15 U.s.c. 3371

15 U.S.C.
United States Code, 2021 Edition
Title 15 - COMMERCE AND TRADE
CHAPTER 60 - NATURAL GAS POLICY
SUBCHAPTER III - ADDITIONAL AUTHORITIES AND REQUIREMENTS
Part B - Other Authorities and Requirements
Sec. 3371 - Authorization of certain sales and transportation
From the U.S. Government Publishing Office, www.gpo.gov

§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.
(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
increase 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);
(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.)
Editorial Notes
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.