Natural Gas Act Section 7

§ 717d

TITLE 15—COMMERCE AND TRADE

§ 717d. Fixing rates and charges; determination
of cost of production or transportation
(a) Decreases in rates
Whenever the Commission, after a hearing had
upon its own motion or upon complaint of any
State, municipality, State commission, or gas
distributing company, shall find that any rate,
charge, or classification demanded, observed,
charged, or collected by any natural-gas company in connection with any transportation or
sale of natural gas, subject to the jurisdiction of
the Commission, or that any rule, regulation,
practice, or contract affecting such rate, charge,
or classification is unjust, unreasonable, unduly
discriminatory, or preferential, the Commission
shall determine the just and reasonable rate,
charge, classification, rule, regulation, practice,
or contract to be thereafter observed and in
force, and shall fix the same by order: Provided,
however, That the Commission shall have no
power to order any increase in any rate contained in the currently effective schedule of
such natural gas company on file with the Commission, unless such increase is in accordance
with a new schedule filed by such natural gas
company; but the Commission may order a decrease where existing rates are unjust, unduly
discriminatory, preferential, otherwise unlawful, or are not the lowest reasonable rates.
(b) Costs of production and transportation
The Commission upon its own motion, or upon
the request of any State commission, whenever
it can do so without prejudice to the efficient
and proper conduct of its affairs, may investigate and determine the cost of the production
or transportation of natural gas by a naturalgas company in cases where the Commission has
no authority to establish a rate governing the
transportation or sale of such natural gas.
(June 21, 1938, ch. 556, § 5, 52 Stat. 823.)
§ 717e. Ascertainment of cost of property
(a) Cost of property
The Commission may investigate and ascertain the actual legitimate cost of the property
of every natural-gas company, the depreciation
therein, and, when found necessary for ratemaking purposes, other facts which bear on the
determination of such cost or depreciation and
the fair value of such property.
(b) Inventory of property; statements of costs
Every natural-gas company upon request shall
file with the Commission an inventory of all or
any part of its property and a statement of the
original cost thereof, and shall keep the Commission informed regarding the cost of all additions, betterments, extensions, and new construction.
(June 21, 1938, ch. 556, § 6, 52 Stat. 824.)
§ 717f. Construction, extension, or abandonment
of facilities
(a) Extension or improvement of facilities on
order of court; notice and hearing
Whenever the Commission, after notice and
opportunity for hearing, finds such action necessary or desirable in the public interest, it may

Page 1006

by order direct a natural-gas company to extend
or improve its transportation facilities, to establish physical connection of its transportation
facilities with the facilities of, and sell natural
gas to, any person or municipality engaged or
legally authorized to engage in the local distribution of natural or artificial gas to the public, and for such purpose to extend its transportation facilities to communities immediately
adjacent to such facilities or to territory served
by such natural-gas company, if the Commission
finds that no undue burden will be placed upon
such natural-gas company thereby: Provided,
That the Commission shall have no authority to
compel the enlargement of transportation facilities for such purposes, or to compel such natural-gas company to establish physical connection or sell natural gas when to do so would impair its ability to render adequate service to its
customers.
(b) Abandonment of facilities or services; approval of Commission
No natural-gas company shall abandon all or
any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the
permission and approval of the Commission first
had and obtained, after due hearing, and a finding by the Commission that the available supply
of natural gas is depleted to the extent that the
continuance of service is unwarranted, or that
the present or future public convenience or necessity permit such abandonment.
(c) Certificate of public convenience and necessity
(1)(A) No natural-gas company or person
which will be a natural-gas company upon completion of any proposed construction or extension shall engage in the transportation or sale of
natural gas, subject to the jurisdiction of the
Commission, or undertake the construction or
extension of any facilities therefor, or acquire or
operate any such facilities or extensions thereof,
unless there is in force with respect to such natural-gas company a certificate of public convenience and necessity issued by the Commission
authorizing such acts or operations: Provided,
however, That if any such natural-gas company
or predecessor in interest was bona fide engaged
in transportation or sale of natural gas, subject
to the jurisdiction of the Commission, on February 7, 1942, over the route or routes or within
the area for which application is made and has
so operated since that time, the Commission
shall issue such certificate without requiring
further proof that public convenience and necessity will be served by such operation, and without further proceedings, if application for such
certificate is made to the Commission within
ninety days after February 7, 1942. Pending the
determination of any such application, the continuance of such operation shall be lawful.
(B) In all other cases the Commission shall set
the matter for hearing and shall give such reasonable notice of the hearing thereon to all interested persons as in its judgment may be necessary under rules and regulations to be prescribed by the Commission; and the application
shall be decided in accordance with the procedure provided in subsection (e) of this section

Page 1007

§ 717f

TITLE 15—COMMERCE AND TRADE

and such certificate shall be issued or denied accordingly: Provided, however, That the Commission may issue a temporary certificate in cases
of emergency, to assure maintenance of adequate service or to serve particular customers,
without notice or hearing, pending the determination of an application for a certificate, and
may by regulation exempt from the requirements of this section temporary acts or operations for which the issuance of a certificate
will not be required in the public interest.
(2) The Commission may issue a certificate of
public convenience and necessity to a naturalgas company for the transportation in interstate
commerce of natural gas used by any person for
one or more high-priority uses, as defined, by
rule, by the Commission, in the case of—
(A) natural gas sold by the producer to such
person; and
(B) natural gas produced by such person.
(d) Application for certificate of public convenience and necessity
Application for certificates shall be made in
writing to the Commission, be verified under
oath, and shall be in such form, contain such information, and notice thereof shall be served
upon such interested parties and in such manner
as the Commission shall, by regulation, require.
(e) Granting of certificate of public convenience
and necessity
Except in the cases governed by the provisos
contained in subsection (c)(1) of this section, a
certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part
of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and
willing properly to do the acts and to perform
the service proposed and to conform to the provisions of this chapter and the requirements,
rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to
the extent authorized by the certificate, is or
will be required by the present or future public
convenience and necessity; otherwise such application shall be denied. The Commission shall
have the power to attach to the issuance of the
certificate and to the exercise of the rights
granted thereunder such reasonable terms and
conditions as the public convenience and necessity may require.
(f) Determination of service area; jurisdiction of
transportation to ultimate consumers
(1) The Commission, after a hearing had upon
its own motion or upon application, may determine the service area to which each authorization under this section is to be limited. Within
such service area as determined by the Commission a natural-gas company may enlarge or extend its facilities for the purpose of supplying
increased market demands in such service area
without further authorization; and
(2) If the Commission has determined a service
area pursuant to this subsection, transportation
to ultimate consumers in such service area by
the holder of such service area determination,
even if across State lines, shall be subject to the
exclusive jurisdiction of the State commission

in the State in which the gas is consumed. This
section shall not apply to the transportation of
natural gas to another natural gas company.
(g) Certificate of public convenience and necessity for service of area already being served
Nothing contained in this section shall be construed as a limitation upon the power of the
Commission to grant certificates of public convenience and necessity for service of an area already being served by another natural-gas company.
(h) Right of eminent domain for construction of
pipelines, etc.
When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of
property to the compensation to be paid for, the
necessary right-of-way to construct, operate,
and maintain a pipe line or pipe lines for the
transportation of natural gas, and the necessary
land or other property, in addition to right-ofway, for the location of compressor stations,
pressure apparatus, or other stations or equipment necessary to the proper operation of such
pipe line or pipe lines, it may acquire the same
by the exercise of the right of eminent domain
in the district court of the United States for the
district in which such property may be located,
or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States
shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property
is situated: Provided, That the United States district courts shall only have jurisdiction of cases
when the amount claimed by the owner of the
property to be condemned exceeds $3,000.
(June 21, 1938, ch. 556, § 7, 52 Stat. 824; Feb. 7,
1942, ch. 49, 56 Stat. 83; July 25, 1947, ch. 333, 61
Stat. 459; Pub. L. 95–617, title VI, § 608, Nov. 9,
1978, 92 Stat. 3173; Pub. L. 100–474, § 2, Oct. 6, 1988,
102 Stat. 2302.)
AMENDMENTS
1988—Subsec. (f). Pub. L. 100–474 designated existing
provisions as par. (1) and added par. (2).
1978—Subsec. (c). Pub. L. 95–617, § 608(a), (b)(1), designated existing first paragraph as par. (1)(A) and existing second paragraph as par. (1)(B) and added par. (2).
Subsec. (e). Pub. L. 95–617, § 608(b)(2), substituted
‘‘subsection (c)(1)’’ for ‘‘subsection (c)’’.
1947—Subsec. (h). Act July 25, 1947, added subsec. (h).
1942—Subsecs. (c) to (g). Act Feb. 7, 1942, struck out
subsec. (c), and added new subsecs. (c) to (g).
EFFECTIVE DATE OF 1988 AMENDMENT
Section 3 of Pub. L. 100–474 provided that: ‘‘The provisions of this Act [amending this section and enacting
provisions set out as a note under section 717w of this
title] shall become effective one hundred and twenty
days after the date of enactment [Oct. 6, 1988].’’
TRANSFER OF FUNCTIONS
Enforcement functions of Secretary or other official
in Department of Energy and Commission, Commissioners, or other official in Federal Energy Regulatory
Commission related to compliance with certificates of
public convenience and necessity issued under this section with respect to pre-construction, construction,
and initial operation of transportation system for Canadian and Alaskan natural gas transferred to Federal

§ 717g

TITLE 15—COMMERCE AND TRADE

Inspector, Office of Federal Inspector for Alaska Natural Gas Transportation System, until first anniversary
of date of initial operation of Alaska Natural Gas
Transportation System, see Reorg. Plan No. 1 of 1979,
§§ 102(d), 203(a), 44 F.R. 33663, 33666, 93 Stat. 1373, 1376, effective July 1, 1979, set out under section 719e of this
title. Office of Federal Inspector for the Alaska Natural
Gas Transportation System abolished and functions
and authority vested in Inspector transferred to Secretary of Energy by section 3012(b) of Pub. L. 102–486,
set out as an Abolition of Office of Federal Inspector
note under section 719e of this title. Functions and authority vested in Secretary of Energy subsequently
transferred to Federal Coordinator for Alaska Natural
Gas Transportation Projects by section 720d(f) of this
title.

§ 717g. Accounts; records; memoranda
(a) Rules and regulations for keeping and preserving accounts, records, etc.
Every natural-gas company shall make, keep,
and preserve for such periods, such accounts,
records of cost-accounting procedures, correspondence, memoranda, papers, books, and
other records as the Commission may by rules
and regulations prescribe as necessary or appropriate for purposes of the administration of this
chapter: Provided, however, That nothing in this
chapter shall relieve any such natural-gas company from keeping any accounts, memoranda, or
records which such natural-gas company may be
required to keep by or under authority of the
laws of any State. The Commission may prescribe a system of accounts to be kept by such
natural-gas companies, and may classify such
natural-gas companies and prescribe a system of
accounts for each class. The Commission, after
notice and opportunity for hearing, may determine by order the accounts in which particular
outlays or receipts shall be entered, charged, or
credited. The burden of proof to justify every accounting entry questioned by the Commission
shall be on the person making, authorizing, or
requiring such entry, and the Commission may
suspend a charge or credit pending submission of
satisfactory proof in support thereof.
(b) Access to and inspection of accounts and
records
The Commission shall at all times have access
to and the right to inspect and examine all accounts, records, and memoranda of natural-gas
companies; and it shall be the duty of such natural-gas companies to furnish to the Commission,
within such reasonable time as the Commission
may order, any information with respect thereto
which the Commission may by order require, including copies of maps, contracts, reports of engineers, and other data, records, and papers, and
to grant to all agents of the Commission free access to its property and its accounts, records,
and memoranda when requested so to do. No
member, officer, or employee of the Commission
shall divulge any fact or information which may
come to his knowledge during the course of examination of books, records, data, or accounts,
except insofar as he may be directed by the
Commission or by a court.
(c) Books, accounts, etc., of the person controlling gas company subject to examination
The books, accounts, memoranda, and records
of any person who controls directly or indirectly

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a natural-gas company subject to the jurisdiction of the Commission and of any other company controlled by such person, insofar as they
relate to transactions with or the business of
such natural-gas company, shall be subject to
examination on the order of the Commission.
(June 21, 1938, ch. 556, § 8, 52 Stat. 825.)
§ 717h. Rates of depreciation
(a) Depreciation and amortization
The Commission may, after hearing, require
natural-gas companies to carry proper and adequate depreciation and amortization accounts in
accordance with such rules, regulations, and
forms of account as the Commission may prescribe. The Commission may from time to time
ascertain and determine, and by order fix, the
proper and adequate rates of depreciation and
amortization of the several classes of property
of each natural-gas company used or useful in
the production, transportation, or sale of natural gas. Each natural-gas company shall conform its depreciation and amortization accounts
to the rates so ascertained, determined, and
fixed. No natural-gas company subject to the jurisdiction of the Commission shall charge to operating expenses any depreciation or amortization charges on classes of property other than
those prescribed by the Commission, or charge
with respect to any class of property a percentage of depreciation or amortization other than
that prescribed therefor by the Commission. No
such natural-gas company shall in any case include in any form under its operating or other
expenses any depreciation, amortization, or
other charge or expenditure included elsewhere
as a depreciation or amortization charge or
otherwise under its operating or other expenses.
Nothing in this section shall limit the power of
a State commission to determine in the exercise
of its jurisdiction, with respect to any naturalgas company, the percentage rates of depreciation or amortization to be allowed, as to any
class of property of such natural-gas company,
or the composite depreciation or amortization
rate, for the purpose of determining rates or
charges.
(b) Rules
The Commission, before prescribing any rules
or requirements as to accounts, records, or
memoranda, or as to depreciation or amortization rates, shall notify each State commission
having jurisdiction with respect to any naturalgas company involved and shall give reasonable
opportunity to each such commission to present
its views and shall receive and consider such
views and recommendations.
(June 21, 1938, ch. 556, § 9, 52 Stat. 826.)
§ 717i. Periodic and special reports
(a) Form and contents of reports
Every natural-gas company shall file with the
Commission such annual and other periodic or
special reports as the Commission may by rules
and regulations or order prescribe as necessary
or appropriate to assist the Commission in the
proper administration of this chapter. The Commission may prescribe the manner and form in