Standards of Conduct/Affiliate NOPR

On March 21, FERC clarified two aspects of its interim affiliate rules in response to INGAA’s request for expedited clarification or rehearing.  (See February board bulletin).  First, FERC clarified that the rules apply only to pipelines affiliated “with a marketing or brokering entity that conducts transportation transactions on such natural gas transmission provider’s pipeline.”  This effectively vindicated INGAA’s principal argument that the scope of the interim rule be limited to marketing affiliates holding capacity on an affiliated pipeline.  Second, FERC clarified that the standards of conduct do not govern the relationship between a pipeline and its electric affiliate that engages in electric marketing, sales or brokering activities as long as that electric affiliate does not engage in natural gas marketing and conduct transportation transactions on the affiliated pipeline

On March 30, INGAA filed comments in response to FERC’s Notice of Proposed Rulemaking to establish new permanent affiliate regulations.  (See March board bulletin.)  INGAA supported FERC’s proposal to retreat to the narrower pre-Order 2004 scope of the rule, which, in general, would confine coverage to Marketing Affiliates and exclude the Energy Affiliates that previously brought affiliated producers, gatherers, intrastates, and other affiliates under the Commission’s Chinese Wall rules.  Among other comments, INGAA urged the Commission to: 

(1) adhere to its interpretation (announced in response to INGAA’s request    for rehearing of FERC’s interim rule) that the rules apply only to a pipeline that “conducts transportation transactions with its marketing or brokering affiliate”;

(2) not expand the rules, as proposed, to cover a new class of “asset manager” affiliates (except to the extent of covering marketing affiliates that “hold or control capacity” on an affiliated pipeline);

(3) confirm that previously granted waivers remain in effect;

(4) clarify the rules applicable to risk managers and senior officers and directors to permit greater freedom of action;

(5) liberalize it rules on logging “discretionary tariff waivers”;

(6) clarify that certain sales will not result in producers losing the exemption for sellers selling solely from their own production; and

(7) clarify that the rules do not apply until a pipeline begin transportation service.