15 U.S.C. § 3371 — Authorization of certain sales and trans-

Page 2007 TITLE 15—COMMERCE AND TRADE § 3371 tunity to participate from the beginning in the development and carrying out of agree- ments and actions under section 3363 of this title, in order to propose any alternative which would avoid or overcome, to the greatest extent practicable, possible anti- competitive effects while achieving substan- tially the purposes of section 3363 of this title and any order thereunder; and (D) such other procedures as may be speci- fied by the President in such request or order shall be complied with. (f) Effect on certain contractual obligations There shall be available as a defense to any ac- tion brought for breach of contract under Fed- eral or State Law arising out of any act or omis- sion that such act was taken or that such omis- sion occurred for purposes of complying with any order issued under section 3363 of this title. (g) Preemption Any order issued pursuant to this subchapter shall preempt any provision of any program for the allocation, emergency delivery, transpor- tation, or purchase of natural gas established by any State or local government if such program is in conflict with any such order. (Pub. L. 95–621, title III, § 304, Nov. 9, 1978, 92 Stat. 3387.) Executive Documents EX. ORD. NO. 12235. ASSIGNMENT OF MANAGEMENT RESPONSIBILITY IN CASES OF NATURAL GAS EMERGENCIES Ex. Ord. No. 12235, Sept. 3, 1980, 45 F.R. 58803, pro- vided: By the authority vested in me as President by the Constitution and statutes of the United States of America, including Section 304(d) of the Natural Gas Policy Act of 1978 (92 Stat. 3387; 15 U.S.C. 3364(d)) and Section 301 of Title 3 of the United States Code, and in order to assign management responsibility in case of a natural gas supply emergency, it is hereby ordered as follows: 1–101. The functions vested in the President by Sec- tions 301 through 304(c) of the Natural Gas Policy Act of 1978 (92 Stat. 3381–3387; 15 U.S.C. 3361–3364(c)) are del- egated to the Secretary of Energy; except for the au- thority to declare, extend, and terminate a natural gas supply emergency pursuant to Section 301 thereof (15 U.S.C. 3361). 1–102. The functions vested in the President by Sec- tion 607 of the Public Utility Regulatory Policies Act of 1978 (92 Stat. 3171; 15 U.S.C. 717z) are delegated to the Secretary of Energy; except for the authority to de- clare, extend, and terminate a natural gas supply emer- gency pursuant to Section 607(a) and (b) thereof (15 U.S.C. 717z(a) and (b)). 1–103. The Secretary shall consult with the Adminis- trator of the Environmental Protection Agency, the Di- 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 per- mitted 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 trans- portation (a) Commission approval of transportation (1) Interstate pipelines (A) In general The Commission may, by rule or order, au- thorize 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, au- thorize 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 transpor- tation authorized under subparagraph (A), including any amount computed in accord- ance 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 transpor- tation service. (ii) Commission rule The Commission shall, by rule, establish the method for calculating an amount nec- essary to— (I) reasonably compensate any intra- state pipeline for expenses incurred by the pipeline and associated with the pro- viding of any gathering, treatment, proc- essing, transportation, delivery, or simi- lar service provided by such pipeline in connection with any transportation of natural gas authorized under subpara- graph (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, au- thorize 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 Page 2008 TITLE 15—COMMERCE AND TRADE § 3371 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 subpara- graph (B); and (iii) any adjustment permitted under subparagraph (C). (B) Commission rule The Commission shall, by rule, establish the method for calculating an amount nec- essary to— (i) reasonably compensate any intrastate pipeline for expenses incurred by the pipe- line and associated with the providing of any gathering, treatment, processing, transportation, or delivery service pro- vided by such pipeline in connection with any sale of natural gas authorized under paragraph (1); and (ii) provide an opportunity for such pipe- line 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 vol- ume of natural gas pursuant to any sale authorized under paragraph (1), any intra- state pipeline acquires quantities of nat- ural 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 pipe- line’s weighted average acquisition cost of natural gas, computed without regard to the acquisition of such additional vol- ume 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 equi- table price provided under subparagraph (A) to increase the revenue to the intra- state 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- 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 exten- sion thereof) under paragraph (1) may be for a period exceeding two years. (B) Extension Any authorization of any sale under para- graph (1), and any extension of any such au- thorization under this subparagraph, may be extended by the Commission if such exten- sion satisfies the requirements of this sub- section. (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 re- quired to enable the intrastate pipeline in- volved 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 accom- panied 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 vol- umes of natural gas subject to such sale; (iv) the price or prices of such volumes; and (v) such other information as the Com- mission may, by rule, require. (B) Verification of compliance Any application for authorization of any sale under paragraph (1) shall be accom- panied by a statement by the intrastate pipeline involved verifying by oath or affir- mation 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 oppor- tunity for oral presentation of views and ar- guments, terminate any sale authorized under paragraph (1) if the Commission deter- mines— (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 in- volved 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 Com- mission 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 re- quired under subparagraph (A), upon com- plaint of any interested person or upon the Commission’s own motion, the Commission may suspend any sale authorized under para- graph (1) if the Commission finds that it is Page 2009 TITLE 15—COMMERCE AND TRADE § 3373 1 See References in Text note below. 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 inter- ruption of any sale authorized under para- graph (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 intra- state 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 appli- cation 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 nat- ural 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 require- ment of this subsection or any term or con- dition 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, which is classi- fied 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 re- ceive surplus natural gas (a) Authorization of assignments The Commission may, by rule or order, au- thorize any intrastate pipeline to assign, with- out compensation, to any interstate pipeline or local distribution company all or any portion of such intrastate pipeline’s right to receive sur- plus natural gas at any first sale, upon such terms and conditions as the Commission deter- mines appropriate. (b) Effect of authorization under subsection (a) For the effect of an authorization under sub- section (a), see section 3431 of this title (relating to the coordination of this chapter with the Nat- ural Gas Act [15 U.S.C. 717 et seq.]). (c) Surplus natural gas For purposes of this section, the term ‘‘surplus natural gas’’ means any natural gas which is de- termined, by the State agency having regu- latory jurisdiction over the intrastate pipeline which would be entitled to receive such natural gas in the absence of any assignment to exceed the then current demands on such pipeline for natural gas. (Pub. L. 95–621, title III, § 312, Nov. 9, 1978, 92 Stat. 3392; Pub. L. 101–60, § 3(b)(2), July 26, 1989, 103 Stat. 158.) Editorial Notes REFERENCES IN TEXT The Natural Gas Act, referred to in subsec. (b), is act June 21, 1938, ch. 556, 52 Stat. 821, which is classified generally to chapter 15B (§ 717 et seq.) of this title. For complete classification of this act to the Code, see sec- tion 717w of this title and Tables. AMENDMENTS 1989—Subsec. (c). Pub. L. 101–60 substituted ‘‘any nat- ural gas’’ for ‘‘any natural gas— ‘‘(1) which is not committed or dedicated to inter- state commerce on November 8, 1978; ‘‘(2) the first sale of which is subject to a maximum lawful price established under subchapter I of this chapter; and ‘‘(3)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Section 3(b) of Pub. L. 101–60 provided in part that the amendment by section 3(b)(2) of Pub. L. 101–60 is effec- tive Jan. 1, 1993. § 3373. Effect of certain natural gas prices on in- definite price escalator clauses (a) High-cost natural gas No price paid in any first sale of high-cost nat- ural gas (as defined in section 3317(c) 1 of this title, as such section was in effect on January 1, 1989) may be taken into account in applying any indefinite price escalator clause (as defined in section 3315(b)(3)(B) 1 of this title, as such sec- tion was in effect on January 1, 1989) with re- spect to any first sale of any natural gas other than high-cost natural gas (as defined in section 3317(c) 1 of this title, as such section was in ef- fect on January 1, 1989). (b) Other transactions No price paid— (1) in any sale authorized under section 3362(a) of this title, or (2) pursuant to any order issued under sec- tion 3363(b), (c), (d), or (g) of this title, may be taken into account in applying any in- definite price escalator clause (as defined in sec- tion 3315(b)(3)(B) 1 of this title, as such section was in effect on January 1, 1989). (Pub. L. 95–621, title III, § 313, Nov. 9, 1978, 92 Stat. 3392; Pub. L. 101–60, § 3(b)(3), July 26, 1989, 103 Stat. 159.)