Review of FERC's Control Over Interstate Gas Supplies

EMD-80-5: Published: Nov 6, 1979. Publicly Released: Nov 6, 1979.

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Although new natural gas legislation has made major changes in the regulation of natural gas supplies, gas already flowing in the interstate system prior to the new act generally remains dedicated to the interstate market unless an abandonment authorization is approved. Because of possible unauthorized diversion of these supplies to more profitable markets, a review was done of the Federal Energy Regulatory Commission's (FERC) control over them.

The review found that natural gas has been diverted from interstate commerce to more profitable intrastate markets. Interstate sources of natural gas have been abandoned without FERC approval. Procedures for detecting abandonments and diversions have only recently been addressed by FERC and need strengthening. The authority to assess civil penalties against violators was needed. The extent to which the natural gas supplies have been diverted was difficult to ascertain. Recent instances of natural gas supply shortages may have been caused by these diversions.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Federal Energy Regulatory Commission should prepare a listing of selected producer filings which identify natural gas dedicated to the interstate market. It should develop audit procedures for the purpose of detecting unauthorized abandonments and diversions; establish and implement an audit program to ensure that dedicated supplies are delivered as prescribed and that appropriate and timely filings are made; and continue the recent use of available criminal penalties as appropriate. It should formally seek enabling legislation from the Congress for assessing civil penalies which will increase the Commission's latitude in carrying out their enforcement responsibilities under the Natural Gas Act.

    Agency Affected:

 

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