
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC3371]

 
                      TITLE 15--COMMERCE AND TRADE
 
                     CHAPTER 60--NATURAL GAS POLICY
 
         SUBCHAPTER III--ADDITIONAL AUTHORITIES AND REQUIREMENTS
 
               Part B--Other Authorities and Requirements
 
Sec. 3371. Authorization of certain sales and transportation


(a) Commission approval of transportation

                      (1) Interstate pipelines

        (A) In general

             The Commission may, by rule or order, authorize any 
        interstate pipeline to transport natural gas on behalf of--
                (i) any intrastate pipeline; and
                (ii) any local distribution company.

        (B) Just and reasonable rates

            The rates and charges of any interstate pipeline with 
        respect to any transportation authorized under subparagraph (A) 
        shall be just and reasonable (within the meaning of the Natural 
        Gas Act [15 U.S.C. 717 et seq.]).

                      (2) Intrastate pipelines

        (A) In general

            The Commission may, by rule or order, authorize any 
        intrastate pipeline to transport natural gas on behalf of--
                (i) any interstate pipeline; and
                (ii) any local distribution company served by any 
            interstate pipeline.

        (B) Rates and charges

            (i) Maximum fair and equitable price

                The rates and charges of any intrastate pipeline with 
            respect to any transportation authorized under subparagraph 
            (A), including any amount computed in accordance with the 
            rule prescribed under clause (ii), shall be fair and 
            equitable and may not exceed an amount which is reasonably 
            comparable to the rates and charges which interstate 
            pipelines would be permitted to charge for providing similar 
            transportation service.
            (ii) Commission rule

                The Commission shall, by rule, establish the method for 
            calculating an amount necessary to--
                    (I) reasonably compensate any intrastate pipeline 
                for expenses incurred by the pipeline and associated 
                with the providing of any gathering, treatment, 
                processing, transportation, delivery, or similar service 
                provided by such pipeline in connection with any 
                transportation of natural gas authorized under 
                subparagraph (A); and
                    (II) provide an opportunity for such pipeline to 
                earn a reasonable profit on such services.

(b) Commission approval of sales

                           (1) In general

        The Commission may, by rule or order, authorize any intrastate 
    pipeline to sell natural gas to--
            (A) any interstate pipeline; and
            (B) any local distribution company served by any interstate 
        pipeline.

                        (2) Rates and charges

        (A) Maximum fair and equitable price

            The rates and charges of any intrastate pipeline with 
        respect to any sale of natural gas authorized under paragraph 
        (1) shall be fair and equitable and may not exceed the sum of--
                (i) such intrastate pipeline's weighted average 
            acquisition cost of natural gas;
                (ii) an amount, computed in accordance with the rule 
            prescribed under subparagraph (B); and
                (iii) any adjustment permitted under subparagraph (C).

        (B) Commission rule

            The Commission shall, by rule, establish the method for 
        calculating an amount necessary to--
                (i) reasonably compensate any intrastate pipeline for 
            expenses incurred by the pipeline and associated with the 
            providing of any gathering, treatment, processing, 
            transportation, or delivery service provided by such 
            pipeline in connection with any sale of natural gas 
            authorized under paragraph (1); and
                (ii) provide an opportunity for such pipeline to earn a 
            reasonable profit on such services.

        (C) Adjustment

            (i) Application

                This subparagraph shall apply in any case in which, in 
            order to deliver any volume of natural gas pursuant to any 
            sale authorized under paragraph (1), any intrastate pipeline 
            acquires quantities of natural gas under any existing 
            contract, if--
                    (I) such intrastate pipeline acquires any volume of 
                natural gas under such contract in excess of that which 
                such pipeline would otherwise have acquired; and
                    (II) the price paid for such additional volume of 
                natural gas acquired under such contract is greater than 
                such pipeline's weighted average acquisition cost of 
                natural gas, computed without regard to the acquisition 
                of such additional volume of natural gas.
            (ii) Commission adjustment

                In any case to which this subparagraph applies, the 
            Commission shall permit an adjustment to the maximum fair 
            and equitable price provided under subparagraph (A) to 
            increase the revenue to the intrastate pipeline under such 
            sale by an amount determined by the Commission to be 
            adequate to offset the additional cost incurred by such 
            pipeline due to any increase in such pipeline's weighted 
            average acquisition cost of natural gas.

                           (3) Limitation

        (A) Two-year duration

            No authorization of any sale (or any extension thereof) 
        under paragraph (1) may be for a period exceeding two years.

        (B) Extension

            Any authorization of any sale under paragraph (1), and any 
        extension of any such authorization under this subparagraph, may 
        be extended by the Commission if such extension satisfies the 
        requirements of this subsection.

           (4) Adequacy of service to intrastate customers

        Any sale authorized under paragraph (1) shall be subject to 
    interruption to the extent that natural gas subject to such sale is 
    required to enable the intrastate pipeline involved to provide 
    adequate service to such pipeline's customers at the time of such 
    sale.

                     (5) Procedural requirements

        (A) Affidavit

            Any application for authorization of any sale under 
        paragraph (1) shall be accompanied by an affidavit filed by the 
        intrastate pipeline involved and setting forth--
                (i) the identity of the interstate pipeline or local 
            distribution company involved;
                (ii) each point of delivery of the natural gas from the 
            intrastate pipeline;
                (iii) the estimated total and daily volumes of natural 
            gas subject to such sale;
                (iv) the price or prices of such volumes; and
                (v) such other information as the Commission may, by 
            rule, require.

        (B) Verification of compliance

            Any application for authorization of any sale under 
        paragraph (1) shall be accompanied by a statement by the 
        intrastate pipeline involved verifying by oath or affirmation 
        that such sale, if authorized, would comply with all 
        requirements applicable to such sale under this subsection and 
        all terms and conditions established, by rule or order, by the 
        Commission and applicable to such sale.

                      (6) Termination of sales

        (A) Hearing

            Upon complaint of any interested person, or upon the 
        Commission's own motion, the Commission shall, after affording 
        an opportunity for oral presentation of views and arguments, 
        terminate any sale authorized under paragraph (1) if the 
        Commission determines--
                (i) such termination is required to enable the 
            intrastate pipeline involved to provide adequate service to 
            the customers of such pipeline at the time of such sale;
                (ii) such sale involves the sale of natural gas acquired 
            by the intrastate pipeline involved solely or primarily for 
            the purpose of resale of such natural gas pursuant to a sale 
            authorized under paragraph (1);
                (iii) such sale violates any requirement of this 
            subsection or any term or condition established, by rule or 
            order, by the Commission and applicable to such sale; or
                (iv) such sale circumvents or violates any provision of 
            this chapter.

        (B) Suspension pending hearing

            Prior to any hearing or determination required under 
        subparagraph (A), upon complaint of any interested person or 
        upon the Commission's own motion, the Commission may suspend any 
        sale authorized under paragraph (1) if the Commission finds that 
        it is likely that the determinations described in subparagraph 
        (A) will be made following the hearing required under 
        subparagraph (A).

        (C) Determination

            The determination of whether any interruption of any sale 
        authorized under paragraph (1) is required under subparagraph 
        (A)(i) shall be made by the Commission without regard to the 
        character of the use of natural gas by any customer of the 
        intrastate pipeline involved.

        (D) State intervention

            Any interested State may intervene as a matter of right in 
        any proceeding before the Commission relating to any 
        determination under this section.

                   (7) Disapproval of application

        The Commission shall disapprove any application for 
    authorization of any sale under paragraph (1) if the Commission 
    determines--
            (A) such sale would impair the ability of the intrastate 
        pipeline involved to provide adequate service to its customers 
        at the time of such sale (without regard to the character of the 
        use of natural gas by such customer);
            (B) such sale would involve the sale of natural gas acquired 
        by the intrastate pipeline involved solely or primarily for the 
        purpose of resale of such natural gas pursuant to a sale 
        authorized under paragraph (1);
            (C) such sale would violate any requirement of this 
        subsection or any term or condition established, by rule or 
        order, by the Commission and applicable to such sale; or
            (D) such sale would circumvent or violate any provision of 
        this chapter.

(c) Terms and conditions

    Any authorization granted under this section shall be under such 
terms and conditions as the Commission may prescribe.

(Pub. L. 95-621, title III, Sec. 311, Nov. 9, 1978, 92 Stat. 3388.)

                       References in Text

    The Natural Gas Act, referred to in subsec. (a)(1)(B), is act June 
21, 1938, ch. 556, 52 Stat. 821, as amended, which is classified 
generally to chapter 15B (Sec. 717 et seq.) of this title. For complete 
classification of this act to the Code, see section 717w of this title 
and Tables.

                  Section Referred to in Other Sections

    This section is referred to in sections 3374, 3431, 3432 of this 
title.
