Natural Gas Market Policy Act of 1984

Summary

Natural Gas Policy Adjustments Act of 1983 - Title I: National Gas Pipeline Accountability - Amends the Natural Gas Policy Act of 1978 to provide that for purposes of the denial by the Federal Energy Regulatory Commission (FERC) of the cost passthroughs to interstate pipelines, the term "abuse" includes misrepresentation, imprudence on the part of the pipeline, the pipeline's failure to bargain at arm's-length with any producer, and the entering into or operating pursuant to a contract by a pipeline with a producer or other seller if the contract materially prevents a response to changes in customer demand or other market forces. Permits any interested persons to request a hearing before the Federal Energy Regulatory Commission (FERC) concerning a pipeline's request for a rate increase which reflects the cost of purchased gas. Prohibits an interstate pipeline from selling in interstate commerce during any month to an affiliate intrastate pipeline, Hinshaw pipeline, or local distribution company a greater percentage of the quantities of natural gas contractually available for sale during the month by the interstate pipeline to its affiliate than the percentage of contractually available lower average-priced natural gas which such affiliate buyer is purchasing during the same month from nonaffiliate interstate pipelines. Prohibits FERC from approving any rate or charge under the Natural Gas Act unless it determines that the rate design incorporated in such rate or charge fully places the pipeline at risk that it will not collect its allowed return on equity unless its purchasing and operating practices are designed to meet the demands of its market and prevent curtailment. Title II: Natural Gas Wellhead Pricing - Provides that following enactment of this Act, wellhead price controls shall not apply to any first sale of natural gas if the surface drilling of the well commenced on or after enactment. Eliminates price controls for the first sale of new enhancement natural gas. Defines "new enhancement natural gas" as natural gas produced as a result of production enhancement work. States that natural gas produced as a result of production enhancement work shall be: (1) the natural gas produced from the well involved after the completion of such work; less (2) the natural gas which would have been produced if such work were not performed. Defines "enhanced recovery production work" to mean work performed for one or more of the following purposes: (1) reentry into a well which has been plugged or reentry to drill deeper; (2) recompletion by reperforation of a zone from which natural gas has been produced or by perforation of a different zone; (3) repair; (4) installation of certain equipment; (5) workover operations to reduce excessive water or sand; (6) disposal or water or brine; (7) injection of inert gas; and (8) production enhancement if the enhancement technique will significantly increase production. Defines "unenhanced natural gas" as gas which is from the same well as new enhancement gas and which is not new enhancement gas. Requires the producer of new enhancement natural gas, before selling such gas, to provide any buyer of unenhanced gas 30 days' notice of the producer's intention to sell such new enhancement natural gas. Permits a producer to sell to any person at any price natural gas: (1) from a well the surface drilling of which began after enactment of this Act; (2) which meets applicable well spacing requirements; and (3) which is covered by a contract in effect as of enactment. Requires a seller, before any first sale of such gas, to give a buyer 30 days' notice of the seller's intention to sell such gas. Provides that maximum price provisions shall be inapplicable to the first sale of gas produced if: (1) the purchaser agrees; and (2) such production is necessary to prolong the productive life of a well. Repeals provisions: (1) allowing the reimposition of price controls; and (2) requiring a report from the Department of Energy concerning gas prices, supplies, and demand. Title III: Certain Contract Provisions - Provides that, for the three-year period following enactment of this Act, in the case of a covered contract containing a clause (commonly referred to as a take-or-pay clause) requiring the purchaser to take delivery of, or if not taken, to pay for, volumes of gas in excess of 50 percent of the contracted volume, the purchaser may elect not to accept delivery of any portion of the total volume exceeding 50 percent of the contracted volume without obligation to pay for volumes not taken pursuant to such election. Provides that a covered contract is one which: (1) is for the first sale of natural gas for resale; (2) is in effect as of enactment of this Act; and (3) has not been amended after enactment of this Act to exclude it from coverage. Permits the seller to terminate a contract with respect to amounts of natural gas not taken by the purchaser. Exempts released natural gas from maximum pricing limitations. Defines "released natural gas" as natural gas subject to a first sale contract for resale which the purchaser is not obligated to take (or pay for) by reason of: (1) the election described above; (2) the doctrine of force majeure; or (3) any law or contract provision which results in the purchaser taking or paying for 50 percent or less of the volume contracted to be taken (determined without regard to the preceding paragraph). Requires a seller, before any first sale of released natural gas, to give the buyer 30 days' notice of the seller's intention to sell such natural gas. Provides the buyer, within such period, with the option to buy the released gas. Revises the limitation on indefinite price escalators. Prohibits the price of any natural gas not subject to any maximum lawful price because of the elimination of price controls and which is sold under any contract for resale at a price established by an indefinite price escalator from exceeding the natural gas price indicator for the month of delivery. Defines the term "natural gas price indicator" to mean, with respect to any month, the determination under this paragraph of the volume weighted average price per million Btu's for deliveries to interstate pipelines, during the three-month period preceding the month prior to the month involved, of natural gas: (1) which is decontrolled natural gas sold under any first sale contract entered into during the twelve month period preceding the month involved; and (2) which was not previously subject to a first sale contract or, if so, the parties to the contract involved are not identical to those of the immediately preceding contract. Directs the Energy Information Administration to: (1) establish procedures for the collection of data regarding prices paid and volumes delivered under the contracts described above; and (2) determine the monthly natural gas price indicator. Provides that, any purchaser of natural gas from an interstate pipeline under a contract in effect as of the enactment of this Act, during the one year period beginning on the first day of the sixth month following enactment of this Act, may, without obligation to pay, exercise a right not to accept any portion of natural gas subject to such contract which would otherwise be deliverable on or after such election, provided the purchaser gives the seller at least 30 days' notice prior to the delivery date. Provides that after such right is exercised, the minimum commodity bill requirement applicable to any volumes of natural gas subject to such election shall be against public policy and unenforceable. Declares a minimum commodity bill requirement applicable to any sale of natural gas by any interstate pipeline to any purchaser to be against public policy and unenforceable if the requirement does not entitle a purchaser who makes a payment under such requirement to take delivery of the natural gas involved during such minimum period of time as FERC prescribes. Defines "minimum commodity bill requirement" to mean any contract or tariff requirement requiring payment for the minimum quantity of natural gas contracted for in the event the purchaser fails to take delivery. Title IV: Contract Carriage - Requires, as a general rule, a pipeline to transport natural gas at the request of a shipper, to the extent the pipeline has firm or interruptible available capacity, if: (1) the shipper submits a written request within a certain time period prior to transportation for the transportation of a certain amount of gas; and (2) the shipper agrees to compensate the pipeline in accordance with applicable tariff rates. Sets forth: (1) a special rule for intrastate pipelines; and (2) a method to determine available capacity. Requires a pipeline, whenever it does not have sufficient available capacity to satisfy both the transportation obligations undertaken pursuant to this paragraph and its other obligations, to allocate its capacity as prescribed by FERC. Sets forth requirements for such regulations. Sets forth provisions relating to: (1) contract carriage compensation; (2) the construction of new facilities by a pipeline upon request of a shipper; (3) the reduction of a pipeline's service obligation and a shipper's minimum bill obligation; (4) termination or reduction of contract carriage services; (5) the issuance of regulations by FERC; and (6) procedures for filing transportation requests, protesting a request, and hearings concerning a protest. Requires a pipeline to report to FERC every three months concerning: (1) its total capacity, current available capacity, and projected available capacity; (2) all transactions under this paragraph either requested or undertaken; and (3) the amount of gas actually used by its existing customers by month during the preceding five years. Requires: (1) each pipeline to file tariffs with FERC within 30 days of issuance of interim implementing regulations; (2) FERC to approve or modify the tariffs within 90 days; and (3) FERC to thereafter require the filing of and determine charges in such tariffs pursuant to procedures of its final regulations. Revises provisions relating to the authorization of sales and transportation. Authorizes FERC to authorize: (1) any interstate pipeline to transport natural gas on behalf of any person; and (2) any pipeline or local distribution company to sell natural gas to any pipeline or local distribution company. Revises provisions relating to assignments. Authorizes FERC to authorize a pipeline or local distribution company to assign, without compensation, to any other pipeline or local distribution company, all or any portion of the assignor's right to receive surplus natural gas at any first sale, upon such terms and conditions as FERC determines appropriate. Redefines the term "surplus natural gas" to mean with respect to any pipeline or local distribution company, any natural which exceeds the then current demands of such person for natural gas, as determind by FERC or the State regulatory agency. Declares a provision of any contract for sale (currently, first sale) of covered natural gas to be against public policy and unenforceable if such provision: (1) prohibits specified commingling of gas; (2) prohibits sales to any person subject to FERC's jurisdiction or prohibits transportation in interstate commerce; or (3) terminates any obligation under such contract as a result of such commingling, sale, or transportation. Provides that "natural gas covered by the Act" shall include for any contract natural gas the sale or transportation of which under the contract is not in interstate commerce because of provisions of this Act excluding (as a general rule) an intrastate pipeline or local distribution company from FERC's jurisdiction by reason of purchasing natural gas in a covered transaction. Defines a "covered transaction." Title V: Repeal of Certain Restrictions on Natural Gas and Petroleum Use and Pricing - Repeals restrictions under the Powerplant and Industrial Fuel Use Act of 1978 on the use of natural gas or petroleum in new facilities, existing major fuel-burning installation, certain boilers used for space heating, decorative outdoor lighting, and existing electric powerplants. Repeals the incremental pricing program of the Natural Gas Policy Act of 1978. Title VI: Imports - Prohibits the importation of natural gas (including liquefied natural gas) beginning 270 days following enactment of this Act, unless: (1) the price and terms of the contract applicable to such importation have been renegotiated by the exporting and importing authorities to be responsive to the current natural gas market; and (2) the renegotiated contract and tariff adjustment to reflect any cost savings achieved by the renegotiation have been filed with FERC. Exempts from such prohibition a natural gas company all of whose sales to customers other than affiliates are from a supply made up solely of imported liquefied natural gas. Permits the recovery of costs prudently incurred for the construction in the United States of any terminal for the importation of Algerian natural gas. Title VII: Miscellaneous Provisions - Limits FERC's jurisdiction with respect to the first sale of natural gas which is committed or dedicated as of the day before enactment of the Natural Gas Policy Act of 1978 and which is exempted from price controls.

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2 official files

• Reported to House with amendment(s)

  summary · EN · 31 May 1984

  Open at official source

• Introduced in House

  summary · EN · 2 November 1983

  Open at official source

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