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the delivery of gas. Thus, this proposal would enable any

person, e.g., another pipeline, producer, or a shipper, to seek receipt of its gas by any natural gas pipeline or person operating under the proposed section 7(k) nonjurisdictional option.

Several questions arise with regard to the proposal

providing the right to petition the Commission to direct physical connection of transportation facilities with petitioner's facilities in order to receive natural gas from the petitioner. Unlike the Commission's authority to direct interconnection for purposes of delivering gas in proposed section 7(a)(1), notice and hearing would not be required before the Commission could direct interconnection, pursuant to proposed section 7(a)(2), for purposes of receiving gas from the facilities of another. Also, proposed section 7(a) (1) states that the Commission may direct an interconnection only after finding that such action is "necessary or desirable in the public interest." This standard is not contained in section 7(a)(2). It is unclear whether this standard is intended to be broader than the test used to determine whether to order delivery interconnections. If the drafters intended this dichotomy, the question is whether there are any limitations upon the Commission's authority to direct interconnection for purposes of receiving gas, and if so, the nature and extent of those limitations. In short, under what circumstances could the Commission properly direct such an

interconnection?

This is particularly important to clarify since

proposed sections 7(a)(3)(A) and 7(a)(3)(B) apply the existing section 7(a) limitations to both proposed sections 7 (a) (1) and

7(a)(2).

It is important to address this question because, as a general policy matter, any proposal that would add flexibility to move gas through mandated physical interconnections would complement the Commission's efforts to establish an open-access market. However, unless the Commission's authority to order interconnections is clearly expanded beyond existing law, the utility of proposed NGA section 7(a) would be limited at best. In this vein, it would seem appropriate for the Committee to address whether, on policy grounds, it is a good idea to expand the circumstances under which such receipt point interconnects could be ordered. The Committee may also wish to consider whether this section should be expanded to extend to local distribution companies the right to seek delivery interconnections for transportation service as well as sales service. This would increase their options to purchase

competitively priced gas and should benefit consumers

accordingly. Since this action would not expand the category of companies who could seek interconnection for delivery of gas, no bypass issues would be raised.

In particular, under current law, only local distribution companies and municipalities may use NGA section 7(a) to request an interconnection to purchase gas from a pipeline. They may not use that section to request interconnection for transportation service. An end-user, such as an industrial facility, has no such rights under existing NGA section 7(a). Only if this section were amended to include end-users could a by-pass of a distributor or municipality occur. However, expanding distributors' rights to request a transportation interconnection does not raise this possibility, one to which distributors object because of the potential impact on their residential and commercial customers of losing a major industrial customer. On the contrary, expansion of the distributors' rights could enhance their ability to serve all of their customers, including maximizing the options for their industrial customers.

SECTION 202: NEPA COMPLIANCE

Major Federal Action

With regard to the National Environmental Policy Act (NEPA), section 202 seeks to amend NGA section 7(c) to provide that the issuance of a certificate for construction or extension of facilities "is the only Federal action that is considered a major Federal action requiring preparation of a detailed statement on the environmental impact of the proposed action." In the

sectional analysis accompanying the bill, it is explained that the only environmental impact statement (EIS) for a pipeline project required by NEPA is that prepared by the Commission, but that the Commission still would be required to consult with and solicit comments from other agencies.

This proposal represents a potentially important advance in determining what the Commission must do to comply with NEPA, which often constitutes the most time-consuming aspect of review of major projects.

Several aspects of this proposal may need to be clarified, however. First, the actual text of the proposed legislation states that only construction or extension of facilities under authority of an NGA section 7(c) certificate constitutes a major Federal action requiring a detailed EIS. The sectional analysis on the other hand appears to interpret this section to say that the only EIS required for a pipeline project is that prepared by the Commission, which is a completely different thing. The sectional analysis in effect states that only the Commission, and not other agencies, is required to prepare an EIS evaluating a pipeline project. The text of the proposed legislation, on the other hand, purports to limit what constitutes a "major Federal action." As to the statement in the sectional analysis, there already exists the "lead agency" concept, which the Commission has endorsed, whereby agencies may adopt an EIS prepared by the

agency with primary jurisdiction over a project; this provision would add little to that concept. Limiting by statute the definition of what constitutes a major Federal action requiring preparation of an EIS to the authorization of construction or extension of facilities by issuance of a certificate on the other hand would be extremely beneficial.

Also, assuming that the literal reading discussed above is correct, it is important to recognize that not all construction or extensions authorized under NGA section 7 (c) necessarily constitute major Federal actions requiring preparation of an EIS. It may be advisable to acknowledge, either in the language of the bill or in the conference report, that most construction or extensions for which a certificate is issued do not necessarily constitute major Federal actions and that oftentimes such construction is limited to minor facilities which could require only preparation of an environmental assessment. Put differently, many projects authorized under section 7(c) do not require a full-fledged environmental review culminating in an

EIS.

In the same manner, the meaning of the statement that construction or extension of facilities is the only action requiring "a detailed statement on the environmental impact of the proposed action" should be clarified. Again, it seems to be the intent that only construction or extension projects receiving