RESHAPING U.S. GAS MARKET KEY PART OF BILLS IN CONGRESS

Proposals to reform the U.S. natural gas market are a key element in National Energy Strategy (NES) bills filed in Congress. The Bush administration has recommended the five person board that oversees the Federal Energy Regulatory Commission be abolished and FERC's functions be rolled into the Department of Energy under the guidance of a single administrator appointed by the president. But key members of the House and Senate have said they will not consider such a change in this session of

April 8, 1991

2 min read

Proposals to reform the U.S. natural gas market are a key element in National Energy Strategy (NES) bills filed in Congress.

The Bush administration has recommended the five person board that oversees the Federal Energy Regulatory Commission be abolished and FERC's functions be rolled into the Department of Energy under the guidance of a single administrator appointed by the president.

But key members of the House and Senate have said they will not consider such a change in this session of Congress.

Separate from the administration's NES proposal, Rep. Phil Sharp (D-Ind.), chairman of the House energy and power subcommittee, has filed a major natural gas reform bill. In the Senate, energy committee Chairman Bennett Johnston (D-La.) and ranking Republican Malcolm Wallop (R-Wyo.) have filed a key bill.

All three approaches would allow a pipeline to be built without FERC certification under Section 7(c) of the Natural Gas Act.

The administration's NES said, "These certification requirements are frequently complex, costly, and time consuming and can delay or even deter construction of additional capacity to meet new demand or serve new producing areas.

"Potential competitors of proposed new pipeline facilities frequently intervene in these proceedings with the intent of delaying construction or to attach terms and conditions of service to the certificate."

Pipelines bypassing the 7(c) process would not receive federal eminent domain rights and would not be allowed traditional cost of service rate recovery. The administration bill goes the furthest.

Under certain conditions FERC does not require preapproval for interstate pipelines building new capacity under Section 31 1 of the Natural Gas Policy Act, which permits interstate lines to transport gas in an expedited fashion:

All three bills would affirm that practice with legislation, with the Sharp bill going the furthest.

And all three would ease pipelines' problems with National Environmental Policy Act (NEPA) permitting. The Sharp and Johnston-Wallop bills would allow FERC to use contractors to prepare environmental impact statements, and the administration and Johnston-Wallop bills would make FERC the key agency on NEPA compliance issues.

The administration bill would allow a pipeline to be exempt from FERC rate regulation after it demonstrated the market it serves is competitive and its rates are not discriminatory.