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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 4, 5, 16, 33, 34, 35, 157, 348, 375, 385 and 388

[Docket No. RM12-2-000; Order No. 769]

Filing of Privileged Materials and Answers to Motions

AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
SUMMARY: In this Final Rule, the Commission revises its rules and regulations relating to the filing of privileged material in keeping with the Commission's efforts to comply with the Paperwork Reduction Act, the Government Paperwork Elimination Act and the E-Government Act of 2002. First, the Commission establishes two categories of privileged material for filing purposes: Privileged material and critical energy infrastructure information. This revision will expand the ability to file electronically by permitting electronic filing of materials subject to Administrative Law Judge protective orders as appropriate. Second, the Commission revises its regulations to provide a single set of uniform procedures for filing privileged materials. These revisions continue the Commission's effort to reassess and streamline its regulations to ensure that they are efficient, effective and up to date.

Also, the Commission revises Rule 213(d) of its Rules of Practice and Procedure, which establishes the timeline for filing answers to motions, to clarify that the standard fifteen day reply time will not apply to motions requesting an extension of time or a shortened time period for action. Instead, the Commission proposes to set the time for responding to such motions at five days, unless another time period is established by notice based on the circumstances.

DATES: Effective Date:This final rule is effective December 28, 2012.
FOR FURTHER INFORMATION CONTACT:

Christopher Cook (Technology/Procedural Information), Office of the Executive Director, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, Telephone: (202) 502-8102. Richard M. Wartchow (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, Telephone: (202) 502-8744.

SUPPLEMENTARY INFORMATION: Order No. 769 Final Rule Table of Contents Paragraph Nos. I. Background 3 A. Electronic Filing Procedures 3 B. Notice of Proposed Rulemaking and Comments 9 II. Regulations for Filing Privileged Materials 12 A. Designation of Confidential Materials as “Privileged” 20 1. Comments 21 2. Commission Response 22 B. Establishing Separate Regulations Governing CEII Information 24 C. Form and Use of Protective Agreement 29 1. Comments 30 2. Commission Response 36 D. Consistency With Discovery Procedures Used in Administrative Proceedings 44 1. Comments 45 2. Commission Response 46 E. Procedures for Distributing Privileged Information 48 1. Comments 49 2. Commission Response 55 F. NERC Notices of Penalty and Other Communications 61 1. Comments 61 2. Commission Response 64 G. Electronic Filing Procedures 66 H. Prospective Effect 68 I. Changes to Text of Proposed Regulations 70 1. Changes Adopted 71 2. Proposed Changes Not Accepted 77 III. Revised Time for Filing Answers to Motions for Extensions of Time or Expedited Action Dates 81 1. Comments 83 2. Commission Response 85 IV. Information Collection Statement 88 V. Environmental Analysis 91 VI. Regulatory Flexibility Act 92 VII. Document Availability 94 VIII. Effective Date and Congressional Notification 97 List of Subjects Regulatory Text Order No. 769 Final Rule Issued October 18, 2012.

1. In this Final Rule, the Commission revises its rules and regulations relating to the filing of privileged material in keeping with the Commission's efforts to comply with the Paperwork Reduction Act, the Government Paperwork Elimination Act and the E-Government Act of 2002. First, the Commission establishes two categories of privileged material for filing purposes: privileged material and critical energy infrastructure information (CEII). This revision will expand the ability to file electronically by permitting electronic filing of materials subject to Administrative Law Judge (ALJ) protective orders as appropriate. Second, the Commission revises its regulations to provide a single set of uniform procedures for filing privileged materials. These revisions continue the Commission's effort to reassess and streamline its regulations to ensure that they are efficient, effective and up to date.

2. Also, the Commission revises Rule 213(d) of its Rules of Practice and Procedure, which establishes the timeline for filing answers to motions, to clarify that the standard fifteen day reply time will not apply to motions requesting an extension of time or a shortened time period for action. Instead, the Commission proposes to set the time for responding to such motions at five days, unless another time period is established by notice based on the circumstances.

I. Background A. Electronic Filing Procedures

3. In 2000, the Commission first permitted filers to use the Internet to submit documents to the Commission.1 Such submissions were limited to categories of documents specified by the Secretary of the Commission (Secretary), with the intention of gradually expanding the range of eligible documents.2 In 2007, the Commission implemented eFiling 7.0 which permitted a much broader range of documents to be submitted through the eFiling interface.3 In 2008, the Commission, in collaboration with the wholesale electric and gas quadrants of the North American Energy Standards Board and representatives from the Association of Oil Pipelines, implemented a set of standards to be used by companies in electronically filing tariff and tariff-related documents at the Commission.4 Under the Commission's regulations, only “qualified documents” may be filed via the Internet, and the Secretary is authorized to specify which documents are qualified and to issue filing instructions.5 A list of qualified documents is published on the Commission's Web site.6

1 Electronic Filing of Documents,Order No. 619, 65 FR 57088 (Sept. 21, 2000), FERC Stats. & Regs. ¶ 31,107 (2000).

2 SeeRule 2003(c) of the Commission's Rules of Practice and Procedure, 18 CFR 385.2003(c).

3 Filing Via the Internet,Order No. 703, FERC Stats. & Regs. ¶ 31,259 (2007) (amending Rule 2003(c)).

4 Electronic Tariff Filings,Order No. 714, FERC Stats. & Regs. ¶ 31,276 (2008).

5Rule 2003(c), 18 CFR 385.2003(c); Rule 2003(c)(1)(ii), 18 CFR 385.2003(c)(1)(ii);see http://www.ferc.gov/docs-filing/efiling/user-guide.asp.

6 See http://www.ferc.gov/docs-filing/efiling/docs-efiled.asp.

4. The eFiling system plays an important role in the Commission's efforts to comply with the Government Paperwork Elimination Act, which requires that agencies provide the option to submit information electronically, when practicable, as a substitute for paper.7 Users of the Commission's eFiling system and related activities must register electronically through the Commission's eRegistration system.8 Filing via the Internet is optional for eligible documents.9 The eFiling system now is receiving a substantial majority of all documents filed at the Commission. The system is accessible through the Commission's Web site athttp://www.ferc.gov/docs-filing/efiling.asp.

7Public Law 105-277, Sec. 1702-1704 (1998);seeOMB Circular A-130 Paragraph 8.a.1(k).

818 CFR 390.1 and 18 CFR 390.2.

9Rule 2001(a) of the Commission's Rules of Practice and Procedure, 18 CFR 385.2001(a).

5. [Paragraph blank]

6. Currently, the Commission accepts through electronic filing all documents, including privileged material and CEII,10 except for documents submitted pursuant to an ALJ's protective order and some forms.11 The Commission's current procedures for submitting materials subject to ALJ protective orders require filers to submit an original copy of the document in hard copy or on electronic media, along with the requisite number of copies, pursuant to section 388.112 of the Commission's regulations. While the Commission permits electronic filing of documents subject to a claim of privilege not subject to an ALJ protective order, the Commission currently does not have a standard set of procedures for submitting such documents.

10 See Critical Energy Infrastructure Information,Order No. 630, FERC Stats. & Regs. ¶ 31,140,order on reh'g,Order No. 630-A, FERC Stats. & Regs. ¶ 31,147, at P 65 (2003) (providing that privileged material and CEII may be filed under 18 CFR 388.112 on electronic media—including compact discs, computer diskettes, and tapes—and noting that the Commission would accept non-public documents through its electronic filing process at some point in the future).

11Order No. 703, FERC Stats. & Regs. ¶ 31,259 at P 9. The following are submitted through eForms: FERC Form No. 1, FERC Form No. 2, FERC Form No. 2-A, FERC Form No. 3-Q, FERC Form No. 6, FERC Form No. 6-Q, FERC Form No. 60, FERC Form No. 714, and Electric Quarterly Reports. FERC Form 1-F is currently not included in eForms.

7. The Commission's current complaint and answer regulations (sections 385.206 and 385.213) contain detailed requirements for submitting privileged materials. Under these regulations, a party filing a complaint or an answer with privileged and/or confidential material is required to submit a request for privileged treatment of documents, a public redacted document, a privileged unredacted document, and a proposed form of protective agreement.12 The filer must serve the public, redacted copy on appropriate parties and other entities required to be served and must provide a copy of the non-public, unredacted material to any participant or entity whose name is on the official service list (compiled by the Secretary) and who has signed the protective agreement.

12 See Astoria Generating Co., L.P.v.New York Independent System Operator, Inc.,136 FERC ¶ 61,155, at P 25 (2011) (Astoria). The Commission's filing requirements for CEII and privileged material are provided in the “Submission Guidelines” available via the eFiling link on the Commission's Web site athttp://www.ferc.gov.

8. In recent years, the Commission has been receiving a larger number of requests for privileged treatment of documents not associated withcomplaints or answers.13 The request for privileged treatment has in some cases delayed the ability of the Commission to process such filings because the Commission was required to issue special orders or notices to ensure that parties could obtain access to the privileged material they needed in order to be able to participate in the proceeding.14 Particularly, in cases involving statutory deadlines, such delays affect the ability of parties to submit timely, well informed comments, as well as the Commission's ability to process those comments.

13 See ANR Pipeline Co.,129 FERC ¶ 61,080 (2009);PPL Montana, LLC,113 FERC ¶ 61,231 (2005).

14 See West Deptford Energy, LLC,134 FERC ¶ 61,189 (2011) (denying request to limit parties' rights to see documents).See also PPL Montana, LLC,113 FERC ¶ 61,231 (2005);PJM Interconnection, L.L.C., Notice of Filing,Docket No. ER05-10-000 (May 6, 2005);PJM Interconnection, L.L.C., Notice of Filing,Docket No. ER04-539-002 (April 30, 2004).

B. Notice of Proposed Rulemaking and Comments

9. In its December 16, 2011 Notice of Proposed Rulemaking (NOPR), the Commission proposed to revise its regulations to address two outstanding concerns.15 First, the Commission proposed uniform procedures for filing privileged materials in any proceeding in which a right of intervention exists. The Commission proposed to (a) provide two categories of privileged material for filing purposes, namely categories for CEII and all other privileged materials, (b) set up uniform procedures for filing and accessing privileged materials in most proceedings with a right to intervene, based upon the current complaint/answer process in Rules 206 and 213,16 and (c) consolidate the Commission's regulations for submitting privileged materials in proposed section 388.112.

15 Filing of Privileged Materials and Answers to Motions,Notice of Proposed Rulemaking, 76 FR 80838 (Dec. 27, 2011) (NOPR), FERC Stats. & Regs. ¶ 32,685 (2011).

1618 CFR 385.206-.213.

10. Second, the Commission proposed to revise its answer regulations, Rule 213, to provide an opportunity for parties to file answers to requests for extension of the time to take action under the Commission's orders and regulations or seeking expedited action where the time to act on these requests may fall sooner than the standard 15 day answer date. To provide an opportunity for interested parties to respond and facilitate the Commission's response to such motions, the Commission proposed to shorten the answer period for these motions to five business days. In addition, the Commission proposed conforming revisions, in particular, revisions to the Secretary's delegated authority under 18 CFR 375.302(b), to clarify the Secretary's authority to address shortened answer periods for requests for extension of time, consistent with the delegated authority of other office directors.17

17 See, e.g.,18 CFR 375.307(b)(1)(ii).

11. In response to the NOPR, American Public Gas Association (APGA), Edison Electric Institute (EEI), Electric Power Supply Association (EPSA), Interstate Natural Gas Association (INGA), International Transmission Co. (ITC), MidAmerican Energy Holdings Company (MidAmerican), North American Electric Reliability Corp. (NERC), PJM Interconnection, L.L.C. and Transmission Dependent Utility Systems (TDU)18 submitted comments. EPSA and PJM support the Commission's proposal to consolidate and establish uniform procedures for filing privileged materials and establish two categories for filing purposes, citing efficient and easily implemented procedures to allow market participants to designate materials as confidential and provide assurance that commercially sensitive and other confidential information will be safe from inadvertent disclosure, without the need for procedural orders. The Commission will address other concerns raised in the comments in the discussion below.

18Consisting of Arkansas Electric Coop. Corp., Golden Spread Electric Coop., Inc., Kansas Electric Power Coop., Inc., North Carolina Electric Membership Corp., Power South Energy Coop. and Seminole Electric Coop., Inc.

II. Regulations for Filing Privileged Materials

12. In this Final Rule, the Commission largely adopts the NOPR proposal to consolidate the Commission's regulations for filing privileged materials in section 388.112 and establish procedures in that section for distribution of such materials pursuant to a protective agreement in proceedings with a right to intervene. The protective agreement provisions largely parallel the existing regulations governing complaints and answers. These regulations will expand those procedures to cover other types of filings, such as statutory public utility or pipeline filings, and protests in those filings, containing confidential information. With these revisions, the Commission is taking advantage of the technologies available to the Commission to safely and securely accept materials by designating them as privileged, while providing for limited use of the materials in proceedings in which other parties must review the materials, by requiring the filing party to make them available pursuant to a protective agreement. In instances where the filer elects to electronically file materials with a protective agreement, submission of the identical hard copy files to the Commission will no longer be necessary. Permitting privileged materials to be submitted via eFiling will facilitate entry of the documents into the Commission's document repository, eLibrary, and will make them available to staff conducting analysis of the documents. Electronic filing will simplify retrieval of the documents in the course of the Commission's duties because the documents may be accessed via the Commission electronic archive in eLibrary, and Commission staff will no longer have to retrieve hard copy documents from offsite document storage. This will avoid the resulting delay in obtaining materials.

13. The consolidated filing procedures, as well as the protective agreement provisions for proceedings in which a right to intervene exists are included in revised section 388.112. Revised section 388.112(a)(1) adopts the Commission's long-standing usage of the term “privileged materials” to refer to information subject to an outstanding claim of exemption from mandatory disclosure under the Freedom of Information Act (FOIA), including CEII.19 The changes adopted in this rule retain the disclaimer that by permitting the filing of privileged materials and treating the documents for which a privilege is claimed as nonpublic, the Commission is not making a determination on the merits as to any claim of privilege or CEII status.20 Revised section 388.112(b) retains the requirement that a filer include a justification for privileged treatment in its filing, following the procedures posted on the Commission's Web site.21 Revised section 388.112(b)(1) requires a person requesting privileged or CEII treatment to designate the material as privileged or CEII in an electronic filing, or clearly indicate a request for privileged treatment on a paper filing, with headings indicating privileged andCEII material.22 Section 388.112(b)(1) states that a person requesting that a document filed with the Commission be treated as privileged or CEII must designate the document as privileged or CEII in making an electronic filing or clearly indicate a request for such treatment on a paper filing. The header of the first page of the cover sheet or transmittal letter and of the pages or portions of the document containing material for which privileged treatment is claimed should be clearly labeled in bold, capital lettering, indicating that it contains privileged, confidential and/or Critical Energy Infrastructure Information, as appropriate, and marked “DO NOT RELEASE.”

19 See also18 CFR 388.107(g); 18 CFR 388.113(c) (defining CEII as information that is exempt from mandatory disclosure under FOIA, providing that CEII be filed under section 388.112(b), and establishing specific procedures for making CEII available pursuant to a non-disclosure agreement).

20 Seerevised section 388.112(c)(i).

21 Seethe Submission Guidelines on the Documents and Filing link athttp://www.ferc.gov.

22This provision follows the Commission's existing practice for filing privileged materials in complaint proceedings in Rule 206, 18 CFR 385.206.

This means that, when a person files a document containing privileged material, that person must prominently indicate the fact that the filing contains privileged material, using an appropriate header on the cover page of the filing. In most cases, the header must be included on the accompanying filing letter or first page of a pleading or motion, and on the separate cover of any portion of the document that contains privileged material, such as an affidavit, exhibit, attachment, etc. In addition, the individual pages should be marked to indicate that the page contains privileged material, and the material identified on the page.

14. The revised regulations make special provision in proceedings featuring a right to intervene, including complaint, certificate, merger and rate filings, to facilitate review of the privileged materials by intervening parties. In such proceedings, a person filing privileged material is required to include a public, redacted copy of the filing and a proposed form of protective agreement and serve these items on the appropriate persons, that is, those required by Commission rule or order, or by law.23 The revised regulations provide that the filing person will thereafter provide a copy of the privileged materials to interveners that request the material and execute the protective agreement within five days or file an objection.24

23Revised section 388.112(b)(2). Under revised section 388.112(b)(2)(ii) service is to be made to persons to be served under Rule 206(c), 18 CFR 385.206(c) (complaints) or Rule 213, 18 CFR 385.213(c)(5) (answers), or otherwise as appropriate.

24Trial Staff, as identified in 18 CFR 385.102(b)(2), should be treated similarly to other persons making a request.

15. The Commission's Model Protective Order may be used as a guide for protective agreements, and the Commission's prior orders may also provide guidance as to how to address particular confidentiality concerns.25 The protective agreement should be self implementing and not require action or approval by the Commission. That is, persons wishing to rely on privileged material to support their filings should make provision for timely and adequate review of these materials under the protective agreement by intervening parties. While the Commission will resolve disputes to the extent necessary to carry out its statutory duties, the Commission intends that these standardized procedures will minimize the need for Commission action, with the accompanying delay in processing filings and applications subject to the Commission's jurisdiction. Where a person wishing to use privileged materials has reason to anticipate objection or difficulty in such disclosure and review, it may be appropriate to negotiate in advance with likely intervenors and attempt to resolve any disputes and come to agreement prior to making the filing. If acceptable terms for use of the material in a proceeding are negotiated prior to filing, the possibility of delay in processing the filing may be avoided.

25The Model Protective Order developed by the Commission's Office of Administrative Litigation is available athttp://www.ferc.gov/legal/admin-lit/model-protective-order.doc. See also Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities,Order No. 697, FERC Stats. & Regs. ¶ 31,252, at P 393 (2007).

16. The public version of the filing should be prepared with only the privileged information redacted to the extent practicable. If a document or filing contains both public and privileged material, the Commission expects filers to file a public version in which the privileged material has been removed or redacted thereby making the non-privileged portion of a document available for use by the Commission and participants in the proceeding.26

26 Astoria,136 FERC ¶ 61,155 at P 25 (requiring the submission of a public redacted copy of documents that contain both privileged and public information).

17. The revised regulations incorporate exceptions for landowner lists, certain cultural resources and liquefied natural gas facility (LNG) information, and proceedings set for hearing or settlement procedures in accordance with the Commission's Rules of Practice and Procedure.27 Thus, filers are not automatically required to provide intervenors with such material.28 The revised regulations retain procedures to address practical and confidentiality concerns with the submission of these materials, due to difficulty in copying and manipulating the material (i.e., maps or spreadsheets presenting voluminous data). To that end, the revised regulations retain provisions permitting the Commission to request full size maps in licensing applications under section 4.32(d) of its rules and regulations.29

27Under revised section 388.112(b)(2)(v), a participant's access to privileged material submitted in a trial-type hearing or for settlement purposes continues to be governed by the presiding official's protective order, according to policies established by the Commission's Office of Administrative Law Judges.SeePart 385 of the Commission's Rules of Practice and Procedure, Subpart D, 18 CFR 385.401,et seq.(hearing procedures), and 18 CFR 385.602,et seq.

28 Seerevised section 388.112(b)(2)(vi);see also Columbia Gas Transmission Corp.,128 FERC ¶ 61,050, at P 32 (2009) (finding insufficient need to disclose storage field maps and landowner lists).

2918 CFR 4.32(d). Landowner lists, cultural resource information required in sections 380.12(f) and 380.16(f), LNG information filed under sections 380.12(m) and (o), forms filed with the Commission and other documents not covered under proposed section 388.112 disclosure provisions may be sought pursuant to a FOIA or CEII request, in accordance with section 388.108 or section 388.113, as applicable.

18. Conforming changes were made throughout the Commission's regulations, including revisions to reflect that section 388.112 provides the procedures for filing privileged materials. To simplify and clarify the regulations, the Commission largely avoided directly referencing section 388.112. Since section 388.112 is intended to apply to all submittals and filings containing privileged or CEII material, it is unnecessary to specify the provision that applies in the many parts of the regulations that refer to filing of privileged materials.30 Consequently, we adopt the NOPR proposals to remove duplicate provisions for filing privileged materials and consolidate and adopt the proposed provisions relating to submittal of and access to privileged material in section 388.112, as revised and discussed below.31

30Changes to consolidate and supersede current procedures for filing privileged material are made to 18 CFR 33.8(a) and 33.9 (merger procedures), 18 CFR 35.37(f) (market based rate applications), 18 CFR 34.7 (filing requirements for application for approval of issuance of securities and assumptions of liabilities), 18 CFR 348.2(a) (oil pipeline market power application procedures), Rule 206, 18 CFR 385.206(e) (complaint procedures), and Rule 213, 18 CFR 385.213(c)(5) (answers). In addition, changes for clarity and to reflect the consolidation of privileged filing procedures are made to 18 CFR 4.39(e), 5.29(c), 16.8(g), 157.21(h), 157.34(d)(4), and 385.606(f) and (j), and changes are proposed to 18 CFR 388.113(d) (1) and (2) to reference procedures in paragraph (d)(4).

31In certain instances, we have kept the reference as a guide to practitioners in a particular Commission program.

19. The Commission responds to the comments filed in response to the NOPR below.

A. Designation of Confidential Materials as “Privileged”

20. In the NOPR, the Commission proposed to continue its long-standing practice of referring to confidential material as privileged.

1. Comments

21. A number of commenters object to the scope of the revised regulations, arguing that the privileged filing procedures, in particular the disclosure procedures developed for proceedings with a right to intervene, should not apply to materials eligible for common law evidentiary privileges such as attorney-client or work product privileges or CEII, which are subject to the disclosure procedures in 18 CFR 388.113.

2. Commission Response

22. The Commission disagrees with suggestions made by EEI and INGAA that use of the term privilege detracts from a filing party's ability to assert a common law evidentiary privilege. The Commission's power to withhold information from mandatory public disclosure is established by FOIA and presented in its rules and regulations, chiefly 18 CFR 388.107. The Commission's long-standing practice has been to refer to materials subject to an outstanding claim of exemption from mandatory disclosure as privileged.32 The Commission is not aware of any confusion arising out of use of this term with materials claimed to be subject to a common law privilege, confidential business trade secrets or CEII. These types of materials are already addressed in the Commission's FOIA regulations in the categories of materials for which a filer may request an exemption from mandatory disclosure under FOIA.33

32 E.g., Revision of Freedom of Information Act Rules,Order No. 488, FERC Stats & Regs ¶ 30,789 (1988) (establishing rules for requesting privileged treatment of documents claimed to be exempt from mandatory disclosure under FOIA).

33In particular, see 18 CFR 388.107(d) (incorporating FOIA exemption 4 for trade secrets and commercial or financial information obtained from a person that are privileged or confidential); 18 CFR 388.107(g) (records or information compiled for law enforcement purposes, including information that could interfere with enforcement proceedings or deprive a person of a right to fair trial, if produced).See also Cargill, Inc.v.Saltville Gas Storage Co., L.L.C.,99 FERC ¶ 61,043, at PP 12-13 (2002) (describing privileged treatment under section 388.107(d) and FOIA exemption 4);Critical Energy Infrastructure Information,Order No. 630, FERC Stats. & Regs. ¶ 31,140, at P 14,order on reh'g,Order No. 630-A, FERC Stats. & Regs. ¶ 31,147 (2003) (discussing privileged treatment for CEII under FOIA exemption 4, and exemption 2 for “records related solely to the internal personnel rules and practices of an agency” and exemption 7 for certain law enforcement information, including information which might jeopardize a person's life or safety, if disclosed).

23. The Commission likewise disagrees with EEI's and INGAA's suggestions that failure to make separate provision for information subject to a claim of common law privilege will create a risk of improper disclosure and loss of privilege.34 Indeed, as we stated in the NOPR, the term privileged material “is not intended to detract from any person's right to assert a common law privilege, e.g., attorney-client or attorney work product privilege.”35 More importantly, the Commission is not requiring any filing party to submit materials that are subject to an evidentiary privilege in support of their filings or any confidential material. The choice whether to include such materials is left to the person making the filing whether to rely on such materials subject to the protective agreement disclosure provisions established in this Final Rule.36 If a party is asked to produce information in an investigation or discovery request that it believes is subject to a common law privilege, the proper course of action is to file a notice of that party's objection to producing the document, identifying the document and the justification of the claim, to facilitate review of the claim of privilege in a confidential setting to determine if the claim is justified.37

34EEI at 5 (citingWest Deptford Energy, LLC,134 FERC ¶ 61,189 (2011) (seeking to protect sensitive market information);Mojave Pipeline Corp.,38 FERC ¶ 61,249, at 61,842 (1987) (discussing Commission's discovery regulations)). MidAmerican supports the EEI comments.

35NOPR, FERC Stats. & Regs. ¶ 32,685 at P 16, item g & n.40 (discussing proposed § 388.112(b)(2)(iv)).

36We note that filing information for which a common law privilege is asserted is likely to breach the confidentiality necessary to maintain the privilege.See generally McCormick on Evidence§ 93 (2007).

37 See, e.g., Independent Oil & Gas Association of West Virginia,21 FERC ¶ 63,030 (1983) (appointing special administrative law judge to performin camerareview of privileged status of discovery materials, to preserve confidentiality).

B. Establishing Separate Regulations Governing CEII Information

24. In the NOPR, the Commission proposed to retain its current regulations (sections 285.206, 385.213 and 388.112) under which privileged and CEII information are subject to the same requirements with respect to disclosure.

25. EEI contends that CEII should be a separate category subject to separate disclosure procedures, as provided for in 18 CFR 388.113.

26. We do not find that using the same regulatory framework for “privileged materials” and “CEII” in section 388.112 will cloud the procedures in 18 CFR 388.113 for handling CEII or that continuation of these procedures will not provide adequate protection for CEII. The Commission's regulations specify that to qualify as CEII, the material must be “exempt from mandatory disclosure under the Freedom of Information Act.”38 Thus, CEII is already a subset of privileged material under the Commission's regulations. Any party relying on CEII information in a filing needs to be prepared to provide that information to intervenors that need the information to understand the filing.

3818 CFR 388.113(c)(1).

27. We also disagree with EEI that CEII should be treated separately and distributed within a Commission proceeding under procedures modeled after the current CEII procedures in 18 CFR 388.113, providing for review of privilege requests with a determination.39 A filing party that has reason to question whether a party has a legitimate need to review information in a Commission proceeding may file an objection to disclosure to that person under section 388.112(b)(2)(iii)),40 which is equivalent to the existing and retained provision for notice of FOIA requests in section 388.112(d).41

39EEI at 4.

40This provision states: “A filer, or any other person, may file an objection to disclosure, generally or to a particular person or persons who have sought intervention.” Indeed, this provision provides greater rights to the submitter than section 388.113, which does not provide for notice to the submitter prior to the determination by the CEII Coordinator.

41This provision states: “When a FOIA or CEII requester seeks a document for which privilege or CEII status has been claimed, or when the Commission itself is considering release of such information, the Commission official who will decide whether to release the information or any other appropriate Commission official will notify the person who submitted the document and give the person an opportunity (at least five calendar days) in which to comment in writing on the request. A copy of this notice will be sent to the requester.”

28. The Commission is not changing its rules for acquiring materials through a FOIA or CEII request, and materials that may be sought through the protective agreement procedures established herein also remain available through FOIA and CEII requests where appropriate. However, the Commission has determined that reliance on the existing CEII procedures exclusively would serve to delay the processing of filings and other pleadings in Commission proceedings. To facilitate timely distribution of materials without the potential for delay pending Commission review, participants who choose to submit CEII information as part of a Commission proceeding must follow the procedures provided insection 388.112. We find this a reasonable method to permit the use of such materials by the Commission and participants in Commission proceedings while protecting the confidentiality of the information.42

42 Pennzoil Co.v.FPC,534 F.2d 627, 632 (5th Cir. 1976) (requiring consideration of alternatives to full disclosure to provide consumers with adequate knowledge to participate in Commission proceedings).

C. Form and Use of Protective Agreement

29. The Commission proposed that its existing procedures regarding protective agreements in its complaint and answer regulations be applied to other filings. Under these procedures, the filing party must provide a “proposed form of protective agreement to each entity that is to be served.”43 Although the Commission pointed to the Model Protective Order developed by the Commission's Office of Administrative Litigation as a guide in developing protective agreements, it did not propose to require a uniform protective agreement.

4318 CFR 385.206(e)(2), 385.213(c)(5)(i)(ii).

1. Comments

30. Several commenters ask the Commission to establish one or more standard protective agreements, based on the Model Protective Order or tailored to meet particular circumstances.44 APGA predicts that, absent such a requirement, filers may attempt to frustrate the interests of requesting parties, who have limited time to respond. ITC supports the Commission's proposal that the proposed protective agreement be self implementing and not require action by the Commission. ITC nevertheless supports use of the Model Protective Order, except when modifications are justified or no party objects. TDUs note that the NOPR does not provide guidance on what provisions may be appropriate for a protective agreement, and notes that clarification will help ensure customer access to information and avoid disputes.45 TDUs advocate adoption of the Model Protective Order as a basis for a protective agreement, with a requirement that parties justify any change.

44 E.g.,APGA, EEI, ITC. APGA provides draft text to implement its proposals.

45TDUs at 3.

31. MidAmerican suggests refinements to the requirement that a proposed form of protective agreement be served on each entity that is required to be served with the filing, arguing that service need not be required after the first time the protective agreement is used.46 In particular, MidAmerican argues that such a requirement is not needed when a party is using information that it obtained using the protective agreement provided by the original filer.

46MidAmerican at 4.

32. APGA urges the Commission to require that a party may execute a non-conforming agreement under protest, with issues to be resolved at a later date by the Commission.47 TDUs likewise argue that parties should have access to materials while any objection is outstanding. TDUs ask the Commission to ensure access to materials during negotiations over terms of delivery, so that a party challenging a protective agreement may still participate effectively in the proceeding. TDUs state that such an approach will permit a party to participate meaningfully in the relevant docket without sacrificing the opportunity to test a filing party's privilege claims.48

47APGA at 3.

48TDUs at 5.

33. APGA urges the Commission to lessen the requirements for signing the protective agreement and receiving the privileged materials and permit any person to whom service is required under the regulations to seek access, rather than require filing of an intervention.49 According to APGA, requiring a person to draft and file an intervention wastes time and should not be a condition to receiving the material. APGA argues that the fact that a person is required to be served justifies access to the material. EEI, on the other hand, asks that the Commission not require release of privileged material to persons or organizations that have not been granted intervenor status.50 EEI seeks to avoid conflict with the Commission's regulations that permit a party 15 days to oppose a motion to intervene. EEI asks the Commission to clarify that intervention in one sub-docket would not provide the right to access material in another sub-docket.51

49APGA at 3-4.

50EEI at 8.

51EEI at 8.

34. APGA argues that the Commission's proposal requiring delivery of privileged materials within five days after a protective agreement is signed is insufficient to ensure that interested persons have timely access to privileged materials filed in pipeline filings due to the short (30-day) statutory action period.52 APGA does not believe that its suggestions prejudice the rights of filers to protect privileged material, but are intended to facilitate meaningful access by interested entities.53

52APGA at 2 (citing NGA section 4, 15 U.S.C. §§ 717c(d) and (e)).

53APGA at 5.

35. Citing procedures developed in applying the Model Protective Order, TDUs ask the Commission to clarify that the burden of proof is on the party asserting a claim of privilege in any dispute of privileged status. TDUs also question whether the provision permitting a party to object to the terms in a protective agreement is effective, given statutory deadlines. TDUs ask the Commission to specify limits on the terms that may be included in a protective agreement, so that parties will not be forced to agree to unduly restrictive access or engage in fruitless litigation. TDUs argue that this is needed because, unlike in a proceeding overseen by an administrative law judge, the Commission cannot delay a statutory deadline to provide time to resolve a dispute.54

54TDUs at 4.

2. Commission Response a. Standard Protective Agreement

36. The Commission declines to adopt a standard protective agreement or provide detailed guidance as to appropriate departures or additions to the Model Protective Order in this proceeding, in light of the need for flexibility in handling different types of privileged material. In the NOPR, the Commission suggested that parties filing privileged materials in a proceeding with a right to intervene may use the Office of Administrative Litigation's Model Protective Order as a guide for protective agreements.55 Parties choosing to use a protective agreement based on the Model Protective Order may avoid potential litigation over the terms of the agreement that may delay the processing of their filing. For example, disputes that cannot be resolved prior to filing or through the protective agreement procedures may lead to further procedures such as suspending a filing, setting the proceeding for hearing, deficiency letters, and requests for additional procedures or information.

55Available athttp://www.ferc.gov/legal/admin-lit/model-protective-order.doc.

37. In the event a protective agreement is protested, the Commission has reviewed proposed protective orders in other contexts and provided for appropriate additions to address particular confidentiality concerns.56 Parties wishing to file privileged material may consult the Commission'sprior orders for approaches that have been employed to address particular concerns that arose in prior proceedings.

56 E.g., Illinoisv.Exelon Generation Co., LLC,119 FERC ¶ 61,027 (2007) (proposing protective order restricting access to certain materials by competitive duty personnel).

b. Right To Object to Protective Agreement and Privileged Treatment

38. APGA expresses concern that a participant may be bound by undesirable terms of a protective agreement, prior to having the opportunity to object. We do not find that signing a protective agreement should result in a waiver of the right to challenge the privileged status of the information. This procedure ensures solely that the case can be processed, not that it result in a waiver of any procedural rights. We note that the Model Protective Order contains procedures under which the signatory reserves its right to challenge the privileged status of documents covered by the agreement, and we encourage parties to include such provisions in their protective agreements. Should a protective agreement purport to contain such a waiver requriement, a party may preserve its rights by filing an objection under section 388.112(b)(2)(iii) and the Commission can then require the protective agreement be revised.

39. TDU's are concerned that the right to object to a protective agreement may not be effective given statutory deadlines. As indicated above, the Commission has procedures that may be used to resolve such disputes fairly.

c. Requirement To File an Intervention

40. We decline to adopt the revision proposed by APGA that a filing party must provide privileged materials to any person to whom service is required on request, rather than only those who have filed an intervention. As Mid-American suggests, the regulations provide that parties who are entitled to receive service will receive a copy of the filing with the protective order when served.57 It is not too great a burden to require such parties to intervene prior to being given a copy of the privileged information. Filing an intervention is not a great burden. Indeed, the Commission has provided for an electronic document-less form of intervention that can be filled out very quickly. The requirement for intervention ensures that copies of the confidential material are provided only to those with sufficient interest in the proceeding and provides the Commission with information about a party's interest in the privileged materials in the event an objection to disclosure is filed.

57Section 388.112(b)(2)(ii) (“the filer must provide the public version of the document and its proposed form of protective agreement to each entity that is required to be served with the filing”).

41. We likewise reject EEI's suggestion that materials should not be provided until an intervention has been granted. We do not believe that lack of intervenor status alone provides justification for refusing to provide the privileged materials.58 Furthermore, waiting for intervention to be granted could unnecessarily delay an interested person's access to privileged materials. As APGA notes, this could be a particular burden in Natural Gas Act cases which must be decided within 30 days. The intervention itself will provide the party filing privileged materials with information to determine whether a requesting party has an interest to support disclosure in the event that an objection to disclosure is filed under section 388.112(d)(iii).

58Under Rule 214, an intervenor obtains party status fifteen days after a timely intervention is filed, if no opposition is filed. 18 CFR 385.203.

d. Other Issues

42. In response to EEI's inquiry whether a protective agreement may apply in separate subdockets, the filer should determine whether a protective agreement signed in one subdocket is sufficient for the information that may be produced in another subdocket. The different character of such information may require a somewhat different form of protective agreement.

43. TDU argues that the burden of proof should be on the party seeking privileged status. This rulemaking does not change existing procedures regarding assignment of burdens. While the determination as to the applicability of the privileged designation is not a hearing with formal burdens of proof, the applicant needs to justify why the information is confidential under the FOIA categories.59

5918 CFR 388.112(d) (providing an applicant for privilege treatment the ability to respond to a requested disclosure).

D. Consistency With Discovery Procedures Used in Administrative Proceedings

44. In the NOPR, the Commission proposed that, for filings made prior to hearing, the party filing the privileged material will propose a form of protective agreement. However, in proceedings set for trial-type hearing, the NOPR proposed to leave intact the authority of the ALJ to administer the hearing and determine the appropriate scope of a protective order.

1. Comments

45. TDUs suggest that the Commission is inconsistent in removing the designation “Protected Materials” covered by an ALJ-approved protective order and treating these materials as privileged. It asserts that an ALJ's protective order may cover a broader range of materials than filings in proceedings not set for hearing. TDUs explain that, in discovery, the term protected materials refers to materials that customarily are treated by a participant as sensitive or proprietary, which are not available to the public and which, if disclosed freely, would subject the participant to competitive harm.60 TDUs ask the Commission to clarify that eliminating the category “protected materials” is for filing purposes and does not expand the definition of privileged materials pursuant to section 388.112.61 EPSA states that establishing separate procedures for materials provided pursuant to a protective order issued by an ALJ may lead to confusion and inadvertent disclosure.

60TDUs at 8 & n.5.

61TDUs at 9.

2. Commission Response

46. Revised section 388.112(b)(2)(v), adopted in this proceeding, states, “For material filed in proceedings set for trial-type hearing or settlement judge proceedings, a participant's access to material for which privileged treatment is claimed is governed by the presiding official's protective order.” The term protected material is a colloquial term that some parties apply to materials covered by a protective order. For consistency, the Commission has used the word “privileged,” as it existed in the regulations prior to this rule, to refer to all material for which confidential treatment is claimed. But the use of the term privileged does not change the scope of material eligible for confidential treatment.

47. TDUs assert that the discovery materials that may be protected by an administrative law judge's protective order include materials that customarily are treated by a participant as sensitive or proprietary, which are not available to the public and which, if disclosed freely, would subject the participant to competitive harm. This description is comparable to the type of information that qualifies for confidential treatment under FOIA Exemption No. 4, which protects information where disclosure is likely “to cause substantial harm to the competitive position of the person from whom the information was obtained.”62 We therefore find no reason to apply a different standard to materials collected during discovery than filed materials in proceedings not in hearing.63

62 See Reporting of Natural Gas Sales to the California Market,96 FERC ¶ 61,119 at 61,466-68 (2001) (citingNational Parks and Conservation Associationv. Morton,498 F.2d 765, 770 (D.C. Cir.1974)). FOIA Exemption No. 4 is incorporated in the Commission's regulations in section 388.107(d).

63Indeed, it would be inconsistent for the Commission to use a different standard for defining material submitted in an application compared with material submitted through an ALJ proceeding. The same FOIA provisions apply to both sets of information and an FOIA request can be filed for material submitted during discovery in an administrative proceeding.

E. Procedures for Distributing Privileged Information

48. The NOPR proposed procedures obtaining access to material that is filed as privileged in complaint proceedings and in any proceeding with a right to intervene. The Commission proposed that any participant or person filing an intervention in the proceeding may request the filer to provide a copy of the complete, non-public version of the document, by providing an executed copy of the protective agreement and showing appropriate party, participant or intervenor status. The proposed regulations provide that the filer provide a copy of the complete, non-public document to the requesting person within five days of receiving the request, if no objection is filed.

1. Comments

49. To provide adequate due process for responses to requests for information, EEI asks the Commission to modify the requirement that confidential information be released “within” five days, to a requirement that the information not be released until the 5th business day, in order to permit parties to object, and suggests the Commission provide a bit more time for objections to be lodged.64 EEI notes that in the NOPR the Commission proposed to revise 18 CFR 388.112 to give parties that have submitted privileged material to FERC staff at least five calendar days to respond to requests for information and a separate five calendar days to respond to a proposed disclosure.See18 CFR 388.112(c)(2). EEI notes that the Commission has not afforded the same protection for information filed under section 388.112(b)(2) and states that the Commission should apply the same protective procedures to all privileged materials submitted to staff or to the Commission.65 To provide adequate due process rights for responses to requests for information, EEI states that the Commission should withhold a proposed release of confidential information if the filing party files notice of intent to seek judicial review to block the release.66

64EEI at 9.

65 Id.

66EEI at 10.

50. TDUs object to the five day delay in delivering privileged materials after receipt of an executed copy of the non-disclosure agreement; instead they request delivery by the next business day. TDUs argue that delay prejudices the party seeking the information, by providing limited time for review.67 APGA similarly recommends that the proposed 5-day period for delivering privileged materials be shortened to 24 hours. APGA states that it only takes minutes to deliver the non-redacted version which was filed with the Commission and there is no basis for delay, given the short time frame to review and address the privileged material in a pleading.68 APGA states that, because the contents of suspension orders may depend on the contents of protests, that it is not sufficient for protesting parties to receive the material at or after the intervention deadline. APGA suggests a typical protest schedule in which a section 4 rate case is noticed after five days, interventions are due within 13 days and an order issued in 30, and asserts that there is no way to secure and review the filing, draft an intervention, execute the protective agreement and prepare a protest based on the privileged material.69

67TDUs at 5.

68APGA at 4.

69 Id.at 4-5.

51. INGAA objects to its reading of the proposed regulations to require service of “fully redacted” documents. According to INGAA, redacting an entire document can be burdensome to the filer and circulation of the document does not provide any benefit to recipients.70 INGAA asks that filers be permitted to comply with the requirement in proposed section 388.112(b)(1) by submitting in its cover page requesting privileged treatment, a statement that the entire document qualifies for privileged, confidential and/or CEII treatment and a short title or description of the type of information it contains. INGAA asks that such a disclosure meet the Commission's objective under 388.112(b)(1) to provide a redacted version “to the extent practicable.”71

70INGAA at 5.

71 Id.at 6.

52. EEI responds to the Commission's observation in the NOPR that a failure by the filing party to afford intervenors a meaningful opportunity to review confidential information under a protective agreement could lead to suspension of the filing, rejection, or other delays in processing an application. EEI a