unregulated rates to be just and reasonable as does the Natural Gas Policy Act. As a result, the Federal preemption of State regulation that exists under the Natural Gas Act and Natural Gas Policy Act may be removed by this provision. On the other hand, courts may still hold that State regulation would continue to be preempted if they found that Congress intended for Federal regulation to occupy the entire field of interstate transportation and wholesale rates, or because State intrusion would stand as an obstacle to Congress' deregulation objective. Thus, whether a State commission would be preempted would depend upon the statutory scheme established by Congress. Moreover, given the litigation then developed with respect to similar issues following termination of oil price controls during the 1980's, we recommend the legislation be as specific as possible on Federal/ State jurisdictional questions. QUESTIONS FOR THE RECORD FROM SENATOR DOMENICI Question 6: Section 212 of S. 570 would appear to define "importation" to include all "actions involved in bringing natural gas into the United States." Would this include sales and transportation downstream from the border? Answer: The bill would remove the regulatory oversight granted to FERC and the Department of Energy's (DOE) Office of Fossil Energy through DOE delegation orders pursuant to the Department of Energy Organization Act. Accordingly, there would be no review or regulation of competitiveness or need for the imported gas, or construction of facilities generally outside the Commission's Natural Gas Act jurisdiction required to implement importation of gas. However, the sectional analysis accompanying the bill emphasizes that imported gas would be treated in the same manner as domestic production, i.e., there would be no regulation of the gas until the gas enters a domestic pipeline system. At that point, it can be argued the transportation and/or sales of the gas would be regulated pursuant to the jurisdiction granted under the Natural Gas Act and Natural Gas Policy Act. QUESTIONS FOR THE RECORD FROM SENATOR DOMENICI Question 7: Suppose that gas sold at the border in a first sale is resold by a marketer. Would that resale also be exempted from Natural Gas Act jurisdiction under the proposed Natural Gas Act section 3(a)? Answer: Yes. Since proposed Natural Gas Act section 3 (a) provides that importation of gas would be considered a first sale that appears to be covered by Natural Gas Policy Act section 601 (a)(1)(A), sales of imported gas made by a marketer would be exempt from Natural Gas Act jurisdiction. QUESTIONS FOR THE RECORD FROM SENATOR DOMENICI Question 8: Under proposed Natural Gas Act section 3(b), would FERC retain the jurisdiction to "level the playing field" regarding differences in rate design between U.S. and Canadian gas? Answer: Under proposed Natural Gas Act section 3(b), the Commission would retain jurisdiction to "level the playing field" to the extent the rates, charges, and practices at issue fall under its NGA jurisdiction. QUESTIONS FOR THE RECORD FROM SENATOR DOMENICI Question 9: Could proposed Natural Gas Act section 3(c) or 3(d) be used to overturn or preempt the U.S. - Canada Free Trade Agreement? Answer: Generally speaking, if a treaty and a Federal statute are incompatible, an attempt must be made to interpret them in such a manner that the inconsistency is resolved. If there is no way to resolve the inconsistency, the "later-in-time" rule applies. For example, an incompatible subsequent Federal statute is superior to a previous treaty. However, the general principle is that "an Act of Congress ought never to be construed to violate the law of nations, if any other possible construction remains ...." Murray v. Schooner Charming Betsy, 6 U.S. (2Cranch) 64, 118 (1804) (Marshall, C.J.). As discussed in our supplemental testimony, this matter should be clarified. |