[Federal Register Volume 62, Number 25 (Thursday, February 6, 1997)]
[Rules and Regulations]
[Pages 5521-5525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2931]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 284
[Docket No. RM96-1-003; Order No. 587-B]
Standards for Business Practices of Interstate Natural Gas
Pipelines
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Federal Energy Regulatory Commission is amending its open
access regulations by incorporating by reference standards promulgated
by the Gas Industry Standards Board (GISB). These standards require
interstate natural gas pipelines to conduct certain standardized
business transactions across the Internet according to protocols.
DATES: This rule is effective March 10, 1997.
The incorporation by reference of certain publications listed in
regulations is approved by the Director of the Federal Register as of
March 10, 1997.
Pipelines are to implement the Internet protocols beginning April
1, 1996, according to a staggered schedule established in Order No.
587, 61 FR 19211 (May 1, 1996).
ADDRESSES: Federal Energy Regulatory Commission, 888 First Street,
N.E., Washington DC, 20426.
FOR FURTHER INFORMATION CONTACT:
Michael Goldenberg, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street, NE, Washington, DC 20426,
(202) 208-2294
Marvin Rosenberg, Office of Economic Policy, Federal Energy Regulatory
Commission, 888 First Street, N.E., Washington, DC 20426, (202) 208-
1283
Kay Morice, Office of Pipeline Regulation, Federal Energy Regulatory
Commission, 888 First Street, N.E., Washington, DC 20426, (202) 208-
0507.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 2A, 888 First
Street, N.E., Washington DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing 202-208-1397 if dialing locally or 1-800-856-3920 if dialing
long distance. To access CIPS, set your communications software to
19200, 14400, 12000, 9600, 7200, 4800, 2400, or 1200 bps, full duplex,
no parity, 8 data bits and stop bit. The full text of this order will
be available on CIPS in ASCII and WordPerfect 5.1 format. CIPS user
assistance is available at 202-208-2474.
[[Page 5522]]
CIPS is also available on the Internet through the Fed World
system. Telnet software is required. To access CIPS via the Internet,
point your browser to the URL address: http://www.fedworld.gov and
select the ``Go to the FedWorld Telnet Site'' button. When your Telnet
software connects you, log on to the FedWorld system, scroll down and
select FedWorld by typing: 1 and at the command line and type: /go
FERC. FedWorld may also be accessed by Telnet at the address
fedworld.gov.
Finally, the complete text on diskette in WordPerfect format may be
purchased from the Commission's copy contractor, La Dorn Systems
Corporation. La Dorn Systems Corporation is also located in the Public
Reference Room at 888 First Street, N.E., Washington, DC 20426.
Before Commissioners: Elizabeth Anne Moler, Chair; Vicky A.
Bailey, James J. Hoecker, William L. Massey, and Donald F. Santa,
Jr.
Final Rule
January 30, 1997.
The Federal Energy Regulatory Commission (Commission) is amending
its open access regulations to adopt standards by which interstate
natural gas pipelines will conduct business transactions with their
business partners over the Internet. The regulations incorporate by
reference standards promulgated by the Gas Industry Standards Board
(GISB), a private standards organization devoted to developing
standards representing a consensus of the interests in the natural gas
industry.
I. Background
In Order No. 587,1 the Commission incorporated by reference
consensus standards developed by GISB covering certain industry
business practices--Nominations, Flowing Gas, Invoicing, and Capacity
Release--as well as GISB datasets in Electronic Data Interchange ASC
X12 (EDI) format that detailed the data requirements needed to conduct
business transactions in these areas. These standards are to be
implemented by the pipelines according to a staggered compliance
schedule from April to June 1997.
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\1\ Standards For Business Practices Of Interstate Natural Gas
Pipelines, Order No. 587, 61 FR 39053 (Jul. 26, 1996), III FERC
Stats. & Regs. Regulations Preambles para. 31,039 (Jul. 17, 1996),
reh'g denied, 61 FR 55208 (Oct. 25, 1996), 77 FERC para. 61,061
(Oct. 21, 1996).
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In Order No. 587, the Commission did not adopt GISB standards
governing the method for transmitting the business transaction datasets
(the electronic delivery mechanism (EDM)) because GISB was still in the
process of testing its standards governing Internet communications. The
Commission anticipated that the EDM standards for the business
transactions would be implemented in April through June 1997 in
conjunction with the implementation of the business practices
standards.
After a successful pilot test, GISB filed, on September 30, 1996,
consensus EDM standards for conducting the standardized business
transactions across the Internet. It also included in the filing
additional standards for providing other information using the Internet
and additional business practice standards. For communications
involving business transactions, the GISB standards would require
trading partners (pipelines and their customers as well as others
communicating with pipelines, such as producers or point operators that
confirm nominations) to maintain Internet servers and Internet
addresses and to exchange files formatted in ASC X12 using HTTP (hyper-
text transfer protocol) as the Internet protocol (hereinafter Internet
server model).2
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\2\ See Standards 4.3.1-4.3.4 and 4.3.7-4.3.15.
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On November 13, 1996, the Commission issued a Notice of Proposed
Rulemaking (NOPR) 3 proposing to adopt all the standards GISB
submitted on September 30, 1996.4 The Commission proposed to
follow the implementation schedule suggested by GISB. Under this
schedule, the standards for Internet communication of business
transactions would be implemented according to the staggered schedule
adopted in Order No. 587, beginning April 1, 1997. With respect to the
other Internet standards and the additional business practice
standards, GISB proposed a March 1997 final rule, with implementation
of the additional Internet standards in August of 1997 and pipeline
tariff filings for the business practices standards to be made in May,
June, and July of 1997, with implementation in November 1997.
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\3\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Notice of Proposed Rulemaking, 61 FR 58790 (Nov. 19,
1996), IV FERC Stats. & Regs. Proposed Regulations para. 35,521
(Nov. 13, 1996).
\4\ The NOPR also gave notice of a staff technical conference to
discuss the future direction of standardization and disputed issues.
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Thirteen comments were filed on the NOPR from Natural Gas Supply
Association, Williams Interstate Natural Gas System (WINGS), Burlington
Resources Oil & Gas Company, Natural Gas Clearinghouse, Conoco, Inc.,
and Vastar Gas Marketing Inc.(filing jointly) (NGC/Conoco/Vastar),
Pacific Gas and Electric Company (PG&E), Williston Basin Interstate
Pipeline Company (Williston Basin), Altra Energy Technologies, L.L.C.
(Altra), Gas Industry Standards Board (GISB), NorAm Gas Transmission
Company and Mississippi River Transmission Corporation (filing jointly)
(NorAm), ANR Pipeline Company and Colorado Interstate Gas Pipeline
Company (filing jointly), Enron Capital & Trade Resources Corp.,
Southern California Edison Company (SoCal Edison), and the PanEnergy
Companies.
II. Discussion
The Commission is incorporating by reference the GISB Internet
server standards for conducting business transactions. Pipelines will
be required to implement these standards according to the April through
June schedule for implementing the associated business practice
standards. Since the additional Internet standards and business
practice standards are not to be implemented as quickly, the Commission
will address these standards in a later order.
The industry and GISB have developed a communication infrastructure
that is at the forefront of the use of Internet-based protocols to
conduct business transactions.5 The protocols adopted in this rule
promise to provide the gas industry with the ability to use automated
computer-to-computer communications to more efficiently conduct crucial
and time-sensitive business transactions, such as nominating and
confirming daily gas flows, as well as invoicing and payment. The
impact of these standards is not limited to the Commission-regulated
aspect of communication between customers and pipelines. These
protocols also carry the potential for enhancing the effectiveness of
communication between all members of the gas industry, including
confirmations between pipelines and upstream point operators,
confirmations among upstream and downstream pipelines, as well as
business transactions involving local distribution companies,
marketers, and producers.
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\5\ See EDI Industry Poised to Invade the Internet, EDI News,
January 6, 1997 (Vol. 11, No. 1); Dave Kosiur, Electronic Commerce
Edges Closer, PCWeek On Line, Oct. 10, 1996, http://www.pcweek.com/
@netweek/1007/07set.html (Jan.9, 1997).
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Under the GISB Internet server standards adopted in this rule,
pipelines and their trading partners would each maintain an Internet
server and an Internet address. Files would be transmitted, when ready,
to the trading partners' Internet address and these files will be
received and processed automatically by the recipient's server,
[[Page 5523]]
with a response sent to the sender indicating successful receipt or
identifying the nature of certain errors, such as the use of an
improper common code identifier.
WINGS, SoCal Edison, and PG&E object to the adoption of the
Internet server approach, principally because of concerns about the
cost and difficulty to customers of establishing and operating an
Internet server. Instead, they recommend what they term a more
traditional Internet approach in which the pipeline would establish an
Internet World Wide Web page which the customer can access by
contracting with a traditional Internet Service Provider (ISP) and then
using a standard Internet browser, such as Netscape Navigator or
Microsoft Internet Explorer (hereinafter Web Browser model).6
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\6\ This model is similar to the GISB model for disseminating
additional information over the Internet, such as pipeline tariffs,
affiliated marketer information, and an index of customers.
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Under the Web browser model, like the Internet server approach, a
customer can send a document to the pipeline's Internet server. Unlike
the Internet server approach, however, the customer's computer would
not automatically receive responsive documents or confirmations from
the pipeline. The customer would have to reconnect to the pipeline's
Web page to retrieve all confirmations and responses from the pipeline.
SoCal Edison maintains that the Web browser model has the capability of
transmitting gas transactions in a standardized file format using the
normal Internet file transfer protocol (FTP). It further maintains that
the Web browser model has the capability for on-line data entry and
validation of time critical nominations, like the pipeline's current
Electronic Bulletin Boards (EBBs).
SoCal Edison further states that, based on its estimates, the
minimum cost of using the Internet server model is $18,000 per year
(under a contract with a ``specialized'' third-party service provider)
compared with a yearly cost of $240 for the Web browser model. SoCal
maintains that even if the Internet server model is adopted for users
capable of using the ASC X12 formats and an Internet server, a lower-
cost interactive solution, such as the Web browser model, also should
be provided.
GISB, Altra, Williston Basin, and NGC/Conoco/Vastar support the
consensus agreement to use the Internet server approach as the
appropriate model for time-sensitive transactional data. The Internet
server approach, they contend, allows for automatic transmittal and
reception of documents, which will facilitate computer-to-computer
exchanges of information. They argue that the Web browser approach is
more appropriate for one-way communication where customers wish to
gather information from the pipeline, without having to return
information, than it is for the two-way communication of business
transactions where both parties have to send and receive data. They
regard the Web browser approach as more appropriate for transmitting
non-transactional data where humans seek to obtain information from
computers, for example, if a person sought information about a tariff
provision and needed to search the pipeline's electronic tariff to find
the information. Altra emphasizes that the time-stamping feature of the
Internet server approach provides significant benefits to the industry,
because it enables the sender of a document to know that the document
has been received by the server of the other party to the transaction
and has not been lost in transmission. It also maintains that the GISB
Future Technology Task Force considered using the FTP protocol, but
concluded it presented numerous problems.
Altra maintains the capital and operating cost of the Internet
server approach for the pipelines' customers will vary depending on
each customer's needs, the size of its business, and the number of
pipelines with which it deals. GISB points out that there are many
ISP's who provide everything from basic worldwide web access to
complete Internet server sites at reasonable prices. Altra and GISB
further maintain that many customers can effectively share the cost
(and minimize individual outlays) by using a third-party service
provider to maintain the Internet server.
Williston Basin is concerned that its shippers may not be willing
to make the investment to support the Internet server model if they
perceive that another, different model may be developed in the future.
It, therefore, requests a definitive decision and implementation
schedule so pipelines, shippers, and third-party service providers have
certainty in the process.
GISB finally points out that none of these standards have yet been
implemented and suggests that until they are, no assessment can be made
of any need for changes or modifications. It urges that the standards
be given a chance to accomplish their intended goal of helping to
create a seamless national marketplace for natural gas.
The Commission is adopting the consensus view of the industry that
the Internet server model is needed to provide customers with a
framework for conducting these business transactions efficiently. For
example, each standardized business transaction requires parties to
exchange numerous files, including ``Quick Response'' transmissions at
varying points in the process to verify receipt and errors in
communication. The Internet server model provides that these multiple
files can be sent and received automatically by computers at both ends.
It further enables the party sending the document to obtain a time
stamp establishing whether the transmission has been received and
whether there are any errors. If a problem occurs, the sender can
resubmit the information. In addition, the model provides customers
with significant flexibility to manage their gas business in the way
that most effectively meets their needs. Customers (or third-party
providers) will be receiving transaction information directly from the
pipelines when the information is ready and can program their computers
to process such information automatically.
In contrast, the Web browser approach advocated by WINGS, PG&E, and
SoCal Edison does not provide the same level of functionality as the
Internet server model. The Web browser model does not support automatic
computer-to-computer exchanges; an employee of the customer must access
the pipeline's home page in order to obtain each quick response and
confirmation document. There also would be no record that the recipient
has received a transmitted document.
As GISB and Altra point out, the Internet server model also
provides a standardized platform which computer software developers and
third-party service providers can use to provide customers, including
smaller customers, with the interface that meets their business needs.
Third-party service providers should enjoy scale economies in
establishing Internet servers, which would reduce the costs to smaller
customers. According to SoCal Edison's cost estimates, for instance,
the use of a specialized third-party service provider would be the most
cost-effective way for it to use the Internet server approach, with an
estimated cost of $1,500/month. Such cost estimates prior to
implementation are necessarily tentative, since the market has not yet
had a full opportunity to develop competing products and interfaces to
meet market demand. However, even if the Internet server model
ultimately costs more than the Web browser approach advocated by WINGS,
PG&E, and SoCal Edison, the Internet server model provides benefits not
available
[[Page 5524]]
from the Web browser approach, such as permitting direct computer-to-
computer communications and automatic processing of information as well
as reducing the inefficiency, and cost, to shippers of having their
personnel access the pipeline's home page each time they need to check
on whether the pipeline has sent a quick response, confirmation, or
other information.
Whether changes to the Internet server model or a lower-cost,
lower-functionality model for transactional exchanges may be needed in
the future can be determined only after the Internet server model has
been implemented and GISB, the industry, and the Commission have the
opportunity to evaluate its performance. Even if it is ultimately
determined that a lower-cost model is needed for smaller customers, an
investment in the Internet server model is still needed to provide
computer-to-computer communication, which appears necessary to provide
an efficient communication system. Moreover, since the Internet server
model uses many of the same protocols as the Web browser model, the
investment and learning involved in developing the Internet server
approach also would be valuable in the development of additional
Internet approaches. In the meantime, the Commission has not eliminated
the pipeline EBBs, so that customers can continue using this means of
transacting business while the computer services market is developing.
NorAm requests consideration of three issues as the transition from
EBBs to the Internet is occurring. First, although GISB has seemingly
resolved data security and transmission reliability concerns with the
Internet, NorAm contends the Commission should consider providing
pipelines protection from negligence claims based on unreliability or
interference with communications. Second, since the Internet is a
third-party controlled media, NorAm believes customers should still be
able to communicate using proprietary pipeline EBBs, the costs of
which, it asserts, should remain in the pipeline's cost-of-service.
Third, as a related matter, NorAm asks that the Commission be sensitive
to the costs and the technological newness of the Internet server model
and not require customers to incur large costs for implementing the
Internet server model. On the other hand, Altra expresses a long-run
concern that if pipelines continue to provide non-standard electronic
services as a cost-of-service item, third-party vendors will be at a
competitive disadvantage.
The Commission sees no need to provide unspecified protection from
liability since NorAm has not shown that existing negligence principles
are inadequate to deal with transmission problems. Indeed, one of the
benefits of the Internet server approach is that it should provide
notice whether a transmission has been received.
Both the Internet and the telephone system used to connect EBBs are
third-party networks, and both systems require computers on both sides
of the transaction to function properly, with the more likely breakdown
occurring on the computer systems at either end than on the network in
between.7 Thus, pipelines and their customers should consider, if
they have not already, fail-safe procedures to deal with such problems.
Moreover, the Commission is not, at this point, proposing to eliminate
the pipeline EBBs, so that customers will still have the ability to use
these systems while the Internet mechanism is fully implemented.
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\7\ What is now termed the Internet initially was conceived
during the cold war as a communication method to maintain continuing
transmission capability in the event of nuclear war. The concept was
to replace the then current point-to-point networks, where each site
on the network was dependent on the link before it, with a web
network, where information could find its own path even if a section
was destroyed. See e.g., Life on the Internet, The Online Edition of
the PBS Series About the People Who are Shaping the Internet, Net
History, http://www.pbs.org.internet/history (Jan. 7, 1997). The
more likely eventuality, therefore, is an individual problem such as
a pipeline or customer's Internet service provider going down, just
as in the current EBB system a pipeline or customer's EBB computer
can malfunction.
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III. Implementation Procedures
Pipelines are required to implement the standards adopted in this
final rule according to the staggered schedule set forth in Order No.
587, beginning on April 1, 1997.8 When a pipeline files its tariff
sheets (as distinct from its pro forma tariff sheets) under section
154.203 of the Commission's regulations to implement Order No. 587, it
must incorporate by reference into its tariff the Electronic Delivery
Mechanism Standards adopted in this rule. A pipeline must further
conform the definitions and its personnel contacts in its tariff to
reflect any changes or additions related to the adoption of these
standards. In complying with the requirements of section 154.203 of the
Commission's regulations, a pipeline must file a marked version of the
tariff sheets (under section 154.201) identifying all changes to the
pro forma tariff sheets previously filed. In addition, the pipeline
must file, as part of its statement of the nature, the reasons, and the
basis for the filing, a complete table showing for each GISB standard
adopted by the Commission, in Order No. 587 and in this rule, the
complying tariff sheet number, and an explanatory statement, if
necessary, describing any reasons for deviations from or changes to
each GISB standard. Any pipeline seeking waiver or extension of the
requirements of this rule is required to file its request within 30
days of the issuance of this rule.
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\8\ 61 FR at 39066-67; III FERC Stats. & Regs. Preambles at
30,076-78.
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IV. Regulatory Flexibility Act Certification
The Regulatory Flexibility Act of 1980 (RFA) 9 generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The regulations adopted in this rule impose requirements only on
interstate pipelines, which are not small businesses, and, these
requirements are, in fact, designed to reduce the difficulty of dealing
with pipelines by all customers, including small businesses.
Accordingly, pursuant to section 605(b) of the RFA, the Commission
hereby certifies that the regulations adopted in this rule will not
have a significant adverse impact on a substantial number of small
entities.
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\9\ 5 U.S.C. 601-612.
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V. Environmental Analysis
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.10 The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.11 The action taken here falls within categorical
exclusions in the Commission's regulations for rules that are
clarifying, corrective, or procedural, for information gathering,
analysis, and dissemination, and for sales, exchange, and
transportation of natural gas that requires no construction of
facilities.12 Therefore, an environmental assessment is
unnecessary and has not been prepared in this rulemaking.
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\10\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. Preambles 1986-1990 para. 30,783 (1987).
\11\ 18 CFR 380.4.
\12\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).
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VI. Information Collection Statement
OMB's regulations in 5 CFR 1320.11 require that it approve certain
reporting and recordkeeping requirements
[[Page 5525]]
(collections of information) imposed by an agency. Upon approval of a
collection of information, OMB shall assign an OMB control number and
an expiration date. Respondents subject to the filing requirements of
this Rule shall not be penalized for failing to respond to these
collections of information unless the collections of information
display valid OMB control numbers.
The cost estimates for complying with the Internet protocols for
transmission of the business practice standards were included in the
FERC-549C information collection costs estimates in Order No. 587. OMB
has approved the information collection under FERC-549C, Standards for
Business Practices of Interstate Natural Gas Pipelines, (OMB Control
No. 1902-0174), through September 30, 1999.
The adoption of the Internet protocols by this rule will create a
more efficient communication medium for conducting business with
interstate pipelines and reduce the burdens created by the disparity in
log-on and other procedures among the pipeline's EBBs. The information
collection requirements in this final rule will be reported directly to
the industry users and later be subject to audit by the Commission. The
implementation of these data requirements will help the Commission
carry out its responsibilities under the Natural Gas Act and coincide
with the current regulatory environment which the Commission instituted
under Order No. 636 and the restructuring of the natural gas industry.
Interested persons may obtain information on the reporting
requirements by contacting the Federal Energy Regulatory Commission,
888 First Street N.E., Washington, DC 20426 [Attention: Michael Miller,
Information Services Division, (202) 208-1415] or the Office of
Management and Budget [Attention: Desk Officer for the Federal Energy
Regulatory Commission (202) 395-3087].
VII. Effective Date
These regulations are effective March 10, 1997. The Commission has
determined, with the concurrence of the Administrator of the Office of
Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996. The incorporation by
reference of certain publications listed in the regulations is approved
by the Director of the Federal Register as of March 10, 1997.
List of Subjects in 18 CFR Part 284
Continental shelf, Incorporation by reference, Natural gas,
Reporting and recordkeeping requirements.
By the Commission.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission amends Part 284,
Chapter I, Title 18, Code of Federal Regulations, as set forth below.
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:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C 7101-7532; 43
U.S.C. 1331-1356.
2. In Sec. 284.10, paragraph(b)(1)(iv) is redesignated (b)(1)(v),
and new paragraph (b)(1)(iv) is added to read as follows:
Sec. 284.10 Standards for Pipeline Business Operations and
Communications.
* * * * *
(b) * * *
(1) * * *
(iv) Electronic Delivery Mechanism Related Standards, Principles
4.1.1 through 4.1.15 and Standards 4.3.1 through 4.3.4 and 4.3.7
through 4.3.15 (Version 1.0, October 24, 1996); and
* * * * *
[FR Doc. 97-2931 Filed 2-5-97; 8:45 am]
BILLING CODE 6717-01-P