NOPR (published)

NOPR (published).pdf

FERC-549C, (Final Rule in RM96-1-042) Standards for Business Practices of Interstate Natural Gas Pipelines

NOPR (published)

OMB: 1902-0174

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3.2) of business practice standards
adopted by the Wholesale Gas Quadrant
of the North American Energy Standards
Board (NAESB) applicable to natural gas
pipelines in place of the currently
incorporated version (Version 3.1) of
those business practice standards. The
revisions made by NAESB in this
version of the standards are designed to
enhance the natural gas industries’
system and software security measures
and to clarify the processing of certain
business transactions.

[FR Doc. 2021–03968 Filed 3–4–21; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 284
[Docket No. RM96–1–042]

Standards for Business Practices of
Interstate Natural Gas Pipelines

DATES:

Federal Energy Regulatory
Commission, Department of Energy.
ACTION: Notice of proposed rulemaking.

ADDRESSES:

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AGENCY:

The Federal Energy
Regulatory Commission is proposing to
amend its regulations to incorporate by
reference, with certain enumerated
exceptions, the latest version (Version

SUMMARY:

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Comments are due April 19,

2021.
Comments, identified by the
docket number of this proceeding, may
be filed electronically at https://
www.ferc.gov/ in acceptable native
applications and print-to-PDF, but not
in scanned or picture format. For those
unable to file electronically, comments
may be filed by mail or may be hand

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delivered. Mailed comments should be
addressed to: Federal Energy Regulatory
Commission, Secretary of the
Commission, 888 First Street NE,
Washington, DC 20426. Hand-delivered
comments should be delivered to:
Federal Energy Regulatory Commission,
12225 Wilkins Avenue, Rockville,
Maryland 20852. The Comment
Procedures Section of this document
contains more detailed filing
procedures. The Comment Procedures
Section of this document contains more
detailed filing procedures.
FOR FURTHER INFORMATION CONTACT:
Stanley Wolf (Technical Issues), Office
of Energy Policy and Information,
Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
6841
Oscar F. Santillana (Technical Issues),
Office of Energy Market Regulation,
Federal Energy Regulatory

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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules

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Commission, 888 First Street NE,
Washington, DC 20426, (202) 502–
6392

Robert McLean (Legal Issues), Office of
the General Counsel, Federal Energy

Regulatory Commission, 888 First
Street NE, Washington, DC 20426
SUPPLEMENTARY INFORMATION:
Paragraph No.

I. Background ................................................................................................................................................................................
II. Discussion ................................................................................................................................................................................
A. Modifications to Previous Version of Standards ............................................................................................................
1. Modifications in Response to the Sandia Surety Assessment ................................................................................
2. Modifications in Response to Industry Request ......................................................................................................
B. Standards Proposed Not To Be Incorporated by Reference ...........................................................................................
C. Proposed Implementation Procedures .............................................................................................................................
III. Notice of Use of Voluntary Consensus Standards ................................................................................................................
IV. Incorporation by Reference ....................................................................................................................................................
V. Information Collection Statement ...........................................................................................................................................
VI. Environmental Analysis .........................................................................................................................................................
VII. Regulatory Flexibility Act .....................................................................................................................................................
VIII. Comment Procedures ...........................................................................................................................................................
IX. Document Availability ...........................................................................................................................................................

1. The Federal Energy Regulatory
Commission (Commission) proposes to
amend its regulations at 18 CFR 284.12
to incorporate by reference, with certain
enumerated
2. exceptions,1 the latest version
(Version 3.2) of business practice
standards adopted by NAESB’s WGQ
applicable to natural gas pipelines that
NAESB reported to the Commission on
August 17, 2020 in place of the
currently incorporated version (Version
3.1) of those business practice
standards. The implementation of these
standards and regulations will promote
the additional efficiency and reliability
of the natural gas industries’ operations
thereby helping the Commission to
carry out its responsibilities under the
Natural Gas Act (NGA). In addition, the
proposed revisions are necessary to
enhance the natural gas industries’
computer security requirements.2

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I. Background
3. Since 1996, the Commission has
adopted regulations to standardize the
business practices and communication
methodologies of interstate natural gas
pipelines to create a more integrated
and efficient pipeline grid. These
regulations have been promulgated in
the Order No. 587 series of orders,3
1 As explained below, we are not proposing in
this proposed rule to incorporate by reference the
optional model contracts and the eTariff-related
standards included in the North American Energy
Standards Board (NAESB) Wholesale Gas Quadrant
(WGQ) Version 3.2 package of business practice
standards.
2 As explained below, NAESB has developed and
adopted, in conjunction with Sandia National
Laboratories, a series of business practice standards
to protect the natural gas industries’ internet
security.
3 This series of orders began with the
Commission’s issuance of Standards for Bus.
Practices of Interstate Nat. Gas Pipelines, Order No.
587, 61 FR 39053 (July 26, 1996), FERC Stats. &
Regs. ¶ 31,038 (1996) (cross-refrenced at 76 FERC
¶ 61,042).

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wherein the Commission has
incorporated by reference standards for
interstate natural gas pipeline business
practices and electronic
communications that were developed
and adopted by NAESB’s WGQ. Upon
incorporation by reference, this version
of the standards will replace the
currently incorporated version (Version
3.1) of those business practice
standards.
4. On August 17, 2020, NAESB filed
a report informing the Commission that
it had adopted and ratified WGQ
Version 3.2 of its business practice
standards applicable to interstate
natural gas pipelines. Version 3.2 of the
WGQ includes business practice
standards developed and modified in
response to industry requests and
directives from the NAESB Board of
Directors. This version also includes the
standards developed in response to the
recommendations of Sandia National
Laboratory (Sandia),4 which in 2019
issued a cybersecurity surety assessment
of the NAESB standards sponsored by
DOE (Sandia Surety Assessment),5 and
4 Sandia is a multidisciplinary national laboratory
and federally funded research and development
center for the U.S. Department of Energy’s (DOE)
National Nuclear Security Administration that
supports numerous federal, state, and local
government agencies, companies, and
organizations.
5 In April 2017, NAESB announced that Sandia,
through funding provided by DOE, would be
performing a surety assessment of the NAESB
standards. As determined by Sandia and DOE, the
purpose of the surety assessment was to analyze
cybersecurity elements within the standards,
focusing on four areas: (1) The NAESB Certification
Program for Accredited Certification Authorities,
including the Wholesale Electric Quadrant (WEQ)012 Public Key Infrastructure Business Practice
Standards, the NAESB Accreditation Requirements
for Authorized Certificate Authorities, and the
Authorized Certification Authority Process; (2) the
WEQ Open Access Same-Time Information Systems
suite of standards; (3) the WGQ and Retail Markets
Quadrant internet Electronic Transport (IET) and
Quadrant Electronic Delivery Mechanism (EDM)

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the standards developed to enable the
use of distributed ledger technologies
when transacting the NAESB Base
Contract for Sale and Purchase of
Natural Gas.
5. The NAESB report identifies all the
changes made to the WGQ Version 3.1
Standards and summarizes the
deliberations that led to the changes
being made. It also identifies changes to
the existing standards that were
considered but not adopted due to a
lack of consensus or other reasons.
II. Discussion
6. In this NOPR, we propose to
incorporate by reference, in our
regulations, Version 3.2 of the NAESB
WGQ consensus business practice
standards, with certain exceptions.6 We
propose that compliance filings made in
accordance with a final rule be made
120 days after issuance of a final rule in
this proceeding or on the first business
day thereafter if falling on a weekend or
holiday, with an effective date 180 days
from the date compliance filings are due
in this proceeding or the first business
day thereafter if falling on a weekend or
holiday. This will allow time for the
Commission to process the compliance
filings before the effective date of the
new standards.
7. As the Commission found in Order
No. 587, adoption of consensus
standards is appropriate, because the
consensus process helps ensure the
reasonableness of the standards by
requiring that the standards draw
support from a broad spectrum of
industry participants representing all
segments of the industry. Moreover,
Related Standards Manual; and (4) a high-level
dependency analysis between the gas and electric
markets to evaluate the different security paradigms
the markets employ.
6 In the discussion below we identify the NAESB
WGQ Version 3.2 Standards that we propose not to
incorporate by reference.

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because the industry conducts business
under these standards, the
Commission’s regulations should reflect
those standards that have the widest
possible support. In section 12(d) of the
National Technology Transfer and
Advancement Act of 1995, Congress
affirmatively requires federal agencies to
use technical standards developed by
voluntary consensus standards
organizations, like NAESB, to carry out
policy objectives or activities.
8. We discuss below some specific
aspects of NAESB’s report.

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A. Modifications to Previous Version of
Standards
1. Modifications in Response to the
Sandia Surety Assessment
9. NAESB revised previously
incorporated standards and developed
new standards in response to the
recommendations in the Sandia Surety
Assessment. Specifically, NAESB
adopted revisions to the WGQ EDM
Related Business Practice Standards,
which establish the framework for the
electronic dissemination and
communication of information between
parties in the North American wholesale
gas marketplace, and to the WGQ IET
Related Business Practice Standards,
which define the implementation of
various technologies necessary to
communicate transactions and other
electronic data using standard protocols
for electronic commerce over the
internet between trading partners. First,
NAESB adopted two new standards,
4.3.109 and 10.3.28, to provide that
trading partners should evaluate
software fixes or patches for known
vulnerabilities within 30 days and
implement the fix or patch as soon as
reasonably practicable based on the
severity of the risk. Second, NAESB
adopted two new standards, 4.3.110 and
10.3.29, to provide that trading partners
should mutually agree to the version of
the EDM and IET to be used. Third, the
new standards specify notification and
coordination timelines with trading
partners, where applicable, to address
vulnerable systems or software as soon
as possible. Fourth, the Sandia Surety
Assessment recommended that NAESB
consider guidelines for configuration
and logging, network traffic monitoring,
alerting systems, and manual continuity
of operations in the event of abnormal
behavior or failure conditions within
the system. In response, NAESB added
language to new Standards 4.3.110 and
10.3.28 to include both specific and
broad adoptions of such system security
measures.
10. Further, NAESB added language
to existing Standards 4.3.60, 4.3.61,

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10.2.33, and 10.3.25 to clarify the
Transport Layer Security protocol,7
which encrypts data to hide information
from electronic observers on the
internet. NAESB also deleted all
references to the Secure Sockets Layer
protocol in the standards.
11. Concerning identification key
lengths, the Sandia Surety Assessment
recommended that Rivest-ShamirAdelman keys 8 must be no shorter than
2048 bits, Elliptic Curve Digital
Signature Algorithm keys 9 must be no
shorter than 224 bits, Hash 10 algorithms
should be from the Secure Hash
Algorithm (SHA)-2 11 or SHA–3
families, and acceptable Advanced
Encryption Standard key lengths range
from 128, to 192, to 256. The Sandia
Surety Assessment recommended that,
in general, implementors use the largest
feasible key length consistent with
implementation of current business
processes. In response, NAESB deleted
Standard 4.3.83 to remove legacy
support references and maintain a
minimum encryption strength of 128
bits. Further, NAESB revised existing
Standards 10.2.34 and 10.3.15 to delete
a proprietary Pretty Good Privacy
(PGP) 12-related hyperlink and to
accommodate license-free OpenPGP,13
respectively. NAESB also adopted a new
Standard 10.2.39 to specify that
OpenPGP should be used to create
public and private keys for privacy and
digital signature applications.
12. Further, NAESB revised existing
Standards 4.3.60, 4.3.84, 10.3.4, and
10.3.16 to specify Hyper-Text Transport
Protocol Secure (HTTPS),14 which is an
7 The National Institute of Standards and
Technology Special Pub. 800–52 requires
government Transport Layer Security servers and
clients to support Transport Layer Security Version
1.2 and recommends support for Transport Layer
Security Version 1.3 by the year 2024.
8 Rivest-Shamir-Adelman is a public key
infrastructure algorithm composed of a public
component and a private component that is
typically installed on a recognized Certificate
Authority.
9 Elliptic Curve Digital Signature Algorithm
public keys generate an encrypted signature to
validate data.
10 A Hash is cryptology technique used for digital
signatures in which a series of numbers that may
represent, for example, a password, an image, a
document, or an executable file is used to generate
a cryptographic hash (i.e., a large number).
11 SHA–2 is a set of cryptographic hash functions.
12 PGP is a proprietary (i.e., an organization must
pay to use it) encryption program developed to
enhance the confidentiality and integrity of data.
13 OpenPGP is an encryption standard defined by
the Internet Engineering Task Force enabling design
and implementation free of licensing fees. At
present, the encryption method is generally
considered the most secure.
14 HTTPS authentication encrypts username and
password combinations as part of a Uniform
Resource Locator address. To obtain an HTTPS
connection, a web browser must contact a trusted,

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encrypted version of Hyper-Text
Transport Protocol (HTTP),15 whenever
a secure communication is required to
protect information in transit and
support overall privacy needs.
Moreover, NAESB revised existing
Standards 4.3.60 and 10.3.16 to require
multi-factor (e.g., two-factor)
authentication on an individual basis
and state that secure websites should
employ individual user credentials.
2. Modifications in Response to Industry
Request
13. The following section describes
standards development efforts
undertaken by NAESB in response to
industry requests or through the normal
course of WGQ activities that resulted in
modifications to the Nomination
Related Standards, QEDM Standards,
and an effort that impacted multiple sets
of standards. NAESB made
corresponding revisions, where
appropriate, to the related data sets and
technical implementation as part of the
standards development effort.
a. Nomination Related Standards
14. NAESB revised existing Standards
1.3.27, 1.4.1, and 1.4.2 to add a new
data element ‘‘Capacity Block ID’’ to
allow a Service Requester to determine
which primary point rights of the
contract their segmented nomination 16
is using and eliminate an existing
manual business process from the TSP
to automate the business process.
b. Quadrant Electronic Delivery
Mechanisms Related Standards
15. NAESB developed two new
standards, Standard 4.3.107 to establish
a standard data retention period for
retrieval of Operationally Available data
from the Informational Postings website,
and Standard 4.3.108, to establish a
standard data retention period for
retrieval of Notices for the subcategories
of Critical, Non-Critical and Planned
Service Outage from the Informational
Postings website.
commercial Certificate Authority, such as a NAESB
Authorized Certificate Authority, to obtain the web
server’s public key, and follow other applicable
HTTPS procedures.
15 HTTP is the original communications protocol
of the internet which enables a web browser to
depict text, pictures, shapes, live data, and click
targets on a web browser. However, username and
password combinations are not encrypted in HTTP
basic authentication.
16 In order for a Service Requester to have control
over its segmented nomination(s), the
Transportation Service Provider (TSP) will require
a ‘‘Capacity Block ID’’ to be submitted with each
nomination line item specifying a Transaction Type
of ‘‘Segmented.’’

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c. Revisions Impacting Multiple
Standards
16. NAESB revised multiple
standards 17 and data sets 18 to remove
references to the term ‘‘gigacalories’’
and add the term ‘‘gigajoules,’’
consistent with the standard quantity
for nominations, confirmations, and
scheduling in Mexico.
d. Other Material in NAESB’s Report
17. NAESB revised multiple data sets
which impacted technical
implementation documentation only.
18. Further, NAESB revised its
optional model contracts and
corresponding Mexican and Canadian
Addendums to reflect a standard digital
representation of natural gas trade
events. NAESB states that these
revisions are intended to capitalize on
smart contracts and distributed ledger
technologies.
B. Standards Proposed Not To Be
Incorporated by Reference
19. We propose to continue our past
practice 19 of not incorporating by
reference into our regulations any
optional model contracts because we do
not require the use of these contracts
and therefore we do not need to include
them in our regulations.20 In addition,
consistent with our findings in past
proceedings, we are not proposing to
incorporate by reference the Wholesale
Electric Quadrant/WGQ eTariff Related
Standards because the Commission
adopted and posted its standards and
protocols for electronic tariff filings.21

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C. Proposed Implementation Procedures
20. We propose to continue the
compliance filing requirements as
revised in Order No. 587–V.22 We
propose that compliance filings made in
accordance with a final rule be made
120 days after issuance of a final rule in
this proceeding or on the first business
day thereafter if falling on a weekend or
holiday, with an effective date 180 days
from the date compliance filings are due
in this proceeding or the first business
17 NAESB WGQ Version 3.2 Standards 1.3.14,
1.3.15, 1.3.82, and 3.3.3.
18 NAESB WGQ Version 3.2 Standards 0.4.1
through 0.4.3, 1.4.1, 1.4.3 through 1.4.6, 2.4.1, 2.4.6,
2.4.17, 3.4.1, 3.4.2, 5.4.24 through 5.4.26.
19 See, e.g., Standards for Bus. Practices of
Interstate Nat. Gas Pipelines, Notice of Proposed
Rulemaking, 83 FR 44521 (Aug. 31, 2018), 164
FERC ¶ 61,125, at P 16 (2018) (WGQ Version 3.1
NOPR).
20 Id., Standards for Bus. Practices of Interstate
Nat. Gas Pipelines, Order. No. 587–V, 77 FR 43711
(Jul. 26, 2012), 140 FERC ¶ 61,036, at n.11 (2012).
21 WGQ Version 3.1 NOPR, 164 FERC ¶ 61,125 at
P 16; Elec. Tariff Filings, Order No. 714, 73 FR
57515 (Oct. 3, 2008), 124 FERC ¶ 61,270 (2008).
22 Order No. 587–V, 140 FERC ¶ 61,036 at PP 36–
39.

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day thereafter if falling on a weekend or
holiday. As the Commission found in
Order No. 587–V, adoption of the
revised compliance filing requirements
increases the transparency of the
interstate natural gas pipelines’
incorporation by reference of the
NAESB WGQ Standards so that shippers
and the Commission will know which
tariff provision(s) implements each
standard as well as the status of each
standard.23
21. Consistent with our practice since
Order No. 587–V, each pipeline must
designate a single tariff section under
which every NAESB WGQ Standard
incorporated by reference by the
Commission is listed.24 For each
standard, the pipeline must specify in
the tariff section or tariff sheet(s) listing
all the NAESB standards:
(a) Whether the standard is
incorporated by reference;
(b) For those standards not
incorporated by reference, the tariff
provision that complies with the
standard; or
(c) For those standards with which
the pipeline does not comply, an
explanatory statement, including an
indication of whether the pipeline has
been granted a waiver, extension of
time, or other variance with respect to
compliance with the standard.25
Likewise, consistent with past
practice, we will post on our eLibrary
website (under Docket No. RM96–1–
042) a sample tariff format, to provide
filers an illustrative example to aid them
in preparing their compliance filings.
22. Consistent with our policy since
Order No. 587–V,26 we propose that
requests for waivers that do not meet the
requirements set forth in Order No. 587–
V will not be granted. In particular, as
we explained in Order No. 587–V,
waivers are unnecessary and will not be
granted when the standard applies only
on condition the pipeline performs a
business function and the pipeline
currently does not perform that
function.27
23. If the pipeline is requesting a
continuation of an existing waiver or
extension of time, it must include a
table in its transmittal letter that
identifies the standard for which the
23 Trans-Union Interstate Pipeline L.P., 141 FERC
¶ 61,167, at P 36 (2012) (Order No. 587–V
Compliance Order).
24 Id. P 36; WGQ Version 3.1 NOPR, 164 FERC
¶ 61,125 at P 18.
25 Shippers can use the Commission’s electronic
tariff system to locate the tariff record containing
the NAESB standards, which will indicate the
docket in which any waiver or extension of time
was granted.
26 Order No. 587–V, 140 FERC ¶ 61,036.
27 Order No. 587–V Compliance Order, 141 FERC
¶ 61,167 at PP 4, 38.

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Commission granted a waiver or
extension of time, and the docket
number or order citation to the
proceeding in which the Commission
granted the waiver or extension of time.
The pipeline also must present an
explanation for why such waiver or
extension of time should remain in force
with regard to the WGQ Version 3.2
Standards.
24. This continues our practice of
having pipelines include in their tariffs
a common location that identifies the
way in which the pipeline is
incorporating all the NAESB WGQ
Standards and the standards with which
it is required to comply.
III. Notice of Use of Voluntary
Consensus Standards
25. Office of Management and Budget
Circular A–119 (section 11) (February
10, 1998) provides that Federal
Agencies should publish a request for
comment in a NOPR when the agency
is seeking to issue or revise a regulation
proposing to adopt a voluntary
consensus standard or a governmentunique standard. In this NOPR, we are
proposing to incorporate by reference
voluntary consensus standards
developed by the WGQ.
IV. Incorporation by Reference
26. The Office of the Federal Register
requires agencies proposing to
incorporate material by reference to
discuss the ways that the materials it
incorporates by reference are reasonably
available to interested parties and how
interested parties can obtain the
materials.28 The regulations also require
agencies to summarize, in the preamble
of the final rule, the material that it
incorporates by reference. The standards
we are proposing to incorporate by
reference consist of seven suites of
NAESB WGQ Business Practice
Standards that address a variety of
topics and are designed to streamline
the transactional processes for the
wholesale natural gas industry by
promoting a more competitive and
efficient market. These include the:
WGQ Additional Business Practice
Standards; WGQ Nominations Related
Business Practice Standards; WGQ
Flowing Gas Related Business Practice
Standards; WGQ Invoicing Related
Business Practice Standards; Quadrant
Electronic Delivery Mechanism Related
Business Practice Standards; Capacity
Release Related Business Practice
Standards; and Internet Electronic
Transport Related Business Practice
28 1 CFR 51.5 (2020). See Incorporation by
Reference, 79 FR 66267 (Nov. 7, 2014).

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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules
Standards. We summarize these
standards below.
27. The WGQ Additional Business
Practice Standards address six areas:
Creditworthiness; Storage Information;
Gas/Electric Operational
Communications; Operational Capacity;
Unsubscribed Capacity; and Location
Data Download.
• The Creditworthiness related
standards describe requirements for the
exchange of information, notification,
and communication between parties
during the creditworthiness evaluation
process.
• The Storage Information related
standards define the information to be
provided to natural gas service
requesters related to storage activities
and/or balances.
• The Gas/Electric Operational
Communications related standards
define communication protocols
intended to improve coordination
between the gas and electric industries
in daily operational communications
between transportation service
providers and gas-fired power plants.
The standards include requirements for
communicating anticipated power
generation fuel for the upcoming day as
well as any operating problems that
might hinder gas-fired power plants
from receiving contractual gas
quantities.
• The Operational Capacity related
standards define requirements of the
transportation service provider related
to the reporting and requesting of a
transportation service provider’s
operational capacity, total scheduled
quantity, and operationally available
capacity.
• The Unsubscribed Capacity related
standards define requirements of the
transportation service provider related
to the reporting and requesting of a
transportation service provider’s
available unsubscribed capacity.
• The Location Data Download
related standards define requirements
for the use of codes assigned by the
transportation service provider for
locations and common codes for parties
communicating electronically.
28. The WGQ Nominations Related
Business Practice Standards define the
process by which a natural gas service
requester with a natural gas
transportation contract nominates (or
requests) service from a pipeline or a
transportation service provider for the
delivery of natural gas.
29. The WGQ Flowing Gas Related
Business Practice Standards define the
business processes related to the
communication of entitlement rights of
flowing gas at a location, of the
entitlement rights on a contractual basis,

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of the management of imbalances, and
of the measurement and gas quality
information of the actual flow of gas.
30. The WGQ Invoicing Related
Business Practice Standards define the
process for the communication of
charges for services rendered (Invoice),
communication of details about funds
rendered in payment for services
rendered (Payment Remittance), and
communication of the financial status of
a customer’s account (Statement of
Account).
31. The Quadrant Electronic Delivery
Mechanism Related Business Practice
Standards define the framework for the
electronic dissemination and
communication of information between
parties in the North American wholesale
gas marketplace for Electronic Data
Interchange/EDM transfers, batch flat
file/EDM transfers, informational
postings websites, Electronic Bulletin
Boards/EDM, and interactive flat file/
EDM.
32. The Capacity Release Related
Business Practice Standards define the
business processes for communication
of information related to the selling of
all or any portion of a transmission
service requester’s contract rights.
33. The Internet Electronic Transport
Related Business Practice Standards
define the implementation of various
technologies necessary to communicate
transactions and other electronic data
using standard protocols for electronic
commerce over the internet between
trading partners.
34. Our regulations provide that
copies of the standards incorporated by
reference may be obtained from NAESB
at https://www.naesb.org// or (713) 356–
0060. Copies of the standards may be
inspected at the Federal Energy
Regulatory Commission, Public
Reference Room, 888 First Street NE,
Washington, DC 20426, Phone: (202)
502–8371, https://www.ferc.gov/.
However, at this time, the Commission
has suspended access to the
Commission’s Public Reference Room
due to the President’s March 13, 2020
proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19).
35. NAESB is a private consensus
standards developer that develops
voluntary wholesale and retail
standards related to the energy industry.
The procedures used by NAESB make
its standards reasonably available to
those affected by Commission
regulations, which generally is
comprised of entities that have the
means to acquire the information they
need to effectively participate in
Commission proceedings. Participants
can join NAESB, for an annual

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membership cost of $8,000, which
entitles them to full participation in
NAESB and enables them to obtain
these standards at no additional cost.
Non-members may obtain the Individual
Standards Manual or Booklets for each
of the seven Manuals by email for $250
per manual, which in the case of these
standards would total $1,750. Nonmembers also may obtain the complete
set of Standards Manuals, Booklets, and
Contracts on USB flash drive for $2,000.
NAESB also provides a free electronic
read-only version of the standards for a
three-business day period or, in the case
of a regulatory comment period, through
the end of the comment period. In
addition, NAESB considers requests for
waivers of the charges on a case-by-case
basis depending on need.
V. Information Collection Statement
36. The Office of Management and
Budget (OMB) regulations require that
OMB approve certain reporting, record
keeping, and public disclosure
requirements (information collection)
imposed by an agency.29 Therefore, we
are submitting our proposed
information collection to OMB for
review in accordance with section
3507(d) of the Paperwork Reduction Act
of 1995. Upon approval of a collection
of information, OMB will assign an
OMB control number and an expiration
date. Respondents subject to the filing
requirements of a rule will not be
penalized for failing to respond to these
collections of information unless the
collection of information displays a
valid OMB control number.
37. We solicit comments on our need
for this information, whether the
information will have practical utility,
the accuracy of the provided burden
estimates, ways to enhance the quality,
utility, and clarity of the information to
be collected, and any suggested methods
for minimizing respondents’ burden,
including the use of automated
information techniques.
38. Public Reporting Burden: The
Commission’s burden estimates for the
proposals in this NOPR are for one-time
implementation of the information
collection requirements of this NOPR
(including tariff filing, documentation of
the process and procedures, and
information technology work).
39. The collections of information
related to this NOPR fall under FERC–
545 (Gas Pipeline Rates: Rate Change
(Non-Formal)) 30 and FERC–549C
(Standards for Business Practices of
29 5

CFR 1320.11 (2020).
covers rate change filings made by
natural gas pipelines, including tariff changes.
30 FERC–545

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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules

Interstate Natural Gas Pipelines).31 The
following estimates of reporting burden
are related only to this NOPR and

anticipate the costs to pipelines for
compliance with our proposals in this
NOPR. The burden estimates are

primarily related to implementing these
standards and regulations and will not
result in ongoing costs.

RM96–1–042 NOPR

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[Standards for Business Practices of Interstate Natural Gas Pipelines]
Number of
respondents 32

Annual number
of responses
per respondent

Total number
of responses

Average burden hr.
per response

Total annual burden hours &
total annual cost 33

Annual costs
per respondent
($)

(1)

(2)

(1) * (2) = (3)

(4)

(3) * (4) = (5)

(5) / (1) = (6)

FERC–545 (one-time) ...........
FERC–549C (one-time) .........

178
178

1
1

178
178

10 hrs.; $1,010 ......................
100 hrs.; $10,100 ..................

1,780 hrs.; $179,780 .............
17,800 hrs.; $1,797,800 ........

$1,010
$10,100

Total ................................

........................

..........................

356

................................................

19,580 hrs.; $1,977,580 ........

..........................

The one-time burden (for both the
FERC–545 and FERC–549C) will take
place in Year 1 and will be averaged
over three years:
FERC–545: 1,780 hours ÷ 3 = 593 hours/
year over three years
FERC–549C: 17,800 hours ÷ 3 = 5,933
hours/year over three years
The number of responses is also
averaged over three years (for both the
FERC–545 and FERC–549C):
FERC–545: 178 responses ÷ 3 = 59
responses/year
FERC–549C: 178 responses ÷ 3 = 59
responses/year
The responses and burden for Years
1–3 will total respectively as follows:
Year 1: 59 responses; 593 hours (FERC–
545); 5,933 hours (FERC–549C)
Year 2: 59 responses; 593 hours (FERC–
545); 5,933 hours (FERC–549C)
Year 3: 59 responses; 593 hours (FERC–
545); 5,933 hours (FERC–549C)
Title: FERC–545, Gas Pipeline Rates:
Rates Change (Non-Formal); FERC–
549C, Standards for Business Practices
of Interstate Natural Gas Pipelines.
Action: Proposed information
collections.
OMB Control Nos.: 1902–0154 (FERC–
545), 1902–0174 (FERC–549C).
Respondents: Business or other for
profit (e.g., Natural Gas Pipelines,
applicable to only a few small
businesses).
Frequency of Responses: One-time
implementation (related to business
procedures, capital/start-up).
Necessity of Information: In response
to the recommendations in the Sandia
report, the proposals in this NOPR
would, if implemented, upgrade current

business practices and communication
standards by updating the Quadrant
EDM Related Standards and IET Related
Standards to specifically: (1) Require the
implementation of fixes or patches for
known vulnerabilities as soon as
reasonably practicable in coordination
with other trading partners; (2) specify
notification timelines to provide notice
to trading partners of any systems or
software that have not been updated and
the potential impact of using the
vulnerable system; (3) include both
specific and broad adoptions of system
security measures and specific
notification and coordination during
outages with affected trading partners;
(4) maintain a minimum encryption
strength of 128 bits, (5) specify that
OpenPGP should be used to create
public and private keys for privacy and
digital signature applications; (6)
specify HTTPS whenever secure
communication is required to protect
information in transit and support
overall privacy needs; (7) use the largest
feasible key length consistent with
implementation of current business
processes; (8) state that secure websites
should employ individual user
credentials; and (9) encourage security
assessments and coordination between
customers, vendors, and trading
partners.
40. Further, in response to industry
requests or through the normal course of
WGQ activities, the proposals in this
NOPR would, if implemented, upgrade
current business practices and
communication standards by
specifically: (1) Updating the
Nominations Related Standards to allow
a Service Requester to determine which

rights of the contract its segmentation
nomination is using; (2) updating the
Quadrant EDM Related Standards to (i)
define a NAESB standard time frame for
information to be retained on a
pipeline’s Informational Postings
website, (ii) allow for processing
functions at the line item level on
Customer Activities websites and allow
for the use of icons and/or graphical
control elements for navigation and/or
processing functions, and (iii) make
minor revisions designed to add clarity,
update the minimum technical
characteristics to account for changes in
technology since the previous version
(Version 3.1) of the WGQ standards, and
update the minimum and suggested
operating systems and web browsers
that entities should support; (3)
updating multiple sets of standards to
remove references to the term
‘‘gigacalories’’ and add the term
‘‘gigajoules’’ as the standard quantity for
nominations, confirmations, and
scheduling in Mexico; and (4) revising
the NAESB WGQ data sets or other
technical implementation
documentation while not resulting in
modifications to the underlying
business practice standards. The
package of standards also includes
minor corrections. The implementation
of these data requirements will provide
additional transparency to Informational
Postings websites and will improve
communication standards. The
implementation of these standards and
regulations will promote the additional
efficiency and reliability of the natural
gas industries’ operations thereby
helping the Commission to carry out its
responsibilities under the NGA. In

31 FERC–549C covers Standards for Business
Practices of Interstate Natural Gas Pipelines.
32 The number of respondents is the number of
entities in which a change in burden from the
current standards to the proposed exists, not the
total number of entities from the current or
proposed standards that are applicable.
33 The estimated hourly cost (salary plus benefits)
provided in this section is based on the salary

figures for May 2019 posted by the Bureau of Labor
Statistics for the Utilities sector (available at https://
www.bls.gov/oes/current/naics3_221000.htm) and
scaled to reflect benefits using the relative
importance of employer costs for employee
compensation from June 2020 (available at https://
www.bls.gov/news.release/ecec.nr0.htm). The
hourly estimates for salary plus benefits are:
Computer and Information Systems Manager
(Occupation Code: 11–3021), $101.58.

Computer and Information Analysts (Occupation
Code: 15–1120(1221), $87.42.
Electrical Engineer (Occupation Code: 17–2071),
$70.19.
Legal (Occupation Code: 23–0000), $142.65.
The average hourly cost (salary plus benefits),
weighting all of these skill sets evenly, is $100.50.
We round it to $101/hour.

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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules
addition, the Commission’s Office of
Enforcement will use the data for
general industry oversight.
Internal Review: We have reviewed
the requirements pertaining to business
practices of interstate natural gas
pipelines and made a preliminary
determination that the proposed
revisions are necessary to establish a
more efficient and integrated pipeline
grid. These requirements conform to our
plan for efficient information collection,
communication, and management
within the natural gas pipeline
industries. We determined through our
internal review, that there is specific,
objective support for the burden
estimates associated with the
information requirements.
41. Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street NE,
Washington, DC 20426 [Attention: Ellen
Brown, Office of the Executive Director],
email: [email protected],
telephone: (202) 502–8663, fax: (202)
273–0873.
42. Comments concerning the
collection of information(s) and the
associated burden estimate(s), should be
sent to the contact listed above and to
the Office of Management and Budget,
Office of Information and Regulatory
Affairs, Washington, DC 20503
[Attention: Desk Officer for the Federal
Energy Regulatory Commission,
telephone: (202) 395–0710; fax: (202)
395–4718].

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VI. Environmental Analysis
43. 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.34 The actions that we
propose to take here fall within
categorical exclusions in the
Commission’s regulations for rules that
are clarifying, corrective, or procedural,
for information gathering, analysis, and
dissemination, and for rules regarding
sales, exchange, and transportation of
natural gas that require no construction
of facilities.35 Therefore, an
environmental review is unnecessary
and has not been prepared as part of this
NOPR.
34 Regulations Implementing the Nat’l Envt’l Pol’y
Act, Order No. 486, FERC Stats. & Regs. ¶ 30,783
(1987).
35 See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), and
380.4(a)(27) (2020).

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VII. Regulatory Flexibility Act
44. The Regulatory Flexibility Act of
1980 (RFA) 36 generally requires a
description and analysis of proposed
rules that will have significant
economic impact on a substantial
number of small entities. The
Commission is not required to make
such analysis if proposed regulations
would not have such an effect.
45. Approximately 178 interstate
natural gas pipelines, both large and
small, are potential respondents subject
to the requirements adopted by this
rule. Most of the natural gas pipelines
regulated by the Commission do not fall
within the RFA’s definition of a small
entity,37 which is currently defined for
natural gas pipelines as a company that,
in combination with its affiliates, has
total annual receipts of $30 million or
less.38 For the year 2019, only 11
companies not affiliated with larger
companies had annual revenues in
combination with its affiliates of $30
million or less and therefore could be
considered a small entity under the
RFA. This represents about six percent
of the total universe of potential
respondents that may have a significant
burden imposed on them. We estimate
that the one-time implementation cost
of the proposals in this NOPR is
$1,977,580 (or $11,110 per entity,
regardless of entity size).39 We do not
consider the estimated $11,110 impact
per entity to be significant. Moreover,
these requirements are designed to
benefit all customers, including small
businesses that must comply with them.
Further, as noted above, adoption of
consensus standards helps ensure the
reasonableness of the standards by
requiring that the standards draw
support from a broad spectrum of
industry participants representing all
segments of the industry. Because of
that representation and the fact that
industry conducts business under these
standards, the Commission’s regulations
should reflect those standards that have
the widest possible support.
46. Accordingly, pursuant to section
605(b) of the RFA,40 the regulations
36 5

U.S.C. 601–612.
5 U.S.C. 601(3) citing section 3 of the Small
Business Act (SBA), 15 U.S.C. 623. Section 3 of the
SBA defines a ‘‘small business concern’’ as a
business which is independently owned and
operated, and which is not dominant in its field of
operation (2019).
38 13 CFR 121.201 (Subsector 486-Pipeline
Transportation; North American Industry
Classification System code 486210; Pipeline
Transportation of Natural Gas) (2020). ‘‘Annual
Receipts’’ are total income plus cost of goods sold.
39 This number is derived by dividing the total
cost figure by the number of respondents.
$1,977,580/178 = $11,110.
40 5 U.S.C. 605(b).
37 See

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proposed herein should not have a
significant economic impact on a
substantial number of small entities.
VIII. Comment Procedures
47. We invite interested persons to
submit comments on the matters and
issues proposed in this notice to be
adopted, including any related matters
or alternative proposals that
commenters may wish to discuss.
Comments are due April 19, 2021.
Comments must refer to Docket No.
RM96–1–042, and must include the
commenter’s name, the organization
they represent (if applicable), and their
address in their comments.
48. We encourage comments to be
filed electronically via the eFiling link
on the Commission’s website at https://
www.ferc.gov/. We accept most standard
word processing formats. Documents
created electronically using word
processing software should be filed in
native applications or print-to-PDF
format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
49. Commenters that are not able to
file comments electronically may mail
or hand-deliver an original of their
comments. Mailed comments should be
addressed to: Federal Energy Regulatory
Commission, Secretary of the
Commission, 888 First Street NE,
Washington, DC 20426. Hand-delivered
comments should be delivered to:
Federal Energy Regulatory Commission,
12225 Wilkins Avenue, Rockville,
Maryland 20852.
50. 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
on this proposal are not required to
serve copies of their comments on other
commenters.
IX. Document Availability
51. In addition to publishing the full
text of this document in the Federal
Register, we provide 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/). At
this time, we have suspended access to
the Commission’s Public Reference
Room due to the President’s March 13,
2020 proclamation declaring a National
Emergency concerning the Novel
Coronavirus Disease (COVID–19).
52. From the Commission’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.

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To access this document in eLibrary,
type the docket number excluding the
last three digits of this document in the
docket number field.
53. User assistance is available for
eLibrary and our website during normal
business hours from the Commission’s
Online Support at (202) 502–6652 (toll
free at 1–866–208–3676) or email at
[email protected], or the
Public Reference Room at (202) 502–
8371, TTY (202) 502–8659. Email the
Public Reference Room at
[email protected].
List of Subjects in 18 CFR Part 284
Natural gas.
By direction of the Commission.
Issued: February 18, 2021.
Kimberly D. Bose,
Secretary.

In consideration of the foregoing, we
propose to amend part 284, chapter I,
title 18, Code of Federal Regulations, as
follows.

[FR Doc. 2021–03797 Filed 3–4–21; 8:45 am]
BILLING CODE 6717–01–P

electronically via the Federal
eRulemaking Portal at http://
www.regulations.gov (IRS REG–111950–
20).
FOR FURTHER INFORMATION CONTACT:
Concerning proposed regulations
§§ 1.250(b)–1(b)(2) and 1.250(b)–2(e)(2),
Lorraine Rodriguez, (202) 317–6726;
concerning proposed regulations
§ 1.951A–3(e)(2), Jorge M. Oben and
Larry R. Pounders, (202) 317–6934;
concerning proposed regulations
§§ 1.1297–0 through 1.1297–2, 1.1298–0
and 1.1298–4, Christina G. Daniels at
(202) 317–6934; concerning proposed
regulations §§ 1.1297–4 through 1.1297–
6 (the PFIC insurance exception),
Josephine Firehock at (202) 317–4932;
concerning submissions of comments
and requests for a public hearing,
Regina L. Johnson at (202) 317–5177
(not toll-free numbers) or by sending an
email to [email protected]
(preferred).
SUPPLEMENTARY INFORMATION:

Background

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

DEPARTMENT OF THE TREASURY

26 CFR Part 1

The proposed regulations that are the
subject of this correction are under
sections 1297 and 1298 of the Internal
Revenue Code.

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

[REG–111950–20]

Need for Correction

RIN 1545–BP91

As published, the notice of proposed
regulations REG–111950–20 contains
errors that needs to be corrected.

■

Authority: 15 U.S.C. 717–717z, 3301–
3432; 42 U.S.C. 7101–7352; 43 U.S.C. 1331–
1356.

2. In § 284.12, revise paragraphs (a)(1)
and (2) to read as follows:

■

§ 284.12 Standards for pipeline business
operations and communications.

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(2) This incorporation by reference
was approved by the Director of the
Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. Copies
of these standards may be obtained from
the North American Energy Standards
Board, 801 Travis Street, Suite 1675,
Houston, TX 77002, Phone: (713) 356–
0060. NAESB’s website is at https://
www.naesb.org/. Copies may be
inspected at the Federal Energy
Regulatory Commission, Public
Reference Room, 888 First Street NE,
Washington, DC 20426, Phone: (202)
502–8371, https://www.ferc.gov/, or at
the National Archives and Records
Administration (NARA). For
information on the availability of this
material at NARA, email fedreg.legal@
nara.gov, or go to: https://
www.archives.gov/federal-register/cfr/
ibr-locations.html.

(a) Incorporation by reference of
NAESB standards. (1) An interstate
pipeline that transports gas under
subparts B or G of this part must comply
with the business practices and
electronic communications standards as
promulgated by the North American
Energy Standards Board, as
incorporated by reference in paragraphs
(a)(1)(i) through (vii) of this section.
(i) Additional Standards (Version 3.2,
August 15, 2020);
(ii) Nominations Related Standards
(Version 3.2, August 15, 2020);
(iii) Flowing Gas Related Standards
(Version 3.2, August 15, 2020);
(iv) Invoicing Related Standards
(Version 3.2, August 15, 2020);
(v) Quadrant Electronic Delivery
Mechanism Related Standards (Version
3.2, August 15, 2020);
(vi) Capacity Release Related
Standards (Version 3.2, August 15,
2020); and
(vii) internet Electronic Transport
Related Standards (Version 3.2, August
15, 2020).

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Internal Revenue Service

Guidance on Passive Foreign
Investment Companies and the
Treatment of Qualified Improvement
Property Under the Alternative
Depreciation System for Purposes of
Sections 250(b) and 951A(d);
Correction
Internal Revenue Service (IRS),
Treasury.
ACTION: Correction to a notice of
proposed rulemaking.
AGENCY:

This document contains a
correction to a notice of proposed
rulemaking (REG–111950–20) that was
published in the Federal Register on
January 15, 2021. The proposed
regulations regarding the determination
of whether a foreign corporation is
treated as a passive foreign investment
company (‘‘PFIC’’) for purposes of the
Internal Revenue Code (‘‘Code’’).
DATES: Written or electronic comments
and requests for a public hearing are
still being accepted and must be
received by April 14, 2021.
ADDRESSES: Send submissions to
Internal Revenue Service, CC: PA: LPD:
PR (REG–111950–20), Room 5205, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20044. Alternatively,
persons may submit comments
SUMMARY:

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Correction of Publication
Accordingly, the notice of proposed
rulemaking (REG–111950–20) that was
the subject of FR Doc. 2020–27003,
published at 86 FR 4582 (January 15,
2021), is corrected to read as follows:
1. On page 4589, the first column, the
twelfth line from the bottom of the last
full paragraph, the language
‘‘corporation)’’ is corrected to read
‘‘corporation’’).
2. On page 4592, the second column,
the tenth line from the top of the first
partial paragraph, the language
‘‘interests’’ is corrected to read
‘‘interests,’’.
§ 1.1297–1

[Corrected]

3. On page 4603, the first column, in
§ 1.1297–1, the second line and fourth
line from the bottom of paragraph
(c)(2)(ii)(A), the language ‘‘(I)’’ is
corrected to read‘‘(1); and ‘‘(II)’’ is
corrected to read ‘‘(2)’’.

■

§ 1.1297–4

[Corrected]

4. On page 4605, the third column, in
§ 1.1297–4, the second line from the
bottom of paragraph (f)(6)(i), the
language ‘‘statement’’ is corrected to
read ‘‘statement,’’.

■

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