Standards of Conduct for Transmission Providers, 2427-2435 [E7-659]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 72, Number 12 (Friday, January 19, 2007)]
[Rules and Regulations]
[Pages 2427-2435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-659]


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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 358

[Docket No. RM07-6-000; Order No. 690]


Standards of Conduct for Transmission Providers

Issued January 9, 2007.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Interim rule.

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

SUMMARY: This interim rule responds to the decision of the United 
States Court of Appeals for the District of Columbia vacating and 
remanding the standards of conduct rule, Order No. 2004, as it relates 
to interstate natural gas pipelines, in National Fuel Gas Supply 
Corporation v. FERC, 468 F.3d 831 (D.C. Cir. 2006). The court objected 
to the Federal Energy Regulatory Commission's (Commission's) expansion 
of the prior standards of conduct to include energy affiliates, and 
vacated the entire rule as it relates to natural gas pipelines. The 
interim rule repromulgates the standards of conduct that were not 
challenged before the court on an interim basis while the Commission 
considers how to respond to the court's decision on a permanent basis.

EFFECTIVE DATE: This rule is effective January 9, 2007.

FOR FURTHER INFORMATION CONTACT: Deme Anas, Office of Enforcement, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-8178. E-mail: 
demetra.anas@ferc.gov. Stuart Fischer, Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426. Telephone: (202) 502-8517. E-mail: stuart.fischer@ferc.gov.

SUPPLEMENTARY INFORMATION: 

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

I. Introduction

    1. The Federal Energy Regulatory Commission (Commission) is 
promulgating interim standards of

[[Page 2428]]

conduct regulations that govern the relationship between natural gas 
transmission providers and their marketing affiliates to respond to the 
decision of the United States Court of Appeals for the District of 
Columbia concerning the Standards of Conduct for Transmission Providers 
under Order No. 2004.\1\ In National Fuel Gas Supply Corporation v. 
FERC (National Fuel),\2\ the court found that the Commission did not 
support the standards of conduct's expansive definition of energy 
affiliates and vacated Order Nos. 2004, 2004-A, 2004-B, 2004-C and 
2004-D (collectively referred to as Order No. 2004) as applied to 
natural gas pipelines, and remanded the orders to the Commission.\3\ 
Specifically, the court rejected the Commission's attempt to extend the 
standards of conduct beyond pipelines' relationships with their 
marketing affiliates to govern pipelines' relationships with numerous 
non-marketing affiliates, such as producers, gatherers, and local 
distribution companies (energy affiliates). In light of this finding, 
the court found moot the other issues raised on appeal.\4\
---------------------------------------------------------------------------

    \1\ On November 25, 2003, the Commission added Part 358 to the 
Commission's regulations adopting standards of conduct that apply 
uniformly to natural gas and electric utility transmission 
providers. Standards of Conduct for Transmission Providers, Order 
No. 2004, FERC Stats. & Regs., Regulations Preambles ] 31,155 
(2003), order on reh'g, Order No. 2004-A, III FERC Stats. & Regs. ] 
31,161 (2004), 107 FERC ] 61,032 (2004), order on reh'g, Order No. 
2004-B, III FERC Stats. & Regs. ] 31,166 (2004), 108 FERC ] 61,118 
(2004), order on reh'g, Order No. 2004-C, 109 FERC ] 61,325 (2004), 
order on reh'g, Order No. 2004-D, 110 FERC ] 61,320 (2005), vacated 
and remanded as it applies to natural gas pipelines, National Fuel 
Gas Supply Corporation v. FERC, 468 F.3d 831 (D.C. Cir. 2006).
    \2\ National Fuel slip op. at 4 [published cite not yet 
available].
    \3\ National Fuel, slip op. at 4. Order No. 2004 was not 
appealed as it applies to electric utility transmission providers.
    \4\ National Fuel, slip op. at 4.
---------------------------------------------------------------------------

    2. The purpose of this order is to repromulgate the standards of 
conduct not challenged in the National Fuel appeal in the interim while 
the Commission considers how to respond to the court's decision on a 
permanent basis. To that end, the Commission plans to issue a Notice of 
Proposed Rulemaking (NOPR) in the very near future. The interim rule 
will thus help eliminate any uncertainty about how the standards of 
conduct apply to natural gas transmission providers while the 
Commission develops a final rule.
    3. The Commission believes that this interim rule is consistent 
with the court's decision in National Fuel and meets the standards for 
an interim rule without notice and comment under the Administrative 
Procedure Act as set out in the court's opinion in Mid-Tex Electric 
Cooperative, Inc. v. FERC (Mid-Tex).\5\ In Mid-Tex, the court reviewed 
the Commission's interim rule regarding the construction work in 
progress (CWIP) accounts for electric utilities that had previously 
been vacated and remanded by the court.\6\ Despite objections to the 
interim CWIP rule, the court upheld the interim rule as consistent with 
the letter and spirit of its previous ruling.\7\ The court concluded 
that the Commission could reasonably infer that should it become 
necessary or proper to provide a regulation prior to its full 
reconsideration of the CWIP issue, it may do so if it addresses the 
issues raised by the court.\8\
---------------------------------------------------------------------------

    \5\ Mid-Tex Electric Cooperative, Inc. v. FERC, 822 F.2d 1123 
(D.C. Cir. 1987).
    \6\ Mid-Tex Electric Cooperative, Inc. v. FERC, 773 F.2d 327 
(D.C. Cir. 1985).
    \7\ Mid-Tex, at 1129-30.
    \8\ Mid-Tex, at 1130.
---------------------------------------------------------------------------

    4. The Mid-Tex court also concluded that the Commission had good 
cause to adopt an interim rule without prior notice and comment.\9\ The 
Administrative Procedure Act permits rulemaking without prior notice 
and comment when an agency ``for good cause * * * finds that notice and 
public procedure are impracticable, unnecessary, or contrary to the 
public interest.'' \10\ In its order adopting the interim rule 
regarding CWIP, the Commission emphasized three factors for foregoing 
prior notice and comment. First, the Commission stressed both the 
interim nature of the CWIP rule and the ongoing public process in 
formulating a permanent CWIP policy. Second, the Commission observed 
that the fundamental policy underlying the CWIP had been accepted by 
the court. Third, the Commission took notice that an interim rule was 
needed to avoid regulatory confusion.
---------------------------------------------------------------------------

    \9\ Mid-Tex, at 1132.
    \10\ 5 U.S.C. 553(b)(3)(B) (2000).
---------------------------------------------------------------------------

    5. Guided by the standards in Mid-Tex, the Commission has 
structured this interim rule in accordance with the court's decision in 
National Fuel while the Commission conducts a public notice and comment 
process for promulgating a final rule. The Commission has adhered to 
both the letter and the spirit of the court's decision in National Fuel 
by fashioning an interim rule under which the standards of conduct do 
not apply to the relationship between natural gas transmission 
providers and energy affiliates, which is the aspect of the standards 
of conduct that the court found infirm.
    6. The issuance of this interim rule is also consistent with the 
three factors articulated in Mid-Tex for issuing an interim rule 
without prior notice and comment under the Administrative Procedures 
Act. First, the Commission stresses that the instant interim rule is 
not intended to serve as a permanent rule and that it is commencing a 
rulemaking proceeding through the issuance in the very near future of a 
NOPR. Second, the interim rule follows both the letter and spirit of 
the court's opinion in National Fuel because, for natural gas 
pipelines, it eliminates the provisions of Order No. 2004 that were 
subject to appeal and instead adopts provisions originally promulgated 
in Order No. 497, which was upheld in relevant part by the court in 
Tenneco Gas v. FERC.\11\ Third, the Commission needs to issue an 
interim rule to avoid regulatory confusion. When the Commission adopted 
Order No. 2004, it rescinded the standards of conduct promulgated by 
Order No. 497.\12\ Because National Fuel vacated Order No. 2004 as 
applied to natural gas transmission providers, there are no existing 
regulations governing the relationship between natural gas transmission 
providers and their marketing affiliates. This interim rule 
repromulgates rules from Order No. 2004 that were not challenged on 
appeal. With respect to provisions that were challenged, as noted, the 
Commission is temporarily re-adopting the standards of conduct 
provisions promulgated under Order No. 497. Otherwise, there would be 
no rules in place governing the relationship between natural gas 
pipelines and their affiliates--a situation which the Commission 
believes would not be in the public interest as such rules have for 
almost two decades played an important role in the agency's program to 
ensure non-discriminatory access by pipeline customers to competitive 
wellhead markets.
---------------------------------------------------------------------------

    \11\ Inquiry Into Alleged Anticompetitive Practices related to 
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR 
223139 (1988), FERC Stats. & Regs., Regulations Preambles 1986-1990 
] 30,820 (1988); Order No. 497-A, order on reh'g, 54 FR 52781 
(1989), FERC Stats & Regs., Regulations Preambles 1986-1990 ] 30,868 
(1989); Order No. 497-B, order extending sunset date, 55 FR 53,291 
(1990), FERC Stats. & Regs., Regulations Preambles 1986-1990 ] 
30,908 (1990); Order No. 497-C, order extending sunset date, 47 FR 9 
(1992), FERC Stats. & Regs., Regulations Preambles 1991-1996 ] 30934 
(1991), reh'g denied, 47 FR 5815 (1992), 58 FERC ] 61,139 (1992); 
aff'd in part and remanded in part sub nom. Tenneco Gas v. FERC, 969 
F.2d 1187 (D.C. cir. 1992).
    \12\ Order No. 2004, supra note 1, (in the description of the 
revisions to Title 18 of the Code of Federal Regulations).
---------------------------------------------------------------------------

    7. Accordingly, in this interim rule, for natural gas transmission 
providers, the Commission modifies the

[[Page 2429]]

regulations originally promulgated by Order No. 2004 consistent with 
the court's decision and issues appealed. The interim regulations will 
make clear that the standards of conduct apply to the relationship 
between natural gas transmission providers and marketing affiliates, 
and that the standards of conduct will not govern the relationship 
between natural gas transmission providers and their other energy 
affiliates. Because Order No. 2004 defined marketing differently than 
Order No. 497, the Commission is revising the definition of marketing 
consistent with Order No. 497.\13\
---------------------------------------------------------------------------

    \13\ Since the standards of conduct will no longer govern the 
relationship between natural gas transmission providers and their 
energy affiliates, this addresses the issue concerning the scope of 
the energy affiliate exception for local distribution companies 
appealed by National Fuel Gas Distribution Corporation and National 
Fuel Gas Supply raised in National Fuel.
---------------------------------------------------------------------------

    8. Although the court did not consider petitioners' appeals with 
respect to specific sections of Part 358 as it vacated Order No. 2004 
based on the lack of record support for the new definition of energy 
affiliate, the interim regulations will treat each of the sections 
challenged on appeal as if the court had held those sections infirm as 
well. Specifically, for natural gas transmission providers, the interim 
rule will: (1) omit restrictions on shared risk management activities 
and employees \14\ and (2) revise the requirement to post all 
discretionary acts.\15\ Also raised on appeal were two issues discussed 
in the preamble of Order No. 2004, but not codified in regulatory text. 
Here, too, although the court did not consider these issues, the 
Commission will incorporate into this preamble modifications consistent 
with petitioners' appeals of Order No. 2004 as if the court had ruled 
in their favor. Specifically, the Commission will (1) allow natural gas 
transmission providers to treat lawyers as permissibly shared 
employees; and (2) not require newly certificated natural gas pipeline 
transmission providers to observe the standards of conduct until they 
commence transmission services.
---------------------------------------------------------------------------

    \14\ 18 CFR 358.4(a)(6) (2006).
    \15\ 18 CFR 385.5(c)(4) (2006).
---------------------------------------------------------------------------

    9. In the very near future, the Commission will issue a NOPR, which 
will seek comments on adopting permanent changes to Part 358 consistent 
with National Fuel. As a result, the Commission expects that the 
provisions in the interim rule will remain in effect until we have 
completed the rulemaking process for a final rule for Standards of 
Conduct for Transmission Providers. The Commission further expects the 
process for adopting a final rule to proceed without delay.

II. Background

A. Order No. 2004

    10. Prior to Order No. 2004, the Commission had two separate sets 
of regulations governing standards of conduct for transmission 
providers. The regulations applicable to natural gas pipelines were 
issued in Order No. 497 in 1988,\16\ pursuant to the agency's statutory 
authority under sections 4 and 5 of the Natural Gas Act.\17\ In 1996, 
the Commission issued Order No. 889,\18\ which created standards of 
conduct regulations applicable to electric public utilities under 
sections 205 and 206 of the Federal Power Act.\19\ Both rules had the 
same goal: To prevent transmission providers from exercising their 
control over transmission to engage in undue discrimination or 
preference in favor of their marketing affiliates over non-affiliates. 
Both rules employed the same general approach: Requiring employees 
engaged in transmission services to function independently from 
employees of its marketing affiliates and imposing prohibitions 
restricting transmission providers from sharing certain information 
with their marketing affiliates.
---------------------------------------------------------------------------

    \16\ See supra note 10.
    \17\ 15 U.S.C. 717c and 717d (2000). See also former 18 CFR part 
161 (2003).
    \18\ Open Access Same-Time Information System (Formerly Real-
Time Information Network) and Standards of Conduct, Order No. 889, 
61 FR 21737 (May 10, 1996), FERC Stats. & Regs., Regulations 
Preambles 1991-1996 ] 31,035 (Apr. 24, 1996); Order No. 889-A, order 
on reh'g, 62 FR 12484 (Mar. 14, 1997), FERC Stats. & Regs., 
Regulations Preambles 1996-2000 ] 31,049 (Mar. 4, 1997); Order No. 
889-B, reh'g denied, 62 FR 64715 (Dec. 9, 1997), FERC Stats. & 
Regs., Regulations Preambles 1996-2000 ] 31,253 (Nov. 25, 1997).
    \19\ 16 U.S.C. 824d and 824e (2000). See also former 18 CFR 37.4 
(2003).
---------------------------------------------------------------------------

    11. In Order No. 2004, the Commission revised the standards of 
conduct so that one set of standards of conduct applied uniformly to 
both natural gas pipelines and electric public utilities.\20\ The 
Commission also expanded the coverage of the standards of conduct to 
govern the relationships between transmission providers and energy 
affiliates.\21\ Previously, the standards of conduct governed the 
relationship between transmission providers and their marketing 
affiliates.\22\
---------------------------------------------------------------------------

    \20\ Order No. 2004 at P 8.
    \21\ The Commission defined energy affiliates as any affiliate 
that is engaged or involved in transmission transactions; manages or 
controls pipeline capacity; buys, sells, trades or administers 
natural gas in domestic energy or transmission markets; and engages 
in financial transactions relating to the sale or transmission of 
natural gas in such markets. 18 CFR 358.3(d) (2006).
    \22\ Under Order No. 497, marketing included affiliates and 
business divisions engaged in making sales for resale of natural gas 
in interstate commerce (former 18 CFR 161.2(c)); and under Order No. 
889, marketing covered affiliates and business divisions engaged in 
making sales for resale of electric energy in interstate commerce 
(former 18 CFR 37.3(e)).
---------------------------------------------------------------------------

B. Matters Appealed

    12. Five issues were appealed from Order No. 2004: (1) Extension of 
the standards of conduct to cover the relationship between natural gas 
transmission providers and their energy affiliates under section 
358.3(d); (2) the scope of the restrictions on sharing risk management 
employees between the natural gas transmission providers and their 
marketing/energy affiliates under section 358.4(a)(6); (3) the scope of 
the restrictions on sharing lawyers between natural gas transmission 
providers and their marketing/energy affiliates; (4) the scope of the 
requirement that natural gas transmission providers post all 
discretionary acts under section 358.5(c)(4); and (5) the timing as to 
when newly certificated pipelines become subject to the standards of 
conduct.

C. The Court's Decision

    13. In National Fuel, the court vacated Order No. 2004 as 
applicable to natural gas pipelines because of the expansion of the 
standards of conduct to include the new definition of energy 
affiliates. The court explained that the Commission relied on both 
theoretical grounds and on record evidence to justify this expansion. 
The court concluded that the Commission's record evidence did not 
withstand scrutiny and, thus, concluded the expansion was arbitrary and 
capricious in violation of the Administrative Procedure Act.\23\ The 
court vacated Order No. 2004 as applicable to natural gas pipelines. In 
light of this disposition, the court did not address the other four 
issues raised on appeal regarding Order No. 2004.
---------------------------------------------------------------------------

    \23\ National Fuel at 4.
---------------------------------------------------------------------------

III. Discussion

A. Partially Repromulgating Part 358

    14. Much of Order No. 2004 codified case-by-case exceptions that 
had evolved during the implementation of Order Nos. 497 and 889, which 
were beneficial to the natural gas transmission providers and not 
appealed. Some of the provisions under Order No. 2004 that were not 
challenged on appeal included: codifying exceptions to the independent

[[Page 2430]]

functioning requirement; \24\ revising information sharing prohibitions 
to reflect practical considerations \25\ and emergency circumstances; 
\26\ codifying a training requirement; \27\ revising and imposing new 
posting requirements to improve transparency; \28\ and requiring the 
transmission providers to designate a chief compliance officer.\29\
---------------------------------------------------------------------------

    \24\ 18 CFR 358.4 (2006).
    \25\ 18 CFR 358.5(b)(6) and (8) (2006).
    \26\ 18 CFR 358.4(a)(2) (2006).
    \27\ 18 CFR 358.4(e)(5) (2006).
    \28\ 18 CFR 358.5(a) and (b) (2006).
    \29\ 18 CFR 358.4(e)(6) (2006).
---------------------------------------------------------------------------

    15. This interim rule maintains one set of standards of conduct 
regulations for both the natural gas and electric utility industries. 
The Commission, however, is only making changes applicable to natural 
gas transmission providers consistent with National Fuel. Therefore, 
the interim rule makes inapplicable to natural gas transmission 
providers those portions of the standards of conduct that the court 
found unsupportable or that were challenged on appeal. However, it also 
repromulgates those sections that were not appealed and not found 
infirm.
    16. In response to several informal inquiries, the Commission also 
clarifies that waivers or exemptions that the Commission issued under 
Order No. 2004 are not negatively impacted by the National Fuel 
decision.

B. Natural Gas Transmission Providers and Their Energy Affiliates

    17. Because the court's decision focused on the Commission's lack 
of evidence to support expanding the standards of conduct to govern the 
relationship between natural gas transmission providers and their 
energy affiliates, the interim rule adds a new provision stating that 
the standards of conduct do not govern the relationship between natural 
gas transmission providers and their energy affiliates. The effect of 
this change, along with the modification to the definition of marketing 
as discussed below, is that the standards of conduct for natural gas 
transmission providers will only govern the relationship between a 
transmission provider and its marketing affiliates, consistent with the 
prior standards of conduct before the adoption of Order No. 2004. New 
section 358.1(e) reads as follows:

    The standards of conduct in this part do not govern the 
relationship between a natural gas Transmission Provider as defined 
in Sec.  358.3(a)(2) and its Energy Affiliates.

C. New Definition of Marketing Affiliate

    18. Order No. 2004 revised the definition of marketing affiliate 
previously codified by Order No. 497. As a result, the interim rule 
will promulgate regulations that mirror the exceptions to the 
definition of marketing that were found in Order No. 497.\30\ 
Specifically, a new provision at section 358.3(l) provides as follows:

    \30\ Former 18 CFR 161.2(c) (2003).
---------------------------------------------------------------------------

    Marketing or brokering under section 358.3(e) means a sale of 
natural gas to any person or entity by a seller that is not an 
interstate pipeline, except when: (1) The seller is selling gas 
solely from its own production; (2) The seller is selling gas solely 
from its own gathering or processing facilities; or (3) The seller 
is an intrastate natural gas pipeline or a local distribution 
company making an on-system sale.

D. Sharing of Risk Management Employees

    19. Prior to Order No. 2004, the standards of conduct were silent 
on whether a transmission provider could share risk management 
employees with its marketing affiliates. In reviewing the standards of 
conduct procedures submitted by Vector Pipeline, however, the 
Commission held that a natural gas pipeline could not share risk 
management employees if the functions included assessing the 
creditworthiness of a transmission customer.\31\ Subsequently, in Order 
No. 2004, the Commission reiterated that holding and permitted the 
sharing of risk management employees provided that they were not 
``engaged in transmission functions or sales or commodity functions 
with their Marketing or Energy Affiliate.'' \32\ INGAA appealed this 
issue.
---------------------------------------------------------------------------

    \31\ Vector Pipeline, L.P., 97 FERC ] 61,085 (2001).
    \32\ Order No. 2004 at P 112. See also 18 CFR 358.4(a)(6) 
(2006).
---------------------------------------------------------------------------

    20. As mentioned above, the court did not address the risk 
management exception in the independent functioning requirement. Still, 
because it was raised as an issue on appeal, the Commission believes 
that to be faithful to the court's decision, section 358.4(a)(6) must 
be amended. Therefore, the Commission is adding, on an interim basis, a 
second sentence to that section as follows:
    This provision does not apply to natural gas transmission 
providers.

E. Discretionary Tariff Provision

    21. In Order No. 2004, the Commission required the transmission 
provider to maintain a log detailing the circumstances and manner in 
which it exercised discretion under any terms of its tariff and post it 
on its OASIS or internet Web site.\33\ The regulatory language in Order 
No. 2004 was substantively identical to the requirement under Order No. 
889, but it was different than the requirement under Order No. 497. 
Former section 161.3(k) promulgated under Order No. 497 required a 
pipeline to maintain a written log of waivers that the pipeline grants 
with respect to tariff provisions that provide for such discretionary 
waivers and provide the log to any person requesting it within 24 hours 
of the request. On appeal, one of the petitioners claimed that section 
358.5(c)(4) was much broader than former section 161.3(k), arguing that 
there was a significant difference between granting waivers of tariff 
provisions that provide for such discretionary waivers (former section 
161.3(k)) and exercising discretion under any terms of its tariff 
(section 358.5(c)(4)).
---------------------------------------------------------------------------

    \33\ 18 CFR 358.5(c)(4) (2006).
---------------------------------------------------------------------------

    22. In response to the National Fuel decision, on an interim basis, 
the Commission is revising section 358.5(c)(4). First, we will make 
clear that 358.5(c)(4) only applies to electric public utility 
transmission providers and, second, we will adopt the language 
regarding discretionary waivers from Order No. 497 for natural gas 
transmission providers. Accordingly, we adopt the following language at 
section 358.5(c)(4):

    (i) Electric Transmission Providers must maintain a written log, 
available for Commission audit, detailing the circumstances and 
manner in which they exercised their discretion under any terms of 
the tariff. The information contained in this log is to be posted on 
the OASIS or Internet Web site within 24 hours of when a 
Transmission Provider exercises its discretion under any terms of 
the tariff.
    (ii) Natural gas Transmission Providers must maintain a written 
log of waivers that the natural gas Transmission Provider grants 
with respect to tariff provisions that provide for such 
discretionary waivers and provide the log to any person requesting 
it within 24 hours of the request.

    23. The Commission recognizes that many natural gas transmission 
providers have put in place procedures to post information regarding 
discretionary waivers on their Internet Web sites. Of course, this is 
an acceptable means of complying with the requirement in lieu of 
providing the log to any person requesting it within 24 hours of the 
request.

F. Sharing of Lawyers

    24. With respect to the sharing of lawyers, under the Order No. 497 
standards of conduct, lawyers were treated as permissibly shared 
employees.\34\ Order No. 2004 was silent

[[Page 2431]]

as to the classification of lawyers. In Order No. 2004-A, the 
Commission clarified that a lawyer who participates in transmission 
policy decisions on behalf of a Transmission Provider would be 
considered a transmission function employee (and hence, not permissibly 
shared).\35\ Additionally, the Commission explained that lawyers may 
provide legal or regulatory advice in their traditional roles without 
becoming transmission function employees,\36\ but, an individual's 
title of ``lawyer'' did not automatically exempt him/her from the 
independent functioning requirement. The Commission stated that if 
lawyers participate in transmission policy decisions on behalf of 
transmission providers, the Commission considers that participation to 
be a transmission function and the lawyers to be transmission function 
employees.\37\ Following requests for clarification, the Commission 
stated that lawyers may provide legal or regulatory advice in their 
traditional roles without becoming transmission function employees, but 
to the extent that lawyers conduct transmission functions or are 
involved in planning, directing or organizing transmission functions, 
the lawyer's status as a ``lawyer'' does not exempt him/her from also 
being a transmission function employee.\38\
---------------------------------------------------------------------------

    \34\ Order No. 497 at 31,142.
    \35\ Order No. 2004-A at P 157.
    \36\ Section 358.3(j) defines transmission function employee as 
an employee, contractor, consultant or agent of a transmission 
provider who conducts transmission system operations or reliability 
functions, including, but not limited to, those who are engaged in 
day-to-day duties and responsibilities for planning, directing, 
organizing or carrying out transmission-related operations.
    \37\ Order No. 2004-A at P 157.
    \38\ Order No. 2004-B at P 74.
---------------------------------------------------------------------------

    25. This issue was appealed. In light of the court's decision, the 
Commission clarifies that participating in business decisions by 
rendering legal advice does not make a lawyer a transmission function 
employee. Since this issue was discussed in the preamble to Order No. 
2004, there is no regulatory text to adopt or revise. However, this 
clarification is intended to provide direction to the natural gas 
industry that the Commission will treat lawyers as permissibly shared 
employees for natural gas transmission providers.

G. Timing of When a Natural Gas Transmission Provider Becomes Subject 
to the Standards of Conduct

    26. Under Order No 497, a natural gas transmission provider became 
subject to the standards of conduct when the transmission provider 
commenced transportation transactions with its marketing or brokering 
affiliate.\39\ In the preamble of Order No. 2004, the Commission stated 
that newly formed transmission providers would become subject to the 
standards of conduct when the transmission providers begin soliciting 
business or negotiating contracts, as those are activities which the 
Commission considers transmission function activities. Since the timing 
of applicability of the standards of conduct was one of the items on 
appeal, the Commission will treat this issue as if the court had ruled 
against the Commission on this issue. As a result, the Commission will 
not require natural gas transmission providers to observe the standards 
of conduct until they commence transportation transactions with their 
marketing affiliates. Because this issue was discussed in the preamble 
to Order No. 2004, there is no regulatory text to adopt or revise. 
However, in the interim, the foregoing statement is intended to provide 
direction to the industry with respect to when the Commission will 
consider natural gas transmission providers subject to the standards of 
conduct.
---------------------------------------------------------------------------

    \39\ Former 18 CFR 161.1 (2003).
---------------------------------------------------------------------------

IV. Information Collection Statement

    27. The Office of Management and Budget (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\40\ Previously, the Commission submitted to OMB the 
information collection requirements arising from the standards of 
conduct adopted in Order No. 2004. OMB approved those requirements.\41\ 
This interim rule does not impose any additional information collection 
burden on industry participants.
---------------------------------------------------------------------------

    \40\ 5 CFR 1320.11 (2006).
    \41\ Letter from OMB to the Commission (Jan. 20, 2004) (OMB 
Control Number 1902-0157); ``Notice of Action'' letter from OMB to 
the Commission (Jan. 20, 2004) (OMB Control Number 1902-0173).
---------------------------------------------------------------------------

    28. The Commission is submitting notification of the information 
collection requirements imposed in the Interim Rule to OMB for its 
review and approval under section 3507(d) of the Paperwork Reduction 
Act of 1995.\42\ Comments are solicited on the Commission's need for 
this information, whether the information will have practical utility, 
the accuracy of provided burden estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods of minimizing respondent's burden, including the use 
of automated information techniques.
---------------------------------------------------------------------------

    \42\ 44 U.S.C. 3507(d) (2000).
---------------------------------------------------------------------------

    29. OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission is 
submitting notification of this proposed rule to OMB.
    Title: FERC-592.
    Action: Proposed Collection.
    OMB Control No: 1902-0157.
    Respondents: Business or other for profit.
    Frequency of Responses: On occasion.
    Necessity of the Information: The information is necessary to 
ensure that all regulated transmission providers treat all transmission 
customers in a non-discriminatory basis.
    Internal Review: The Commission has reviewed the requirements 
pertaining to natural gas pipelines and determined the interim rule is 
necessary to avoid a regulatory gap.
    30. These requirements conform to the Commission's plan for 
efficient information collection, communication, and management within 
the natural gas and electric public utility industries. The Commission 
has assured itself, by means of internal review, that there is 
specific, objective support for the burden estimates associated with 
the information requirements.
    31. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426, [Attention: Michael Miller, 
Office of the Chief Information Officer], phone: (202) 502-8415, fax: 
(202) 208-2425, e-mail: Michael.miller@ferc.gov. Comments on the 
requirements of the proposed rule also may be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy 
Regulatory Commission].

V. Environmental Analysis

    32. 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.\43\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\44\ The action proposed here falls within the categorical 
exclusions provided in the Commission's regulations because this rule 
is clarifying and corrective and does not substantially change the 
effect of the regulations being amended.\45\

[[Page 2432]]

Therefore, an environmental assessment is unnecessary and has not been 
prepared in this rulemaking.
---------------------------------------------------------------------------

    \43\ 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).
    \44\ 18 CFR 380.4 (2006).
    \45\ 18 CFR 380.4(a)(2)(ii) and 380.4(a)(5) (2006).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act

    33. The Regulatory Flexibility Act of 1980 \46\ generally requires 
a description and analysis of final rules that will have significant 
economic impact on a substantial number of small entities. Because most 
transmission providers do not fall within the definition of ``small 
entity,'' \47\ the Commission certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.

VII. Document Availability

    34. 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.
    35. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    36. User assistance is available for eLibrary and the FERC's 
website during normal business hours from our Help line at (202) 502-
8222 or the Public Reference Room at (202) 502-8371 Press 0, TTY (202) 
502-8659. E-Mail the Public Reference Room at 
public.referenceroom@ferc.gov.

VIII. Effective Date and Congressional Notification
---------------------------------------------------------------------------

    \46\ 5 U.S.C. 601-612 (2000).
    \47\ See 5 U.S.C. 601(3) (2000).
---------------------------------------------------------------------------

    37. These regulations are effective on date of issuance. 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. The Commission will submit 
the interim rule to both houses of Congress and the General Accounting 
Office.\48\
---------------------------------------------------------------------------

    \48\ 5 U.S.C. 801(a)(1)(A) (2000).
---------------------------------------------------------------------------

List of Subjects in 18 CFR Part 358

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

    By the Commission.
Magalie R. Salas,
Secretary.

0
In consideration of the foregoing, the Commission revises part 358, 
Chapter I, Title 18, Code of Federal Regulations, to read as follows.

PART 358--STANDARDS OF CONDUCT

Sec.
358.1 Applicability.
358.2 General principles.
358.3 Definitions.
358.4 Independent functioning.
358.5 Non-discrimination requirements.

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


Sec.  358.1  Applicability.

    (a) This part applies to any interstate natural gas pipeline that 
transports gas for others pursuant to subpart A of part 157 or subparts 
B or G of part 284 of this chapter.
    (b) This part applies to any public utility that owns, operates, or 
controls facilities used for the transmission of electric energy in 
interstate commerce.
    (c) This part does not apply to a public utility Transmission 
Provider that is a Commission-approved Independent System Operator 
(ISO) or Regional Transmission Organization (RTO). If a public utility 
transmission owner participates in a Commission-approved ISO or RTO and 
does not operate or control its transmission facilities and has no 
access to transmission, customer or market information covered by Sec.  
358.5(b), it may request an exemption from this part.
    (d) A Transmission Provider may file a request for an exemption 
from all or some of the requirements of this part for good cause.
    (e) The Standards of Conduct in this part do not govern the 
relationship between a natural gas Transmission Provider as defined in 
Sec.  358.3(a)(2) and its Energy Affiliates.


Sec.  358.2  General principles.

    (a) A Transmission Provider's employees engaged in transmission 
system operations must function independent from employees of its 
Marketing and Energy Affiliates.
    (b) A Transmission Provider must treat all transmission customers, 
affiliated and non-affiliated, on a non-discriminatory basis, and must 
not operate its transmission system to preferentially benefit its 
Marketing or Energy Affiliates.


Sec.  358.3  Definitions.

    (a) Transmission Provider means:
    (1) Any public utility that owns, operates or controls facilities 
used for the transmission of electric energy in interstate commerce; or
    (2) Any interstate natural gas pipeline that transports gas for 
others pursuant to subpart A of part 157 or subparts B or G of part 284 
of this chapter.
    (3) A Transmission Provider does not include a natural gas storage 
provider authorized to charge market-based rates that is not 
interconnected with the jurisdictional facilities of any affiliated 
interstate natural gas pipeline, has no exclusive franchise area, no 
captive ratepayers and no market power.
    (b) Affiliate means:
    (1) Another person that controls, is controlled by or is under 
common control with, such person. An Affiliate includes a division that 
operates as a functional unit,
    (2) For any exempt wholesale generator, as defined under Section 
32(a) of the Public Utility Holding Company Act of 1935, as amended, 
the same as provided in section 214 of the Federal Power Act.
    (c) Control (including the terms ``controlling,'' ``controlled 
by,'' and ``under common control with'') as used in this part and Sec.  
250.16 of this chapter, includes, but is not limited to, the 
possession, directly or indirectly and whether acting alone or in 
conjunction with others, of the authority to direct or cause the 
direction of the management or policies of a company. A voting interest 
of 10 percent or more creates a rebuttable presumption of control.
    (d) Energy Affiliate means an affiliate of a Transmission Provider 
that:
    (1) Engages in or is involved in transmission transactions in U.S. 
energy or transmission markets; or
    (2) Manages or controls transmission capacity of a Transmission 
Provider in U.S. energy or transmission markets; or
    (3) Buys, sells, trades or administers natural gas or electric 
energy in U.S. energy or transmission markets; or
    (4) Engages in financial transactions relating to the sale or 
transmission of natural gas or electric energy in U.S. energy or 
transmission markets.
    (5) A local distribution company division of an electric public 
utility Transmission Provider shall be considered the functional 
equivalent of an Energy Affiliate, unless it qualifies for the 
exemption in Sec.  358.3(d)(6)(v).
    (6) An Energy Affiliate does not include:

[[Page 2433]]

    (i) A foreign affiliate that does not participate in U.S. energy 
markets;
    (ii) An affiliated Transmission Provider or an interconnected 
foreign affiliated natural gas pipeline that is engaged in natural gas 
transmission activities that are regulated by the state, provincial or 
national regulatory boards of the foreign country in which such 
facilities are located.
    (iii) A holding, parent or service company that does not engage in 
energy or natural gas commodity markets or is not involved in 
transmission transactions in U.S. energy markets;
    (iv) An affiliate that purchases natural gas or energy solely for 
its own consumption. ``Solely for its own consumption'' does not 
include the purchase of natural gas or energy for the subsequent 
generation of electricity.
    (v) A State-regulated local distribution company that acquires 
interstate transmission capacity to purchase and resell gas only for 
on-system sales, and otherwise does not engage in the activities 
described in Sec. Sec.  358.3(d)(1), (2), (3) or (4), except to the 
limited extent necessary to support on-system sales and to engage in de 
minimis sales necessary to remain in balance under applicable pipeline 
tariff requirements.
    (vi) A processor, gatherer, Hinshaw pipeline or an intrastate 
pipeline that makes incidental purchases or sales of de minimis volumes 
of natural gas to remain in balance under applicable pipeline tariff 
requirements and otherwise does not engage in the activities described 
in Sec. Sec.  358.3(d)(1), (2), (3) or (4).
    (e) Marketing, sales or brokering means a sale for resale of 
natural gas or electric energy in interstate commerce. Sales and 
marketing employee or unit includes:
    (1) An interstate natural gas pipeline's sales operating unit, to 
the extent provided in Sec.  284.286 of this chapter, and
    (2) A public utility Transmission Provider's energy sales unit, 
unless such unit engages solely in bundled retail sales.
    (3) Marketing or sales does not include incidental purchases or 
sales of natural gas to operate interstate natural gas pipeline 
transmission facilities.
    (f) Transmission means natural gas transportation, storage, 
exchange, backhaul, or displacement service provided pursuant to 
subpart A of part 157 or subparts B or G of part 284 of this chapter; 
and electric transmission, network or point-to-point service, 
reliability service, ancillary services or other methods of 
transportation or the interconnection with jurisdictional transmission 
facilities.
    (g) Transmission Customer means any eligible customer, shipper or 
designated agent that can or does execute a transmission service 
agreement or can or does receive transmission service, including all 
persons who have pending requests for transmission service or for 
information regarding transmission.
    (h) Open Access Same-time Information System or OASIS refers to the 
Internet location where a public utility posts the information, by 
electronic means, required by part 37 of this chapter.
    (i) Internet Web site refers to the Internet location where an 
interstate natural gas pipeline posts the information, by electronic 
means, required by Sec. Sec.  284.12 and 284.13 of this chapter.
    (j) Transmission Function employee means an employee, contractor, 
consultant or agent of a Transmission Provider who conducts 
transmission system operations or reliability functions, including, but 
not limited to, those who are engaged in day-to-day duties and 
responsibilities for planning, directing, organizing or carrying out 
transmission-related operations.
    (k) Marketing Affiliate means an Affiliate as that term is defined 
in Sec.  358.3(b) or a unit that engages in marketing, sales or 
brokering activities as those terms are defined at Sec.  358.3(e).
    (l) Marketing or brokering under Sec.  358.3(e) means a sale of 
natural gas to any person or entity by a seller that is not an 
interstate pipeline, except when:
    (1) The seller is selling gas solely from its own production;
    (2) The seller is selling gas solely from its own gathering or 
processing facilities; or
    (3) The seller is an intrastate natural gas pipeline or a local 
distribution company making an on-system sale.


Sec.  358.4  Independent functioning.

    (a) Separation of functions. (1) Except in emergency circumstances 
affecting system reliability, the transmission function employees of 
the Transmission Provider must function independently of the 
Transmission Provider's Marketing or Energy Affiliates' employees.
    (2) Notwithstanding any other provisions in this section, in 
emergency circumstances affecting system reliability, a Transmission 
Provider may take whatever steps are necessary to keep the system in 
operation. Transmission Providers must report to the Commission and 
post on the OASIS or Internet Web site, as applicable, each emergency 
that resulted in any deviation from the standards of conduct, within 24 
hours of such deviation.
    (3) The Transmission Provider is prohibited from permitting the 
employees of its Marketing or Energy Affiliates from:
    (i) Conducting transmission system operations or reliability 
functions; and
    (ii) Having access to the system control center or similar 
facilities used for transmission operations or reliability functions 
that differs in any way from the access available to other transmission 
customers.
    (4) Transmission Providers are permitted to share support employees 
and field and maintenance employees with their Marketing and Energy 
Affiliates.
    (5) Transmission Providers are permitted to share with their 
Marketing or Energy Affiliates senior officers and directors who are 
not ``Transmission Function Employees'' as that term is defined in 
Sec.  358.3(j). A Transmission Provider may share transmission 
information covered by Sec.  385.5(a) and (b) with its shared senior 
officers and directors provided that they do not participate in 
directing, organizing or executing transmission system operations or 
marketing functions; or act as a conduit to share such information with 
a Marketing or Energy Affiliate.
    (6) Transmission Providers are permitted to share risk management 
employees that are not engaged in Transmission Functions or sales or 
commodity Functions with their Marketing and Energy Affiliates. This 
provision does not apply to natural gas transmission providers.
    (b) Identifying affiliates on the public Internet. (1) A 
Transmission Provider must post the names and addresses of Marketing 
and Energy Affiliates on its OASIS or Internet Web site.
    (2) A Transmission Provider must post on its OASIS or Internet Web 
site, as applicable, a complete list of the facilities shared by the 
Transmission Provider and its Marketing and Energy Affiliates, 
including the types of facilities shared and their addresses.
    (3) A Transmission Provider must post comprehensive organizational 
charts showing:
    (i) The organizational structure of the parent corporation with the 
relative position in the corporate structure of the Transmission 
Provider, Marketing and Energy Affiliates;
    (ii) For the Transmission Provider, the business units, job titles 
and descriptions, and chain of command for all positions, including 
officers and directors, with the exception of clerical, maintenance, 
and field positions. The job titles and descriptions must include the 
employee's title, the employee's duties, whether the employee is

[[Page 2434]]

involved in transmission or sales, and the name of the supervisory 
employees who manage non-clerical employees involved in transmission or 
sales.
    (iii) For all employees who are engaged in transmission functions 
for the Transmission Provider and marketing or sales functions or who 
are engaged in transmission functions for the Transmission Provider and 
are employed by any of the Energy Affiliates, the Transmission Provider 
must post the name of the business unit within the marketing or sales 
unit or the Energy Affiliate, the organizational structure in which the 
employee is located, the employee's name, job title and job description 
in the marketing or sales unit or Energy Affiliate, and the employee's 
position within the chain of command of the Marketing or Energy 
Affiliate.
    (iv) The Transmission Provider must update the information on its 
OASIS or Internet Web site, as applicable, required by Sec. Sec.  
358.4(b)(1), (2) and (3) within seven business days of any change, and 
post the date on which the information was updated.
    (v) The Transmission Provider must post information concerning 
potential merger partners as affiliates within seven days after the 
potential merger is announced.
    (vi) All OASIS or Internet Web site postings required by part 358 
must comply, as applicable, with the requirements of Sec.  37.6 or 
Sec. Sec.  284.12(a) and (c)(3)(v) of this chapter.
    (c) Transfers. Employees of the Transmission Provider, Marketing or 
Energy Affiliates are not precluded from transferring among such 
functions as long as such transfer is not used as a means to circumvent 
the Standards of Conduct. Notices of any employee transfers between the 
Transmission Provider, on the one hand, and the Marketing or Energy 
Affiliates on the other, must be posted on the OASIS or Internet Web 
site, as applicable. The information to be posted must include: the 
name of the transferring employee, the respective titles held while 
performing each function (i.e., on behalf of the Transmission Provider, 
Marketing or Energy Affiliate), and the effective date of the transfer. 
The information posted under this section must remain on the OASIS or 
Internet Web site, as applicable, for 90 days.
    (d) Books and records. A Transmission Provider must maintain its 
books of account and records (as prescribed under parts 101, 125, 201 
and 225 of this chapter) separately from those of its Energy Affiliates 
and these must be available for Commission inspections.
    (e) Written procedures. (1) By February 9, 2004, each Transmission 
Provider is required to file with the Commission and post on the OASIS 
or Internet Web site a plan and schedule for implementing the standards 
of conduct.
    (2) Each Transmission Provider must be in full compliance with the 
standards of conduct by September 22, 2004.
    (3) The Transmission Provider must post on the OASIS or Internet 
Web site, current written procedures implementing the standards of 
conduct in such detail as will enable customers and the Commission to 
determine that the Transmission Provider is in compliance with the 
requirements of this section by September 22, 2004 or within 30 days of 
becoming subject to the requirements of part 358.
    (4) Transmission Providers will distribute the written procedures 
to all Transmission Provider employees and employees of the Marketing 
and Energy Affiliates.
    (5) Transmission Providers shall train officers and directors as 
well as employees with access to transmission information or 
information concerning gas or electric purchases, sales or marketing 
functions. The Transmission Provider shall require each employee to 
sign a document or certify electronically signifying that s/he has 
participated in the training.
    (6) Transmission Providers are required to designate a Chief 
Compliance Officer who will be responsible for standards of conduct 
compliance.


Sec.  358.5  Non-discrimination requirements.

    (a) Information access. (1) The Transmission Provider must ensure 
that any employee of its Marketing or Energy Affiliate may only have 
access to that information available to the Transmission Provider's 
transmission customers (i.e., the information posted on the OASIS or 
Internet Web site, as applicable), and must not have access to any 
information about the Transmission Provider's transmission system that 
is not available to all users of an OASIS or Internet Web site, as 
applicable.
    (2) The Transmission Provider must ensure that any employee of its 
Marketing or Energy Affiliate is prohibited from obtaining information 
about the Transmission Provider's transmission system (including, but 
not limited to, information about available transmission capability, 
price, curtailments, storage, ancillary services, balancing, 
maintenance activity, capacity expansion plans or similar information) 
through access to information not posted on the OASIS or Internet Web 
site or that is not otherwise also available to the general public 
without restriction.
    (b) Prohibited disclosure. (1) An employee of the Transmission 
Provider may not disclose to its Marketing or Energy Affiliates any 
information concerning the transmission system of the Transmission 
Provider or the transmission system of another (including, but not 
limited to, information received from non-affiliates or information 
about available transmission capability, price, curtailments, storage, 
ancillary services, balancing, maintenance activity, capacity expansion 
plans, or similar information) through non-public communications 
conducted off the OASIS or Internet Web site, through access to 
information not posted on the OASIS or Internet Web site that is not 
contemporaneously available to the public, or through information on 
the OASIS or Internet Web site that is not at the same time publicly 
available.
    (2) A Transmission Provider may not share any information, acquired 
from non-affiliated transmission customers or potential non-affiliated 
transmission customers, or developed in the course of responding to 
requests for transmission or ancillary service on the OASIS or Internet 
Web site, with employees of its Marketing or Energy Affiliates, except 
to the limited extent information is required to be posted on the OASIS 
or Internet website in response to a request for transmission service 
or ancillary services.
    (3) If an employee of the Transmission Provider discloses 
information in a manner contrary to the requirements of Sec.  
358.5(b)(1) and (2), the Transmission Provider must immediately post 
such information on the OASIS or Internet Web site.
    (4) A non-affiliated transmission customer may voluntarily consent, 
in writing, to allow the Transmission Provider to share the non-
affiliated customer's information with a Marketing or Energy Affiliate. 
If a non-affiliated customer authorizes the Transmission Provider to 
share its information with a Marketing or Energy Affiliate, the 
Transmission Provider must post notice on the OASIS or Internet Web 
site of that consent along with a statement that it did not provide any 
preferences, either operational or rate-related, in exchange for that 
voluntary consent.
    (5) A Transmission Provider is not required to contemporaneously 
disclose to all transmission customers or potential transmission 
customers information covered by Sec.  358.5(b)(1) if it relates solely 
to a Marketing or Energy

[[Page 2435]]

Affiliate's specific request for transmission service.
    (6) A Transmission Provider may share generation information 
necessary to perform generation dispatch with its Marketing and Energy 
Affiliate that does not include specific information about individual 
third party transmission transactions or potential transmission 
arrangements.
    (7) Neither a Transmission Provider nor an employee of a 
Transmission Provider is permitted to use anyone as a conduit for 
sharing information covered by the prohibitions of Sec. Sec.  
358.5(b)(1) and (2) with a Marketing or Energy Affiliate. A 
Transmission Provider may share information covered by Sec. Sec.  
358.5(b)(1) and (2) with employees permitted to be shared under 
Sec. Sec.  358.4(a)(4), (5) and (6) provided that such employees do not 
act as a conduit to share such information with any Marketing or Energy 
Affiliates.
    (8) A Transmission Provider is permitted to share information 
necessary to maintain the operations of the transmission system with 
its Energy Affiliates.
    (c) Implementing tariffs. (1) A Transmission Provider must strictly 
enforce all tariff provisions relating to the sale or purchase of open 
access transmission service, if these tariff provisions do not permit 
the use of discretion.
    (2) A Transmission Provider must apply all tariff provisions 
relating to the sale or purchase of open access transmission service in 
a fair and impartial manner that treats all transmission customers in a 
non-discriminatory manner, if these tariff provisions permit the use of 
discretion.
    (3) A Transmission Provider must process all similar requests for 
transmission in the same manner and within the same period of time.
    (4) (i) Electric Transmission Providers must maintain a written 
log, available for Commission audit, detailing the circumstances and 
manner in which they exercised their discretion under any terms of the 
tariff. The information contained in this log is to be posted on the 
OASIS or Internet website within 24 hours of when a Transmission 
Provider exercises its discretion under any terms of the tariff.
    (ii) Natural gas Transmission Providers must maintain a written log 
of waivers that the natural gas Transmission Provider grants with 
respect to tariff provisions that provide for such discretionary 
waivers and provide the log to any person requesting it within 24 hours 
of the request.
    (5) The Transmission Provider may not, through its tariffs or 
otherwise, give preference to its Marketing or Energy Affiliate, over 
any other wholesale customer in matters relating to the sale or 
purchase of transmission service (including, but not limited to, issues 
of price, curtailments, scheduling, priority, ancillary services, or 
balancing).
    (d) Discounts. Any offer of a discount for any transmission service 
made by the Transmission Provider must be posted on the OASIS or 
Internet Web site contemporaneous with the time that the offer is 
contractually binding. The posting must include: the name of the 
customer involved in the discount and whether it is an affiliate or 
whether an affiliate is involved in the transaction, the rate offered; 
the maximum rate; the time period for which the discount would apply; 
the quantity of power or gas upon which the discount is based; the 
delivery points under the transaction; and any conditions or 
requirements applicable to the discount. The posting must remain on the 
OASIS or Internet Web site for 60 days from the date of posting.

[FR Doc. E7-659 Filed 1-18-07; 8:45 am]
BILLING CODE 6717-01-P