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Z. Natural Gas Act, Public Law 75-688,52 Stat. 821, June 21, 1938 (15 USC 717-717w), as

amended by: Public Laws 77-444, 56 Stat. 83, February 7, 1942; 80-245, 61 Stat. 459, July 25, 1947; 83-323, 68 Stat. 36, March 27, 1954; 85-791, 72 Stat. 941, August 28, 1958; 87-454, 76 Stat. 72, May 21, 1962; 91-452, 84 Stat. 922, October 15, 1970; and 95-617, 92 Stat. 3117, November 9, 1978.

An Act

To regulate the transportation and sale of natural gas in interstate commerce, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,

Natural
Gas Act.

Necessity for regulation of natural-gas companies. Declaration of policy

Application of provisions.

Exemptions.

Necessity for Regulation of Natural Gas Companies Section 1.

(a) As disclosed in reports of the Federal Trade Commission made pursuant to Senate Resolution 83 (Seventieth Congress, first session) and other reports made pursuant to the authority of Congress, it is hereby declared that the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest, and that Federal regulation in matters relating to the transportation of natural gas and the sale thereof in interstate and foreign commerce is necessary in the public interest.

(b) The provisions of this act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.

(c) The provisions of this Act shall not apply to any person engaged in or legally authorized to engage in the transportation in interstate commerce or the sale in interstate commerce for resale, of natural gas received by such person from another person within or at the boundary of a State if all the natural gas so received is ultimately consumed within such State, or to any facilities used by such person for such transportation or sale, provided that the rates and service of such person and facilities be subject to regulation by a State commission. The matters exempted from the provisions of this Act by this subsection are hereby declared to be matters primarily of local concern and subject to regulation by the several States. A certification from such State commission to the Federal Power Commission that such State commission has regulatory jurisdiction over rates and service of such person and facilities and is exercising such jurisdiction shall constitute conclusive evidence of such regulatory power or jurisdiction.

State jurisdiction.

(As amended by P.L. 83-323, 68 Stat. 36, March 27, 1954)
Sec. 2. When used in this act, unless the context otherwise requires

(1) "Person" includes an individual or a corporation.

(2) "Corporation” includes any corporation, joint-stock company, partnership, association, business trust, organized group of persons, whether incorporated or not, receiver or receivers, trustee or trustees of any of the foregoing, but shall not include municipalities as hereinafter defined.

(3) "Municipality” means a city, county, or other political subdivision or agency of a State.

(4) "State" means a State admitted to the Union, the District of Columbia, and any organized Territory of the United States.

(5) "Natural gas” means either natural gas unmixed, or any mixture of natural and artificial gas.

(6) "Natural-gas company” means a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale.

(7) "Interstate commerce” means commerce between any point in a State and any point outside thereof, or between points within the same State but through any place outside thereof, but only insofar as such commerce takes place within the United States.

(8) "State commission” means the regulatory body of the State or municipality having jurisdiction to regulate rates and charges for the sale of natural gas to consumers within the State or municipality.

(9) "Commission” and “Commissioner" means the Federal Power Commission, and a member thereof, respectively.

Exportation or importation of natural gas.

15 USC 717b.

Exportation or Importation of Natural Gas Sec. 3. After six months from the date on which this act takes effect no person shall export any natural gas from the United States to a foreign country or import any natural gas from a foreign country without first having secured an order of the Commission authorizing it to do so. The Commission shall issue such order upon application, unless, after opportunity for hearing, it finds that the proposed exportation

or importation will not be consistent with the public interest. The Commission may by its order grant such application, in whole or in part, with such modification and upon such terms and conditions as the Commission may find necessary or appropriate, and may from time to time, after opportunity for hearing, and for good cause shown, make such supplemental order in the premises as it may find necessary or appropriate.

Issuance of orders by Commission upon application.

Rates and
charges.
15 USC 717c.

Undue preferences or advantages.

Unreasonable difference in rates, etc.

Schedules and contracts.

Change in rate, classification, or service.

Rates and Charges; Schedules; Suspension of New Rates
Sec. 4.

(a) All rates and charges made, demanded, or received by any natural-gas company for or in connection with the transportation or sale of natural gas subject to the jurisdiction of the Commission, and all rules and regulations affecting or pertaining to such rates or charges, shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.

(b) No natural-gas company shall, with respect to any transportation or sale of natural gas subject to the jurisdiction of the Commission,

(1) make or grant any undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage, or

(2) maintain any unreasonable difference in rates, charges, service, facilities, or in any other respect, either as between localities or as between classes of service.

(c) Under such rules and regulations as the Commission may prescribe, every natural-gas company shall file with the Commission, within such time (not less than sixty days from the date this act takes effect) and in such form as the Commission may designate, and shall keep open in convenient form and place for public inspection, schedules showing all rates and charges for any transportation or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services.

(d) Unless the Commission otherwise orders, no change shall be made by any natural-gas company in any such rate, charge, classification, or service, or in any rule, regulations, or contract relating thereto, except after thirty days' notice to the Commission and to the public

. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the change or changes to be made in the schedules then in force and the time when the change or changes will go into effect. The Commission, for good cause shown, may allow changes to take effect without requiring the thirty days' notice her in provided for by an order specifying the changes so to be made and the time when they shall ta ke effect and the manner in which they shall be filed and published.

(e) Whenever any such new schedule is filed the Commission shall have authority, eitler upon complaint of any State, municipality, State commission, or gas distributing company or upon its own initiative without complaint, at once, and if it so orders, without answer or fori al pleading by the natural-gas company, but upon reasonable notice, to enter upon a hear ng concerning the lawfulness of such rate, charge, classification, or service; and, pleading si ch hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the natural-gas company affected thereby a statement in writing of its reasons or such suspension, may suspend the operation of such schedule and defer the use of such ri te, charge, classification, or service, but not for a longer period than five months beyond the ti ne when it would otherwise go into effect; and after full hearings, either completed before or a er the rate, charge, classification, or service goes into effect, the Commission may make s ch orders with reference thereto as would be proper in a proceeding initiated after it had beca ne effective. If the proceeding has not been concluded and an order made at the expiration of he suspension period, on motion of the natural-gas company making the filing, the propc ed change of rate, charge, classification, or service shall go into effect. Where increased rate or charges are thus made effective, the Commission may, by order, require the natural as company to furnish a bond, to be approved by the Commission, to refund any amounts ordere y the Commission, to keep accurate accounts in detail of all amounts received by reason of h increase, specifying by whom and in whose behalf such amounts were paid, and, u in completion of the hearing and decision, to order such natural-gas company to refund, th interest, the portion of such increased rates or charges by its decision found not justified. At ly

Hearings.

If proceeding not concluded, etc.

Bond.

Refunds if increased rates not approved.

Burden of proof.

hearing involving a rate or charge sought to be increased, the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the natural-gas company, and the Commission shall give to the hearing and decision of such questions preference over other questions pending before it and decide the same as speedily as possible.

(As amended by P.L. 87-454, 76 Stat. 72, May 21, 1962.)

Fixing Rate and Charges; Determination of Cost of

Production or Transportation

Sec. 5.

Fixing rates (a) Whenever the Commission, after a hearing had upon its own motion or upon complaint of and charges. any State, municipality, State commission, or gas distributing company, shall find that any 15 USC 717d. rate, charge, or classification demanded, observed, charged, or collected by any natural-gas company in connection with any transportation or sale of natural gas, subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by

Provisos. order:Provided, however, That the Commission shall have no power to order any increase in any rate contained in the currently effective schedule of such natural-gas company on file with the

Power of Commission, unless such increase is in accordance with a new schedule filed by such natural-gas

Commission to

increase or company; but the Commission may order a decrease where existing rates are unjust, unduly

decrease rates. discriminatory, preferential, otherwise unlawful, or are not the lowest reasonable rates.

(b) The Commission upon its own motion, or upon the request of any State commission, Determination whenever it can do so without prejudice to the efficient and proper conduct of its affairs, may

of cost of investigate and determine the cost of the production or transportation of natural gas by a production or natural-gas company in cases where the Commission has no authority to establish a rate

transportation. governing the transportation or sale of such natural gas.

Ascertainment of Cost of Property

Sec. 6.

Ascertainment (a) The Commission may investigate and ascertain the actual legitimate cost of the property

of cost of of every natural-gas company, the depreciation therein, and, when found necessary for property. rate-making purposes, other facts which bear on the determination of such cost or depreciation

15 USC 717e. and the fair value of such property.

(b) Every natural-gas company upon request shall file with the Commission an inventory of Inventory of all or any part of its property and a statement of the original cost thereof, and shall keep the property, Commission informed regarding the cost of all additions, betterments, extensions, and new original cost, construction.

improvements,

etc. Extension of Facilities; Abandonment of Service

Sec. 7.

Extension of (a) Whenever the Commission, after notice and opportunity for hearing, finds such action facilities. necessary or desirable in the public interest, it may by order direct a natural-gas company to extend or improve its transportation facilities, to establish physical connection of its USC 717f. transportation facilities with the facilities of, and sell natural gas to, any person or municipality engaged or legally authorized to engage in the local distribution of natural or artificial gas to the public, and for such purpose to extend its transportation facilities to communities immediately adjacent to such facilities or to territory served by such natural-gas company, if the Commission finds that no undue burden will be placed upon such natural-gas company, thereby: Provided, Provisos. That the Commission shall have no authority to compel the enlargement of transportation Not to impair facilities for such purposes, or to compel such natural-gas company to establish physical service, etc. connection or sell natural gas when to do so would impair its ability to render adequate service to its customers.

(b) No natural-gas company shall abandon all or any portion of its facilities subject to the Abandonment jurisdiction of the Commission, or any service rendered by means of such facilities, without the of service. permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or Certificate of necessity permit such abandonment.

Public (c) (1) (A) No natural-gas company or person which will be a natural-gas company upon Convenience

completion of any proposed construction or extension shall engage in the transportation and Necessity.

Grandfather clause certificates.

Temporary certificates.

Application for certificate.

or sale of natural gas, subject to the jurisdiction of the Commission, or undertake the construction or extension of any facilities therefor, or acquire or operate any such facilities or extensions thereof, unless there is in force with respect to such natural-gas company a certificate of public convenience and necessity issued by the Commission authorizing such acts or operations: Provided, however, That if any such natural-gas company or predecessor in the interest was bona fide engaged in transportation or sale of natural gas, subject to the jurisdiction of the Commission, on the effective date of this amendatory Act, over the route or routes or within the area for which application is made and has so operated since that time, the Commission shall issue such certificate without requiring further proof that public convenience and necessity will be served by such operation, and without further proceedings, if application for such certificate is made to the Commission within ninety days after the effective date of this amendatory Act. Pending the determination of any such application, the continuance of such operation shall be lawful.

(B) In all other cases the Commission shall set the matter for hearing and shall give such reasonable notice of the hearing thereon to all interested persons as in its judgment may be necessary under rules and regulations to be prescribed by the Commission; and the application shall be decided in accordance with the procedure provided in subsection (e) of this section and such certificate shall be issued or denied accordingly: Provided, however, that the Commission may issue a temporary certificate in cases of emergency, to assure maintenance of adequate service or to serve particular customers, without notice or hearing, pending the determination of an application for a certificate, and may by regulation exempt from the requirements of this section temporary acts or operations for which the issuance of a certificate will not be required in the public interest.

(2) The Commission may issue a certificate of public convenience and necessity to a natural-gas company for the transportation in interstate commerce of natural gas used by any person for one or more high-priority uses, as defined, by rule, by the Commission, in the case of

(A) natural gas sold by the producer to such person; and

(B) natural gas produced by such person. (d) Application for certificates shall be made in writing to the Commission, be verified under oath, and shall be in such form, contain such information, and notice thereof shall be served upon such interested parties and in such manner as the Commission shall, by regulation, require.

(e) Except in the cases governed by the provisos contained in subsection (c)(1) of this section, a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extention, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Act and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied. The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.

(f) The Commission, after a hearing had upon its own motion or upon application, may determine the service area to which each authorization under this section is to be limited. Within such service area as determined by the Commission a natural-gas company may enlarge or extend its facilities for the purpose of supplying increased market

demands in such service area without further authorization.

(g) Nothing contained in this section shall be construed as a limitation upon the power of the Commission to grant certificates of public convenience and necessity for service of an area already being served by another natural-gas company.

(h) When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipeline or pipelines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipeline or pipelines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That the United

Requirements for issuance of certificate.

States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

(As amended by P.L. 77-444, 56 Stat. 83, February 7, 1942; P.L. 80-245, 61 Stat. 459, July 25, 1947; and P.L. 95-617, 92 Stat 3117, November 9, 1978).

Accounts, Records, and Memoranda

accounts.

Sec. 8.

Accounts, (a) Every natural-gas company shall make, keep, and preserve for such periods, such records, and accounts, records of cost-accounting procedures, correspondence, memoranda, papers, books, memoranda. and other records as the Commission may by rules and regulations prescribe as necessary or 15 USC 717g. appropriate for purposes of the administration of this act: Provided, however, That nothing in Proviso. this act shall relieve any such natural-gas company from keeping any accounts, memoranda, or State records which such natural-gas company may be required to keep by or under authority of the requirements. laws of any State. The Commission may prescribe a system of accounts to be kept by such

Commission natural-gas companies, and may classify such natural-gas companies and prescribe a system of accounts for each class. The Commission, after notice and opportunity for hearing, may

may prescribe determine by order the accounts in which particular outlays or receipts shall be entered,

system of charged, or credited. The burden of proof to justify every accounting entry questioned by the Commission shall be on the person making, authorizing, or requiring such entry, and the Burden of Commission may suspend a charge or credit pending submission of satisfactory proof in support proof. thereof.

(b) The Commission shall at all times have access to and the right to inspect and examine all Inspection of accounts, records, and memoranda of natural-gas companies; and it shall be the duty of such accounts, etc. natural-gas companies to furnish to the Commission, within such reasonable time as the Commission may order, any information with respect thereto which the Commission may by order require, including copies of maps, contracts, reports of engineers, and other data, records, and papers, and to grant to all agents of the Commission free access to its property and its accounts, records, and memoranda when requested so to do. No member, officer, or employee of Divulging of the Commission shall divulge any fact or information which may come to his knowledge during information the course of examination of books, records, data, or accounts, except insofar as he may be prohibited. directed by the Commission or by a court.

(c) The books, accounts, memoranda, and records of any person who controls directly or Extent of indirectly a natural-gas company subject to the jurisdiction of the Commission and of any other jurisdiction company controlled by such person, insofar as they relate to transactions with or the business of of Commission. such natural-gas company, shall be subject to examination on the order of the Commission.

Rates of Depreciation

15 USC 717h.

Rates of depreciation.

Charges.

Sec. 9.

(a) The Commission may, after hearing, require natural-gas companies to carry proper and adequate depreciation and amortization accounts in accordance with such rules, regulations, and forms of account as the Commission may prescribe. The Commission may from time to time ascertain and determine, and by order fix, the proper and adequate rates of depreciation and amortization of the several classes of

property of each natural-gas company used or useful in the production, transportation, or sale of natural gas. Each natural-gas company shall conform its depreciation and amortization accounts to the rates so ascertained, determined, and fixed. No natural-gas company subject to the jurisdiction of the Commission shall charge to operating expenses any depreciation or amortization charges on classes of property other than those prescribed by the Commission, or charge with respect to any class of property a percentage of depreciation or amortization other than that prescribed therefor by the Commission. No such natural-gas company shall in any case include in any form under its operating or other expenses any depreciation, amortization, or other charge or expenditure included elsewhere as a depreciation or amortization charge or otherwise under its operating or other expenses. Nothing in this section shall limit the power of a State commission to determine in the exercise of its jurisdiction, with respect to any natural-gas company, the percentage rates of depreciation or amortization to be allowed, as to any class of property of such natural-gas company, or the composite depreciation or amortization rate, for the purpose of determining rates or charges.

(b) The Commission, before prescribing any rules or requirements as to accounts, records, or memoranda, or as to depreciation or amortization rates, shall notify each State commission having jurisdiction with respect to any natural-gas company involved and shall give reasonable opportunity to each such commission to present its views and shall receive and consider such views and recommendations.

Restriction.

Jurisdiction of State commissions.

Presentation of views of State commissions.

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