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-CITE-

15 USC Sec. 3371 01/05/2009

-EXPCITE-

TITLE 15 - COMMERCE AND TRADE

CHAPTER 60 - NATURAL GAS POLICY

SUBCHAPTER III - ADDITIONAL AUTHORITIES AND REQUIREMENTS

Part B - Other Authorities and Requirements

-HEAD-

Sec. 3371. Authorization of certain sales and transportation

-STATUTE-

(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

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.

-SOURCE-

(Pub. L. 95-621, title III, Sec. 311, Nov. 9, 1978, 92 Stat. 3388.)

-REFTEXT-

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 (Sec. 717 et seq.) of this

title. For complete classification of this act to the Code, see

section 717w of this title and Tables.

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