Standards for Business Practices of Interstate Natural Gas Pipelines, 28204-28211 [05-9803]
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Federal Register / Vol. 70, No. 94 / Tuesday, May 17, 2005 / Rules and Regulations
customer segregated cash account shall
receive same-day funds credited to such
account simultaneously with the
delivery or transfer of securities from
the customer segregated custodial
account.
(ii) With respect to transactions under
paragraph (a)(3)(ii) of this section, the
transfer of securities to the customer
segregated custodial account shall be
made simultaneously with the transfer
of securities from the customer
segregated custodial account. In no
event shall securities held in the
customer segregated custodial account
be released prior to the transfer of
securities to that account. Any transfer
of securities to the customer segregated
custodial account shall not be
recognized as accomplished until the
securities are actually received by the
custodian of the customer segregated
custodial account. Upon unwinding of
the transaction, the customer segregated
custodial account shall receive the
securities simultaneously with the
delivery or transfer of securities from
the customer segregated custodial
account.
(iii) With respect to transactions
under paragraph (a)(3)(iii) of this
section, the transfer of money to the
customer segregated cash account shall
be made simultaneously with the
transfer of securities from the customer
segregated custodial account. In no
event shall securities held in the
customer segregated custodial account
be released prior to the transfer of
money to the customer segregated cash
account. Any transfer of money to the
customer segregated cash account shall
not be recognized as accomplished until
the money is actually received by the
custodian of the customer segregated
cash account. Upon unwinding of the
transaction, the customer segregated
custodial account shall receive the
securities simultaneously with the
disbursement of money from the
customer segregated cash account.
(7) The futures commission merchant
maintains all books and records with
respect to the transactions in accordance
with §§ 1.25, 1.27, 1.31, and 1.36 and
the applicable rules and regulations of
the Securities and Exchange
Commission.
(8) An actual transfer of securities by
book entry is made consistent with
Federal or State commercial law, as
applicable. At all times, securities
transferred to the customer segregated
account are reflected as ‘‘customer
property.’’
(9) For purposes of §§ 1.25, 1.26, 1.27,
1.28 and 1.29, securities transferred to
the customer segregated account are
considered to be customer funds until
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the customer money or securities for
which they were exchanged are
transferred back to the customer
segregated account. In the event of the
bankruptcy of the futures commission
merchant, any securities exchanged for
customer funds and held in the
customer segregated account may be
immediately transferred.
(10) In the event the futures
commission merchant is unable to
return to the customer any customerdeposited securities exchanged
pursuant to paragraphs (a)(3)(ii) or
(a)(3)(iii) of this section, the futures
commission merchant shall act
promptly to ensure that such inability
does not result in any direct or indirect
cost or expense to the customer.
(f) Deposit of firm-owned securities
into segregation. A futures commission
merchant shall not be prohibited from
directly depositing unencumbered
securities of the type specified in this
section, which it owns for its own
account, into a segregated safekeeping
account or from transferring any such
securities from a segregated account to
its own account, up to the extent of its
residual financial interest in customers’
segregated funds; provided, however,
that such investments, transfers of
securities, and disposition of proceeds
from the sale or maturity of such
securities are recorded in the record of
investments required to be maintained
by § 1.27. All such securities may be
segregated in safekeeping only with a
bank, trust company, derivatives
clearing organization, or other registered
futures commission merchant.
Furthermore, for purposes of §§ 1.25,
1.26, 1.27, 1.28 and 1.29, investments
permitted by § 1.25 that are owned by
the futures commission merchant and
deposited into such a segregated
account shall be considered customer
funds until such investments are
withdrawn from segregation.
I 3. Section 1.27 is amended as follows:
I A. By inserting the word ‘‘derivatives’’
before the term ‘‘clearing organization’’
in paragraphs (a) and (b);
I B. By inserting the phrase ‘‘or current
market value of securities’’ after the
phrase ‘‘The amount of money’’ in
paragraph (a)(3);
I C. By inserting the phrase ‘‘or current
market value of securities’’ after the
phrase ‘‘the amount of money’’ in
paragraph (a)(6);
I D. By deleting ‘‘and’’ at the end of
paragraph (a)(6);
I E. By changing the period to a semicolon at the end of paragraph (a)(7) and
inserting ‘‘and’’ at the end of that
paragraph; and
I F. By adding paragraph (a)(8) to read
as follows:
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§ 1.27
Record of investments.
(a) * * *
(8) Daily valuation for each
instrument and readily available
documentation supporting the daily
valuation for each instrument. Such
supporting documentation must be
sufficient to enable auditors to verify the
valuations and the accuracy of any
information from external sources used
in those valuations.
*
*
*
*
*
Issued in Washington, DC on May 11,
2005, by the Commission.
Catherine D. Daniels,
Assistant Secretary of the Commission.
[FR Doc. 05–9794 Filed 5–16–05; 8:45 am]
BILLING CODE 6351–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 284
[Docket No. RM96–1–026]
Standards for Business Practices of
Interstate Natural Gas Pipelines
Issued May 9, 2005.
Federal Energy Regulatory
Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: The Federal Energy
Regulatory Commission is amending its
regulations governing standards for
conducting business practices with
interstate natural gas pipelines. The
Commission is incorporating by
reference the most recent version of the
standards, Version 1.7, promulgated
December 31, 2003, by the Wholesale
Gas Quadrant (WGQ) of the North
American Energy Standards Board
(NAESB); the standards ratified by
NAESB on June 25, 2004 to implement
Order No. 2004; the standards ratified
by NAESB on May 3, 2005 to implement
Order No. 2004–A; and the standards
implementing gas quality reporting
requirements ratified by NAESB on
October 20, 2004. These standards can
be obtained from NAESB at 1301
Fannin, Suite 2350, Houston, TX 77002,
713–356–0060, https://www.naesb.org.
EFFECTIVE DATES: The rule will become
effective June 16, 2005. Pipelines are
required to comply with this rule by
making a compliance filing on or before
July 1, 2005 with an effective date of
September 1, 2005.
FOR FURTHER INFORMATION CONTACT:
Marvin Rosenberg, Office of Markets,
Tariffs, and Rates, Federal Energy
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Regulatory Commission, 888 First
Street, NE., Washington, DC 20426;
202–502–8292.
Kay Morice, Office of Markets, Tariffs,
and Rates, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426; 202–502–
6507.
Jamie Chabinsky, Office of the General
Counsel, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426; 202–502–
6040.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Pat Wood, III,
Chairman; Nora Mead Brownell, Joseph
T. Kelliher, and Suedeen G. Kelly;
ORDER NO. 654
1. The Federal Energy Regulatory
Commission (Commission) is amending
§ 284.12 of its open access regulations
governing standards for conducting
business practices and electronic
communications with interstate natural
gas pipelines.1 The Commission is
incorporating by reference the most
recent version, Version 1.7, of the
consensus standards promulgated by the
Wholesale Gas Quadrant (WGQ) of the
North American Energy Standards
Board (NAESB). The Commission is also
incorporating by reference the standards
ratified by NAESB on June 25, 2004 to
implement Order No. 2004,2 the
standards ratified by NAESB on May 3,
2005 to implement Order No. 2004–A,
and the standards to implement gas
quality reporting requirements ratified
by NAESB on October 20, 2004, in
Recommendation R03035A, which
NAESB intends to include in its next
version of standards (Version 1.8). This
rule is intended to benefit the public by
adopting the most recent and up-to-date
standards governing business practices
and electronic communication.
I. Background
2. Since 1996, in the Order No. 587
series,3 the Commission has adopted
1 18
CFR 284.12 (2004).
No. 2004, 68 FR 69134 (Dec. 11, 2003),
III FERC Stats. & Regs. Regulations Preambles
¶ 31,155 (Nov. 25, 2003); Order No. 2004–A, 69 FR
23562 (Apr. 29, 2004), III FERC Stats. & Regs.
Regulations Preambles ¶ 31,161 (Apr. 16, 2004);
Order No. 2004–B, 69 FR 48371 (Aug. 10, 2004) III
FERC Stats. & Regs. Regulations and Preambles
¶ 31,166 (Aug. 2, 2004), Order No. 2004–C, 70 FR
284 (Jan. 4, 2005), III FERC Stats. & Regs.
Regulations Preambles ¶ 31,172 (Dec. 21, 2004);
Order No. 2004–D, FERC Stats. & Regs. Regulations
Preambles ¶ 61,320 (Mar. 23, 2005).
3 Standards For Business Practices Of Interstate
Natural Gas Pipelines, Order No. 587, 61 FR 39053
(July 26, 1996), FERC Stats. & Regs. Regulations
Preambles [July 1996–December 2000] ¶ 31,038
(July 17, 1996), Order No. 587–B, 62 FR 5521 (Feb.
6, 1997), FERC Stats. & Regs. Regulations Preambles
[July 1996–December 2000] ¶ 31,046 (Jan. 30, 1997),
Order No. 587–C, 62 FR 10684 (Mar. 10, 1997),
2 Order
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regulations to standardize the business
practices and communication
methodologies of interstate pipelines in
order to create a more integrated and
efficient pipeline grid. In this series of
orders, the Commission incorporated by
reference consensus standards
developed by the WGQ (formerly the
Gas Industry Standards Board or GISB),
a private consensus standards developer
composed of members from all segments
of the natural gas industry. NAESB is an
accredited standards organization under
the auspices of the American National
Standards Institute (ANSI).
3. On April 14, 2004 NAESB filed
with the Commission a report informing
the Commission that the WGQ had
adopted a new version of its standards,
Version 1.7. NAESB reports that Version
1.7 includes standards for partial day
recalls which were requested in Order
No. 587–N. The Commission previously
incorporated these standards by
reference in Order No. 587–R.4 Version
1.7 also contains ten standards
regarding creditworthiness 5 which the
Commission proposed to adopt in a
Notice of Proposed Rulemaking (NOPR)
in Docket No. RM04–4–000.6 Version
FERC Stats. & Regs. Regulations Preambles [July
1996–December 2000] ¶ 31,050 (Mar. 4, 1997),
Order No. 587–G, 63 FR 20072 (Apr. 23, 1998),
FERC Stats. & Regs. Regulations Preambles [July
1996–December 2000] ¶ 31,062 (Apr. 16, 1998),
Order No. 587–H, 63 FR 39509 (July 23, 1998),
FERC Stats. & Regs. Regulations Preambles [July
1996–December 2000] ¶ 31,063 (July 15, 1998);
Order No. 587–I, 63 FR 53565 (Oct. 6, 1998), FERC
Stats. & Regs. Regulations Preambles [July 1996–
December 2000] ¶ 31,067 (Sept. 29, 1998), Order
No. 587–K, 64 FR 17276 (Apr. 9, 1999), FERC Stats.
& Regs. Regulations Preambles [July 1996–December
2000] ¶ 31,072 (Apr. 2, 1999); Order No. 587–M, 65
FR 77285 (Dec. 11, 2000), FERC Stats. & Regs.
Regulations Preambles [July 1996–December 2000]
¶ 31,114 (Dec. 11, 2000); Order No. 587–N, 67 FR
11906 (Mar. 18, 2002), III FERC Stats. & Regs.
Regulations Preambles ¶ 31,125 (Mar. 11, 2002),
Order No. 587–O, 67 FR 30788 (May 8, 2002), III
FERC Stats. & Regs. Regulations Preambles ¶ 31,129
(May 1, 2002); Order No. 587–R, 68 FR 13813 (Mar.
21, 2003), III FERC Stats. & Regs. Regulations
Preambles ¶ 31,141 (Mar. 12, 2003).
4 Order No. 587–R, 68 FR 13813 (Mar. 21, 2003),
III FERC Stats. & Regs. Regulations Preambles
& 31,141 (Mar. 12, 2003).
5 The credit-related standards in Version 1.7,
which we are incorporating by reference, are
designated as Standards 0.3.3 through 0.3.10, 5.3.59
and 5.3.60. They include procedures for the
following practices: requesting additional
information for credit evaluation; acknowledging
and responding to requests and receipt of
information; notice regarding creditworthiness and
notice regarding contract termination due to creditrelated issues; forms of communication;
reevaluation of determinations that a Service
Requester is not creditworthy; and awarding
capacity release offers only after a service requester
has been determined to meet the creditworthiness
requirements applicable to all services.
6 Creditworthiness Standards for Interstate
Natural Gas Pipeline, Notice of Proposed
Rulemaking (NOPR), 69 FR 8587 (Feb. 25, 2004), IV
FERC Stats. & Regs. Proposed Regulations ¶ 32,573
(Feb. 12, 2004).
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28205
1.7 contains revisions that more
accurately reflect the workings of the
market including the definition of
transaction types, charge types, Service
Codes, and Reduction Reason Codes.
Other revisions update standards that
contained outmoded references, make
the naming conventions more uniform,
and permit use of proprietary entity
codes when D–U–N–S numbers are not
available. In addition, the Version 1.7
standards update the treatment of
allocations as well as requests for
information on scheduled quantities,
allocations, and shipper imbalances.
4. On August 6, 2004, NAESB filed
with the Commission a report informing
the Commission that on June 25, 2004
the WGQ membership ratified a package
of modifications to the Version 1.7
standards to implement Order No. 2004
(2004 Annual Plan Item 2 FERC Order
2004). These standards modify the
Informational Posting requirements for
pipeline web sites to reflect the
information required to be posted
pursuant to Order No. 2004 and will be
included as part of the WGQ’s Version
1.8 standards.
5. On October 1, 2004, NAESB filed
a report with the Commission informing
the Commission that errata to Version
1.7 of the NAESB WGQ standards were
adopted by the Executive Committee on
August 26, 2004 and, following a
member comment period, the errata
would be applied to Version 1.7 on
October 15, 2004. The errata contain
minor corrections which remove the
table of code values for Bidder Affiliate
from Standard 5.4.13 and correct the
Transaction Status Code data element in
the Code Values Dictionary of Standard
1.4.2.
6. On November 1, 2004, NAESB filed
a report with the Commission informing
the Commission that on October 20,
2004 the WGQ membership ratified
standards to implement gas quality
reporting requirements
(Recommendation R03035A).7 These
standards require a pipeline to provide
a link on its Informational Posting Web
Site to its gas quality tariff provisions,
or a simple reference guide to such
information. In addition, a pipeline is
required to provide on its Informational
Postings Web site, in a downloadable
format, daily average gas quality
information for prior day(s) to the extent
available for locations(s) that are
7 The standards ratified October 20, 2004
modified Standard 4.3.23 and added Principle
4.1.p1 and Standards 4.3.s1, 4.3.s2, 4.3.s3, and
4.3.s4. On March 18, 2005, NAESB filed a report
informing the Commission that the added Principle
and Standards have been assigned the following
permanent numbers: Principle 4.1.40 and Standards
4.3.89, 4.3.90, 4.3.91, and 4.3.92, respectively.
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representative of mainline gas flow for
the most recent three-month period.
7. On December 21, 2004, the
Commission issued a NOPR 8 that
proposed to adopt Version 1.7 of the
consensus standards, the standards
ratified by NAESB on June 24, 2004 to
implement Order No. 2004 and the
standards to implement gas quality
reporting requirements ratified by
NAESB in Recommendation R03035A.9
Five comments and one reply comment
were filed.10 The comments generally
support adoption of the standards,
although some comments raise issues
regarding the gas quality standards,
creditworthiness standards, and
implementation date.
8. On April 12, 2005, NAESB notified
the Commission that the Executive
Committee adopted errata to be applied
to Version 1.7 on April 1, 2005. The
errata correct certain errors in the
validation codes in the Code Values
Dictionary of NAESB WGQ Standards
1.4.2 (Nomination Quick Response) and
1.4.7 (Confirmation Quick Response).11
9. On April 22, 2005 NAESB notified
the Commission that a modification to
Standard 4.3.23 was approved by the
NAESB WGQ Executive Committee on
April 4, 2005 and distributed for WGQ
member ratification, with ballots due on
May 3, 2005. The modification to the
standard specifies a location for posting
voluntary consent to information
disclosure by non affiliated customers
as required by § 358 of the
Commission’s regulations.12
II. Discussion
10. The Commission is incorporating
by reference Version 1.7 of the NAESB
consensus standards; the standards to
implement Order No. 2004 ratified by
NAESB on June 25, 2004 (2004 Annual
8 Standards for Business Practices of Interstate
Natural Gas Pipelines, Notice of Proposed
Rulemaking, 70 FR 319 (Jan. 4, 2005), FERC Stats.
& Regs. Proposed Regulations ¶ 32,578 (Dec. 21,
2004).
9 Section 284.12(a)(2) also is revised to reflect
NAESB’s current address.
10 Those filing comments are: American Gas
Association (AGA); BP America Production
Company and BP Energy Company (jointly ‘‘BP’’);
Florida Power and Light Company (FPL); the
Interstate Natural Gas Association of America
(INGAA); Tennessee Valley Authority (TVA); and
Total Peaking Services, LLC (Total Peaking). On
March 14, 2005, INGAA filed reply comments.
11 Additionally, the errata correct the definition of
Monthly Allocation in 2.2.4 in the NAESB WGQ
Standards Book 1 of 2. The correct definition was
originally adopted prior to publication of Version
1.7, but during publication of Version 1.7 the
definition was captured incorrectly. However, the
definition is correct in the NAESB WGQ Flowing
Gas Related Standards book.
12 18 CFR 358 (2004). NAESB states that it made
the modification in response to paragraph 10 of the
NOPR in this proceeding.
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Plan Item 2 FERC Order 2004); the
standards to implement Order No.
2004–A ratified by NAESB on May 3,
2005 (2005 Annual Plan Item 8 FERC
Order 2004); and the standards
governing gas quality reporting ratified
by NAESB on October 20, 2004
(Recommendation R03035A).13
Pipelines will be required to implement
the standards by September 1, 2005,
which is the first day of the month
following 90 days after the issuance of
this rule.14
11. The adoption of Version 1.7 15 of
the NAESB WGQ standards will help
continue the process of updating and
improving the current standards. In
adopting the Version 1.7 standards, the
Commission is adopting the new
‘‘Additional Standards’’ implementation
guide that contains standards generally
applicable to all the business processes.
The Additional Standards include
standards governing the use of common
codes to identify entities in transactions
and the creditworthiness standards.
12. The Commission is also adopting
the NAESB standards related to gas
quality in WGQ Recommendation
R03035A. These standards require a
pipeline to provide a link on its
Informational Posting Web Site to its gas
quality tariff provisions, or a simple
reference guide to such information. In
addition, a pipeline is required to
provide on its Informational Postings
Web site, in a downloadable format,
daily average gas quality information for
prior day(s) to the extent available for
location(s) that are representative of
mainline gas flow for the most recent
three-month period. Adoption of these
standards will provide greater
transparency to shippers with respect to
the gas quality requirements of
interstate pipelines and available
information on gas quality on such
pipelines’ systems.
13. The NAESB WGQ approved the
standards under NAESB’s consensus
procedures.16 As the Commission found
13 Pursuant to the regulations regarding
incorporation by reference, copies of Version 1.7 are
available from NAESB. 5 U.S.C. 552(a)(1); 1 CFR 51
(2001).
14 The Commission is also revising § 284.12(a)(2)
to reflect NAESB new address.
15 In Version 1.7 the NAESB WGQ made the
following changes to its standards, including the
creditworthiness standards. It revised Standards
1.3.32, 2.3.21, 4.3.1, 4.3.2, 5.3.2, 5.3.7, 5.3.41, and
5.3.42, and Datasets 1.4.1 through 1.4.7, 2.4.1
through 2.4.16, 3.4.1 through 3.4.4, and 5.4.1
through 5.4.22. It added Principles 1.1.22, 2.1.6,
5.1.2, 5.1.3, and 5.1.4, Definitions 2.2.4, 2.2.5 and
5.2.3, and Standards 0.3.2, 0.3.3 through 0.3.10,
2.3.51 through 2.3.64, and 5.3.44 through 5.3.60. It
deleted Principles 1.1.6, 1.1.8, 1.1.19, and 4.1.14,
and Standards 1.3.78, 2.3.24, 2.3.36 through 2.3.39,
and 5.3.6.
16 This process first requires a super-majority vote
of 17 out of 25 members of the WGQ’s Executive
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in Order No. 587, adoption of consensus
standards is appropriate because the
consensus process helps ensure the
reasonableness of the standards by
requiring that the standards draw
support from a broad spectrum of all
segments of the industry. Moreover,
since the industry itself has to conduct
business under these standards, the
Commission’s regulations should reflect
those standards that have the widest
possible support. In section 12(d) of the
National Technology Transfer and
Advancement Act of 1995, Congress
affirmatively requires federal agencies to
use technical standards developed by
voluntary consensus standards
organizations, like NAESB, as means to
carry out policy objectives or
activities.17
14. The Comments addressing various
aspects of the standards will be
addressed below.
A. Implementation Date
15. INGAA requests that the
Commission implement the standards
on the first day of the month following
180 days after issuance of a final rule.
INGAA maintains that a transition to the
new standards and the business
requirements supported by those
standards will be coordinated most
effectively and seamlessly with the
existing accounting, billing and
nomination processes if such a
transition is implemented at the
beginning of a month. INGAA also states
that delaying the required
implementation date to 180 days after
issuance of the final rule will allow time
for interstate pipelines to make
necessary changes in systems and
procedures to implement the posting of
gas quality criteria and data.
16. The Commission agrees that
requiring implementation on the first of
the month allows for a more effective
transition, and will therefore grant
INGAA’s request. However, we will not
grant the requested 180-day delay in
implementation. The pipelines have
been on notice of the consensus
standards since the standards were
ratified and adopted. Also, the request
relates principally to the gas quality
standards, and thus does not justify a
180-day delay for implementing all the
standards. We recognize that individual
pipelines may have more difficulty in
Committee with support from at least two members
from each of the five industry segments—interstate
pipelines, local distribution companies, gas
producers, end-users, and services (including
marketers and computer service providers). For
final approval, 67 percent of the WGQ’s general
membership must ratify the standards.
17 Pub. L. 104–113, § 12(d), 110 Stat. 775 (1996),
15 U.S.C. 272 note (1997).
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implementing some of the standards,
and the Commission has in the past
been willing to grant extensions of time
for implementation when pipelines
have justified such requests.
Accordingly, the Commission is
requiring implementation on the first of
the month, following 90 days after
issuance of this final rule.
B. Gas Quality Standards
1. Tariff Provisions Regarding Gas
Quality Standards
17. The gas quality standards ratified
by NAESB include Standard 4.3.89
(formerly 4.3.s1), which states a
pipeline should provide, on its Web
site, a link to the natural gas quality
tariff provisions or, where no tariff
exists in the general terms and
conditions, a simple reference guide to
such information. FPL maintains that
merely providing a link to the existing
tariff provision will not necessarily
provide clarity for end users or
operational personnel unless the
Commission encourages development of
more clearly written and presented tariff
language. FPL states that additional
progress towards gas quality
measurement standardization should be
made. Specifically, FPL states that the
absence of a consistent definition of the
chemical characteristics of natural gas
can cause problems for end users. FPL
also states that standardized
assumptions upon which chemical
characteristics or physical properties are
determined are needed.18 AGA requests
that the Commission confirm the
reporting standard does not relieve
pipelines of their responsibility to
ensure adherence to the gas quality
specifications in their tariffs.
18. These requests go beyond the
scope of this rule, which addresses only
the posting requirements for standards.
Issues as to the clarity and substance of
tariff provisions should be addressed in
individual pipeline proceedings in
which these issues are raised. The
Commission has recognized that the
issue of how to measure gas quality is
of importance to the industry and has
established a Natural Gas
Interchangeability proceeding in Docket
No. PL04–3–000 to address these
substantive issues.19 The issues raised
18 FPL states that the Environmental Protection
Agency defines standard conditions as 68 degrees
Fahrenheit at 1 atmosphere of pressure, but
pipelines generally define and measure the volume
of gas transported at 60 degrees Fahrenheit and an
absolute pressure of 14.73 pounds per square inch
absolute, and variances exist from this measure.
19 The Commission held a technical conference
on these issues on February 18, 2004, and on March
2, 2005 issued a request for comment on two papers
filed by the Natural Gas Council: White Paper on
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by FPL and AGA are more appropriately
considered in that proceeding.
2. Information Posting
19. Standard 4.3.90 (formerly 4.3.s2)
states that pipelines should provide
information ‘‘to the extent available, for
location(s) that are representative of
mainline gas flow.’’ BP states that this
standard does not specify the data to be
included in the operational posting, and
the Commission’s requirements in
Natural 20 are appropriate and should be
incorporated into this rule. BP contends
that the Natural standards include the
requirement that the pipeline must post
on its Internet Web site every receipt
point dewpoint value it calculates,
along with the method by which the
dewpoint was calculated, and every
blended dewpoint and blended BTU
value it calculates for a line segment of
its system. In Natural, the Commission
required that the information must be
posted within 24 hours of completion of
the calculations.
20. The Commission is incorporating
the standards as developed by the WGQ.
These standards represent a consensus
of the industry as to the minimum
posting requirements for information on
gas quality that are applicable to all
pipelines. In individual pipeline cases,
such as in Natural, the Commission may
have specified additional information be
posted.21 Pipelines that are required to
comply with such requirements must
continue to do so, and the WGQ
standards accommodate such postings.
However, whether such requirements
developed in individual cases should be
extended to the entire industry is
beyond the scope of this proceeding.
Such issues can be raised in the
proceeding in Docket No. PL04–3–000
that the Commission has instituted.
Regarding BP’s concern with the
timeliness of posting, we expect that
pipelines will promptly post their
information.
Liquid Hydrocarbon Drop Out in Natural Gas
Infrastructure and White Paper on Natural Gas
Interchangeability and Non-Combustion End Use.
On April 13, 2005, the Commission issued a notice
of a technical conference to be held May 17, 2005,
to consider further comments on the NGC reports
and recommendations for Commission action on
natural gas quality and liquefied natural gas
interchangeability issues.
20 Natural Gas Pipeline Co., 102 FERC ¶ 61,234,
order on reh’g, 104 FERC ¶ 61,322 (2003) (Natural).
21 The procedures developed in Natural were the
result of problems Natural experienced during the
winter of 2000–2001 when gas prices were so high
that liquefiable hydrocarbons had a greater value to
shippers as constituents of the gas stream than as
extracted liquids. Shippers ceased their common
practice of extracting the liquefiable hydrocarbons
before tendering the gas to Natural, and this caused
the closing of two gas processing plants that
normally would tender processed residue gas.
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28207
21. Additionally, BP states that
pipelines should not be able to avoid
compliance with the data posting
requirements by claiming that the data
are not available at a specific location,
and that the rule should provide that all
pipelines must develop the means, to
the extent they do not already have
equipment in place, to measure gas
quality at key points. TVA states that
consumers should have access to
documented information on the quality
of the product being received, and that
information should include
measurements against a well-defined,
documented formula and be publicly
posted. INGAA states such a
requirement would involve pipelines
installing additional gas quality
equipment, thus imposing on pipelines
and their ratepayers millions of dollars
of investment for new equipment.
INGAA maintains the installation of
additional equipment at each receipt
point would add little or no value in
improving safety and/or efficiency of
pipeline operations.
22. These standards involve only the
posting of information obtained by the
pipeline and require only that the
pipeline post information it already has
obtained. Issues relating to the
development of additional information
or other substantive questions are
beyond the scope of this proceeding and
should be addressed in individual cases
or in the Commission’s generic
proceeding on gas quality.
23. AGA states that, in adopting the
NAESB gas quality standards, the
Commission should include direction to
the pipelines that in implementing the
standards they should consult with their
customers to determine which points
are ‘‘representative of mainline gas
flow’’ on its system. AGA states that the
pipelines should provide meaningful
indication of gas quality at all major
delivery points. The Commission agrees
that the pipelines should post
information relevant to their shippers
and consult with shippers in
determining the information posted.
3. Exemption
24. Total Peaking proposes an
exemption from the gas quality posting
requirements for natural gas companies
that do not physically deliver natural
gas into the facilities of an interstate
pipeline. Total Peaking states it is a
liquid natural gas storage company
subject to Natural Gas Act jurisdiction
and is required to have a tariff on file
with the Commission. It states that the
purpose of gas quality reporting cannot
be served by imposing additional gas
quality and measurement and reporting
obligations on entities such as Total
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Peaking, which do not physically
deliver natural gas into the facilities of
an interstate pipeline.
25. We decline to grant a generic
waiver of the standards as proposed by
Total Peaking. The standards are
intended to provide information
regarding the quality of a particular
pipeline or storage facility’s system.
Even though Total Peaking may not
delivery gas to an interstate pipeline,
the gas quality information may be
useful to its customers. Although we
decline to grant the generic exemption
Total Peaking requests, entities such as
Total Peaking may request a waiver of
the requirements in their individual
compliance filings where justified.
C. Creditworthiness
26. In the NOPR, we proposed to
incorporate by reference the
creditworthiness standards adopted by
NAESB that had previously been
noticed in the creditworthiness
rulemaking in Docket No. RM04–4–
000.22 In the NOPR in this proceeding,
the Commission stated it would address
the comments filed on these standards
before the issuance of a final rule
adopting these standards.23
27. The ten WGQ standards on
creditworthiness provide procedural
rules by which pipelines should deal
with their customers with respect to
credit issues, such as providing shippers
with the reasons a pipeline is requesting
credit information, procedures for
communications between pipelines and
customers, and the timeline for
providing responses to requests for
credit reevaluation.
28. Commenters in Docket No. RM04–
4–000 generally support, or do not
oppose, the consensus standards on
creditworthiness. Many shippers urge
the Commission to adopt the ten
creditworthiness consensus standards.24
Several pipelines also support the
incorporation of the ten NAESB
standards into the Commission’s
regulations.25 Commenters, however,
raise several issues which will be
discussed below.
22 Creditworthiness Standards for Interstate
Natural Gas Pipelines, Notice of Proposed
Rulemaking, 69 FR 8587 (Feb. 25, 2004), FERC
Stats. & Regs. Regulations Preambles ¶ 32,573 (Feb.
12, 2004).
23 We are addressing the comments filed in
Docket No. RM04–4–000 regarding creditworthiness
here.
24 See, e.g., Northwest Industrial Gas Users at 7;
Process Gas Consumers Group, et al. at 9–13;
Calpine Corporation at 18; Encana Marketing (USA)
Inc. at 4, 9–10.
25 National Fuel at 2; Vector at 2–3; Williston
Basin at 3; INGAA at 42.
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1. Notice to Releasing Shippers
29. Standard 5.3.60 provides that a
pipeline should provide the original
releasing shipper with Internet E-mail
notification ‘‘reasonably proximate in
time’’ of the following events: (1) Notice
to the replacement shipper regarding the
replacement shipper’s past due,
deficiency, or default status pursuant to
the pipeline’s tariff; (2) notice to the
replacement shipper regarding the
replacement shipper’s suspension of
service notice; (3) notice to the
replacement shipper regarding the
replacement shipper’s contract
termination notice due to default or
credit-related issues; and (4) notice to
the replacement shipper that the
replacement shipper(s) is no longer
creditworthy and has not provided
credit alternative(s) pursuant to the
pipeline’s tariff.
30. Several commenters point out that
in creditworthiness orders, the
Commission required pipelines to
provide simultaneous notice to a
releasing shipper and a replacement
shipper upon determining that a
replacement shipper is not
creditworthy.26 Commenters argue that
the standard of ‘‘simultaneous notice’’ is
preferable to the standard of
‘‘reasonably proximate in time’’ in
Standard 5.3.60 (formerly 5.3.zF) given
the importance of timely notice of
credit-related events, since notice need
only be sent to a small list of parties (the
original releasing shipper(s)), since
simultaneity is unambiguous, and since
releasing shippers could be liable for
unpaid reservation charges if a
replacement shipper defaults.27 If the
Commission retains the ‘‘reasonably
proximate’’ standard, Peoples requests a
limitation in the rule clarifying that no
more than one business day constitutes
‘‘reasonably proximate.’’ 28 Moreover,
Peoples requests clarification that given
the time sensitivity associated with
credit related information, the
requirement is not that the releasing
shipper receive the notice that the
pipeline sent to the replacement
shipper, but only that the releasing
shipper receive notice that such a notice
was sent.29
31. Alliance, however, contends that
requiring the pipeline to provide the
releasing shipper with notice regarding
the replacement shipper’s financial
26 See, e.g., Tennessee Gas Pipeline Co., 102 FERC
¶ 61,075 at P 78 (2003); Northern Natural Gas Co.,
103 FERC ¶ 61,276 at P 43 (2003).
27 AGA at 10–11, Dominion at 6–7, Peoples at 6–
8.
28 Peoples at 6–7.
29 See Peoples at 8 (suggesting revised regulatory
language).
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Fmt 4700
Sfmt 4700
performance could expose the pipeline
to claims of liability, particularly where
the replacement shipper has not
defaulted on its contractual obligations,
but is merely past due or deficient, or
in situations where the replacement
shipper has not authorized the release of
confidential information to third
parties.30 Alliance argues that, if the
releasing shipper wants to require the
replacement shipper to provide the
releasing shipper with notice of any
changes in its financial performance, the
releasing shipper should make such a
requirement a condition of the release.
Alliance contends that the pipeline
should not be required to keep the
releasing shipper apprised of the
replacement shipper’s performance.
32. The Commission will adopt the
standard as proposed by the WEQ since
this standard reflects the consensus of
the industry. Providing simultaneous
notice is not necessary, as long as the
notice to the releasing shipper is
provided promptly, such as on the same
day as the notice to the replacement
shipper.
33. Nor does the Commission see a
need to revise Standard 5.3.60 to
respond to the comments filed by
Peoples and Alliance. The standard
does not require the pipeline to provide
an identical notice to the releasing
shipper, only that the releasing shipper
should receive notice that one of the
events has occurred. With respect to
Alliance’s concerns, we find that it is a
reasonable default provision for the
pipeline to notify the releasing shipper
of conditions that may affect the
replacement shipper’s ability to perform
under its release. Such information is
relevant, for example, to the releasing
shipper’s decision whether to recall
capacity. Further, replacement shippers
that object to this condition can seek to
obtain agreement from the releasing
shipper that the releasing shipper will
not receive such a notice. Alliance has
not shown that liability will attach to
the pipeline in such a case.
34. Alliance suggests that such notice
only be provided when the releasing
shipper includes the provision in the
terms and conditions of the release.
However, given the comments by
releasing shippers on the proposed
standard and in many of the
creditworthiness cases, it appears that,
in the majority of cases, the releasing
shipper will insist on such a provision
in a release, and, therefore, we find the
inclusion of this standard reasonable as
the default provision. However, we
clarify that if the releasing and
replacement shippers agree that such
30 Alliance
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17MYR1
Federal Register / Vol. 70, No. 94 / Tuesday, May 17, 2005 / Rules and Regulations
notice not be provided, that agreement
can be included in the terms and
conditions of the release, in which case
the pipeline will not provide the notice.
2. Publishing the Standards in the
Regulations
35. NiSource contends the
Commission should restate the ten
consensus standards in the regulations
since the standards are a critically
important component of this
rulemaking. NiSource states that
restating the standards in the
regulations will facilitate the
interpretation and implementation of
the rules.
36. As the Commission has explained
in previous orders, the Freedom of
Information Act and implementing
regulations establish that the proper
method of adopting private sector
standards is to incorporate those
standards by reference into the agency’s
regulations.31 Because these standards
are copyrighted, reproducing them in
the regulations is not appropriate.32
However, the standards are available on
compact disc from NAESB at the
reasonable price of $100.33
D. 2004 Standards
37. As the Commission stated in the
NOPR, the NAESB standards with
respect to the Order No. 2004 affiliate
standards establish uniform posting
requirements for the Commission
requirements. However, the NAESB
standards were developed prior to the
issuance of Order No. 2004–A, and
revised Standard 4.3.23 did not specify
a location for posting voluntary consent
to information disclosure by non
affiliated customers as required by § 358
of the Commission’s regulations.34 The
Commission noted that electric utilities
and pipelines have been posting this
information as a separate category from
other non-discrimination requirements,
and that posting this information as a
separate category represents a better
practice, since it will make it easier for
the Commission as well as other parties
to find and access this information. The
Commission stated that it expects
pipelines and electric utilities to post
this information as a separate category.
38. On May 3, 2005, the NAESB
membership ratified a revision to
Standard 4.3.23 to provide for a separate
category for posting voluntary consent
information consistent with the
Commission’s policy, and the
Commission will incorporate this
modification into its regulations.
Notice of Use of Voluntary Consensus
Standards
39. Office of Management and Budget
Circular A–119 (§ 11) (February, 10,
1998) provides that when a Federal
agency issues or revises a regulation
containing a standard, the agency
should publish a statement in the final
rule stating whether the adopted
standard is a voluntary consensus
standard or a government-unique
standard. In this rulemaking, the
Commission is incorporating by
reference voluntary consensus standards
developed by the WGQ.
Information Collection Statement
40. The Office of Management and
Budget’s (OMB) regulations in 5 CFR
1320.11 (2005) require that it approve
certain reporting and recordkeeping
requirements (collections of
information) imposed by an agency.
Upon approval of a collection of
information, OMB will assign an OMB
control number and an expiration date.
Respondents subject to the filing
requirements of this Rule will not be
penalized for failing to respond to these
collections of information unless the
collections of information display a
valid OMB control number.
41. The final rule will affect the
following existing data collections:
FERC–545 ‘‘Gas Pipeline Rates: Rate
Change (Non-Formal)’’ (OMB Control
No. 1902–0154) and FERC–549C
‘‘Standards for Business Practices of
Interstate Natural Gas Pipelines’’ (OMB
Control No. 1902–0174). The following
burden estimates are related only to this
rule and include the costs of complying
with Version 1.7 of the WGQ’s
consensus standard as modified by the
standards ratified by the WGQ on June
25, 2004, to implement Order No. 2004
and the standards to implement gas
quality reporting requirements ratified
by the WGQ on October 20, 2004, in
Recommendation R03035A. The burden
estimates for the FERC–545 data
collection are related to the tariff filings
required to implement these standards.
The burden estimates for the FERC–
549C data collection are related to
implementing the latest version of the
business practice standards and related
data sets. The costs for both of these
data collections are primarily related to
start-up and will not be on-going costs.
Number of respondents
Data collection
Number of responses per
respondent
Hours per response
93
93
1
1
38
2,614
FERC–545 .......................................................................................................
FERC–549C .....................................................................................................
28209
Total annual
hours
3,534
243,102
The total annual hours for collection
is 246,636 hours.
FERC–549C
FERC–545
Annualized Capital/Startup Costs ............................................................................................................................
Annualized Costs (Operations & Maintenance) ......................................................................................................
$12,691,327
0
$184,495
0
Total Annualized Costs ....................................................................................................................................
12,691,327
184,495
31 Standards for Business Practices of Interstate
Natural Gas Pipeline, 95 FERC ¶ 61,127, at 61,400–
01 (2001); Standards for Business Practices of
Interstate Natural Gas Pipelines, 77 FERC ¶ 61,061,
at 61,232–33 (1996).
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32 5 U.S.C. 553 (a)(1) (2000); 1 CFR 51.7(4) (2005).
See 28 U.S.C. 1498 (2000) (government liability for
patent and copyright infringement).
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Fmt 4700
Sfmt 4700
33 NAESB Home Page, https://www.naesb.org/pdf/
ordrform.pdf.
34 18 CFR 358 (2004).
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The cost per respondent is $138,450
(rounded off).
42. The Commission sought
comments to comply with these
requirements. Comments were received
from six entities. No comments
addressed the reporting burden imposed
by these requirements. The substantive
issues raised by the commenters are
addressed in this preamble.
43. The Commission’s regulations
adopted in this rule are necessary to
further the process begun in Order No.
587 of creating a more efficient and
integrated pipeline grid by
standardizing the business practices and
electronic communication of interstate
pipelines. Adoption of these regulations
will update the Commission’s
regulations relating to business practices
and communication protocols to
conform to the latest version, Version
1.7, of the WGQ’s consensus standards
and the standards to implement Order
No. 2004 and gas quality reporting
requirements.
44. The Commission has assured
itself, by means of its internal review,
that there is specific, objective support
for the burden estimates associated with
the information requirements. The
information required in this final rule
will help the Commission carry out its
responsibilities under the Natural Gas
Act and conforms to the Commission’s
plan for efficient information collection,
communication, and management
within the natural gas industry.
45. Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426 [Attention:
Michael Miller, Office of the Chief
Information Officer, CI–1, (202) 502–
8415, or michael.miller@ferc.gov] or the
Office of Management and Budget,
Office of Information and Regulatory
Affairs, Attention: Desk Officer for the
Federal Energy Regulatory Commission,
725 17th Street, NW., Washington, DC
20503. The Desk Officer can also be
reached at (202) 395–7856, or fax: (202)
395–7285.
Environmental Analysis
46. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.35 The Commission has
categorically excluded certain actions
35 Order No. 486, Regulations Implementing the
National Environmental Policy Act, 52 FR 47897
(Dec. 17, 1987), FERC Stats. & Regs. Preambles
1986–1990 ¶ 30,783 (1987).
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14:54 May 16, 2005
Jkt 205001
from these requirements as not having a
significant effect on the human
environment.36 The actions adopted
here fall within categorical exclusions
in the Commission’s regulations for
rules that are clarifying, corrective or
procedural, for information gathering,
analysis, and dissemination, and for
sales, exchange, and transportation of
natural gas the requires no construction
of facilities.37
Regulatory Flexibility Act Certification
47. The Regulatory Flexibility Act of
1980 (RFA) 38 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities. The regulations adopted here
impose requirements only on interstate
pipelines, the majority of which are not
small business, and, these requirements
are, in fact, designed to benefit all
customers, including small business.
Accordingly, pursuant to § 605(b) of the
RFA, the Commission hereby certifies
that the regulations adopted herein will
not have a significant adverse impact on
a substantial number of small entities.
Document Availability
48. 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 (https://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.
49. From FERC’s Home Page on the
Internet, this information is available in
eLibrary. The full text of this document
is available in 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.
50. User assistance is available for
eLibrary and the FERC’s Web site during
normal business hours. For assistance
contact FERC Online Support at
FERCOnlineSupport@ferc.gov or tollfree at (866) 208–3676 or for TTY,
contact (202) 502–8659.
Implementation Dates And Procedures
51. Pipelines are required to file tariff
sheets to reflect the changed standards
CFR 380.4 (2004).
18 CFR 380.4(a)(2)(ii), 380.4(a)(5),
380.4(a)(27) (2004).
38 5 U.S.C. 601–612 (2000).
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36 18
37 See
Frm 00030
Fmt 4700
Sfmt 4700
on or before July 1, 2005, with an
effective date of September 1, 2005.
Pipelines incorporating the Version 1.7
standards into their tariffs must include
the standard number and Version 1.7.
Pipelines incorporating by reference the
gas quality standards must refer to the
standard number (e.g. 4.3.89) and the
Recommendation number in which the
standard is adopted (R03035A).
Pipelines incorporating the standards
adopted by NAESB to implement Order
No. 2004 must refer to the standard as
2004 Annual Plan Item 2 FERC Order
2004 and 2005 Annual Plan Item 8 (May
3, 2005) (Affiliate Order standards).
Effective Date
52. These regulations are effective
June 16, 2005. The Commission has
determined, with the concurrence of the
Administrator of the Office of
Information and Regulatory Affairs of
OMB, that this rule is not a ‘‘major rule’’
as defined in section 351 of the Small
Business Regulatory Enforcement
Fairness Act of 1996.
List of Subjects in 18 CFR Part 284
Continental shelf, Incorporation by
reference, Natural gas, Reporting and
recordkeeping requirements.
By the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing, the
Commission amends part 284, Chapter I,
Title 18, Code of Federal Regulations, as
follows:
I
PART 284—CERTAIN SALES AND
TRANSPORTATION OF NATURAL GAS
UNDER THE NATURAL GAS POLICY
ACT OF 1978 AND RELATED
AUTHORITIES
1. The authority citation for part 284
continues to read as follows:
I
Authority: 15 U.S.C. 717–717w, 3301–
3432; 42 U.S.C. 7101–7352; 43 U.S.C. 1331–
1356.
2. Section 284.12 is amended as
follows:
I a. In paragraph (a)(2), the reference to
‘‘1100 Louisiana, Suite 3625’’ is revised
to read ‘‘1301 Fannin, Suite 2350’’.
I b. Paragraphs (a)(1)(i) through (v) are
revised and a new paragraph (a)(1)(vi) is
added to read as follows:
I
§ 284.12 Standards for pipeline business
operations and communications.
(a) * * *
(1) * * *
(i) Additional Standards (General
Standards and Creditworthiness
Standards) (Version 1.7, December 31,
2003);
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Federal Register / Vol. 70, No. 94 / Tuesday, May 17, 2005 / Rules and Regulations
(ii) Nominations Related Standards
(Version 1.7, December 31, 2003,
including errata, October 15, 2004 and
April 1, 2005);
(iii) Flowing Gas Related Standards
(Version 1.7, December 31, 2003);
(iv) Invoicing Related Standards
(Version 1.7, December 31, 2003);
(v) Electronic Delivery Mechanism
Related Standards (Version 1.7,
December 31, 2003) with the exception
of Standard 4.3.4, and including the
standards contained in 2004 Annual
Plan Item 2 (June 25, 2004) (Order No.
2004 standards) and the standard
contained in 2005 Annual Plan Item 8
(May 3, 2005) (Affiliate Order
standards), and the standards contained
in Recommendation R03035A (October
20, 2004) (gas quality reporting); and
(vi) Capacity Release Related
Standards (Version 1.7, December 31,
2003, including errata, October 15,
2004).
*
*
*
*
*
[FR Doc. 05–9803 Filed 5–16–05; 8:45 am]
BILLING CODE 6717–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9198]
RIN 1545–AY42
Guidance Under Section 355(e);
Recognition of Gain on Certain
Distributions of Stock or Securities in
Connection With an Acquisition;
Correction
is the subject of this correction are
under section 355(e) of the Internal
Revenue Code.
Need for Correction
As published, the final regulations
and removal of temporary regulations
(TD 9198) contain errors that may prove
to be misleading and are in need of
clarification.
Correction of Publication
Accordingly, the publication of the
final regulations and removal of
temporary regulations (TD 9198), which
was the subject of FR. Doc. 05–7811, is
corrected as follows:
1. On page 20280, column 2, in the
preamble, under the paragraph heading
‘‘New Safe Harbor for Acquisitions
Before a Pro Rata Distribution’’, line 9,
the language ‘‘discussions regarding the
acquisition’’ is corrected to read
‘‘discussions with the acquirer regarding
a distribution’’.
2. On page 20280, column 2, in the
preamble, under the paragraph heading
‘‘New Safe Harbor for Acquisitions
Before a Pro Rata Distribution’’, lines 15
and 16, the language ‘‘prior to
discussions regarding the acquisition
and that the acquisition was’’ is
corrected to read ‘‘prior to discussions
regarding a distribution and that the
acquisition was’’.
Cynthia E. Grigsby,
Acting Chief, Publications and Regulations
Branch, Legal Processing Division, Associate
Chief Counsel, (Procedures and
Administration).
[FR Doc. 05–9615 Filed 5–16–05; 8:45 am]
DEPARTMENT OF THE TREASURY
This document corrects final
regulations and removal of temporary
regulations (TD 9198), that were
published in the Federal Register on
Tuesday, April 19, 2005 (70 FR 20279)
that relate to the recognition of gain on
certain distributions of stock or
securities of a controlled corporation in
connection with an acquisition.
DATES: This correction is effective April
19, 2005.
FOR FURTHER INFORMATION CONTACT:
Amber R. Cook, (202) 622–7530 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
[TD 9196]
SUMMARY:
Background
The final regulations and removal of
temporary regulations (TD 9198), which
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14:54 May 16, 2005
Jkt 205001
This document is effective on
April 14, 2005.
DATES:
FOR FURTHER INFORMATION CONTACT:
Margaret A. Owens, (202) 622–0047 (not
a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
The final and temporary regulations
(TD 9196) that are the subject of these
corrections are under section 3402 of
the Internal Revenue Code.
Need for Correction
As published, TD 9196 contains errors
that may prove to be misleading and are
in need of clarification.
List of Subjects in 26 CFR Part 31
Employment taxes, Income taxes,
Penalties, Pensions, Railroad retirement,
Reporting and recordkeeping
requirements, Social Security,
Unemployment compensation.
Correction of Publication
Accordingly, 26 CFR part 31 is
corrected by making the following
correcting amendment:
I
PART 31—EMPLOYMENT TAXES
Paragraph 1. The authority citation for
part 31 continues to read in part as
follows:
I
Authority: 26 U.S.C. 7805 * * *
§ 31.3402(f)(2)–1T
[Corrected]
BILLING CODE 4830–01–P
Internal Revenue Service (IRS),
Treasury.
ACTION: Correction to final regulations
and removal of temporary regulations.
AGENCY:
28211
Internal Revenue Service
§ 31.3402(f)(5)–1T
26 CFR Part 31
RIN 1545–BE21
Withholding Exemptions: Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correcting Amendment.
AGENCY:
SUMMARY: This document corrects final
and temporary regulations (TD 9196)
that were published in the Federal
Register on Thursday, April 14, 2005
(70 FR 19694). The document contains
regulations providing guidance under
section 3402(f) of the Internal Revenue
Code (Code) for employers and
employees relating to the Form W–4,
‘‘Employee’s Withholding Allowance
Certificate.’’
PO 00000
Frm 00031
Fmt 4700
I 1. Section 31.3402(f)(2)–1T(g)(4), the
second sentence is amended by
removing the date ‘‘April 14, 2008.’’ and
adding ‘‘April 11, 2008.’’ in its place.
Sfmt 4700
[Corrected]
I 2. Section 31.3402(f)(5)–1T(a)(2), the
second sentence is amended by
removing the date ‘‘April 14, 2008.’’ and
adding ‘‘April 11, 2008.’’ in its place.
Cynthia Grigsby,
Acting Chief, Publications and Regulations
Branch, Legal Processing Division, Associate
Chief Counsel (Procedures and
Administration).
[FR Doc. 05–9610 Filed 5–16–05; 8:45 am]
BILLING CODE 4830–01–P
E:\FR\FM\17MYR1.SGM
17MYR1
]]>Agencies
[Federal Register Volume 70, Number 94 (Tuesday, May 17, 2005)]
[Rules and Regulations]
[Pages 28204-28211]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-9803]
=======================================================================
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 284
[Docket No. RM96-1-026]
Standards for Business Practices of Interstate Natural Gas
Pipelines
Issued May 9, 2005.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Federal Energy Regulatory Commission is amending its
regulations governing standards for conducting business practices with
interstate natural gas pipelines. The Commission is incorporating by
reference the most recent version of the standards, Version 1.7,
promulgated December 31, 2003, by the Wholesale Gas Quadrant (WGQ) of
the North American Energy Standards Board (NAESB); the standards
ratified by NAESB on June 25, 2004 to implement Order No. 2004; the
standards ratified by NAESB on May 3, 2005 to implement Order No. 2004-
A; and the standards implementing gas quality reporting requirements
ratified by NAESB on October 20, 2004. These standards can be obtained
from NAESB at 1301 Fannin, Suite 2350, Houston, TX 77002, 713-356-0060,
https://www.naesb.org.
EFFECTIVE DATES: The rule will become effective June 16, 2005.
Pipelines are required to comply with this rule by making a compliance
filing on or before July 1, 2005 with an effective date of September 1,
2005.
FOR FURTHER INFORMATION CONTACT:
Marvin Rosenberg, Office of Markets, Tariffs, and Rates, Federal Energy
[[Page 28205]]
Regulatory Commission, 888 First Street, NE., Washington, DC 20426;
202-502-8292.
Kay Morice, Office of Markets, Tariffs, and Rates, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426;
202-502-6507.
Jamie Chabinsky, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426;
202-502-6040.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Pat Wood, III, Chairman; Nora Mead Brownell,
Joseph T. Kelliher, and Suedeen G. Kelly; ORDER NO. 654
1. The Federal Energy Regulatory Commission (Commission) is
amending Sec. 284.12 of its open access regulations governing
standards for conducting business practices and electronic
communications with interstate natural gas pipelines.\1\ The Commission
is incorporating by reference the most recent version, Version 1.7, of
the consensus standards promulgated by the Wholesale Gas Quadrant (WGQ)
of the North American Energy Standards Board (NAESB). The Commission is
also incorporating by reference the standards ratified by NAESB on June
25, 2004 to implement Order No. 2004,\2\ the standards ratified by
NAESB on May 3, 2005 to implement Order No. 2004-A, and the standards
to implement gas quality reporting requirements ratified by NAESB on
October 20, 2004, in Recommendation R03035A, which NAESB intends to
include in its next version of standards (Version 1.8). This rule is
intended to benefit the public by adopting the most recent and up-to-
date standards governing business practices and electronic
communication.
---------------------------------------------------------------------------
\1\ 18 CFR 284.12 (2004).
\2\ Order No. 2004, 68 FR 69134 (Dec. 11, 2003), III FERC Stats.
& Regs. Regulations Preambles ] 31,155 (Nov. 25, 2003); Order No.
2004-A, 69 FR 23562 (Apr. 29, 2004), III FERC Stats. & Regs.
Regulations Preambles ] 31,161 (Apr. 16, 2004); Order No. 2004-B, 69
FR 48371 (Aug. 10, 2004) III FERC Stats. & Regs. Regulations and
Preambles ] 31,166 (Aug. 2, 2004), Order No. 2004-C, 70 FR 284 (Jan.
4, 2005), III FERC Stats. & Regs. Regulations Preambles ] 31,172
(Dec. 21, 2004); Order No. 2004-D, FERC Stats. & Regs. Regulations
Preambles ] 61,320 (Mar. 23, 2005).
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I. Background
2. Since 1996, in the Order No. 587 series,\3\ the Commission has
adopted regulations to standardize the business practices and
communication methodologies of interstate pipelines in order to create
a more integrated and efficient pipeline grid. In this series of
orders, the Commission incorporated by reference consensus standards
developed by the WGQ (formerly the Gas Industry Standards Board or
GISB), a private consensus standards developer composed of members from
all segments of the natural gas industry. NAESB is an accredited
standards organization under the auspices of the American National
Standards Institute (ANSI).
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\3\ Standards For Business Practices Of Interstate Natural Gas
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. &
Regs. Regulations Preambles [July 1996-December 2000] ] 31,038 (July
17, 1996), Order No. 587-B, 62 FR 5521 (Feb. 6, 1997), FERC Stats. &
Regs. Regulations Preambles [July 1996-December 2000] ] 31,046 (Jan.
30, 1997), Order No. 587-C, 62 FR 10684 (Mar. 10, 1997), FERC Stats.
& Regs. Regulations Preambles [July 1996-December 2000] ] 31,050
(Mar. 4, 1997), Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC
Stats. & Regs. Regulations Preambles [July 1996-December 2000] ]
31,062 (Apr. 16, 1998), Order No. 587-H, 63 FR 39509 (July 23,
1998), FERC Stats. & Regs. Regulations Preambles [July 1996-December
2000] ] 31,063 (July 15, 1998); Order No. 587-I, 63 FR 53565 (Oct.
6, 1998), FERC Stats. & Regs. Regulations Preambles [July 1996-
December 2000] ] 31,067 (Sept. 29, 1998), Order No. 587-K, 64 FR
17276 (Apr. 9, 1999), FERC Stats. & Regs. Regulations Preambles
[July 1996-December 2000] ] 31,072 (Apr. 2, 1999); Order No. 587-M,
65 FR 77285 (Dec. 11, 2000), FERC Stats. & Regs. Regulations
Preambles [July 1996-December 2000] ] 31,114 (Dec. 11, 2000); Order
No. 587-N, 67 FR 11906 (Mar. 18, 2002), III FERC Stats. & Regs.
Regulations Preambles ] 31,125 (Mar. 11, 2002), Order No. 587-O, 67
FR 30788 (May 8, 2002), III FERC Stats. & Regs. Regulations
Preambles ] 31,129 (May 1, 2002); Order No. 587-R, 68 FR 13813 (Mar.
21, 2003), III FERC Stats. & Regs. Regulations Preambles ] 31,141
(Mar. 12, 2003).
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3. On April 14, 2004 NAESB filed with the Commission a report
informing the Commission that the WGQ had adopted a new version of its
standards, Version 1.7. NAESB reports that Version 1.7 includes
standards for partial day recalls which were requested in Order No.
587-N. The Commission previously incorporated these standards by
reference in Order No. 587-R.\4\ Version 1.7 also contains ten
standards regarding creditworthiness \5\ which the Commission proposed
to adopt in a Notice of Proposed Rulemaking (NOPR) in Docket No. RM04-
4-000.\6\ Version 1.7 contains revisions that more accurately reflect
the workings of the market including the definition of transaction
types, charge types, Service Codes, and Reduction Reason Codes. Other
revisions update standards that contained outmoded references, make the
naming conventions more uniform, and permit use of proprietary entity
codes when D-U-N-S[reg] numbers are not available. In
addition, the Version 1.7 standards update the treatment of allocations
as well as requests for information on scheduled quantities,
allocations, and shipper imbalances.
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\4\ Order No. 587-R, 68 FR 13813 (Mar. 21, 2003), III FERC
Stats. & Regs. Regulations Preambles & 31,141 (Mar. 12, 2003).
\5\ The credit-related standards in Version 1.7, which we are
incorporating by reference, are designated as Standards 0.3.3
through 0.3.10, 5.3.59 and 5.3.60. They include procedures for the
following practices: requesting additional information for credit
evaluation; acknowledging and responding to requests and receipt of
information; notice regarding creditworthiness and notice regarding
contract termination due to credit-related issues; forms of
communication; reevaluation of determinations that a Service
Requester is not creditworthy; and awarding capacity release offers
only after a service requester has been determined to meet the
creditworthiness requirements applicable to all services.
\6\ Creditworthiness Standards for Interstate Natural Gas
Pipeline, Notice of Proposed Rulemaking (NOPR), 69 FR 8587 (Feb. 25,
2004), IV FERC Stats. & Regs. Proposed Regulations ] 32,573 (Feb.
12, 2004).
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4. On August 6, 2004, NAESB filed with the Commission a report
informing the Commission that on June 25, 2004 the WGQ membership
ratified a package of modifications to the Version 1.7 standards to
implement Order No. 2004 (2004 Annual Plan Item 2 FERC Order 2004).
These standards modify the Informational Posting requirements for
pipeline web sites to reflect the information required to be posted
pursuant to Order No. 2004 and will be included as part of the WGQ's
Version 1.8 standards.
5. On October 1, 2004, NAESB filed a report with the Commission
informing the Commission that errata to Version 1.7 of the NAESB WGQ
standards were adopted by the Executive Committee on August 26, 2004
and, following a member comment period, the errata would be applied to
Version 1.7 on October 15, 2004. The errata contain minor corrections
which remove the table of code values for Bidder Affiliate from
Standard 5.4.13 and correct the Transaction Status Code data element in
the Code Values Dictionary of Standard 1.4.2.
6. On November 1, 2004, NAESB filed a report with the Commission
informing the Commission that on October 20, 2004 the WGQ membership
ratified standards to implement gas quality reporting requirements
(Recommendation R03035A).\7\ These standards require a pipeline to
provide a link on its Informational Posting Web Site to its gas quality
tariff provisions, or a simple reference guide to such information. In
addition, a pipeline is required to provide on its Informational
Postings Web site, in a downloadable format, daily average gas quality
information for prior day(s) to the extent available for locations(s)
that are
[[Page 28206]]
representative of mainline gas flow for the most recent three-month
period.
---------------------------------------------------------------------------
\7\ The standards ratified October 20, 2004 modified Standard
4.3.23 and added Principle 4.1.p1 and Standards 4.3.s1, 4.3.s2,
4.3.s3, and 4.3.s4. On March 18, 2005, NAESB filed a report
informing the Commission that the added Principle and Standards have
been assigned the following permanent numbers: Principle 4.1.40 and
Standards 4.3.89, 4.3.90, 4.3.91, and 4.3.92, respectively.
---------------------------------------------------------------------------
7. On December 21, 2004, the Commission issued a NOPR \8\ that
proposed to adopt Version 1.7 of the consensus standards, the standards
ratified by NAESB on June 24, 2004 to implement Order No. 2004 and the
standards to implement gas quality reporting requirements ratified by
NAESB in Recommendation R03035A.\9\ Five comments and one reply comment
were filed.\10\ The comments generally support adoption of the
standards, although some comments raise issues regarding the gas
quality standards, creditworthiness standards, and implementation date.
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\8\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Notice of Proposed Rulemaking, 70 FR 319 (Jan. 4, 2005),
FERC Stats. & Regs. Proposed Regulations ] 32,578 (Dec. 21, 2004).
\9\ Section 284.12(a)(2) also is revised to reflect NAESB's
current address.
\10\ Those filing comments are: American Gas Association (AGA);
BP America Production Company and BP Energy Company (jointly
``BP''); Florida Power and Light Company (FPL); the Interstate
Natural Gas Association of America (INGAA); Tennessee Valley
Authority (TVA); and Total Peaking Services, LLC (Total Peaking). On
March 14, 2005, INGAA filed reply comments.
---------------------------------------------------------------------------
8. On April 12, 2005, NAESB notified the Commission that the
Executive Committee adopted errata to be applied to Version 1.7 on
April 1, 2005. The errata correct certain errors in the validation
codes in the Code Values Dictionary of NAESB WGQ Standards 1.4.2
(Nomination Quick Response) and 1.4.7 (Confirmation Quick
Response).\11\
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\11\ Additionally, the errata correct the definition of Monthly
Allocation in 2.2.4 in the NAESB WGQ Standards Book 1 of 2. The
correct definition was originally adopted prior to publication of
Version 1.7, but during publication of Version 1.7 the definition
was captured incorrectly. However, the definition is correct in the
NAESB WGQ Flowing Gas Related Standards book.
---------------------------------------------------------------------------
9. On April 22, 2005 NAESB notified the Commission that a
modification to Standard 4.3.23 was approved by the NAESB WGQ Executive
Committee on April 4, 2005 and distributed for WGQ member ratification,
with ballots due on May 3, 2005. The modification to the standard
specifies a location for posting voluntary consent to information
disclosure by non affiliated customers as required by Sec. 358 of the
Commission's regulations.\12\
---------------------------------------------------------------------------
\12\ 18 CFR 358 (2004). NAESB states that it made the
modification in response to paragraph 10 of the NOPR in this
proceeding.
---------------------------------------------------------------------------
II. Discussion
10. The Commission is incorporating by reference Version 1.7 of the
NAESB consensus standards; the standards to implement Order No. 2004
ratified by NAESB on June 25, 2004 (2004 Annual Plan Item 2 FERC Order
2004); the standards to implement Order No. 2004-A ratified by NAESB on
May 3, 2005 (2005 Annual Plan Item 8 FERC Order 2004); and the
standards governing gas quality reporting ratified by NAESB on October
20, 2004 (Recommendation R03035A).\13\ Pipelines will be required to
implement the standards by September 1, 2005, which is the first day of
the month following 90 days after the issuance of this rule.\14\
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\13\ Pursuant to the regulations regarding incorporation by
reference, copies of Version 1.7 are available from NAESB. 5 U.S.C.
552(a)(1); 1 CFR 51 (2001).
\14\ The Commission is also revising Sec. 284.12(a)(2) to
reflect NAESB new address.
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11. The adoption of Version 1.7 \15\ of the NAESB WGQ standards
will help continue the process of updating and improving the current
standards. In adopting the Version 1.7 standards, the Commission is
adopting the new ``Additional Standards'' implementation guide that
contains standards generally applicable to all the business processes.
The Additional Standards include standards governing the use of common
codes to identify entities in transactions and the creditworthiness
standards.
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\15\ In Version 1.7 the NAESB WGQ made the following changes to
its standards, including the creditworthiness standards. It revised
Standards 1.3.32, 2.3.21, 4.3.1, 4.3.2, 5.3.2, 5.3.7, 5.3.41, and
5.3.42, and Datasets 1.4.1 through 1.4.7, 2.4.1 through 2.4.16,
3.4.1 through 3.4.4, and 5.4.1 through 5.4.22. It added Principles
1.1.22, 2.1.6, 5.1.2, 5.1.3, and 5.1.4, Definitions 2.2.4, 2.2.5 and
5.2.3, and Standards 0.3.2, 0.3.3 through 0.3.10, 2.3.51 through
2.3.64, and 5.3.44 through 5.3.60. It deleted Principles 1.1.6,
1.1.8, 1.1.19, and 4.1.14, and Standards 1.3.78, 2.3.24, 2.3.36
through 2.3.39, and 5.3.6.
---------------------------------------------------------------------------
12. The Commission is also adopting the NAESB standards related to
gas quality in WGQ Recommendation R03035A. These standards require a
pipeline to provide a link on its Informational Posting Web Site to its
gas quality tariff provisions, or a simple reference guide to such
information. In addition, a pipeline is required to provide on its
Informational Postings Web site, in a downloadable format, daily
average gas quality information for prior day(s) to the extent
available for location(s) that are representative of mainline gas flow
for the most recent three-month period. Adoption of these standards
will provide greater transparency to shippers with respect to the gas
quality requirements of interstate pipelines and available information
on gas quality on such pipelines' systems.
13. The NAESB WGQ approved the standards under NAESB's consensus
procedures.\16\ As the Commission found in Order No. 587, adoption of
consensus standards is appropriate because the consensus process helps
ensure the reasonableness of the standards by requiring that the
standards draw support from a broad spectrum of all segments of the
industry. Moreover, since the industry itself has to conduct business
under these standards, the Commission's regulations should reflect
those standards that have the widest possible support. In section 12(d)
of the National Technology Transfer and Advancement Act of 1995,
Congress affirmatively requires federal agencies to use technical
standards developed by voluntary consensus standards organizations,
like NAESB, as means to carry out policy objectives or activities.\17\
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\16\ This process first requires a super-majority vote of 17 out
of 25 members of the WGQ's Executive Committee with support from at
least two members from each of the five industry segments--
interstate pipelines, local distribution companies, gas producers,
end-users, and services (including marketers and computer service
providers). For final approval, 67 percent of the WGQ's general
membership must ratify the standards.
\17\ Pub. L. 104-113, Sec. 12(d), 110 Stat. 775 (1996), 15
U.S.C. 272 note (1997).
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14. The Comments addressing various aspects of the standards will
be addressed below.
A. Implementation Date
15. INGAA requests that the Commission implement the standards on
the first day of the month following 180 days after issuance of a final
rule. INGAA maintains that a transition to the new standards and the
business requirements supported by those standards will be coordinated
most effectively and seamlessly with the existing accounting, billing
and nomination processes if such a transition is implemented at the
beginning of a month. INGAA also states that delaying the required
implementation date to 180 days after issuance of the final rule will
allow time for interstate pipelines to make necessary changes in
systems and procedures to implement the posting of gas quality criteria
and data.
16. The Commission agrees that requiring implementation on the
first of the month allows for a more effective transition, and will
therefore grant INGAA's request. However, we will not grant the
requested 180-day delay in implementation. The pipelines have been on
notice of the consensus standards since the standards were ratified and
adopted. Also, the request relates principally to the gas quality
standards, and thus does not justify a 180-day delay for implementing
all the standards. We recognize that individual pipelines may have more
difficulty in
[[Page 28207]]
implementing some of the standards, and the Commission has in the past
been willing to grant extensions of time for implementation when
pipelines have justified such requests. Accordingly, the Commission is
requiring implementation on the first of the month, following 90 days
after issuance of this final rule.
B. Gas Quality Standards
1. Tariff Provisions Regarding Gas Quality Standards
17. The gas quality standards ratified by NAESB include Standard
4.3.89 (formerly 4.3.s1), which states a pipeline should provide, on
its Web site, a link to the natural gas quality tariff provisions or,
where no tariff exists in the general terms and conditions, a simple
reference guide to such information. FPL maintains that merely
providing a link to the existing tariff provision will not necessarily
provide clarity for end users or operational personnel unless the
Commission encourages development of more clearly written and presented
tariff language. FPL states that additional progress towards gas
quality measurement standardization should be made. Specifically, FPL
states that the absence of a consistent definition of the chemical
characteristics of natural gas can cause problems for end users. FPL
also states that standardized assumptions upon which chemical
characteristics or physical properties are determined are needed.\18\
AGA requests that the Commission confirm the reporting standard does
not relieve pipelines of their responsibility to ensure adherence to
the gas quality specifications in their tariffs.
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\18\ FPL states that the Environmental Protection Agency defines
standard conditions as 68 degrees Fahrenheit at 1 atmosphere of
pressure, but pipelines generally define and measure the volume of
gas transported at 60 degrees Fahrenheit and an absolute pressure of
14.73 pounds per square inch absolute, and variances exist from this
measure.
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18. These requests go beyond the scope of this rule, which
addresses only the posting requirements for standards. Issues as to the
clarity and substance of tariff provisions should be addressed in
individual pipeline proceedings in which these issues are raised. The
Commission has recognized that the issue of how to measure gas quality
is of importance to the industry and has established a Natural Gas
Interchangeability proceeding in Docket No. PL04-3-000 to address these
substantive issues.\19\ The issues raised by FPL and AGA are more
appropriately considered in that proceeding.
---------------------------------------------------------------------------
\19\ The Commission held a technical conference on these issues
on February 18, 2004, and on March 2, 2005 issued a request for
comment on two papers filed by the Natural Gas Council: White Paper
on Liquid Hydrocarbon Drop Out in Natural Gas Infrastructure and
White Paper on Natural Gas Interchangeability and Non-Combustion End
Use. On April 13, 2005, the Commission issued a notice of a
technical conference to be held May 17, 2005, to consider further
comments on the NGC reports and recommendations for Commission
action on natural gas quality and liquefied natural gas
interchangeability issues.
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2. Information Posting
19. Standard 4.3.90 (formerly 4.3.s2) states that pipelines should
provide information ``to the extent available, for location(s) that are
representative of mainline gas flow.'' BP states that this standard
does not specify the data to be included in the operational posting,
and the Commission's requirements in Natural \20\ are appropriate and
should be incorporated into this rule. BP contends that the Natural
standards include the requirement that the pipeline must post on its
Internet Web site every receipt point dewpoint value it calculates,
along with the method by which the dewpoint was calculated, and every
blended dewpoint and blended BTU value it calculates for a line segment
of its system. In Natural, the Commission required that the information
must be posted within 24 hours of completion of the calculations.
---------------------------------------------------------------------------
\20\ Natural Gas Pipeline Co., 102 FERC ] 61,234, order on
reh'g, 104 FERC ] 61,322 (2003) (Natural).
---------------------------------------------------------------------------
20. The Commission is incorporating the standards as developed by
the WGQ. These standards represent a consensus of the industry as to
the minimum posting requirements for information on gas quality that
are applicable to all pipelines. In individual pipeline cases, such as
in Natural, the Commission may have specified additional information be
posted.\21\ Pipelines that are required to comply with such
requirements must continue to do so, and the WGQ standards accommodate
such postings. However, whether such requirements developed in
individual cases should be extended to the entire industry is beyond
the scope of this proceeding. Such issues can be raised in the
proceeding in Docket No. PL04-3-000 that the Commission has instituted.
Regarding BP's concern with the timeliness of posting, we expect that
pipelines will promptly post their information.
---------------------------------------------------------------------------
\21\ The procedures developed in Natural were the result of
problems Natural experienced during the winter of 2000-2001 when gas
prices were so high that liquefiable hydrocarbons had a greater
value to shippers as constituents of the gas stream than as
extracted liquids. Shippers ceased their common practice of
extracting the liquefiable hydrocarbons before tendering the gas to
Natural, and this caused the closing of two gas processing plants
that normally would tender processed residue gas.
---------------------------------------------------------------------------
21. Additionally, BP states that pipelines should not be able to
avoid compliance with the data posting requirements by claiming that
the data are not available at a specific location, and that the rule
should provide that all pipelines must develop the means, to the extent
they do not already have equipment in place, to measure gas quality at
key points. TVA states that consumers should have access to documented
information on the quality of the product being received, and that
information should include measurements against a well-defined,
documented formula and be publicly posted. INGAA states such a
requirement would involve pipelines installing additional gas quality
equipment, thus imposing on pipelines and their ratepayers millions of
dollars of investment for new equipment. INGAA maintains the
installation of additional equipment at each receipt point would add
little or no value in improving safety and/or efficiency of pipeline
operations.
22. These standards involve only the posting of information
obtained by the pipeline and require only that the pipeline post
information it already has obtained. Issues relating to the development
of additional information or other substantive questions are beyond the
scope of this proceeding and should be addressed in individual cases or
in the Commission's generic proceeding on gas quality.
23. AGA states that, in adopting the NAESB gas quality standards,
the Commission should include direction to the pipelines that in
implementing the standards they should consult with their customers to
determine which points are ``representative of mainline gas flow'' on
its system. AGA states that the pipelines should provide meaningful
indication of gas quality at all major delivery points. The Commission
agrees that the pipelines should post information relevant to their
shippers and consult with shippers in determining the information
posted.
3. Exemption
24. Total Peaking proposes an exemption from the gas quality
posting requirements for natural gas companies that do not physically
deliver natural gas into the facilities of an interstate pipeline.
Total Peaking states it is a liquid natural gas storage company subject
to Natural Gas Act jurisdiction and is required to have a tariff on
file with the Commission. It states that the purpose of gas quality
reporting cannot be served by imposing additional gas quality and
measurement and reporting obligations on entities such as Total
[[Page 28208]]
Peaking, which do not physically deliver natural gas into the
facilities of an interstate pipeline.
25. We decline to grant a generic waiver of the standards as
proposed by Total Peaking. The standards are intended to provide
information regarding the quality of a particular pipeline or storage
facility's system. Even though Total Peaking may not delivery gas to an
interstate pipeline, the gas quality information may be useful to its
customers. Although we decline to grant the generic exemption Total
Peaking requests, entities such as Total Peaking may request a waiver
of the requirements in their individual compliance filings where
justified.
C. Creditworthiness
26. In the NOPR, we proposed to incorporate by reference the
creditworthiness standards adopted by NAESB that had previously been
noticed in the creditworthiness rulemaking in Docket No. RM04-4-
000.\22\ In the NOPR in this proceeding, the Commission stated it would
address the comments filed on these standards before the issuance of a
final rule adopting these standards.\23\
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\22\ Creditworthiness Standards for Interstate Natural Gas
Pipelines, Notice of Proposed Rulemaking, 69 FR 8587 (Feb. 25,
2004), FERC Stats. & Regs. Regulations Preambles ] 32,573 (Feb. 12,
2004).
\23\ We are addressing the comments filed in Docket No. RM04-4-
000 regarding creditworthiness here.
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27. The ten WGQ standards on creditworthiness provide procedural
rules by which pipelines should deal with their customers with respect
to credit issues, such as providing shippers with the reasons a
pipeline is requesting credit information, procedures for
communications between pipelines and customers, and the timeline for
providing responses to requests for credit reevaluation.
28. Commenters in Docket No. RM04-4-000 generally support, or do
not oppose, the consensus standards on creditworthiness. Many shippers
urge the Commission to adopt the ten creditworthiness consensus
standards.\24\ Several pipelines also support the incorporation of the
ten NAESB standards into the Commission's regulations.\25\ Commenters,
however, raise several issues which will be discussed below.
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\24\ See, e.g., Northwest Industrial Gas Users at 7; Process Gas
Consumers Group, et al. at 9-13; Calpine Corporation at 18; Encana
Marketing (USA) Inc. at 4, 9-10.
\25\ National Fuel at 2; Vector at 2-3; Williston Basin at 3;
INGAA at 42.
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1. Notice to Releasing Shippers
29. Standard 5.3.60 provides that a pipeline should provide the
original releasing shipper with Internet E-mail notification
``reasonably proximate in time'' of the following events: (1) Notice to
the replacement shipper regarding the replacement shipper's past due,
deficiency, or default status pursuant to the pipeline's tariff; (2)
notice to the replacement shipper regarding the replacement shipper's
suspension of service notice; (3) notice to the replacement shipper
regarding the replacement shipper's contract termination notice due to
default or credit-related issues; and (4) notice to the replacement
shipper that the replacement shipper(s) is no longer creditworthy and
has not provided credit alternative(s) pursuant to the pipeline's
tariff.
30. Several commenters point out that in creditworthiness orders,
the Commission required pipelines to provide simultaneous notice to a
releasing shipper and a replacement shipper upon determining that a
replacement shipper is not creditworthy.\26\ Commenters argue that the
standard of ``simultaneous notice'' is preferable to the standard of
``reasonably proximate in time'' in Standard 5.3.60 (formerly 5.3.zF)
given the importance of timely notice of credit-related events, since
notice need only be sent to a small list of parties (the original
releasing shipper(s)), since simultaneity is unambiguous, and since
releasing shippers could be liable for unpaid reservation charges if a
replacement shipper defaults.\27\ If the Commission retains the
``reasonably proximate'' standard, Peoples requests a limitation in the
rule clarifying that no more than one business day constitutes
``reasonably proximate.'' \28\ Moreover, Peoples requests clarification
that given the time sensitivity associated with credit related
information, the requirement is not that the releasing shipper receive
the notice that the pipeline sent to the replacement shipper, but only
that the releasing shipper receive notice that such a notice was
sent.\29\
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\26\ See, e.g., Tennessee Gas Pipeline Co., 102 FERC ] 61,075 at
P 78 (2003); Northern Natural Gas Co., 103 FERC ] 61,276 at P 43
(2003).
\27\ AGA at 10-11, Dominion at 6-7, Peoples at 6-8.
\28\ Peoples at 6-7.
\29\ See Peoples at 8 (suggesting revised regulatory language).
---------------------------------------------------------------------------
31. Alliance, however, contends that requiring the pipeline to
provide the releasing shipper with notice regarding the replacement
shipper's financial performance could expose the pipeline to claims of
liability, particularly where the replacement shipper has not defaulted
on its contractual obligations, but is merely past due or deficient, or
in situations where the replacement shipper has not authorized the
release of confidential information to third parties.\30\ Alliance
argues that, if the releasing shipper wants to require the replacement
shipper to provide the releasing shipper with notice of any changes in
its financial performance, the releasing shipper should make such a
requirement a condition of the release. Alliance contends that the
pipeline should not be required to keep the releasing shipper apprised
of the replacement shipper's performance.
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\30\ Alliance at 15-17.
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32. The Commission will adopt the standard as proposed by the WEQ
since this standard reflects the consensus of the industry. Providing
simultaneous notice is not necessary, as long as the notice to the
releasing shipper is provided promptly, such as on the same day as the
notice to the replacement shipper.
33. Nor does the Commission see a need to revise Standard 5.3.60 to
respond to the comments filed by Peoples and Alliance. The standard
does not require the pipeline to provide an identical notice to the
releasing shipper, only that the releasing shipper should receive
notice that one of the events has occurred. With respect to Alliance's
concerns, we find that it is a reasonable default provision for the
pipeline to notify the releasing shipper of conditions that may affect
the replacement shipper's ability to perform under its release. Such
information is relevant, for example, to the releasing shipper's
decision whether to recall capacity. Further, replacement shippers that
object to this condition can seek to obtain agreement from the
releasing shipper that the releasing shipper will not receive such a
notice. Alliance has not shown that liability will attach to the
pipeline in such a case.
34. Alliance suggests that such notice only be provided when the
releasing shipper includes the provision in the terms and conditions of
the release. However, given the comments by releasing shippers on the
proposed standard and in many of the creditworthiness cases, it appears
that, in the majority of cases, the releasing shipper will insist on
such a provision in a release, and, therefore, we find the inclusion of
this standard reasonable as the default provision. However, we clarify
that if the releasing and replacement shippers agree that such
[[Page 28209]]
notice not be provided, that agreement can be included in the terms and
conditions of the release, in which case the pipeline will not provide
the notice.
2. Publishing the Standards in the Regulations
35. NiSource contends the Commission should restate the ten
consensus standards in the regulations since the standards are a
critically important component of this rulemaking. NiSource states that
restating the standards in the regulations will facilitate the
interpretation and implementation of the rules.
36. As the Commission has explained in previous orders, the Freedom
of Information Act and implementing regulations establish that the
proper method of adopting private sector standards is to incorporate
those standards by reference into the agency's regulations.\31\ Because
these standards are copyrighted, reproducing them in the regulations is
not appropriate.\32\ However, the standards are available on compact
disc from NAESB at the reasonable price of $100.\33\
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\31\ Standards for Business Practices of Interstate Natural Gas
Pipeline, 95 FERC ] 61,127, at 61,400-01 (2001); Standards for
Business Practices of Interstate Natural Gas Pipelines, 77 FERC ]
61,061, at 61,232-33 (1996).
\32\ 5 U.S.C. 553 (a)(1) (2000); 1 CFR 51.7(4) (2005). See 28
U.S.C. 1498 (2000) (government liability for patent and copyright
infringement).
\33\ NAESB Home Page, https://www.naesb.org/pdf/ordrform.pdf.
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D. 2004 Standards
37. As the Commission stated in the NOPR, the NAESB standards with
respect to the Order No. 2004 affiliate standards establish uniform
posting requirements for the Commission requirements. However, the
NAESB standards were developed prior to the issuance of Order No. 2004-
A, and revised Standard 4.3.23 did not specify a location for posting
voluntary consent to information disclosure by non affiliated customers
as required by Sec. 358 of the Commission's regulations.\34\ The
Commission noted that electric utilities and pipelines have been
posting this information as a separate category from other non-
discrimination requirements, and that posting this information as a
separate category represents a better practice, since it will make it
easier for the Commission as well as other parties to find and access
this information. The Commission stated that it expects pipelines and
electric utilities to post this information as a separate category.
---------------------------------------------------------------------------
\34\ 18 CFR 358 (2004).
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38. On May 3, 2005, the NAESB membership ratified a revision to
Standard 4.3.23 to provide for a separate category for posting
voluntary consent information consistent with the Commission's policy,
and the Commission will incorporate this modification into its
regulations.
Notice of Use of Voluntary Consensus Standards
39. Office of Management and Budget Circular A-119 (Sec. 11)
(February, 10, 1998) provides that when a Federal agency issues or
revises a regulation containing a standard, the agency should publish a
statement in the final rule stating whether the adopted standard is a
voluntary consensus standard or a government-unique standard. In this
rulemaking, the Commission is incorporating by reference voluntary
consensus standards developed by the WGQ.
Information Collection Statement
40. The Office of Management and Budget's (OMB) regulations in 5
CFR 1320.11 (2005) require that it approve certain reporting and
recordkeeping requirements (collections of information) imposed by an
agency. Upon approval of a collection of information, OMB will assign
an OMB control number and an expiration date. Respondents subject to
the filing requirements of this Rule will not be penalized for failing
to respond to these collections of information unless the collections
of information display a valid OMB control number.
41. The final rule will affect the following existing data
collections: FERC-545 ``Gas Pipeline Rates: Rate Change (Non-Formal)''
(OMB Control No. 1902-0154) and FERC-549C ``Standards for Business
Practices of Interstate Natural Gas Pipelines'' (OMB Control No. 1902-
0174). The following burden estimates are related only to this rule and
include the costs of complying with Version 1.7 of the WGQ's consensus
standard as modified by the standards ratified by the WGQ on June 25,
2004, to implement Order No. 2004 and the standards to implement gas
quality reporting requirements ratified by the WGQ on October 20, 2004,
in Recommendation R03035A. The burden estimates for the FERC-545 data
collection are related to the tariff filings required to implement
these standards. The burden estimates for the FERC-549C data collection
are related to implementing the latest version of the business practice
standards and related data sets. The costs for both of these data
collections are primarily related to start-up and will not be on-going
costs.
----------------------------------------------------------------------------------------------------------------
Number of
Data collection Number of responses per Hours per Total annual
respondents respondent response hours
----------------------------------------------------------------------------------------------------------------
FERC-545........................................ 93 1 38 3,534
FERC-549C....................................... 93 1 2,614 243,102
----------------------------------------------------------------------------------------------------------------
The total annual hours for collection is 246,636 hours.
------------------------------------------------------------------------
FERC-549C FERC-545
------------------------------------------------------------------------
Annualized Capital/Startup Costs........ $12,691,327 $184,495
Annualized Costs (Operations & 0 0
Maintenance)...........................
-----------------
Total Annualized Costs.............. 12,691,327 184,495
------------------------------------------------------------------------
[[Page 28210]]
The cost per respondent is $138,450 (rounded off).
42. The Commission sought comments to comply with these
requirements. Comments were received from six entities. No comments
addressed the reporting burden imposed by these requirements. The
substantive issues raised by the commenters are addressed in this
preamble.
43. The Commission's regulations adopted in this rule are necessary
to further the process begun in Order No. 587 of creating a more
efficient and integrated pipeline grid by standardizing the business
practices and electronic communication of interstate pipelines.
Adoption of these regulations will update the Commission's regulations
relating to business practices and communication protocols to conform
to the latest version, Version 1.7, of the WGQ's consensus standards
and the standards to implement Order No. 2004 and gas quality reporting
requirements.
44. The Commission has assured itself, by means of its internal
review, that there is specific, objective support for the burden
estimates associated with the information requirements. The information
required in this final rule will help the Commission carry out its
responsibilities under the Natural Gas Act and conforms to the
Commission's plan for efficient information collection, communication,
and management within the natural gas industry.
45. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 [Attention:
Michael Miller, Office of the Chief Information Officer, CI-1, (202)
502-8415, or michael.miller@ferc.gov] or the Office of Management and
Budget, Office of Information and Regulatory Affairs, Attention: Desk
Officer for the Federal Energy Regulatory Commission, 725 17th Street,
NW., Washington, DC 20503. The Desk Officer can also be reached at
(202) 395-7856, or fax: (202) 395-7285.
Environmental Analysis
46. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\35\ The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.\36\ The actions adopted here fall within categorical
exclusions in the Commission's regulations for rules that are
clarifying, corrective or procedural, for information gathering,
analysis, and dissemination, and for sales, exchange, and
transportation of natural gas the requires no construction of
facilities.\37\
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\35\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. Preambles 1986-1990 ] 30,783 (1987).
\36\ 18 CFR 380.4 (2004).
\37\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27)
(2004).
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Regulatory Flexibility Act Certification
47. The Regulatory Flexibility Act of 1980 (RFA) \38\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The regulations adopted here impose requirements only on interstate
pipelines, the majority of which are not small business, and, these
requirements are, in fact, designed to benefit all customers, including
small business. Accordingly, pursuant to Sec. 605(b) of the RFA, the
Commission hereby certifies that the regulations adopted herein will
not have a significant adverse impact on a substantial number of small
entities.
---------------------------------------------------------------------------
\38\ 5 U.S.C. 601-612 (2000).
---------------------------------------------------------------------------
Document Availability
48. 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 (https://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.
49. From FERC's Home Page on the Internet, this information is
available in eLibrary. The full text of this document is available in
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.
50. User assistance is available for eLibrary and the FERC's Web
site during normal business hours. For assistance contact FERC Online
Support at FERCOnlineSupport@ferc.gov or toll-free at (866) 208-3676 or
for TTY, contact (202) 502-8659.
Implementation Dates And Procedures
51. Pipelines are required to file tariff sheets to reflect the
changed standards on or before July 1, 2005, with an effective date of
September 1, 2005. Pipelines incorporating the Version 1.7 standards
into their tariffs must include the standard number and Version 1.7.
Pipelines incorporating by reference the gas quality standards must
refer to the standard number (e.g. 4.3.89) and the Recommendation
number in which the standard is adopted (R03035A). Pipelines
incorporating the standards adopted by NAESB to implement Order No.
2004 must refer to the standard as 2004 Annual Plan Item 2 FERC Order
2004 and 2005 Annual Plan Item 8 (May 3, 2005) (Affiliate Order
standards).
Effective Date
52. These regulations are effective June 16, 2005. The Commission
has determined, with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996.
List of Subjects in 18 CFR Part 284
Continental shelf, Incorporation by reference, Natural gas,
Reporting and recordkeeping requirements.
By the Commission.
Magalie R. Salas,
Secretary.
0
In consideration of the foregoing, the Commission amends part 284,
Chapter I, Title 18, Code of Federal Regulations, as follows:
PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES
0
1. The authority citation for part 284 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352;
43 U.S.C. 1331-1356.
0
2. Section 284.12 is amended as follows:
0
a. In paragraph (a)(2), the reference to ``1100 Louisiana, Suite 3625''
is revised to read ``1301 Fannin, Suite 2350''.
0
b. Paragraphs (a)(1)(i) through (v) are revised and a new paragraph
(a)(1)(vi) is added to read as follows:
Sec. 284.12 Standards for pipeline business operations and
communications.
(a) * * *
(1) * * *
(i) Additional Standards (General Standards and Creditworthiness
Standards) (Version 1.7, December 31, 2003);
[[Page 28211]]
(ii) Nominations Related Standards (Version 1.7, December 31, 2003,
including errata, October 15, 2004 and April 1, 2005);
(iii) Flowing Gas Related Standards (Version 1.7, December 31,
2003);
(iv) Invoicing Related Standards (Version 1.7, December 31, 2003);
(v) Electronic Delivery Mechanism Related Standards (Version 1.7,
December 31, 2003) with the exception of Standard 4.3.4, and including
the standards contained in 2004 Annual Plan Item 2 (June 25, 2004)
(Order No. 2004 standards) and the standard contained in 2005 Annual
Plan Item 8 (May 3, 2005) (Affiliate Order standards), and the
standards contained in Recommendation R03035A (October 20, 2004) (gas
quality reporting); and
(vi) Capacity Release Related Standards (Version 1.7, December 31,
2003, including errata, October 15, 2004).
* * * * *
[FR Doc. 05-9803 Filed 5-16-05; 8:45 am]
BILLING CODE 6717-01-P
