Contract Reporting Requirements of Intrastate Natural Gas Companies, 72395-72398 [E8-28218]

Download as PDF hsrobinson on PROD1PC76 with PROPOSALS Federal Register / Vol. 73, No. 230 / Friday, November 28, 2008 / Proposed Rules when possible, she does not mention them or the company during her appearance on the show. No disclosure is required because no representation is being made about the clothes in this context. Example 4: An ad for an anti-snoring product features a physician who says that he has seen dozens of products come on the market over the years and, in his opinion, this is the best ever. Consumers would expect the physician to be reasonably compensated for his appearance in the ad. Consumers are unlikely, however, to expect that the physician receives a percentage of gross product sales or that he owns part of the company, and either of these facts would likely materially affect the credibility that consumers attach to the endorsement. Accordingly, the advertisement should clearly and conspicuously disclose such a connection between the company and the physician. Example 5: An actual patron of a restaurant, who is neither known to the public nor presented as an expert, is shown seated at the counter. He is asked for his ‘‘spontaneous’’ opinion of a new food product served in the restaurant. Assume, first, that the advertiser had posted a sign on the door of the restaurant informing all who entered that day that patrons would be interviewed by the advertiser as part of its TV promotion of its new soy protein ‘‘steak.’’ This notification would materially affect the weight or credibility of the patron’s endorsement, and, therefore, viewers of the advertisement should be clearly and conspicuously informed of the circumstances under which the endorsement was obtained. Assume, in the alternative, that the advertiser had not posted a sign on the door of the restaurant, but had informed all interviewed customers of the ‘‘hidden camera’’ only after interviews were completed and the customers had no reason to know or believe that their response was being recorded for use in an advertisement. Even if patrons were also told that they would be paid for allowing the use of their opinions in advertising, these facts need not be disclosed. Example 6: An infomercial producer wants to include consumer endorsements for an automotive additive product featured in her commercial, but because the product has not yet been sold, there are no consumer users. The producer’s staff reviews the profiles of individuals interested in working as ‘‘extras’’ in commercials and identifies several who are interested in automobiles. The extras VerDate Aug<31>2005 16:53 Nov 26, 2008 Jkt 217001 are asked to use the product for several weeks and then report back to the producer. They are told that if they are selected to endorse the product in the producer’s infomercial, they will receive a small payment. Viewers would not expect that these ‘‘consumer endorsers’’ are actors who were asked to use the product so that they could appear in the commercial or that they were compensated. Because the advertisement fails to disclose these facts, it is deceptive. Example 7: A college student who has earned a reputation as a video game expert maintains a personal weblog or ‘‘blog’’ where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. The readers of his blog are unlikely to expect that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact would likely materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. Example 8: An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board. Example 9: A young man signs up to be part of a ‘‘street team’’ program in which points are awarded each time a team member talks to his or her friends about a particular advertiser’s products. Team members can then exchange their points for prizes, such as concert tickets or electronics. These incentives would materially affect the weight or credibility of the team member’s endorsements. They should be clearly and conspicuously disclosed, and the PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 72395 advertiser should take steps to ensure that these disclosures are being provided. VI. INVITATION TO COMMENT The Commission invites interested members of the public to submit written data, views, facts, and arguments addressing the issues raised by this Notice, including the proposed changes to the Guides. Such comments must be received by January 30, 2009, and must be filed in accordance with the instructions in the ADDRESSES section of this document. List of Subjects in 16 C.F.R. § 255 Advertising, Trade practices. Authority: 15 U.S.C. 41-58. By direction of the Commission. Donald S. Clark Secretary [FR Doc. E8–28294 Filed 11–26–08: 8:45 am] [BILLING CODE: 6750–01–S] DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 284 [Docket No. RM09–2–000] Contract Reporting Requirements of Intrastate Natural Gas Companies Issued November 20, 2008. Federal Energy Regulatory Commission. ACTION: Proposed rule; Notice of Inquiry. AGENCY: SUMMARY: The Federal Energy Regulatory Commission is considering whether to revise its contract reporting requirements for those natural gas pipelines that fall under the Commission’s jurisdiction pursuant to section 311 of the Natural Gas Policy Act of 1978 or section 1(c) of the Natural Gas Act. This Notice of Inquiry will assist the Commission in determining what changes, if any, should be made to its regulations. DATES: Comments are due January 27, 2009. ADDRESSES: You may submit comments on the Notice of Inquiry, identified by Docket No. RM09–2–000, by one of the following methods: • Agency Web site: https:// www.ferc.gov. Follow instructions for submitting comments via the eFiling link found in the Comment Procedures Section of the preamble. • Mail: Commenters unable to file comments electronically must mail or E:\FR\FM\28NOP1.SGM 28NOP1 72396 Federal Register / Vol. 73, No. 230 / Friday, November 28, 2008 / Proposed Rules hand deliver an original and 14 copies of their comments to the Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street, NE., Washington, DC 20426. Please refer to the Comment Procedures Section of the preamble for additional information on how to file paper comments. FOR FURTHER INFORMATION CONTACT: Vince Mareino (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502–6167, Vince.Mareino@ferc.gov. Brian White (Technical Information), Office of Energy Markets Regulation, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502– 8332, Brian.White@ferc.gov. SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. 1. In this Notice of Inquiry, the Federal Energy Regulatory Commission (Commission) seeks comments on whether the Commission should impose additional reporting requirements on (1) intrastate pipelines providing interstate services pursuant to section 311 of the Natural Gas Policy Act of 1978 (NGPA) 1 and (2) Hinshaw pipelines providing interstate services subject to the Commission’s Natural Gas Act (NGA) jurisdiction pursuant to blanket certificates issued under § 284.224 of the Commission’s regulations.2 In particular, the Commission is interested in exploring whether it should require section 311 and Hinshaw pipelines to post the details of their transactions with individual shippers in a manner more comparable to the reporting requirements applicable to interstate pipelines under § 284.13(b) of the Commission’s Regulations.3 I. Background 2. NGPA section 311 authorizes the Commission to allow intrastate pipelines to transport gas ‘‘on behalf of’’ interstate pipelines or local distribution companies served by interstate 1 15 U.S.C. 3372. 1(c) of the NGA exempts from the Commission’s NGA jurisdiction pipelines which transport gas in interstate commerce if (1) They receive natural gas at or within the boundary of a state, (2) all the gas is consumed within that state and (3) the pipeline is regulated by a state Commission. This exemption is referred to as the Hinshaw exemption after the Congressman who introduced the bill amending the NGA to include section 1(c). See ANR Pipeline Co. v. Federal Energy Regulatory Comm’n, 71 F.3d 897, 898 (1995) (briefly summarizing the history of the Hinshaw exemption). 3 18 CFR 284.13(b). hsrobinson on PROD1PC76 with PROPOSALS 2 Section VerDate Aug<31>2005 16:53 Nov 26, 2008 Jkt 217001 pipelines ‘‘under such terms and conditions as the Commission may prescribe.’’ 4 NGPA section 601(a)(2) exempts transportation service authorized under NGPA section 311 from the Commission’s Natural Gas Act (NGA) jurisdiction. Congress adopted these provisions in order to eliminate the regulatory barriers between the intrastate and interstate markets and to promote the entry of intrastate pipelines into the interstate market. Such entry eliminates the need for duplication of facilities between interstate and intrastate pipelines. Shortly after the adoption of the NGPA, the Commission authorized Hinshaw pipelines to apply for NGA section 7 certificates authorizing them to transport gas in interstate commerce in the same manner as intrastate pipelines may do under NGPA section 311.5 3. Subpart C of the Commission’s Part 284 open access regulations (18 CFR 284.121–126) implements the provisions of NGPA section 311 concerning transportation by intrastate pipelines. Section 284.224 of the regulations provides for the issuance of blanket certificates to Hinshaw pipelines to provide open access transportation service ‘‘to the same extent that, and in the same manner’’ as intrastate pipelines are authorized to perform such service by Subpart C. 4. The Part 284, Subpart C, regulations require that intrastate pipelines performing interstate service under NGPA section 311 must do so on an open access basis.6 However, consistent with the NGPA’s goal of encouraging intrastate pipelines to provide interstate service, the Commission has not imposed on intrastate pipelines all of the Part 284 requirements imposed on interstate pipelines. For example, when the Commission first adopted the Part 284 open access regulations in Order No. 436, the Commission exempted intrastate pipelines from the requirement that they offer open access service on a firm basis.7 The Commission found that requiring intrastate pipelines to offer firm service to out-of-state shippers could discourage them from providing any interstate service, because such a requirement could progressively turn the intrastate 4 15 U.S.C. 3371(c). Transportation, Sales, and Assignments by Pipeline Companies not Subject to Commission Jurisdiction Under Section 1(c) of the Natural Gas Act, Order No. 63, FERC Stats. & Regs. ¶ 30,118, at 30,824–25 (1980). 6 See 18 CFR 284.7(b), 284.9(b) and 284.122. 7 Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 436, FERC Stats. & Regs. ¶ 30,665, at 31,502 (1985). 5 Certain PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 pipeline into an interstate pipeline against its will and against the will of the responsible state authorities. Similarly, Order No. 636–B exempted intrastate pipelines from the requirements of Order No. 636.8 Those requirements included capacity release, electronic bulletin boards (now internet Web sites), and flexible receipt and delivery points. 5. In Order No. 637,9 the Commission modified the Part 284 regulations applicable to interstate pipelines in a number of ways. Among other things, the Commission revised the reporting requirements for interstate pipelines in order to provide more transparent pricing information and to permit more effective monitoring for the exercise of market power and undue discrimination. Section 284.13(b), as adopted by Order No. 637, requires interstate pipelines to post on their internet Web sites basic information on each transaction with individual shippers. Interstate pipelines must post on their Web site the following details about new transactions, including revisions to a contract, no later than the first nomination under a transaction: • The name of the shipper. • The contract number (for firm service). • The rate charged. • The maximum rate. • The duration (for firm service). • The receipt and delivery points and zones covered. • The quantity of gas covered. • Any special terms or details, such as any deviations from the tariff. • Whether any affiliate relationship exists. 6. Section 284.13(c) of the Commission’s regulations also requires interstate pipelines to file with the Commission on the first business day of each calendar quarter an index of its firm transportation and storage customers and to publish the same 8 Pipeline Service Obligations, and Revisions to Regulations Governing Self-Implementing Transportation Under Part 284 of the Commission’s Regulations; Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 636-B, 61 FERC ¶ 61,272, at 61,992 n.26 (1992), order on reh’g, 62 FERC ¶ 61,007 (1993), aff’d in part and remanded in part sub nom. United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on remand, Order No. 636–C, 78 FERC ¶ 61,186 (1997). 9 Regulation of Short-Term Natural Gas Transportation Services and Regulation of Interstate Natural Gas Transportation Services, Order No. 637, FERC Stats. & Regs. ¶31,091, clarified, Order No. 637–A, FERC Stats. & Regs. ¶ 31,099, reh’g denied, Order No. 637–B, 92 FERC ¶ 61,062 (2000), aff’d in part and remanded in part sub nom. Interstate Natural Gas Ass’n of America v. FERC, 285 F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ¶ 61,127 (2002), order on reh’g, 106 FERC ¶ 61,088 (2004), aff’d sub nom. American Gas Ass’n v. FERC, 428 F.3d 255 (D.C. Cir. 2005). E:\FR\FM\28NOP1.SGM 28NOP1 Federal Register / Vol. 73, No. 230 / Friday, November 28, 2008 / Proposed Rules hsrobinson on PROD1PC76 with PROPOSALS information on their Web site. The information required to be included in the Index of Customers does not include the rates paid by the customers. Section 284.13(d) requires interstate pipelines to provide on their Web sites ‘‘equal and timely access to information relevant to the availability of all transportation services whenever capacity is scheduled.’’ Section 284.13(e) requires interstate pipelines to file semi-annual reports of their storage injection and withdrawal activities, including the identities of the customers, the volumes into and withdrawn from storage for each customer and the unit charge and total revenues received. 7. Order No. 637 did not modify the reporting requirements for NGPA section 311 intrastate pipelines and Hinshaw pipelines provided in § 284.126(c) of the Commission’s regulations. That section only requires section 311 and Hinshaw pipelines to file semi-annual reports of their storage injection and withdrawal activity. The reports must be filed within 30 days of the end of each complete injection and withdrawal period and must include: The identity of each customer injecting or withdrawing gas from storage; the docket where the storage injection or withdrawal rates were approved; the maximum storage quantity and daily withdrawal quantity applicable to each customer; the volumes each customer injected or withdrew from storage; and the unit charge and total revenues received from each customer during the injection/withdrawal period. Section 284.126(b) of the Commission’s regulations requires section 311 pipelines to make similar reports concerning their transportation services on an annual basis.10 8. Recently, an interstate storage provider with market-based rates, SG Resources Mississippi, L.L.C. (SGRM) filed a request for waiver of the §§ 284.13(b)(1)(iii) and (b)(2)(ii) requirements that interstate pipelines post the rates charged in firm and interruptible transactions no later than first nomination for service.11 SGRM requested the waiver for both itself and all interstate storage providers with market-based rates. It contended that the mandatory disclosure of commercially sensitive pricing information provides prospective customers and competitors, 10 Some section 311 intrastate storage and transportation operators submit these reports subject to a request for privileged treatment under §§ 388.112 or 385.1112 of the Commission’s regulations. In such instances, the reports are treated as privileged at least until another party asks that they be made public. 11 See Docket No. RP08–606–000, SGRM September 3, 2008 Petition. VerDate Aug<31>2005 16:53 Nov 26, 2008 Jkt 217001 such as NGPA section 311 intrastate storage providers that are not subject to this disclosure, with an unfair competitive advantage. In the alternative, SGRM requested that the Commission initiate a rulemaking proceeding to determine whether the Commission’s regulations should be modified to exempt storage providers authorized to charge market-based rates from the relevant portions of the Internet posting regulations. A number of other interstate storage providers with market-based rates filed comments in support of SGRM’s requests. A number of natural gas industry trade associations and a natural gas commodities trading firm filed in opposition of SGRM’s request. 9. In a contemporaneous order, the Commission is denying the request for waiver and the alternative petition for a rulemaking proceeding.12 In that order, the Commission finds that the fact some interstate storage companies have been authorized to charge market-based rates does not justify exempting them from the requirements in § 284.13(b) that they post the rates charged in each storage transaction. The Commission explains that Order No. 637 adopted the posting requirements for the purpose of enabling the Commission and shippers to monitor market-based rate transactions, as well as cost-based transactions, for undue discrimination and preference and to promote competition through price transparency. As the Commission stated in Order No. 637: The reporting of detailed transactional information is necessary because the Commission is modifying its method of regulating the natural gas industry by replacing traditional regulatory controls, such as the price cap on short-term capacity releases, with competition. Thus, greater transactional information is necessary to ensure that competition flourishes, and that market power and undue discrimination remain in check in the new competitive environment. * * * The Commission finds it axiomatic that greater, more complete and detailed information about transactions will greatly improve shippers’ ability to make informed decisions, and both shippers’ and the Commission’s ability to monitor the market.13 10. In addition, the Commission rejects SGRM’s contention that it should not require the transactional data to be made public, because such disclosure could cause competitive harm. The Commission finds that, while disclosure of the transactional information may cause some commercial disadvantage to 12 SGRM, 125 FERC ¶ 61,191 (2008). No. 637–A, FERC Stats. & Regs. ¶ 31,099 at 31,612–3. 13 Order PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 72397 individual entities, it benefits the market as a whole, by improving efficiency and competition.14 The Commission also finds that SGRM’s request that the Commission permit storage providers to report their prices only to the Commission, and not publicly disclose them, is contrary to NGA section 4(c)’s requirement that ‘‘every natural gas company * * * keep open * * * for public inspection * * * all rates.’’ 15 II. Discussion 11. While the Commission is rejecting SGRM’s waiver request and reaffirming that all interstate pipelines must post the information required by § 284.13(b) of the Commission’s regulations, the Commission is issuing this Notice of Inquiry to consider (1) whether the disparate reporting requirements for interstate and NGPA section 311 and Hinshaw pipelines have an adverse competitive effect on the interstate pipelines and (2) if so, whether the Commission should modify the posting requirements for section 311 intrastate pipelines and Hinshaw pipelines in order to make them more comparable to the § 284.13(b) posting requirements for interstate pipelines. 12. SGRM and other interstate storage providers with market-based rates have raised a concern that our disparate reporting requirements for interstate pipelines and section 311 intrastate pipelines may provide the intrastate pipelines with a competitive advantage. Although the interstate storage providers have sought to remedy any competitive disadvantage by seeking an exemption from the § 284.13(b) price disclosure requirements, an alternative remedy would be to extend the interstate reporting requirements to NGPA section 311 and Hinshaw pipelines. 13. The Commission recognizes that ‘‘Congress intended that intrastate pipelines should be able to compete in the transportation market without bearing the burden of full regulation by FERC under the Natural Gas Act.’’ 16 Consistent with that fact, the Commission has not extended all of the Part 284 open access requirements to NGPA section 311 intrastate pipelines or to Hinshaw pipelines. However, the U.S. Court of Appeals for the District of Columbia Circuit has also held that the Commission ‘‘must provide a reasonable justification for excluding’’ an intrastate 14 SGRM, 125 FERC ¶ 61,191 at P 32–33. U.S.C. 717c(c). 16 Mustang Energy Corp. v. Federal Energy Regulatory Comm’n, 859 F.2d 1447, 1457 (10th Cir. 1988), cert. denied, 490 U.S. 1019 (1988); see also EPGT Texas Pipeline, 99 FERC ¶61,295 (2002). 15 15 E:\FR\FM\28NOP1.SGM 28NOP1 hsrobinson on PROD1PC76 with PROPOSALS 72398 Federal Register / Vol. 73, No. 230 / Friday, November 28, 2008 / Proposed Rules pipeline from a requirement that binds interstate pipelines.17 Similarly, the Commission has held that it may grant intrastate facilities ‘‘additional flexibility,’’ but not if lighter regulation would ‘‘harm any party [or] impede the Commission’s goal of fostering a national pipeline grid.’’ 18 14. Accordingly, comments are requested to assist in evaluating whether changes in the Commission’s posting requirements should be considered in order to remove any competitive disadvantage between interstate pipelines, on the one hand, and intrastate pipelines providing interstate transportation and storage services under section 311 of the NGPA and Hinshaw pipelines providing such service pursuant to a § 284.224 blanket certificate. Specifically, the Commission requests comments on the following questions: 1. What are the competitive impacts of the current differences in reporting requirements applicable to interstate pipelines subject to the § 284.13 reporting requirements and section 311 and Hinshaw pipelines subject to the § 284.126 reporting requirements? Are the competitive effects greater where the competing pipelines have market-based rates, than where the competing pipelines have cost-based rates? Does competition between interstate pipelines, on the one hand, and section 311 and Hinshaw pipelines, on the other, occur primarily in the context of storage services or is there also significant competition in the context of transportation services? 2. Should the reporting requirements for interstate pipelines in § 284.13 be extended to all section 311 and Hinshaw pipelines providing interstate transportation and storage services? Should the reporting requirements in § 284.13 only be required for section 311 and Hinshaw pipelines with authority to provide interstate services at marketbased rates? 3. To what extent would market transparency be enhanced by requiring section 311 and Hinshaw pipelines providing interstate services to comply with the requirements of § 284.13? 4. Should the reporting requirements for interstate pipelines in § 284.13 only be extended to larger section 311 and Hinshaw pipelines and, if so, what measurement should be used to separate larger section 311 and Hinshaw pipelines from smaller storage providers? 17 ANR v. FERC, 71 F.3d at 902. Texas Pipeline, 99 FERC ¶ 61,295, at 62,252–3 (2002). 18 EPGT VerDate Aug<31>2005 16:53 Nov 26, 2008 Jkt 217001 5. Should all of the § 284.13 reporting requirements be imposed on section 311 and Hinshaw pipelines or only some of those requirements? If the latter, which of the § 284.13 reporting requirements are necessary to avoid adverse competitive effects and promote transparency? 6. Would extending the § 284.13 reporting requirements to section 311 and Hinshaw pipelines have a material effect on the amount of intrastate transportation and storage capacity made available in the interstate market? 7. Would a periodic report filed more frequently than semi-annually but short of a daily posting requirement provide the necessary level of price transparency to address the issues raised by SGRM and other storage developers in Docket No. RP08–606–000? 8. Should section 311 and Hinshaw pipelines be prohibited from submitting their § 284.126(b) and (c) annual transportation and semi-annual storage reports subject to a request for privileged treatment under §§ 385.1112 and 388.112 of the Commission’s regulations? If so, does that provide the necessary level of price transparency to address the issues raised by SGRM and other storage developers in Docket No. RP08–606–000? III. Procedure for Comments 15. The Commission invites interested persons to submit comments, and other information on the matters, issues, and specific questions identified in this notice. Comments are due January 27, 2009. Comments must refer to Docket No. RM09–2–000, and must include the commenter’s name, the organization it represents, if applicable, and its address. 16. To facilitate the Commission’s review of the comments, commenters are requested to provide an executive summary of their position. Commenters are requested to identify each specific question posed by the Notice of Inquiry that their discussion addresses and to use appropriate headings. Additional issues the commenters wish to raise should be identified separately. The commenters should double-space their comments. 17. Comments may be filed on paper or electronically via the eFiling link on the Commission’s Web site at https:// www.ferc.gov. The Commission accepts most standard word processing formats and commenters may attach additional files with supporting information in certain other file formats. Commenters filing electronically do not need to make a paper filing. Commenters that are not able to file comments electronically must send an original and 14 copies of PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street, NE., Washington, DC 20426. 18. All comments will be placed in the Commission’s public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters are not required to serve copies of their comments on other commenters. IV. Document Availability 19. 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 the Commission’s Home Page (https:// www.ferc.gov) and in the Commission’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. 20. From the Commission’s Home Page on the Internet, this information is available in the Commission’s document management system, 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) in the docket number field. 21. User assistance is available for eLibrary and the Commission’s Web site during normal business hours. For assistance, please contact the Commission’s Online Support at 1–866– 208–3676 (toll free) or 202–502–6652 (email at FERCOnlineSupport@ferc.gov or the Public Reference Room at 202–502– 8371, TTY 202–502–8659 (e-mail at public.referenceroom@ferc.gov). By direction of the Commission. Nathaniel J. Davis, Sr., Deputy Secretary. [FR Doc. E8–28218 Filed 11–26–08; 8:45 am] BILLING CODE 6717–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG–140029–07] RIN 1545–BH62 Substantiation and Reporting Requirements for Cash and Noncash Charitable Contribution Deductions; Hearing Internal Revenue Service (IRS), Treasury. AGENCY: E:\FR\FM\28NOP1.SGM 28NOP1

Agencies

[Federal Register Volume 73, Number 230 (Friday, November 28, 2008)]
[Proposed Rules]
[Pages 72395-72398]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28218]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM09-2-000]


Contract Reporting Requirements of Intrastate Natural Gas 
Companies

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

ACTION: Proposed rule; Notice of Inquiry.

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SUMMARY: The Federal Energy Regulatory Commission is considering 
whether to revise its contract reporting requirements for those natural 
gas pipelines that fall under the Commission's jurisdiction pursuant to 
section 311 of the Natural Gas Policy Act of 1978 or section 1(c) of 
the Natural Gas Act. This Notice of Inquiry will assist the Commission 
in determining what changes, if any, should be made to its regulations.

DATES: Comments are due January 27, 2009.

ADDRESSES: You may submit comments on the Notice of Inquiry, identified 
by Docket No. RM09-2-000, by one of the following methods:
     Agency Web site: https://www.ferc.gov. Follow instructions 
for submitting comments via the eFiling link found in the Comment 
Procedures Section of the preamble.
     Mail: Commenters unable to file comments electronically 
must mail or

[[Page 72396]]

hand deliver an original and 14 copies of their comments to the Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street, NE., Washington, DC 20426. Please refer to the Comment 
Procedures Section of the preamble for additional information on how to 
file paper comments.

FOR FURTHER INFORMATION CONTACT: 
Vince Mareino (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6167, Vince.Mareino@ferc.gov.
Brian White (Technical Information), Office of Energy Markets 
Regulation, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-8332, Brian.White@ferc.gov.

SUPPLEMENTARY INFORMATION:

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

    1. In this Notice of Inquiry, the Federal Energy Regulatory 
Commission (Commission) seeks comments on whether the Commission should 
impose additional reporting requirements on (1) intrastate pipelines 
providing interstate services pursuant to section 311 of the Natural 
Gas Policy Act of 1978 (NGPA) \1\ and (2) Hinshaw pipelines providing 
interstate services subject to the Commission's Natural Gas Act (NGA) 
jurisdiction pursuant to blanket certificates issued under Sec.  
284.224 of the Commission's regulations.\2\ In particular, the 
Commission is interested in exploring whether it should require section 
311 and Hinshaw pipelines to post the details of their transactions 
with individual shippers in a manner more comparable to the reporting 
requirements applicable to interstate pipelines under Sec.  284.13(b) 
of the Commission's Regulations.\3\
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    \1\ 15 U.S.C. 3372.
    \2\ Section 1(c) of the NGA exempts from the Commission's NGA 
jurisdiction pipelines which transport gas in interstate commerce if 
(1) They receive natural gas at or within the boundary of a state, 
(2) all the gas is consumed within that state and (3) the pipeline 
is regulated by a state Commission. This exemption is referred to as 
the Hinshaw exemption after the Congressman who introduced the bill 
amending the NGA to include section 1(c). See ANR Pipeline Co. v. 
Federal Energy Regulatory Comm'n, 71 F.3d 897, 898 (1995) (briefly 
summarizing the history of the Hinshaw exemption).
    \3\ 18 CFR 284.13(b).
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I. Background

    2. NGPA section 311 authorizes the Commission to allow intrastate 
pipelines to transport gas ``on behalf of'' interstate pipelines or 
local distribution companies served by interstate pipelines ``under 
such terms and conditions as the Commission may prescribe.'' \4\ NGPA 
section 601(a)(2) exempts transportation service authorized under NGPA 
section 311 from the Commission's Natural Gas Act (NGA) jurisdiction. 
Congress adopted these provisions in order to eliminate the regulatory 
barriers between the intrastate and interstate markets and to promote 
the entry of intrastate pipelines into the interstate market. Such 
entry eliminates the need for duplication of facilities between 
interstate and intrastate pipelines. Shortly after the adoption of the 
NGPA, the Commission authorized Hinshaw pipelines to apply for NGA 
section 7 certificates authorizing them to transport gas in interstate 
commerce in the same manner as intrastate pipelines may do under NGPA 
section 311.\5\
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    \4\ 15 U.S.C. 3371(c).
    \5\ Certain Transportation, Sales, and Assignments by Pipeline 
Companies not Subject to Commission Jurisdiction Under Section 1(c) 
of the Natural Gas Act, Order No. 63, FERC Stats. & Regs. ] 30,118, 
at 30,824-25 (1980).
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    3. Subpart C of the Commission's Part 284 open access regulations 
(18 CFR 284.121-126) implements the provisions of NGPA section 311 
concerning transportation by intrastate pipelines. Section 284.224 of 
the regulations provides for the issuance of blanket certificates to 
Hinshaw pipelines to provide open access transportation service ``to 
the same extent that, and in the same manner'' as intrastate pipelines 
are authorized to perform such service by Subpart C.
    4. The Part 284, Subpart C, regulations require that intrastate 
pipelines performing interstate service under NGPA section 311 must do 
so on an open access basis.\6\ However, consistent with the NGPA's goal 
of encouraging intrastate pipelines to provide interstate service, the 
Commission has not imposed on intrastate pipelines all of the Part 284 
requirements imposed on interstate pipelines. For example, when the 
Commission first adopted the Part 284 open access regulations in Order 
No. 436, the Commission exempted intrastate pipelines from the 
requirement that they offer open access service on a firm basis.\7\ The 
Commission found that requiring intrastate pipelines to offer firm 
service to out-of-state shippers could discourage them from providing 
any interstate service, because such a requirement could progressively 
turn the intrastate pipeline into an interstate pipeline against its 
will and against the will of the responsible state authorities. 
Similarly, Order No. 636-B exempted intrastate pipelines from the 
requirements of Order No. 636.\8\ Those requirements included capacity 
release, electronic bulletin boards (now internet Web sites), and 
flexible receipt and delivery points.
---------------------------------------------------------------------------

    \6\ See 18 CFR 284.7(b), 284.9(b) and 284.122.
    \7\ Regulation of Natural Gas Pipelines After Partial Wellhead 
Decontrol, Order No. 436, FERC Stats. & Regs. ] 30,665, at 31,502 
(1985).
    \8\ Pipeline Service Obligations, and Revisions to Regulations 
Governing Self-Implementing Transportation Under Part 284 of the 
Commission's Regulations; Regulation of Natural Gas Pipelines After 
Partial Wellhead Decontrol, Order No. 636-B, 61 FERC ] 61,272, at 
61,992 n.26 (1992), order on reh'g, 62 FERC ] 61,007 (1993), aff'd 
in part and remanded in part sub nom. United Distribution Cos. v. 
FERC, 88 F.3d 1105 (D.C. Cir. 1996), order on remand, Order No. 636-
C, 78 FERC ] 61,186 (1997).
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    5. In Order No. 637,\9\ the Commission modified the Part 284 
regulations applicable to interstate pipelines in a number of ways. 
Among other things, the Commission revised the reporting requirements 
for interstate pipelines in order to provide more transparent pricing 
information and to permit more effective monitoring for the exercise of 
market power and undue discrimination. Section 284.13(b), as adopted by 
Order No. 637, requires interstate pipelines to post on their internet 
Web sites basic information on each transaction with individual 
shippers. Interstate pipelines must post on their Web site the 
following details about new transactions, including revisions to a 
contract, no later than the first nomination under a transaction:
---------------------------------------------------------------------------

    \9\ Regulation of Short-Term Natural Gas Transportation Services 
and Regulation of Interstate Natural Gas Transportation Services, 
Order No. 637, FERC Stats. & Regs. ]31,091, clarified, Order No. 
637-A, FERC Stats. & Regs. ] 31,099, reh'g denied, Order No. 637-B, 
92 FERC ] 61,062 (2000), aff'd in part and remanded in part sub nom. 
Interstate Natural Gas Ass'n of America v. FERC, 285 F.3d 18 (D.C. 
Cir. 2002), order on remand, 101 FERC ] 61,127 (2002), order on 
reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American Gas Ass'n 
v. FERC, 428 F.3d 255 (D.C. Cir. 2005).
---------------------------------------------------------------------------

     The name of the shipper.
     The contract number (for firm service).
     The rate charged.
     The maximum rate.
     The duration (for firm service).
     The receipt and delivery points and zones covered.
     The quantity of gas covered.
     Any special terms or details, such as any deviations from 
the tariff.
     Whether any affiliate relationship exists.
    6. Section 284.13(c) of the Commission's regulations also requires 
interstate pipelines to file with the Commission on the first business 
day of each calendar quarter an index of its firm transportation and 
storage customers and to publish the same

[[Page 72397]]

information on their Web site. The information required to be included 
in the Index of Customers does not include the rates paid by the 
customers. Section 284.13(d) requires interstate pipelines to provide 
on their Web sites ``equal and timely access to information relevant to 
the availability of all transportation services whenever capacity is 
scheduled.'' Section 284.13(e) requires interstate pipelines to file 
semi-annual reports of their storage injection and withdrawal 
activities, including the identities of the customers, the volumes into 
and withdrawn from storage for each customer and the unit charge and 
total revenues received.
    7. Order No. 637 did not modify the reporting requirements for NGPA 
section 311 intrastate pipelines and Hinshaw pipelines provided in 
Sec.  284.126(c) of the Commission's regulations. That section only 
requires section 311 and Hinshaw pipelines to file semi-annual reports 
of their storage injection and withdrawal activity. The reports must be 
filed within 30 days of the end of each complete injection and 
withdrawal period and must include: The identity of each customer 
injecting or withdrawing gas from storage; the docket where the storage 
injection or withdrawal rates were approved; the maximum storage 
quantity and daily withdrawal quantity applicable to each customer; the 
volumes each customer injected or withdrew from storage; and the unit 
charge and total revenues received from each customer during the 
injection/withdrawal period. Section 284.126(b) of the Commission's 
regulations requires section 311 pipelines to make similar reports 
concerning their transportation services on an annual basis.\10\
    8. Recently, an interstate storage provider with market-based 
rates, SG Resources Mississippi, L.L.C. (SGRM) filed a request for 
waiver of the Sec. Sec.  284.13(b)(1)(iii) and (b)(2)(ii) requirements 
that interstate pipelines post the rates charged in firm and 
interruptible transactions no later than first nomination for 
service.\11\ SGRM requested the waiver for both itself and all 
interstate storage providers with market-based rates. It contended that 
the mandatory disclosure of commercially sensitive pricing information 
provides prospective customers and competitors, such as NGPA section 
311 intrastate storage providers that are not subject to this 
disclosure, with an unfair competitive advantage. In the alternative, 
SGRM requested that the Commission initiate a rulemaking proceeding to 
determine whether the Commission's regulations should be modified to 
exempt storage providers authorized to charge market-based rates from 
the relevant portions of the Internet posting regulations. A number of 
other interstate storage providers with market-based rates filed 
comments in support of SGRM's requests. A number of natural gas 
industry trade associations and a natural gas commodities trading firm 
filed in opposition of SGRM's request.
---------------------------------------------------------------------------

    \10\ Some section 311 intrastate storage and transportation 
operators submit these reports subject to a request for privileged 
treatment under Sec. Sec.  388.112 or 385.1112 of the Commission's 
regulations. In such instances, the reports are treated as 
privileged at least until another party asks that they be made 
public.
    \11\ See Docket No. RP08-606-000, SGRM September 3, 2008 
Petition.
---------------------------------------------------------------------------

    9. In a contemporaneous order, the Commission is denying the 
request for waiver and the alternative petition for a rulemaking 
proceeding.\12\ In that order, the Commission finds that the fact some 
interstate storage companies have been authorized to charge market-
based rates does not justify exempting them from the requirements in 
Sec.  284.13(b) that they post the rates charged in each storage 
transaction. The Commission explains that Order No. 637 adopted the 
posting requirements for the purpose of enabling the Commission and 
shippers to monitor market-based rate transactions, as well as cost-
based transactions, for undue discrimination and preference and to 
promote competition through price transparency. As the Commission 
stated in Order No. 637:
---------------------------------------------------------------------------

    \12\ SGRM, 125 FERC ] 61,191 (2008).

    The reporting of detailed transactional information is necessary 
because the Commission is modifying its method of regulating the 
natural gas industry by replacing traditional regulatory controls, 
such as the price cap on short-term capacity releases, with 
competition. Thus, greater transactional information is necessary to 
ensure that competition flourishes, and that market power and undue 
discrimination remain in check in the new competitive environment. * 
* * The Commission finds it axiomatic that greater, more complete 
and detailed information about transactions will greatly improve 
shippers' ability to make informed decisions, and both shippers' and 
the Commission's ability to monitor the market.\13\
---------------------------------------------------------------------------

    \13\ Order No. 637-A, FERC Stats. & Regs. ] 31,099 at 31,612-3.

    10. In addition, the Commission rejects SGRM's contention that it 
should not require the transactional data to be made public, because 
such disclosure could cause competitive harm. The Commission finds 
that, while disclosure of the transactional information may cause some 
commercial disadvantage to individual entities, it benefits the market 
as a whole, by improving efficiency and competition.\14\ The Commission 
also finds that SGRM's request that the Commission permit storage 
providers to report their prices only to the Commission, and not 
publicly disclose them, is contrary to NGA section 4(c)'s requirement 
that ``every natural gas company * * * keep open * * * for public 
inspection * * * all rates.'' \15\
---------------------------------------------------------------------------

    \14\ SGRM, 125 FERC ] 61,191 at P 32-33.
    \15\ 15 U.S.C. 717c(c).
---------------------------------------------------------------------------

II. Discussion

    11. While the Commission is rejecting SGRM's waiver request and 
reaffirming that all interstate pipelines must post the information 
required by Sec.  284.13(b) of the Commission's regulations, the 
Commission is issuing this Notice of Inquiry to consider (1) whether 
the disparate reporting requirements for interstate and NGPA section 
311 and Hinshaw pipelines have an adverse competitive effect on the 
interstate pipelines and (2) if so, whether the Commission should 
modify the posting requirements for section 311 intrastate pipelines 
and Hinshaw pipelines in order to make them more comparable to the 
Sec.  284.13(b) posting requirements for interstate pipelines.
    12. SGRM and other interstate storage providers with market-based 
rates have raised a concern that our disparate reporting requirements 
for interstate pipelines and section 311 intrastate pipelines may 
provide the intrastate pipelines with a competitive advantage. Although 
the interstate storage providers have sought to remedy any competitive 
disadvantage by seeking an exemption from the Sec.  284.13(b) price 
disclosure requirements, an alternative remedy would be to extend the 
interstate reporting requirements to NGPA section 311 and Hinshaw 
pipelines.
    13. The Commission recognizes that ``Congress intended that 
intrastate pipelines should be able to compete in the transportation 
market without bearing the burden of full regulation by FERC under the 
Natural Gas Act.'' \16\ Consistent with that fact, the Commission has 
not extended all of the Part 284 open access requirements to NGPA 
section 311 intrastate pipelines or to Hinshaw pipelines. However, the 
U.S. Court of Appeals for the District of Columbia Circuit has also 
held that the Commission ``must provide a reasonable justification for 
excluding'' an intrastate

[[Page 72398]]

pipeline from a requirement that binds interstate pipelines.\17\ 
Similarly, the Commission has held that it may grant intrastate 
facilities ``additional flexibility,'' but not if lighter regulation 
would ``harm any party [or] impede the Commission's goal of fostering a 
national pipeline grid.'' \18\
---------------------------------------------------------------------------

    \16\ Mustang Energy Corp. v. Federal Energy Regulatory Comm'n, 
859 F.2d 1447, 1457 (10th Cir. 1988), cert. denied, 490 U.S. 1019 
(1988); see also EPGT Texas Pipeline, 99 FERC ]61,295 (2002).
    \17\ ANR v. FERC, 71 F.3d at 902.
    \18\ EPGT Texas Pipeline, 99 FERC ] 61,295, at 62,252-3 (2002).
---------------------------------------------------------------------------

    14. Accordingly, comments are requested to assist in evaluating 
whether changes in the Commission's posting requirements should be 
considered in order to remove any competitive disadvantage between 
interstate pipelines, on the one hand, and intrastate pipelines 
providing interstate transportation and storage services under section 
311 of the NGPA and Hinshaw pipelines providing such service pursuant 
to a Sec.  284.224 blanket certificate. Specifically, the Commission 
requests comments on the following questions:
    1. What are the competitive impacts of the current differences in 
reporting requirements applicable to interstate pipelines subject to 
the Sec.  284.13 reporting requirements and section 311 and Hinshaw 
pipelines subject to the Sec.  284.126 reporting requirements? Are the 
competitive effects greater where the competing pipelines have market-
based rates, than where the competing pipelines have cost-based rates? 
Does competition between interstate pipelines, on the one hand, and 
section 311 and Hinshaw pipelines, on the other, occur primarily in the 
context of storage services or is there also significant competition in 
the context of transportation services?
    2. Should the reporting requirements for interstate pipelines in 
Sec.  284.13 be extended to all section 311 and Hinshaw pipelines 
providing interstate transportation and storage services? Should the 
reporting requirements in Sec.  284.13 only be required for section 311 
and Hinshaw pipelines with authority to provide interstate services at 
market-based rates?
    3. To what extent would market transparency be enhanced by 
requiring section 311 and Hinshaw pipelines providing interstate 
services to comply with the requirements of Sec.  284.13?
    4. Should the reporting requirements for interstate pipelines in 
Sec.  284.13 only be extended to larger section 311 and Hinshaw 
pipelines and, if so, what measurement should be used to separate 
larger section 311 and Hinshaw pipelines from smaller storage 
providers?
    5. Should all of the Sec.  284.13 reporting requirements be imposed 
on section 311 and Hinshaw pipelines or only some of those 
requirements? If the latter, which of the Sec.  284.13 reporting 
requirements are necessary to avoid adverse competitive effects and 
promote transparency?
    6. Would extending the Sec.  284.13 reporting requirements to 
section 311 and Hinshaw pipelines have a material effect on the amount 
of intrastate transportation and storage capacity made available in the 
interstate market?
    7. Would a periodic report filed more frequently than semi-annually 
but short of a daily posting requirement provide the necessary level of 
price transparency to address the issues raised by SGRM and other 
storage developers in Docket No. RP08-606-000?
    8. Should section 311 and Hinshaw pipelines be prohibited from 
submitting their Sec.  284.126(b) and (c) annual transportation and 
semi-annual storage reports subject to a request for privileged 
treatment under Sec. Sec.  385.1112 and 388.112 of the Commission's 
regulations? If so, does that provide the necessary level of price 
transparency to address the issues raised by SGRM and other storage 
developers in Docket No. RP08-606-000?

III. Procedure for Comments

    15. The Commission invites interested persons to submit comments, 
and other information on the matters, issues, and specific questions 
identified in this notice. Comments are due January 27, 2009. Comments 
must refer to Docket No. RM09-2-000, and must include the commenter's 
name, the organization it represents, if applicable, and its address.
    16. To facilitate the Commission's review of the comments, 
commenters are requested to provide an executive summary of their 
position. Commenters are requested to identify each specific question 
posed by the Notice of Inquiry that their discussion addresses and to 
use appropriate headings. Additional issues the commenters wish to 
raise should be identified separately. The commenters should double-
space their comments.
    17. Comments may be filed on paper or electronically via the 
eFiling link on the Commission's Web site at https://www.ferc.gov. The 
Commission accepts most standard word processing formats and commenters 
may attach additional files with supporting information in certain 
other file formats. Commenters filing electronically do not need to 
make a paper filing. Commenters that are not able to file comments 
electronically must send an original and 14 copies of their comments 
to: Federal Energy Regulatory Commission, Secretary of the Commission, 
888 First Street, NE., Washington, DC 20426.
    18. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters are not required to 
serve copies of their comments on other commenters.

IV. Document Availability

    19. 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 the Commission's Home Page (https://www.ferc.gov) and 
in the Commission'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.
    20. From the Commission's Home Page on the Internet, this 
information is available in the Commission's document management 
system, 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) in the docket number field.
    21. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours. For assistance, please contact 
the Commission's Online Support at 1-866-208-3676 (toll free) or 202-
502-6652 (e-mail at FERCOnlineSupport@ferc.gov or the Public Reference 
Room at 202-502-8371, TTY 202-502-8659 (e-mail at 
public.referenceroom@ferc.gov).

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E8-28218 Filed 11-26-08; 8:45 am]
BILLING CODE 6717-01-P
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