FERC Reforms Capacity Release Rules

On June 19, 2008, FERC reformed its rules regarding the release of firm capacity on interstate natural gas pipelines. A petition filed in October 2006 by Bracewell & Giuliani LLP on behalf of a number of gas marketing firms was a major impetus for the rule changes. The reforms represent one of the most important initiatives FERC has undertaken in its regulation of natural gas transportation in almost a decade.

Major rule changes adopted by FERC would:

• exempt short-term releases of capacity from pipelines' maximum rate caps;
  
  
• exempt capacity releases associated with both supply and marketing asset management arrangements from FERC's prohibition against tying and the bidding requirements of FERC's capacity release rules;