NOTE: The provisions of this section may be affected by Standby Regulation 211-1. Standby Regulation 211-1 appears in Appendix A to Part 211. For the convenience of the user, a table listing all Standby Regulations and sections affected appears in the Finding Aids section of this volume.

Subpart D—Natural Gas Liquids (NGL's)

AUTHORITY: Emergency Petroleum Allocation Act of 1973, 15 U.S.C. 751 et seq., Pub. L. 93-159, as amended, Pub. L. 93-511, Pub. L. 94-99, Pub. L. 94-133, Pub. L. 94-163, and Pub. L. 94-385; Federal Energy Administration Act of 1974, 15 U.S.C. 787 et seq., Pub. L. 93-275, as amended, Pub. L. 94-332, Pub. L. 94-385, Pub. L. 95-70, and Pub. L. 95-91; Energy Policy and Conservation Act, 42 U.S.C. 6201 et seq., Pub. L. 94-163, as amended, Pub. L. 94-385, and Pub. L. 95-70; Department of Energy Organization Act, 42 U.S.C. 7101 et seq., Pub. L. 95-91; E.O. 11790, 39 FR 23185; E.O. 12009, 42 FR 46267.

SOURCE: 44 FR 60650, Oct. 19, 1979, unless otherwise noted.

§ 211.81 Scope.

(a) This subpart applies to all suppliers, including producers, and purchasers of allocated natural gas liquid products, derived from any source.

(b)(1) This subpart provides for the mandatory allocation as separate products with separate allocation entitlements of all propane, butane and natural gasoline. If greater than 10 percent by weight, the propane,

butane, and natural gasoline content of all fractionated NGL mixtures produced in or imported into the United States will also be allocated as propane, butane and natural gasoline, respectively, except for the propane content of certain ethane-propane mixtures as described in subparagraph (b)(2) of this section. Excluded are (i) unfractionated NGL mixtures (except as set forth in § 211.88); (ii) bottled propane or butane; (iii) the propane or butane content of refinery gas used for refinery fuel purposes and (iv) the propane and butane content of hydrocarbon aerosol propellants.

(2) This subparagraph applies to the propane content of ethane-propane mixtures.

(i) At a fractionation facility which produced ethane-propane mixtures

prior to January 1, 1979, the propane portion of such mixtures produced subsequent to January 1, 1979 which is less than either the 1978 average propane content of E-P mixtures produced at that facility or thirty percent by liquid volume, whichever is smaller, shall be allocated as a separate allocated natural gas liquid product.

(ii) At a fractionation facility which initially produces ethane-propane mixtures subsequent to January 1, 1979, the propane portion of such mixtures produced at that facility which is twenty percent or less by liquid volume shall be allocated as a separate allocated natural gas liquid product.

(iii) The propane portion of ethanepropane mixtures in inventory prior to January 1, 1979 which is thirty percent or less by liquid volume shall be allocated as a separate allocated natural gas liquid product.

(c) This subpart provides for a state set-aside for propane only.

For purposes of this subpart-"Base period" means each calendar quarter during the period April 1, 1972, through March 31, 1973, which corresponds to the present calendar quarter.

"Bottled propane or butane" means propane or butane or mixtures of propane and butane bottled in cylinders with a capacity of one hundred (100) pounds or less, provided that the cylinders are not manifolded at the time of sale

"Commercial B-P mixture" means any product which meets Gas Processors Association (GPA) specifications for commercial B-P mixture as revised in 1977 and listed in GPA Publication 2140 (77), "GPA LPG Specifications and Test Methods."

"Commercial butane" means all products which meet GPA specifications for commercial butane as revised in 1977 and listed in GPA Publication 2140 (77), "GPA LPG specifications and Test Methods."

"Commercial grade natural gasoline" means any product which meets Gas Processors Association (GPA) specifications for any of the twentyfour (24) grades of natural gasoline as

80-028 0-81--13

revised in 1974 and listed in GPA Publication 3132 (74), “GPA Natural Gasoline Specifications and Test Methods."

"Commercial propane" means all products which meet Gas Processors Association (GPA) specifications for commercial propane as revised in 1977 and listed in GPA Publication 2140 (77), "GPA LPG Specifications and Test Methods."

"Dispensing station" means those retail sales outlets which sell less than 15,000 gallons per year and sell or fill only bottled propane or butane.

"Fractionated" means separated into components by partial or complete fractional distillation of natural gas liquids mixtures. Once having been so separated, each component shall be considered fractionated regardless of subsequent mixing or commingling.

"Isobutane" means butane which contains 95 percent or more by volume of the saturated branch chain hydrocarbon isomer known as isobutane.

"Merchant storage facility" means any facility which is utilized to store allocated natural gas liquid products for firms other than the owner or operator of such a facility.

"Normal butane" means butane which contains 95 percent or more by volume of the saturated straight-chain hydrocarbon isomer known as normal butane.

"Plant protection fuel" means the use of allocated natural gas liquid products in the minimum volume required to prevent physical harm to the plant facilities or danger to plant personnel. This includes the protection of such material and equipment which would otherwise be damaged, but does not include sufficient quantities of allocated natural gas liquid products required to maintain plant production. Allocated natural gas liquid products may not be considered plant protection fuel if an alternate fuel capability is in place which uses an available fuel other than allocated natural gas liquid products or natural gas and can be operated on a continuing basis.

"Process fuel" means allocated natural gas liquid products used in applications requiring precise temperature controls or precise flame characteristics. Allocated natural gas liquid products may not be considered process

fuel if an alternate fuel (other than natural gas) is available and technically feasible for substitution.

"Producer" means a firm which (1) produces an allocated natural gas liquid product in a refinery, (2) maintains an ownership interest in any allocated natural gas liquid product when such product is initially extracted from natural gas in a gas processing plant or separated from an unfractionated natural gas liquid mixture at a fractionating facility or (3) imported into the United States more than 5,000,000 gallons of allocated natural gas liquid products or unfractionated natural gas liquid mixtures during the immediately preceding four calendar quarters.

"Propane HD-5" means all products which meet Gas Processors Association (GPA) specifications for propane HD-5 as revised in 1977 and listed in GPA Publication 2140(77), “GPA LPG Specifications and Test Methods."

§ 211.83 Allocation levels.

(a) General. The allocation levels in this paragraph apply only to allocations made by suppliers or producers to wholesale purchaser-consumers and end-users. Except as otherwise provided in this subpart, suppliers shall allocate to all purchasers to which the allocation levels apply in accordance with the provisions of § 211.10. Endusers and wholesale purchaser-consumers which are entitled to purchase allocated natural gas liquid products under an allocation level not subject to an allocation fraction shall receive first priority and be supplied sufficient amounts to meet 100 percent of their allocation requirements. End-users and wholesale purchaser-consumers which are entitled to purchase allocated natural gas liquid products under an allocation level subject to reduction by application of an allocation fraction shall receive second priority.

(b) Allocation levels not subject to an allocation fraction. One hundred (100) percent of current requirements for the following uses:

(1) Agricultural production;

(2) Department of Defense use as specified in § 211.26.

(c) Allocation levels subject to an allocation fraction. (1) One hundred (100) percent of current requirements for the following uses:

(i) Emergency services;

(ii) Energy production (excluding boiler fuel uses);

(iii) Sanitation services;

(iv) Telecommunications services; (v) Passenger transportation services;

(vi) Transportation of crude oil, natural gas liquids, and refined petroleum products;

(vii) Medical and nursing buildings; (viii) Aviation ground support vehicles and equipment;

(ix) Start-up, testing, and flame stability of electric utility plants;

(x) Residential use, except that an allocation fraction of less than nine tenths (.90) may not be applied with respect to a firm's entitlement to product intended for residential use; a supplier whose allocation fraction is less than .90 shall allocate product intended for residential use as if the allocation level for such use is ninety (90) percent of current requirements, not subject to an allocation fraction;

(xi) Plant protection fuel use; and (xii) Petrochemical feedstock and process fuel use of allocated natural gas liquid products other than propane and the propane content of fractionated natural gas liquid mixtures;

(xiii) Gasoline blending and manufacturing use of allocated natural gas liquid products other than propane.

(2) One hundred (100) percent of base period use for:

feedstock

and

(i) Petrochemical process fuel use of propane (including the propane content of fractionated natural gas liquid mixtures);

(ii) Synthetic natural gas feedstock use;

(iii) Synthetic natural gas enrichment use;

(iv) Other industrial use; (v) Governmental use;

(vi) Gas utility and gas transmission company use; the base period use for gas utilities and gas transmission companies shall mean the larger of that volume of an allocated natural gas liquid product which a gas utility or gas transmission company either contracted for (if a specific maximum

§ 211.84 Adjustments and assignments.

(a) Specified industrial use. Notwithstanding the provisions of § 211.13(e), a wholesale purchaser-consumer may apply (1) to the ERA National Office for adjustments to its base period use, in accordance with the provisions of Subpart B of Part 205 of this chapter, for petrochemical feedstock use of propane (including the propane content of fractionated natural gas liquid mixtures), and (2) to the appropriate ERA Regional Office for adjustments to base period use of propane for process fuel.

(b) Gas utility use, gas transmission company use and gas utilities as agents. (1) Adjustments and assignments. Wholesale purchaser-consumers shall apply to the ERA National Office for all assignments of a base period use of allocated natural gas liquid products for gas utility or gas transmission company use, and, notwithstanding the provisions of § 211.13(e), may apply to the ERA National Office for an adjustment to base period use, in accordance with Subparts B and C, respectively, of Part 205 of this chapter.

(2) Waivers. Applications for waivers of the limitations on gas utility use or gas transmission company use of allocated natural gas liquid products set forth in § 211.87(a)(3) (when such limitations are in effect) shall be filed with the ERA National Office in accordance with the provisons of Subpart G of Part 205 of this chapter.

(3) Gas utilities as agents for endusers or wholesale purchaser-consumers. In addition to acquiring product under their own allocation entitlement, gas utilities may act as agents in acquiring and delivering allocated natural gas liquid products through natural gas pipelines to end users or wholesale purchaser-consumers separately authorized to purchase and use such products pursuant to this part. Unless otherwise authorized by ERA, such actions are permitted only in those cases (i) where the wholesale purchaser-consumer or end user owns the product and bears the entire cost of its storage, gasification, and transmission; (ii) where there will be no adverse effects on the gas utility's other customers; and (iii) where this procedure is consistent with all applicable Federal and State laws, regulations, and orders. Actions taken by gas utilities under this subparagraph (b)(3) are not subject to the volumetric limitations contained in § 211.87(a)(3).

§ 211.85 Supplier/purchaser relationships.

(a) General. Supplier/purchaser relationships shall be as set forth in §§ 211.9-211.13 unless otherwise specified in this subpart.

(b) Changes in relationships. (1) Notwithstanding the provisions of subpart A of this part, any wholesale purchaser of any allocated natural gas liquid product may terminate a supplier/purchaser relationship or adjust downward its allocation entitlement from that supplier for a calendar quarter by providing written notice to its base period supplier of its intent to do so, provided that the affected supply obligation will be assumed by another supplier pursuant to subparagraph (b)(2) of this section or the purchaser certifies that such volumes are longer required from any supplier. Wholesale purchasers shall specify in the notice the volume of the supply obligation which shall be reduced or terminated, and shall include the effective date of termination or downward adjustment. Such date shall correspond to the first day of a base period. Upon receipt of such notification a supplier shall subtract the volumes so terminated or adjusted downward from its base period supply obli

no

gations, and, under the procedures set forth in subparagraph (b)(3), shall not include such volumes in its base period use from its supplier, unless (i) by the exclusion of such volumes its base period use, as adjusted by this paragraph (b), would fall below its original unadjusted base period use or (ii) it has historically maintained an allocation fraction of one (1.0) or less by importing a volume of such product equal to or greater than the sum of its base period obligations terminated under this section.

(2) Any supplier of allocated natural gas liquid products may establish a supplier/purchaser relationship with a wholesale purchaser to the extent such purchaser has terminated a supplier/purchaser relationship or has adjusted downward its base period use pursuant to paragraph (b)(1) of this section, provided that (i) the supplier's net new obligations for a particular calendar quarter corresponding to a base period would not, if applied in the immediately preceding corresponding calendar quarter, have reduced the supplier's allocation fraction below one (1.0), and (ii) the supplier can demonstrate that its net adjustments to its base period supply obligations for any particular calendar quarter for which supply obligations will be assumed are not reasonably estimated to reduce its allocation fraction below 1.0 for that quarter. The mere ability to certify upward such adjustments to its supplier will not be sufficient to constitute a demonstration by a wholesale purchaser-reseller that its allocation fraction will not be reduced below 1.0. The supplier and wholesale purchaser must notify ERA and obtain approval from the appropriate ERA Office before a new supplier/purchaser relationship and base period use can be established under this section.

(3) A wholesale purchaser-reseller, which in its capacity as a supplier establishes new supplier/purchaser relationships under subparagraph (b)(2) of this section that increase its base period supply obligations, or which has excluded certain volumes from its base period use pursuant to subparagraph (b)(1) of this section, shall receive an upward or downward adjust

ment, respectively, to its base period use in an amount equal to the net change to its base period obligations, except that unless ordered by ERA, a wholesale purchaser-reseller may receive an upward adjustment pursuant to this subparagraph only with the consent of its supplier whose obligations would thereby be increased. Certifications of such adjustments shall be made in accordance with the procedures set forth in § 211.13(c) (2) and (3).

§ 211.86 Method of allocation.

(a) General. Except as specifically otherwise provided in this subpart and except with respect to the allocation of such products for synthetic natural gas feedstock use as provided in § 211.29, the allocation of allocated natural gas liquid products shall be as specified in § 211.10. Adjustments to a wholesale purchaser's base period volume specified in §§ 211.13, 211.84 and 211.85 shall apply to this subpart. New wholesale purchasers and endusers are subject to the requirements of § 211.12. Notwithstanding the provisions of § 211.12(c), each supplier or producer which sells allocated natural gas liquid products to a wholesale purchaser-consumer, end-user, or dispensing station shall determine the base period volume of those purchasers but is not required to report that determination to such purchasers except on written request by a purchaser.

(b) State set-aside. The initial state set-aside level for propane is three (3) percent of a prime supplier's estimated portion of its total supply for that month which will be sold into the State's distribution system for consumption within the State. Section 211.17 shall control the distribution of propane from the State set-aside.

(c) Dispensing stations. Notwithstanding the provisions of § 211.10, dispensing stations which sell or fill only bottled propane or butane to end-users shall be entitled to receive a volume of propane or butane equal to one hundred (100) percent of the volume necessary to supply the current requirements of all end-users purchasing from them, without being subject to an allocation fraction.

(d) Producers. Producers shall allocate their total supply in accordance with 211.10 except as otherwise provided in this subpart. If a producer is the base period supplier to wholesale purchaser-resellers which have certified amounts of propane to be for ultimate use under an allocation level of one hundred (100) percent of current requirements whether or not subject to an allocation fraction, that producer may not recertify such amounts to any other producer which may be its base period supplier.

(1)

(e) Inventory accumulation. Except as otherwise provided in this paragraph (e), producers, suppliers, wholesale purchasers and end-users may accumulate allocated natural gas liquid products in inventory in quantities which are normal and reasonable for seasonal usage in accordance with their normal business practices. The propane content of those ethane-propane mixtures separately allocated under § 211.81(b)(2) are not subject to the inventory restrictions contained in subparagraphs (e)(2), (e)(3), and (e)(4). [See paragraph (e)(5) for a waiver of the limitations imposed by subparagraphs (e)(2) and (e)(3).]

(2) Unless authorized by the ERA, no end-user or wholesale purchaserconsumer shall accumulate in inventory allocated natural gas liquid products produced in the United States for gas utility use, gas transmission company use or synthetic natural gas feedstock or enrichment use in excess of one hundred (100) percent of the sum of their base period uses for the four base period quarters plus the amount held in inventory for such uses on April 1, 1972.

(3) Unless authorized by the ERA, no end user or wholesale purchaserconsumer shall accumulate in inventory propane (including the propane content of fractionated natural gas liquid mixtures) produced in the United States for industrial use (for other than process fuel use or plant protection fuel use) in excess of one hundred (100) percent of the sum total of such base period use for the four base period quarters.

(4) If a firm controls greater than the above mentioned inventories of allocated natural gas liquid products, it