Skip to Content

Proposed Rule

Assignment of Firm Capacity on Upstream Interstate Pipelines; Notice of Proposed Rulemaking

Document Details

Information about this document as published in the Federal Register.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble April 10, 2002.

AGENCY:

Federal Energy Regulatory Commission, DOE.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Energy Regulatory Commission is proposing to remove from its regulations the Order No. 636 requirement that pipelines assign their upstream capacity to their firm shippers. This requirement was a necessary part of the unbundling of interstate pipelines' gas sales from their gas transportation service required in Order No. 636. On December 14, 2000, the Commission announced a new policy allowing unbundled open access pipelines to acquire and hold capacity on other pipelines without prior Commission approval. Since the unbundling of interstate gas sales from transportation has largely been accomplished, and since the Commission has developed a new policy allowing pipelines to acquire capacity on other pipelines, Subpart H is no longer relevant.

DATES:

Written comments are due on or before June 3, 2002.

ADDRESSES:

Send comments to: Office of the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Cecilia Desmond, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-2280. Start Printed Page 19137

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

I. Introduction

The Federal Energy Regulatory Commission (Commission) is proposing to remove from its regulations the requirement in subpart H of part 284 of the Commission's regulations (18 CFR 284.241 and 284.242) that pipelines assign their upstream capacity to their firm shippers. The Commission promulgated subpart H in Order No. 636 [1] as a necessary part of the unbundling of interstate pipelines' gas sales from their gas transportation service required in Order No. 636. Since the unbundling of interstate gas sales from transportation has largely been accomplished, and since the Commission has developed a new policy allowing unbundled open access pipelines to acquire capacity on other pipelines, subpart H is no longer relevant. The Commission therefore proposes to remove subpart H from its regulations.

II. Discussion

In Order No. 636, the Commission required interstate gas pipelines to unbundle the sale of gas from the sale of transportation and to assign their upstream capacity to their firm shippers.[2] The Commission found that pipelines' access to upstream capacity needed to provide bundled gas sales gave them an undue competitive advantage over other gas merchants since the upstream capacity gave pipelines access to more gas suppliers. The Commission also found that a pipeline's holding upstream capacity inhibited the goal of a competitive national market because the downstream gas purchasers would not be able to access the production areas and gas merchants reached by the downstream pipeline through its upstream capacity.

The Commission adhered to that policy for several years during the individual pipelines' Order No. 636 restructuring proceedings. Then, in Texas Eastern Transmission Corporation (Texas Eastern), the Commission determined that Order No. 636 did not create a per se rule precluding restructured pipelines from entering into contracts for transportation or storage capacity on other pipelines (offsystem capacity).[3] The Commission reasoned that pipelines had completed the unbundling of gas sales and transportation service required by Order No. 636 and that the market had become sufficiently competitive to allow pipelines to hold capacity on other pipelines. Therefore, the Commission said it would decide whether to allow pipelines to acquire offsystem capacity on a case-by-case basis.

Two pipelines appealed the Texas Eastern requirement for case-specific approval, claiming that it discriminated against pipelines because non-pipeline shippers could acquire capacity without prior approval.[4] They also argued that the Commission's blanket certificate and capacity release regulations, which require pipelines to make transportation services available on a nondiscriminatory basis under Commission-approved open access tariffs, were sufficient to control unduly discriminatory or anticompetitive actions that might arise when a pipeline acquires offsystem capacity. The court agreed and remanded the case.

On December 14, 2000, the Commission issued its Order on Remand in the Texas Eastern proceeding.[5] In that order, the Commission announced a new policy that unbundled open access pipelines will no longer be required to seek Commission approval before acquiring offsystem capacity, that existing safeguards provide the necessary protection against discriminatory and anticompetitive actions with respect to acquired offsystem capacity, and that pipelines will be at-risk for the costs of any such capacity. Before transporting gas for others on any acquired offsystem capacity, the Commission required a pipeline to seek a blanket waiver of the shipper-must-hold-title policy by amending its tariff to include a general statement that it will only transport for others on offsystem capacity pursuant to its existing open access tariff and rates.[6]

As the Commission has noted numerous times, the natural gas marketplace has fundamentally changed since the issuance of Order No. 636. In the Texas Eastern series of orders, the Commission developed and modified its policy with respect to pipelines' acquiring capacity on other pipelines in light of these changes. Since the requirement to assign upstream capacity contained in § 284.242 was specific to the implementation of Order No. 636, the restructuring of the natural gas industry under Order No. 636 has been accomplished, and the Commission now allows pipelines to acquire capacity on other pipelines as can any other shipper without seeking Commission, subpart H is no longer necessary. However, we reiterate that the removal of the regulation will not modify our Texas Eastern policy under which the appropriateness of a pipeline's acquisitions of capacity on other pipelines is subject to review in a subsequent general section 4 rate proceeding or the Commission's requirement that the shipper must hold title to any gas being shipped through the acquired capacity.

III. Environmental Analysis

Commission regulations describe the circumstances where preparation of an environmental assessment or an environmental impact statement will be required.[7] The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment.[8] No environmental consideration is necessary since the proposed action is clarifying, corrective, or procedural and affects transportation of natural gas that requires no construction of facilities.[9]

IV. Regulatory Flexibility Impact Statement

The Regulatory Flexibility Act of 1980 (RFA)[10] generally requires a description and analysis of proposed rules that will, if promulgated, have a significant economic impact on a substantial number of small entities. The Commission is not required to make such analysis if a rule would not have such an effect.[11]

The Commission does not believe that the proposed rule removal would have such an impact on small entities. The proposed removal of regulations would have an impact only on interstate pipelines, which generally do not fall within the RFA's definition of small entity.[12] Accordingly, pursuant to Start Printed Page 19138section 605(b) of the RFA, the Commission proposes to certify that the removal of regulations proposed here will not have a significant economic impact on a substantial number of small entities.

V. Information Collection Statement

The Office of Management and Budget's (OMB) regulations require that OMB approve certain information collection requirements imposed by agency rules.[13] However, this proposed rule contains no information reporting requirements, and therefore is not subject to OMB approval.

VI. Comment Procedures

The Commission invites interested persons to submit comments, data, views and other information concerning matters set out in this notice.

To facilitate the Commission's review of the comments, commenters are requested to provide an executive summary of their position on the issues raised in the notice. Commenters are requested to identify each specific issue 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.

Comments may be filed on paper or electronically via the Internet and must be received by the Commission within 45 days after publication in the Federal Register. Those filing electronically do not need to make a paper filing. For paper filings, the original and 14 copies of such comments should be submitted to the Office of the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE, Washington DC 20426 and should refer to Docket No. RM01-6-000.

Comments filed via the Internet must be prepared in WordPerfect, MS Word, Portable Document Format, or ASCII format. To file the document, access the Commission's website at www.ferc.gov and click on “e-Filing,” and then follow the instructions for each screen. First time users will have to establish a user name and password. The Commission will send an automatic acknowledgment to the sender's E-Mail address upon receipt of comments.

User assistance for electronic filing is available at 202-208-0258 or by E-Mail to efiling@ferc.gov. Comments should not be submitted to the E-Mail address. All comments will be placed in the Commission's public files and will be available for inspection in the Commission's Public Reference Room at 888 First Street, NE, Washington D.C. 20426, during regular business hours. Additionally, all comments may be viewed, printed, or downloaded remotely via the Internet through FERC's Homepage using the RIMS link.

User assistance for RIMS is available at 202-208-2222, or by E-mail to RimsMaster@ferc.gov.

VII. Document Availability

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

From FERC's Home Page on the Internet, this information is available in both the Commission Issuance Posting System (CIPS) and the Records and Information Management System (RIMS).

—CIPS provides access to the texts of formal documents issued by the Commission since November 14, 1994.

—CIPS can be accessed using the CIPS link or the Energy Information Online icon. The full text of this document is available on CIPS in ASCII and WordPerfect 8.0 format for viewing, printing, and/or downloading.

-—RIMS contains images of documents submitted to and issued by the Commission after November 16, 1981. Documents from November 1995 to the present can be viewed and printed from FERC's Home Page using the RIMS link or the Energy Information Online icon. Descriptions of documents back to November 16, 1981, are also available from RIMS-on-the-Web; requests for copies of these and other older documents should be submitted to the Public Reference Room.

User assistance is available for RIMS, CIPS, and the Website during normal business hours from our Help line at (202) 208-2222 (E-Mail to WebMaster@ferc.gov) or the Public Reference at (202) 208-1371 (E-Mail to public.referenceroom@ferc.gov).

During normal business hours, documents can also be viewed and/or printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC Website are available. User assistance is also available.

Start List of Subjects

List of Subjects in 18 CFR Part 284

End List of Subjects Start Signature

By direction of the Commission.

Magalie R. Salas,

Secretary.

End Signature

In consideration of the foregoing, the Commission proposes to amend part 284, Chapter I, Title 18, Code of Federal Regulations, as follows.

Start Part

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

1. The authority citation for part 284 continues to read as follows:

Start Authority

Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 1331-1356.

End Authority
(Subpart H) [Removed and reserved]

2. In part 284, remove and reserve subpart H, consisting of §§ 284.241 and 284.242.

End Part End Supplemental Information

Footnotes

1.  Pipeline Service Obligations and Revisions to Regulations Governing Self-Implementing Transportation Under Part 284 of the Commission's Regulations, Order No. 636, 57 FR 13267 (Apr. 16, 1992), FERC Stats & Regs., Regulations Preambles January 1991-June 1996 ¶ 30,939 (Apr. 8, 1992).

Back to Citation

2.  The Commission allowed pipelines to retain upstream capacity for operational management and balancing purposes and no-notice transportation service.

Back to Citation

3.  74 FERC ¶ 61,074 (1996); 78 FERC ¶ 61,277 (1997); order on remand, 93 FERC ¶ 61,273 (2000); reh'g denied, 94 FERC ¶ 61,139; reh'g denied, 95 FERC ¶ 61,056 (2001).

Back to Citation

4.  See Colorado Interstate Gas Co. v. FERC, 146 F.3d 889 (D.C. Cir. 1998).

Back to Citation

5.  Texas Eastern Transmission Corp., 93 FERC ¶ 61,273 (2000); reh'g denied, 94 FERC ¶ 61,139; reh'g denied, 95 FERC ¶ 61056 (2001).

Back to Citation

6.  See Texas Eastern, 95 FERC ¶ 61056 (2001).

Back to Citation

7.  Regulations Implementing National Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), codified at 18 CFR Part 380.

Back to Citation

9.  See 18 CFR 380.4(a)(2)(ii), 380.4(a)(27).

Back to Citation

12.  5 U.S.C. 601(3), citing to section 3 of the Small Business Act, 15 U.S.C. 632. Section 3 of the Small Business Act defines a “small business concern” as a business which is independently owned and operated and which is not dominant in its field of operations.

Back to Citation

[FR Doc. 02-9251 Filed 4-17-02; 8:45 am]

BILLING CODE 6717-01-P