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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
In this regard, the sectional analysis states
that no Federal right of eminent doma in 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
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 7 and the traditional standards relating to abandonment
Section 205 (b)
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
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 jurisdicticn over those rates and
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.
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
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
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. 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
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. This would eliminate the previous distinction between "interstate
commerce" and "foreign commerce,
as defined in various court
Seg, 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