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Under this option, it appears that the construction of

facilities would be entirely outside the Commission's

jurisdiction, as well as that of the States except under limited circumstances. In this regard, the sectional analysis states that no Federal right of eminent domain would attach to facilities constructed or extended under this provision.

It is also stated in the sectional analysis that since no Commission action would be required for the construction of such facilities, any environmental review would be by State or other Federal agencies. While the Commission apparently would be relieved of all responsibility to conduct an environmental review under this option, other Federal and State agencies would be obligated to conduct such reviews as recognized in the sectional analysis. Receiving the requisite State and Federal approvals, rights of way and permits is often the most time-consuming element of construction.

Therefore, this procedure may not necessarily result in completion of projects in a more timely fashion.

A final issue relates to the fact that under the proposed nonjurisdictional option a person may elect to acquire a facility for the transportation or sale of natural gas through that

facility without a certificate.

Presumably, abandonment

authority would be required for a facility certificated under NGA

Section 205(b) would amend existing NGA section 4 to provide that the Commission would be authorized to issue an order finding that rates charged by a natural gas company in a market are not within the Commission's jurisdiction under the NGA if, after a hearing upon the application of a natural gas company, the Commission finds that the market is competitive and that the natural gas company offers transportation or sales service to that market on a basis which is not unduly discriminatory. stated in the sectional analysis that this authority is in addition to the Commission's existing authority to determine that market-based rates meet the just and reasonable standard when sufficient competition exists to protect consumers from market

power abuses.

It is

Although this amendment to NGA section 4 is located in the same section as the nonjurisdictional construction option, it appears to pertain only to facilities subject to the Commission's jurisdiction. That follows from its application to "natural gas companies." Accordingly, its intention is the deregulation of existing (or subsequently certificated) interstate pipelines' sales and transportation rates.

With respect to sales rates, the

amendment is in accord with the Commission's efforts to establish

market-based rates in the context of its gas inventory

proceedings.

The Commission has permitted such sales rates only

when it has found sufficient divertible supplies and

comparability of transportation and sales service to ensure that the pipelines do not possess market power. To date, however, the Commission has not had the opportunity to address the

deregulation of pipelines' transportation rates. In large part, this is due to the predominantly monopolistic configuration of the existing interstate pipeline grid. In fact, the continued regulation of pipelines' transportation rates has been an important factor in the Commission's determinations that pipelines' sales rates require less regulatory scrutiny.

In addition to the observation above on the importance of the regulation of pipelines' transportation rates to the

deregulation of their sales rates, a major concern with regard to this proposed amendment is what happens if, once rates are deregulated, circumstances change such that the market the natural gas company is authorized to serve is no longer competitive and the transportation or sales service is no longer offered on a basis that is not unduly discriminatory. Would the Commission be able to reassert jurisdiction over those rates and charges? If so, what would be the jurisdictional predicate for the exercise of that authority?

SECTIONS 211, 212, 213: NATURAL GAS IMPORT/EXPORT DEREGULATION

Subtitle B of the National Energy Strategy Act, comprising sections 212, 213, and 214, proposes certain changes pertaining to the regulation of imports and exports of natural gas, which would in effect deregulate those activities. In accordance with

the request at the hearing of March 7, 1991, comments on that aspect of the proposed legislation are set forth as follows.

Prior to 1977, jurisdiction to regulate natural gas imports and exports under NGA section 3 was vested in our predecessor agency, the Federal Power Commission (FPC). In 1977, Congress vested exclusive jurisdiction to decide import and export issues arising under section 3 in the Secretary of Energy, pursuant to §§301(b) and 402 (f) of the Department of Energy Organization Act. 42 U.S.C. §7152(a), 42 U.S.C. §7172(a). The Secretary thereafter delegated and divided section 3 authority between the Administrator of the Economic Regulatory Administration (ERA) and the Federal Energy Regulatory Commission (FERC), pursuant to a series of delegation orders.

Pursuant to the Secretary's delegation orders, the Administrator of the ERA was given exclusive jurisdiction under section 3 to authorize imports and exports of gas. ERA import/export authorization is dependent upon considerations of, among other things, the competitiveness of the import, the need

for the gas, the security of supply and any other appropriate matters. By order issued February 7, 1989, the Secretary transferred the authority to regulate natural gas imports and exports held by the ERA to the Assistant Secretary for Fossil Energy (DOE/FE).

The Commission was delegated jurisdiction under section 3 to approve or disapprove the construction and operation, including the site at which the facilities are located, of particular facilities incidental to the importation of natural gas. The Commission also has the authority to perform all functions under sections 4, 5, and 7 of the NGA.

Section 212 of the proposed bill would rewrite section 3 in its entirety and would, in effect deregulate the international gas market. At the same time, the definition of interstate commerce in section 2 of the NGA would be revised to include natural gas following importation or preceding exportation. would eliminate the previous distinction between "interstate commerce" and "foreign commerce, " as defined in various court decisions.

(1948);

This

See, Border Pipe Line Company v. FPC, 171 F.2d 149 Distrigas Corporation v. FPC., 495 F.2d 1057 (1974).

The sectional analysis appropriately points out that, under this proposal, gas imports would be treated in the same manner as domestic natural gas production and gas exports would be treated as gas sold to any consumer. However, it should be noted here