 
posting on OASIS links to information that was required by the pre-
Order No. 717 Standards, but is no longer required, such as 
organizational charts.\262\
---------------------------------------------------------------------------

    \261\ Id. at 17.
    \262\ Id.
---------------------------------------------------------------------------

    145. EPSA requests clarification on whether generators scheduling 
transmission through an RTO or ISO must adhere to the posting 
requirements of the Independent Functioning Rule under Sec.  
358.1.\263\ EPSA asserts that the waiver found in Sec.  358.1(c) of the 
Commission's regulations applies, on its face, only to wholesale 
transmission providers.\264\ EPSA states that while transmission 
providers may file for a waiver of the Standards of Conduct if they 
belong to a Commission-approved ISO or RTO, it is not clear whether an 
affiliated wholesale generator would still be subject to the posting 
requirements of the Independent Functioning Rule if it is scheduled 
through an RTO.\265\
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    \263\ EPSA at 1-2.
    \264\ Id. at 2.
    \265\ Id.
---------------------------------------------------------------------------

    146. Southwest Gas contends that the phrase ``by a local 
distribution company'' contained within Sec.  358.3(c)(2)(v) does not 
reflect clearly the fact that the exemption from marketing function 
includes those LDCs that operate across state lines under NGA section 
7(f).\266\ Southwest Gas argues that while these companies are natural 
gas companies under the NGA, they function as LDCs and there is no 
evidence of affiliate abuse by NGA section 7(f) companies.\267\ 
Southwest Gas requests revision of the regulatory text of Sec.  
358.3(c)(2)(v) to include NGA section 7(f) companies.
---------------------------------------------------------------------------

    \266\ Southwest Gas at 12.
    \267\ Id.
---------------------------------------------------------------------------

Commission Determination
    147. We grant the clarification request by EEI in regards to 
changing the term ``transmission function customers'' in Sec.  358.2(d) 
and change the term to ``transmission customers.''
    148. We grant the clarification request of EEI regarding compliance 
with the NAESB Business Practice Standards to note that, as stated in a 
NOPR issued earlier this year,\268\ the Commission will not require 
public utilities to comply with the NAESB Business Practice Standards 
incorporated by reference by the Commission that require information to 
be posted in a manner inconsistent with Order No. 717 until such time 
as the Commission issues a new standard conforming to the changes in 
Order No. 717. While the NOPR made this determination for the 
requirements of WEQ-001-13.1.2, version 1.5, we note that the same is 
true for all aspects of the NAESB Business Practice Standards that are 
inconsistent with Order No. 717's posting requirements. We understand 
that NAESB is working on making appropriate revisions.
---------------------------------------------------------------------------

    \268\ Standards for Business Practices and Communication 
Protocols for Public Utilities, FERC Stats. & Regs. ] 32,640, at P 
16 (2009).
---------------------------------------------------------------------------

    149. We deny EPSA's request for clarification concerning whether a 
wholesale generator scheduling transportation transactions with an RTO 
is obligated by the posting requirements

[[Page 54482]]

of the Independent Functioning Rule. We note that the Independent 
Functioning Rule in Sec.  358.5 no longer contains posting 
requirements. For this reason, we find that EPSA's request for 
clarification has been rendered moot.
    150. The Commission grants the clarification request by Southwest 
Gas to include NGA section 7(f) companies within the LDC exemption, and 
will revise the regulatory text of Sec.  358.3(c)(2)(v) to read, ``On-
system sales by an intrastate natural gas pipeline, by a Hinshaw 
interstate pipeline exempt from the Natural Gas Act, by a local 
distribution company, or by a local distribution company operating 
under section 7(f) of the Natural Gas Act.'' \269\ While section 7(f) 
companies are natural gas companies under the NGA, they function as 
LDCs and should be treated the same as LDCs for purposes of the LDC 
exemption under the Standards of Conduct.
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    \269\ The change to the regulatory language moving ``on-system 
sale'' to the beginning of section 358.3(c)(2)(v) is discussed 
supra.
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IV. Document Availability

    151. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    152. 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.
    153. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

V. Effective Date

    154. Changes to Order No. 717 adopted in this order on rehearing 
and clarification are effective November 23, 2009.

List of Subjects in 18 CFR Part 358

    Electric power plants, Electric utilities, Natural gas, Reporting 
and recordkeeping requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

0
In consideration of the foregoing, the Commission amends Part 358, 
Chapter I, Title 18, Code of Federal Regulations, as follows.

PART 358--STANDARDS OF CONDUCT

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

    Authority:  15 U.S.C. 717-717w, 3301-3432; 16 U.S.C. 791-825r, 
2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352.

0
2. Section 358.2 is revised to read as follows:

Sec.  358.2  General principles.

    (a) As more fully described and implemented in subsequent sections 
of this part, a transmission provider must treat all transmission 
customers, affiliated and non-affiliated, on a not unduly 
discriminatory basis, and must not make or grant any undue preference 
or advantage to any person or subject any person to any undue prejudice 
or disadvantage with respect to any transportation of natural gas or 
transmission of electric energy in interstate commerce, or with respect 
to the wholesale sale of natural gas or of electric energy in 
interstate commerce.
    (b) As more fully described and implemented in subsequent sections 
of this part, a transmission provider's transmission function employees 
must function independently from its marketing function employees, 
except as permitted in this part or otherwise permitted by Commission 
order.
    (c) As more fully described and implemented in subsequent sections 
of this part, a transmission provider and its employees, contractors, 
consultants and agents are prohibited from disclosing, or using a 
conduit to disclose, non-public transmission function information to 
the transmission provider's marketing function employees.
    (d) As more fully described and implemented in subsequent sections 
of this part, a transmission provider must provide equal access to non-
public transmission function information disclosed to marketing 
function employees to all its transmission customers, affiliated and 
non-affiliated, except as permitted in this part or otherwise permitted 
by Commission order.

0
3. In Sec.  358.3, paragraph (c)(2)(v) is revised to read as follows:

Sec.  358.3  Definitions.

* * * * *
    (c) * * *
    (2) * * *
    (v) On-system sales by an intrastate natural gas pipeline, by a 
Hinshaw interstate pipeline exempt from the Natural Gas Act, by a local 
distribution company, or by a local distribution company operating 
under section 7(f) of the Natural Gas Act.
* * * * *
[FR Doc. E9-25252 Filed 10-21-09; 8:45 am]

BILLING CODE 6717-01-P