Natural Gas Policy Act Section 311

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TITLE 15—COMMERCE AND TRADE

rector [now Administrator] of the Federal Emergency
Management Agency, and the heads of other executive
agencies in exercising the functions delegated to him
by this Order.
1–104. All functions delegated to the Secretary by this
Order may be redelegated, in whole or in part, to the
head of any other agency.
1–105. All Executive agencies shall, to the extent permitted by law, cooperate with and assist the Secretary
in carrying out the functions delegated to him by this
Order.
JIMMY CARTER.

PART B—OTHER AUTHORITIES AND
REQUIREMENTS
§ 3371. Authorization of certain sales and transportation
(a) Commission approval of transportation
(1) Interstate pipelines
(A) In general
The Commission may, by rule or order, authorize any interstate pipeline to transport
natural gas on behalf of—
(i) any intrastate pipeline; and
(ii) any local distribution company.
(B) Just and reasonable rates
The rates and charges of any interstate
pipeline with respect to any transportation
authorized under subparagraph (A) shall be
just and reasonable (within the meaning of
the Natural Gas Act [15 U.S.C. 717 et seq.]).
(2) Intrastate pipelines
(A) In general
The Commission may, by rule or order, authorize any intrastate pipeline to transport
natural gas on behalf of—
(i) any interstate pipeline; and
(ii) any local distribution company
served by any interstate pipeline.
(B) Rates and charges
(i) Maximum fair and equitable price
The rates and charges of any intrastate
pipeline with respect to any transportation authorized under subparagraph (A),
including any amount computed in accordance with the rule prescribed under clause
(ii), shall be fair and equitable and may
not exceed an amount which is reasonably
comparable to the rates and charges which
interstate pipelines would be permitted to
charge for providing similar transportation service.
(ii) Commission rule
The Commission shall, by rule, establish
the method for calculating an amount necessary to—
(I) reasonably compensate any intrastate pipeline for expenses incurred by
the pipeline and associated with the providing of any gathering, treatment, processing, transportation, delivery, or similar service provided by such pipeline in
connection with any transportation of
natural gas authorized under subparagraph (A); and
(II) provide an opportunity for such
pipeline to earn a reasonable profit on
such services.

§ 3371

(b) Commission approval of sales
(1) In general
The Commission may, by rule or order, authorize any intrastate pipeline to sell natural
gas to—
(A) any interstate pipeline; and
(B) any local distribution company served
by any interstate pipeline.
(2) Rates and charges
(A) Maximum fair and equitable price
The rates and charges of any intrastate
pipeline with respect to any sale of natural
gas authorized under paragraph (1) shall be
fair and equitable and may not exceed the
sum of—
(i) such intrastate pipeline’s weighted
average acquisition cost of natural gas;
(ii) an amount, computed in accordance
with the rule prescribed under subparagraph (B); and
(iii) any adjustment permitted under
subparagraph (C).
(B) Commission rule
The Commission shall, by rule, establish
the method for calculating an amount necessary to—
(i) reasonably compensate any intrastate
pipeline for expenses incurred by the pipeline and associated with the providing of
any gathering, treatment, processing,
transportation, or delivery service provided by such pipeline in connection with
any sale of natural gas authorized under
paragraph (1); and
(ii) provide an opportunity for such pipeline to earn a reasonable profit on such
services.
(C) Adjustment
(i) Application
This subparagraph shall apply in any
case in which, in order to deliver any volume of natural gas pursuant to any sale
authorized under paragraph (1), any intrastate pipeline acquires quantities of natural gas under any existing contract, if—
(I) such intrastate pipeline acquires
any volume of natural gas under such
contract in excess of that which such
pipeline would otherwise have acquired;
and
(II) the price paid for such additional
volume of natural gas acquired under
such contract is greater than such pipeline’s weighted average acquisition cost
of natural gas, computed without regard
to the acquisition of such additional volume of natural gas.
(ii) Commission adjustment
In any case to which this subparagraph
applies, the Commission shall permit an
adjustment to the maximum fair and equitable price provided under subparagraph
(A) to increase the revenue to the intrastate pipeline under such sale by an
amount determined by the Commission to
be adequate to offset the additional cost
incurred by such pipeline due to any in-

§ 3372

TITLE 15—COMMERCE AND TRADE

crease in such pipeline’s weighted average
acquisition cost of natural gas.
(3) Limitation
(A) Two-year duration
No authorization of any sale (or any extension thereof) under paragraph (1) may be for
a period exceeding two years.
(B) Extension
Any authorization of any sale under paragraph (1), and any extension of any such authorization under this subparagraph, may be
extended by the Commission if such extension satisfies the requirements of this subsection.
(4) Adequacy of service to intrastate customers
Any sale authorized under paragraph (1)
shall be subject to interruption to the extent
that natural gas subject to such sale is required to enable the intrastate pipeline involved to provide adequate service to such
pipeline’s customers at the time of such sale.
(5) Procedural requirements
(A) Affidavit
Any application for authorization of any
sale under paragraph (1) shall be accompanied by an affidavit filed by the intrastate
pipeline involved and setting forth—
(i) the identity of the interstate pipeline
or local distribution company involved;
(ii) each point of delivery of the natural
gas from the intrastate pipeline;
(iii) the estimated total and daily volumes of natural gas subject to such sale;
(iv) the price or prices of such volumes;
and
(v) such other information as the Commission may, by rule, require.
(B) Verification of compliance
Any application for authorization of any
sale under paragraph (1) shall be accompanied by a statement by the intrastate
pipeline involved verifying by oath or affirmation that such sale, if authorized, would
comply with all requirements applicable to
such sale under this subsection and all terms
and conditions established, by rule or order,
by the Commission and applicable to such
sale.
(6) Termination of sales
(A) Hearing
Upon complaint of any interested person,
or upon the Commission’s own motion, the
Commission shall, after affording an opportunity for oral presentation of views and arguments, terminate any sale authorized
under paragraph (1) if the Commission determines—
(i) such termination is required to enable
the intrastate pipeline involved to provide
adequate service to the customers of such
pipeline at the time of such sale;
(ii) such sale involves the sale of natural
gas acquired by the intrastate pipeline involved solely or primarily for the purpose
of resale of such natural gas pursuant to a
sale authorized under paragraph (1);

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(iii) such sale violates any requirement
of this subsection or any term or condition
established, by rule or order, by the Commission and applicable to such sale; or
(iv) such sale circumvents or violates
any provision of this chapter.
(B) Suspension pending hearing
Prior to any hearing or determination required under subparagraph (A), upon complaint of any interested person or upon the
Commission’s own motion, the Commission
may suspend any sale authorized under paragraph (1) if the Commission finds that it is
likely that the determinations described in
subparagraph (A) will be made following the
hearing required under subparagraph (A).
(C) Determination
The determination of whether any interruption of any sale authorized under paragraph (1) is required under subparagraph
(A)(i) shall be made by the Commission
without regard to the character of the use of
natural gas by any customer of the intrastate pipeline involved.
(D) State intervention
Any interested State may intervene as a
matter of right in any proceeding before the
Commission relating to any determination
under this section.
(7) Disapproval of application
The Commission shall disapprove any application for authorization of any sale under
paragraph (1) if the Commission determines—
(A) such sale would impair the ability of
the intrastate pipeline involved to provide
adequate service to its customers at the
time of such sale (without regard to the
character of the use of natural gas by such
customer);
(B) such sale would involve the sale of natural gas acquired by the intrastate pipeline
involved solely or primarily for the purpose
of resale of such natural gas pursuant to a
sale authorized under paragraph (1);
(C) such sale would violate any requirement of this subsection or any term or condition established, by rule or order, by the
Commission and applicable to such sale; or
(D) such sale would circumvent or violate
any provision of this chapter.
(c) Terms and conditions
Any authorization granted under this section
shall be under such terms and conditions as the
Commission may prescribe.
(Pub. L. 95–621, title III, § 311, Nov. 9, 1978, 92
Stat. 3388.)
REFERENCES IN TEXT
The Natural Gas Act, referred to in subsec. (a)(1)(B),
is act June 21, 1938, ch. 556, 52 Stat. 821, as amended,
which is classified generally to chapter 15B (§ 717 et
seq.) of this title. For complete classification of this
act to the Code, see section 717w of this title and
Tables.

§ 3372. Assignment of contractual rights to receive surplus natural gas
(a) Authorization of assignments
The Commission may, by rule or order, authorize any intrastate pipeline to assign, with-