Appendix — Producer Coalition v. Federal Energy Regulatory Commission

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APPENDIX A

TITLE 15. COMMERCE AND TRADE

CHAPTER 15B. NATURAL GAS

15 USCS § 717c (2003)

§ 717c. Rates and charges

(a) Just and reasonable rates and charges. 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) Undue preferences and unreasonable rates and charges

prohibited. 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) Filing of rates and charges with Commission; public

inspection of schedules. 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

sueh 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

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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) Changes in rates and charges; notice to Commission.

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, regulation, or con-

tract 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 schedule or 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 herein

provided for by an order specifying the changes so to be

made and the time when they shall take effect and the manner

in which they shall be filed and published.

(e) Authority of Commission to hold hearings concerning

new schedule of rates. Whenever any such new schedule is

filed the Commission shall have authority, either 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

formal pleading by the natural-gas company, but upon

reasonable notice, to enter upon a hearing concerning the

lawfulness of such rate, charge, classification, or service; and,

pending such 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 for such suspension, may suspend the

operation of such schedule and defer the use of such rate,

charge, classification, or service, but not for a longer period

than five months beyond the time when it would otherwise go

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into effect; and after full hearings, either completed before or

after the rate, charge, classification, or service goes into

effect, the Commission may make such orders with reference

thereto as would be proper in a proceeding initiated after it

had become effective. If the proceeding has not been

concluded and an order made at the expiration of the

suspension period, on motion of the natural-gas company

making the filing, the proposed change of rate, charge,

classification, or service shall go into effect. Where increased

rates or charges are thus made effective, the Commission

may, by order, require the natural-gas company to furnish a

bond, to be approved by the Commission, to refund any

amounts ordered by the Commission, to keep accurate

accounts in detail of ali amounts received by reason of such

increase, specifying by whom and in whose behalf such

amounts were paid, and, upon completion of the hearing and

decision, to order such natural-gas company to refund, with

interest, the portion of such increased rates or charges by its

decision found not justified. At any 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.

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APPENDIX B

TITLE 15. COMMERCE AND TRADE

CHAPTER I5B. NATURAL GAS

15 USCS § 717d (2003)

§ 717d. Fixing rates and charges; determination of cost of

production or transportation

(a) Decreases in rates. Whenever the Commission, after a

hearing had upon its own motion or upon complaint of any

State, municipality, State commission, or gas distributing

company, shall find that any 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 deter-

mine 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 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

Commission, unless such increase is in accordance with a

new schedule filed by such natural-gas company; but the

Commission may order a decrease where existing rates are

unjust, unduly discriminatory, preferential, otherwise unlaw-

ful, or are not the lowest reasonable rates.

(b) Costs of production and transportation. The Commis-

sion upon its own motion, or upon the request of any State

commission, whenever it can do_so without prejudice to the

efficient and proper conduct of its affairs, may investigate and

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determine the cost of the production or transportation of

natural gas by a natural-gas company in cases where the

Commission has no authority to establish a rate governing the

transportation or sale of such natural gas.

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APPENDIX C

TITLE 43. PUBLIC LANDS

CHAPTER 29. SUBMERGED LANDS

OUTER CONTINENTAL SHELF LANDS

43 USCS § 1334 (2003)

§ 1334. Administration of leasing

(a) Rules and regulations; amendment; cooperation with

State agencies; subject matter and scope of regulations. The

Secretary shall administer the provisions of this Act relating

to the leasing of the outer Continental Shelf, and shall

prescribe such rules and regulations as may be necessary to

carry out such provisions. The Secretary may at any time

prescribe and amend such rules and regulations as he

determines to be necessary and proper in order to provide for

the prevention of waste and conservation of the natural

resources of the outer Continental Shelf, and the protection of

correlative rights therein, and, notwithstanding any other

provisions herein, such rules and regulations shall, as of their

effective date, apply to all operations conducted under a lease

issued or maintained under the provisions of this Act. In the

enforcement of safety, environmental, and conservation laws

and regulations, the Secretary shall cooperate with the

relevant departments and agencies of the Federal Government

and of the affected States. In the formulation and promul-

gation of regulations, the Secretary shall request and give due

consideration to the views of the Attorney General with

respect to matters which may affect competition. In consider-

ing any regulations and in preparing any such views, the

Attorney General shall consult with the Federal Trade

Commission. The regulations prescribed by the Secretary

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under this subsection shall include, but not be limited

to, provisions—

(1) for the suspension or temporary prohibition of any

operation or activity, including production, pursuant to any

lease or permit (A) at the request of a lessee, in the national

interest, to facilitate proper development of a lease or to allow

for the construction or negotiation for use of transportation

facilities, or (B) if there is a threat of serious, irreparable, or

immediate harm or damage to life (including fish and other

aquatic life), to property, to any mineral deposits (in areas

leased or not leased), or to the marine, coastal, or human

environment, and for the extension of any permit or lease

affected by suspension or prohibition under clause (A) or (B)

by a period equivalent to the period of such suspension or

prohibition, except that no permit or lease shall be so

extended when such suspension or prohibition is the result of

gross negligence or willful violation of such lease or permit,

or of regulations issued with respect to such lease or permit;

(2) with respect to cancellation of any lease or permit—

(A) that such cancellation may occur at any time, if

the Secretary determines, after a hearing, that—

(i) continued activity pursuant to such lease or

permit would probably cause serious harm or damage to life

(including fish and other aquatic life), to property, to any

mineral (in areas leased or not leased), to the national security

or defense, or to the marine, coastal, or human environment;

(ii) the threat of harm or damage will not disappear

or decrease to an acceptable extent within a reasonable period

of time; and

(iii) the advantages of cancellation outweigh the

advantages of continuing such lease or permit in force;

(B) that such cancellation shall not occur unless and

until operations under such lease or permit shall have been

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under suspension, or temporary prohibition, by the Secretary,

with due extension of any lease or permit term continuously

for a period of five years, or for a lesser period upon request

of the lessee;

(C) that such cancellation shall entitle the lessee to

receive such compensation as he shows to the Secretary as

being equal to the lesser of (i) the fair value of the canceled

rights as of the date of cancellation, taking account of both

anticipated revenues from the lease and anticipated costs,

including costs of compliance with all applicable regulations

and operating orders, liability for cleanup costs or damages,

or both, in the case of an oil spill, and all other costs

reasonably anticipated on the lease, or (ii) the excess, if any,

over the lessee's revenues, from the lease (plus interest

thereon from the date of receipt to date of reimbursement) of

all consideration paid for the lease and all direct expenditures

made by the lessee after the date of issuance of such lease and

in connection with exploration or development, or both,

pursuant to the lease (plus interest on such consideration and

such expenditures from date of payment to date of reim-

bursement), except that (I) with respect to leases issued

before the date of enactment of this subparagraph [enacted

Sept. 18, 1978], such compensation shall be equal to the

amount specified in clause (i) of this subparagraph; and (II) in

the case of joint leases which are canceled due to the failure

of one or more partners to exercise due diligence, the

innocent parties shall have the right to seek damages for such

loss from the responsible party or parties and the right to

acquire the interests of the negligent party or parties and be

issued the lease in question;

(3) for the assignment or relinquishment of a lease;

(4) for unitization, pooling, and drilling agreements;

(5) for the subsurface storage of oil and gas other than

by the Federal Government;

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(6) for drilling or easements necessary for exploration,

development, and production;

(7) for the prompt and efficient exploration and

development of a lease area; and

(8) for compliance with the national ambient air quality

standards pursuant to the Clean Air Act (42 U.S.C. 7401 et

seq.), to the extent that activities authorized under this Act

significantly affect the air quality of any State.

(b) Compliance with regulations as condition for issuance,

continuation, assignment, or other transfer of leases. The

issuance and continuance in effect of any lease, or of any

assignment or other transfer of any lease, under the provisions

of this Act shall be conditioned upon compliance with

regulations issued under this Act.

(c) Cancellation of nonproducing lease. Whenever the

owner of a nonproducing lease fails to comply with any of the

provisions of this Act, or of the lease, or of the regulations

issued under this Act, such lease may be canceled by the

Secretary, subject to the right of judicial review as provided

in this Act, if such default continues for the period of thirty

days after mailing of notice by registered letter to the lease

owner at his record post office address.

(d) Cancellation of producing lease. Whenever the owner

of any producting lease fails to comply with any of the

provisions of this Act, of the lease, or of the regulations

issued under this Act, such lease may be forfeited and

canceled by an appropriate proceeding in any United States

district court having jurisdiction under the provisions of this

Act.

(e) Pipeline rights of way; forfeiture of grant. Rights-of-

way through the submerged lands of the outer Continental

Shelf, whether or not such lands are included in a lease

maintained or issued pursuant to this Act, may be granted by

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the Secretary for pipeline purposes for the transportation of

oil, natural gas, sulphur, or other minerals, or under such

regulations and upon such conditions as may be prescribed by

the Secretary, or where appropriate the Secretary of

Transportation, including (as provided in section 21(b) of this

Act [43 USCS § 1347(b)]) assuring maximum environmental

protection by utilization of the best available and safest

technologies, including the safest practices for pipeline burial

and upon the express condition that oil or gas pipelines shall

transport or purchase without discrimination, oil or natural

gas produced from submerged lands or outer Continental

Shelf lands in the vicinity of the pipelines in such

proportionate amounts as the Federal Energy Regulatory

Commission, in consultation with the Secretary of Energy,

may, after a full hearing with due notice thereof to the

interested parties, determine to be reasonable, taking into

account, among other things, conservation and the prevention

of waste. Failure to comply with the provisions of this section

or the regulations and conditions prescribed under this section

shall be ground for forfeiture of the grant in an appropriate

judicial proceeding instituted by the United States in any

United States district court having jurisdiction under the

provisions of this Act.

(f) Competitive principles governing pipeline operation.

(1) Except as provided in paragraph (2), every permit,

license, easement, right-of-way, or other grant of authority for

the transportation by pipeline on or across the outer

Continental Shelf of oil or gas shall require that the pipeline

be operated in accordance with the following competitive

principles:

(A) The pipeline must provide open and nondiscrimi-

natory access to both owner and nonowner shippers.

(B) Upon the specific request of one or more owner or

nonowner shippers able to provide a guaranteed level of

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throughput, and on the condition that the shipper or shippers

requesting such expansion shall be responsible for bearing

their proportionate share of the costs and risks related thereto,

the Federal Energy Regulatory Commission may, upon

finding, after a full hearing with due notice thereof to the

interested parties, that such expansion is within technological

limits and economic feasibility, order a subsequent expansion

of throughput capacity of any pipeline for which the permit,

license, easement, right-of-way, or other grant of authority is

approved or issued after the date of enactment of this

subparagraph [enacted Sept. 18, 1978]. This subparagraph

shall not apply to any such grant of authority approved or

issued for the Gulf of Mexico or the Santa Barbara Channel.

(2) The Federal Energy Regulatory Commission may, by

order or regulation, exempt from any or all of the require-

ments of paragraph (1) of this subsection any pipeline or class

of pipelines which feeds into a facility where oil and gas are

first collected or a facility where oil and gas are first sepa-

rated, dehydrated, or otherwise processed.

(3) The Secretary of Energy and the Federal Energy

Regulatory Commission shall consult with and give due

consideration to the views of the Attorney General on specific

conditions to be included in any permit, license, easement,

right-of-way, or grant of authority in order to ensure that

pipelines are operated in accordance with the competitive

principles set forth in paragraph (1) of this subsection. In

preparing any such views, the Attorney General shall consult

with the Federal Trade Commission.

(4) Nothing in this subsection shall be deemed to limit,

abridge, or modify any authority of the United States under

any other provision of law with respect to pipelines on or

across the outer Continental Shelf.

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(g) Rates of production.

(1) The leasee [lessee] shall produce any oil or gas, or

both, obtained pursuant to an approved development and

production plan, at rates consistent with any rule or order

issued by the President in accordance with any provision of

law.

(2) If no rule or order referred to in paragraph (1) has

been issued, the lessee shall produce such oil or gas, or both,

at rates consistent with any regulation promulgated by the

Secretary of Energy which is to assure the maximum rate of

production which may be sustained without loss of ultimate

recovery of oil or gas, or both, under sound engineering and

economic principles, and which is safe for the duration of the

activity covered by the approved plan. The Secretary may

permit the lessee to vary such rates if he finds that such

variance is necessary.

(h) Federal action affecting outer Continental Shelf;

notification; recommended changes. The head of any Federal

department or agency who takes any action which has a direct

and significant effect on the outer Continental Shelf or its

development shall promptly notify the Secretary of such

action and the Secretary shall thereafter notify the Governor

of any affected State and the Secretary may thereafter

recommend such changes in such action as are considered

appropriate.

(i) Flaring of natural gas. After the date of enactment of

this section [enacted Sept. 18, 1978], no holder of any oil and

gas lease issued or maintained pursuant to this Act shall be

permitted to flare natural gas from any well unless the

Secretary finds that there is no practicable way to complete

production of such gas, or that such flaring is necessary to

alleviate a temporary emergency situation or to conduct

testing or work-over operations.

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(j) Cooperative development of common _hydrocarbon-

bearing areas.

(1) Findings. [(A)] The Congress of the United States

finds that the unrestrained competitive production of

hydrocarbons from a common __hydrocarbon-bearing

geological area underlying the Federal and State boundary

may result in a number of harmful national effects,

including—

(i) the drilling of unnecessary wells, the installation of

unnecessary facilities and other imprudent operating practices

that result in economic waste, environmental damage, and

damage to life and property;

(ii) the physical waste of hydrocarbons and an

unnecessary reduction in the amounts of hydrocarbons that

can be produced from certain hydrocarbon-bearing areas; and

(iii) the loss of correlative rights which can result in

the reduced value of national hydrocarbon resources and

disorders in the leasing of Federal and State resources.

(2) Prevention of harmful effects. The Secretary shall

prevent, through the cooperative development of an area, the

harmful effects of unrestrained competitive production of

hydrocarbons from a common hydrocarbon-bearing area

underlying the Federal and State boundary.