(8) Proration Unit.-The term "proration unit"means (A) any portion of a reservoir, as designated by the State or Federal agency having regulatory jurisdiction with respect to production from such reservoir, which will be effectively and efficiently drained by a single well; (B) any drilling unit, production unit, or comparable arrangement, designated or recognized by the State or Federal agency having jurisdiction with respect to production from the reservoir, to describe that portion of such reservoir which will be effectively and efficiently drained by a single well; or (C) if such portion of a reservoir, unit, or comparable arrangement is not specifically provided for by State law or by any action of any State or Federal agency having regulatory jurisdiction with respect to production from such reservoir, any voluntary unit agreement or other comparable arrangement applied, under local custom or practice within the locale in which such reservoir is situated, for the purpose of describing the portion of a reservoir which may be effectively and efficiently drained by a single well. (9) New Lease.-The term "new lease", when used with respect to the Outer Continental Shelf, means a lease, entered into on or after April 20, 1977, of submerged acreage. (10) Old Lease.-The term "old lease", when used with respect to the Outer Continental Shelf, means any lease other than a new lease. (11) New Contract.-The term "new contract" means any contract, entered into on or after the date of the enactment of this Act, for the first sale of natural gas which was not previously subject to an existing contract. (12) Rollover Contract. The term "rollover contract" means any contract, entered into on or after the date of the enactment of this Act, for the first sale of natural gas that was previously subject to an existing contract which expired at the end of a fixed term (not including any extension thereof taking effect on or after such date of enactment) specified by the provisions of such existing contract, as such contract was in effect on the date of the enactment of this Act, whether or not there is an identity of parties or terms with those of such existing contract. (13) Existing Contract.-The term "existing contract" means any contract for the first sale of natural gas in effect on the day before the date of the enactment of this Act. (14) Successor to an Existing Contract. The term "successor to an existing contract" means any contract, other than a rollover contract, entered into on or after the date of the enactment of this Act, for the first sale of natural gas which was previously subject to an existing contract, whether or not there is an identity of parties or terms with those of such existing contract. (15) Interstate Pipeline.-The term "interstate pipeline" means any person engaged in natural gas transportation subject to the jurisdiction of the Commission under the Natural Gas Act. (16) Intrastate Pipeline.-The term "intrastate pipeline" means any person engaged in natural gas transportation (not including gathering) which is not subject to the jurisdiction of the Commission under the Natural Gas Act (other than any such pipeline which is not subject to the jurisdiction of the Commission solely by reason of section 1(c) of the Natural Gas Act). (17) Local Distribution Company.-The term "local distribution company" means any person, other than any interstate pipeline or any intrastate pipeline, engaged in the transportation, or local distribution, of natural gas and the sale of natural gas for ultimate consumption. (18) Committed or Dedicated to Interstate Commerce. (A) General Rule.-The term "committed or dedicated to interstate commerce", when used with respect to natural gas, means (i) natural gas which is from the Outer Continental Shelf; and (ii) natural gas which, if sold, would be required to be sold in interstate commerce (within the meaning of the Natural Gas Act) under the terms of any contract, any certificate under the Natural Gas Act, or any provision of such Act. (B) Exclusion.-Such term does not apply with respect to (i) natural gas sold in interstate commerce (within the meaning of the Natural Gas Act) (I) under section 6 of the Emergency Natural Gas Act of 1977; (II) under any limited term certificate, granted pursuant to section 7 of the Natural Gas Act, which contains a pregrant of abandonment of service for such natural gas; (III) under any emergency regulation under the second proviso of section 7(c) of the Natural Gas Act; or (IV) to the user by the producer and transported under any certificate, granted pursuant to section 7(c) of the Natural Gas Act, if such certificate was specifically granted for the transportation of that natural gas for such user; (ii) natural gas for which abandonment of service was granted before the date of enactment of this Act under section 7 of the Natural Gas Act; and (iii) natural gas which, but for this clause, would be committed or dedicated to interstate commerce under subparagraph (A)(ii) by reason of the action of any person (including any successor in interest thereof, other than by means of any reversion of a leasehold interest), if on May 31, 1978 (I) neither that person, nor any affiliate thereof, had any right to explore for, develop, produce, or sell such natural gas; and (II) such natural gas was not being sold in interstate commerce (within the meaning of the Natural Gas Act) for resale (other than any sale described in clause (i)(I), (II), or (III)). (19) Certificated Natural Gas.-The term "certificated natural gas" means natural gas transported by any interstate pipeline in a facility for which there is in effect a certificate issued under section 7(c) of the Natural Gas Act. Such term does not include natural gas sold to the user by the producer and transported pursuant to a certificate which is specifically issued under section 7(c) of the Natural Gas Act for the transportation of that natural gas, for such user unless such natural gas is used for the generation of electricity. (20) Sale. The term "sale" means any sale, exchange, or other transfer for value. (21) First Sale. gas (A) General Rule.-The term "first sale" means any sale of any volume of natural (i) to any interstate pipeline or intrastate pipeline; (ii) to any local distribution company; (iii) to any person for use by such person; (iv) which precedes any sale described in clauses (i), (ii), or (iii); and (v) which precedes or follows any sale described in clauses (i), (ii), (iii), or (iv) and is defined by the Commission as a first sale in order to prevent circumvention of any maximum lawful price established under this Act. (B) Čertain Sales Not Included.-Clauses (i), (ii), (iii), or (iv) of subparagraph (A) shall not include the sale of any volume of natural gas by any interstate pipeline, intrastate pipeline, or local distribution company, or any affiliate thereof, unless such sale is attributable to volumes of natural gas produced by such interstate pipeline, intrastate pipeline, or local distribution company, or any affiliate thereof. (22) Deliver. The term "deliver" when used with respect to any first sale of natural gas, means the physical delivery from the seller; except that in the case of the sale of proven reserves in place to any interstate pipeline, any intrastate pipeline, any local distribution company, or any user of such natural gas, such term means the transfer of title to such reserves. (23) Certificate.-The term "certificate", when used with respect to the Natural Gas Act, means a certificate of public convenience and necessity issued under such Act. (24) Commission.-The term "Commission" means the Federal Energy Regulatory Commission. (25) Federal Agency.-The term "Federal agency" has the same meaning as given such term in section 105 of title 5, United States Code. (26) Person.-The term "person" includes the United States, any State, and any political subdivision, agency, or instrumentality of the foregoing. (27) Affiliate.-The term "affiliate", when used in relation to any person, means another person which controls, is controlled by, or is under common control with, such person. (28) Electric Utility. The term "electric utility" means any person to the extent such person is engaged in the business of the generation of electricity and sale, directly or indirectly, of electricity to the public. (29) Mcf. The term "Mcf", when used with respect to natural gas, means 1,000 cubic feet of natural gas measured at a pressure of 14.73 pounds per square inch (absolute) and a temperature of 60 degrees Fahrenheit. (30) Btu.-The term "Btu" means British thermal unit. (31) Month.-The term "month" means a calendar month. (32) Mile. The term "mile" means a statute mile of 5,280 feet. (33) United States.-The term "United States" means the several States and includes the Outer Continental Shelf. (34) State. The term "State" means each of the several States and the District of Columbia. (35) Outer Continental Shelf.-The term "Outer Continental Shelf" has the same meaning as such term has under section 2(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1331 (a)). (36) Prudhoe Bay Unit of Alaska.-The term "Prudhoe Bay Unit of Alaska" means the geographic area subject to the voluntary unit agreement approved by the Commissioner of the Department of Natural Resources of the State of Alaska on June 2, 1977, and referred to as the "affected area" in Conservation Order No. 145 of the Alaska Oil and Gas Conservation Committee, Division of Oil and Gas Conservation, Department of Natural Resources of the State of Alaska, as such order was in effect on June 1, 1977, and determined without regard to any adjustments in the description of the affected area permitted to be made under such order. (37) Antitrust Laws.-The term "Federal antitrust laws" means the Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 U.S.C. 12, 13, 14-19, 20, 21, 22-27), the Federal Trade Commission Act (15 U.S.C. 41 et seq.), sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8-9), and the Act of June 19, 1936, chapter 592 (15 U.S.C. 13, 13a, 13b, and 21a). Sec. 101. TITLE I-WELLHEAD PRICING Subtitle A-Wellhead Price Controls Inflation Adjustment; Other General Price Ceiling Rules (a) Annual Inflation Adjustment Factor. (1) General Rule. For purposes of this title, the annual inflation adjustment factor applicable for any month shall be the sum of (A) a factor equal to one hundredth of the quarterly percent change in the GNP implicit price deflator; plus (B) a correction factor of 1.002. (2) Quarterly Percent Change in the GNP Implicit Price Deflator.-For purposes of paragraph (1) (A) In General.-The term "quarterly percent change in the GNP implicit price deflator", when used with respect to any month, means the quarterly percent change in the GNP implicit price deflator, computed and published as an annual rate by the Department of Commerce, for the most recent calendar quarter for which such quarterly percent change has been so published at least 8 days before the beginning of such month. (B) Months Before Enactment.-For purposes of applying such term with respect to any month in any calendar quarter which ends before the date of the enactment of this Act and for which a quarterly percent change in the GNP implicit price deflator has been published by the Department of Commerce as of such date of enactment, the quarterly percent change in the GNP implicit price deflator for the calendar quarter in which such month occurs shall be used in lieu of the quarterly percent change in the GNP implicit price deflator for a preceding calendar quarter. (3) GNP Implicit Price Deflator.-For purposes of paragraph (2)— (A) In General.-The term "GNP implicit price deflator" means, except as provided in subparagraph (B), the preliminary estimate of the implicit price deflator, seasonally adjusted, for the gross national product, as computed and published by the Department of Commerce for the calendar quarter involved. (B) Most Recent Data Available on Enactment.-The most recent revision, if any, of such implicit price deflator which has been so published before the date of the enactment of this Act, shall be used in lieu of the preliminary estimate of such implicit price deflator. (b) Rules of General Application. (1) Depth.-Except where otherwise provided, the depth of the completion location of any well shall be the true vertical depth, measured from the surface location of the well. (2) Commercial Quantities.-In determining whether production of natural gas has occurred in commercial quantities, quantities of natural gas produced from a well and used for the testing of such well or for other field uses which are production related shall not be taken into account. (3) Computation of Monthly Equivalent. For purposes of computing any price under this title, the monthly equivalent of any factor shall be the twelfth root of such factor. (4) Application of Ceiling Prices.-The maximum lawful ceiling prices under this title (A) shall only apply to natural gas produced in the United States; the date of the contract under which the sale occurs; and (C) shall not apply to deliveries occurring before the first day of the first month beginning after the date of the enactment of this Act. (5) Sales Qualifying Under More Than One Provision.-If any natural gas qualifies under more than one provision of this title providing for any maximum lawful price or for any exemption from such a price with respect to any first sale of such natural gas, the provision which could result in the highest price shall be applicable. (6) Computation and Publication of Ceiling Prices.-The Commission shall— (A) not later than 5 days before the beginning of any month, compute and make available the maximum lawful prices prescribed under this title for such month and the monthly equivalent of the annual inflation adjustment factor for such month, and (B) as soon as possible thereafter, publish such maximum lawful prices and such factor for such month in the Federal Register. (7) Rounding. Any maximum lawful price under this title shall be computed to the nearest mill (rounding any fraction thereof which is one-half a mill or higher to the next highest mill). (8) Computation of Initial Ceiling Prices.-In computing any maximum lawful price under the provisions of this title for the first month for which such provisions take effect, if the initial maximum lawful price is established by reference to any month before such month, such maximum lawful price shall be computed as if such provisions had been in effect during each such prior month. (9) Effect on Contract Price.-In the case of (A) any price which is established under any contract for the first sale of natural gas and which does not exceed the applicable maximum lawful price under this title, or (B) any price which is established under any contract for the first sale of natural gas which is exempted under subtitle B of this title from the application of a maximum lawful price under this title, such maximum lawful price, or such exemption from such a maximum lawful price, shall not supersede or nullify the effectiveness of the price established under such contract. Sec. 102. Ceiling Price for New Natural Gas and Certain Natural Gas (a) Application.-The maximum lawful price computed under subsection (b) shall apply to any first sale of natural gas delivered during any month in the case of (1) new natural gas; and (2) natural gas produced from any old lease on the Outer Continental Shelf and qualifying under subsection (d) for the new natural gas ceiling price. (b) Maximum Lawful Price.-The maximum lawful price under this section for any month shall be (1) $1.75 per million Btu's, in the case of April 1977; and (2) in the case of any month thereafter, the maximum lawful price, per million Btu's, prescribed under this subsection for the preceding month multiplied by the monthly equivalent of a factor equal to the sum of (A) the annual inflation adjustment factor applicable for such month; plus (B) (i) .035, in the case of any month beginning before April 20, 1981; or (ii) .04, in the case of any month beginning after April 20, 1981. (c) Definition of New Natural Gas. (1) General Rule. For the purposes of this section, the term "new natural gas" means each of the following categories of natural gas: (A) New OCS Leases.-Natural gas determined in accordance with section 503 to be produced from a new lease on the Outer Continental Shelf. (B) New Onshore Wells.-Natural gas determined in accordance with section 503 to be produced (other than from the Outer Continental Shelf) from (i) any new well which is 2.5 miles or more (determined in accordance with paragraph (2)) from the nearest marker well; or (ii) any completion location, of any new well, which is located at a depth at least 1,000 feet below the deepest completion location of each marker well within 2.5 miles (determined in accordance with paragraph (2)) of such new well. (C) New Onshore Reservoirs.— (i) General Rule.-Except as provided in clauses (ii) and (iii), natural gas determined in accordance with section 503 to be produced (other than from the Outer Continental Shelf) from a reservoir from which natural gas was not produced in commercial quantities before April 20, 1977. (ii) Behind-The-Pipe Exclusion.-Clause (i) shall not apply to natural gas produced from any reservoir if— (I) the reservoir was penetrated before April 20, 1977, by an old well from which natural gas or crude oil was produced in commercial quantities (whether or not such production was from such reservoir); and (II) natural gas could have been produced in commercial quantities from such reservoir through such old well before April 20, 1977. (iii) Withheld Gas Exclusion.-Clause (i) shall not apply to natural gas produced from any reservoir (I) if such natural gas is produced through an old well; and (II) subject to clause (iv), suitable facilities for the production and delivery to a pipeline of such natural gas were in existence on April 20, 1977. (iv) Emergency Sale Facilities.-The criteria of clause (iii)(II) shall not be considered to be met by reason of the existence of production and delivery facilities which were installed to carry out sales and deliveries of natural gas— (I) under section 6 of the Emergency Natural Gas Act of 1977; or (II) under the emergency sale authority pursuant to Opinion 699-B issued by the Federal Power Commission under section 7(c) of the Natural Gas Act. (2) Determination of Distance.-For purposes of determining the distance from any new well to any marker well (A) Surface Location to Surface Location.-The measurement shall be the horizontal distance from the surface location of the new well to the surface location of the marker well (i) in any case in which the new well meets requirements for the nondirectional drilling of wells prescribed by the appropriate State or Federal agency having regulatory jurisdiction over the drilling of such well; or (ii) in any case in which (I) the surface drilling of such new well began on or after February 19, 1977; (II) production of natural gas in commercial quantities began from such well before the date of the enactment of this Act; and (III) the drilling of such well was not subject to any requirement regarding directional or nondirectional drilling, or the drilling of such well was subject to requirements regarding directional drilling but such requirements did not necessitate the obtaining of any permit or other certificate before drilling began. (B) Completion Location to Surface Location. In the case of any new well which is not covered by subparagraph (A), the measurements shall be the horizontal distance from (i) the closest point of any completion location of the new well, vertically projected to the same elevation as the surface location of the nearest marker well; to (ii) the surface location of such marker well. (3) Determination of Commercial Quantities. For purposes of determining whether production of natural gas has occurred in commercial quantities under paragraph (1)(C)— (A) a rebuttable presumption exists that production from a reservoir in commercial quantities has not occurred if natural gas has not been sold and delivered from such reservoir before April 20, 1977; and (B) quantities of natural gas sold in interstate commerce (within the meaning of the Natural Gas Act) shall not be taken into account if such quantities were sold before the date of the enactment of this Act (i) under section 6 of the Emergency Natural Gas Act of 1977; or (ii) under the emergency sale authority pursuant to Opinion 699-B issued by the Federal Power Commission under section 7(c) of the Natural Gas Act. (4) New Wells Which are also Marker Wells.-For purposes of applying paragraph (c)(1)(B)(ii) in the case of any marker well which is also a new well under section 2(3)(B), the reference in such paragraph (c)(1)(B)(ii) to the deepest completion location of any marker well shall be deemed to be a reference to any subsurface location from which natural gas was produced in commercial quantities after January 1, 1970, and before February 19, 1977. (d) OCS Gas Qualifying for New Natural Gas Ceiling Price. For purposes of this section (1) OCS Reservoirs Discovered on or after July 27, 1976.-Natural gas determined in accordance with section 503 to be produced from an old lease on the Outer Continental Shelf shall qualify for the new natural gas ceiling price if such natural gas is produced from a reservoir which was not discovered before July 27, 1976. (2) Reservoirs Penetrated Before July 27, 1976.-For purposes of paragraph (1), a |