FERC recently conceded some degree of latitutde on the issue ofaccess to information by shared employees, but it refused to budgeon other aspects of an earlier ruling dealing with the standards ofconduct governing the relationship between pipelines and theirmarketing affiliates.

In a rehearing order involving Natural Gas Pipeline Co. ofAmerica (NGPL) and Amoco Production, the Commission addressed theissue of whether non-operating employees were bound by Standards Eand F, which ban pipelines from relaying information to theirmarketing affiliates to give them a competitive edge overnon-affiliates [RP97-232]. Standard E prohibits a pipeline fromdisclosing to its affiliate any information it receives from anon-affiliated shipper, while Standard F requires pipelines toprovide information contemporaneously to all shippers on theirsystems – both affiliates and non-affiliates..

The central issue in the case was whether Standards E and Fapplied to non-operating employees, such as officers and members ofboards of directors, as well as to operating employees, which areinvolved in the day-to-day operation of the pipeline. Natural andthe Interstate Natural Gas Association of America (INGAA) arguedthat non-operating employees were exempted from the two standards,but FERC saw it differently.

“…Standards E and F are not limited in their scope tooperating employees,” the order said [RP97-232]. The Commissiondisagreed with Natural and INGAA that this was a new policy. FERC”has consistently applied Standards E and F to all employees,operating and non-operating, in reviewing pipelines’ standards ofconduct.”

The Commission, however, conceded that access to information byshared employees is not by itself tantamount to disclosure, as itearlier had ruled. “…[W]e will grant the petitioners’ request forclarification that access to such information does not constitutedisclosure,” it said, adding that a violation would occur only ifan employee actually “receives” the information.

“For example, if a non-operating senior executive officer has’access’ to non-affiliated shipper information in a pipeline’s filerooms, a Standard E violation is not triggered unless he or sheactually ‘receives’ [the] non-affiliated shipper’s information.”

In the event information is ‘received’ by a shared employee yetnot communicated to a marketing affiliate, the Commission ruledthis would constitute disclosure. In citing a Tenneco Gas courtdecision, FERC said the court ruled “because an individual cannotsegregate or divide the information in his or her head, theinformation is automatically disclosed to the marketing affiliate.”

Susan Parker

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.