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Federal Regulation of the Uses of Natural Gas

Published online by Cambridge University Press:  02 September 2013

Ralph K. Huitt
Ralph K. Huitt
Affiliation:
University of Wisconsin
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Extract

The Natural Gas Act of 1938, as amended in 1942, requires natural-gas companies subject to the act to obtain certificates of public convenience and necessity from the Federal Power Commission before transporting or selling natural gas in interstate commerce, as well as before acquiring, constructing, or extending facilities for those purposes. The issuance of such certificates is a conventional function of public-utility regulatory bodies, and the Commission has administered it in a conventional manner. The tests developed by the Commission to determine the “public convenience and necessity,” relating primarily to the adequacy of natural gas reserves, physical facilities, financial resources, and market demand, are commonplace standards, framed in the public-utility tradition to fit the economic and physical characteristics of the natural-gas industry. The real importance of the certificate power under the Natural Gas Act lies in the fact that issues raised in proceedings pursuant to it have transcended the scope of these standards, involving no less than an attempt to redefine in the broadest terms the public interest in respect to natural gas.

Type
Research Article
Information
American Political Science Review , Volume 46 , Issue 2 , June 1952 , pp. 455 - 469
Copyright
Copyright © American Political Science Association 1952

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References

1 The Commission first made a comprehensive statement of these standards in Kansas Pipe Line and Gas Co. et al., 2 F.P.C. 29 (1939), and they are the criteria still relied upon. See Twenty-Eighth Annual Report of the Federal Power Commission (1948), p. 57Google Scholar. For an analysis of the problems arising under the certificate power prior to 1946, see Wheat, Carl J., “Administration by the Federal Power Commission of the Certificate Provisions of the Natural Gas Act,” George Washington Law Review, Vol. 14, p. 194 (Dec., 1945)Google Scholar.

2 Cf. Hearing before a subcommittee on H.R. 11662 (Natural Gas Act), U. S. House of Representatives, Committee on Interstate and Foreign Commerce, 74th Cong., 2d sess. (Washington, 1936), and Hearing on H.R. 4008 (Natural Gas Act), ibid., 75th Cong., 1st sess. (Washington, 1937).

3 Natural Gas Investigation, Docket No. G-580. The transcript of the hearings will be cited as “Tr.” Two reports were made by the Commission to Congress in 1948, one signed by Commissioners Nelson Lee Smith and Harrington Wimberly (cited hereafter as Smith-Wimberly Report), and the other by Commissioners Leland Olds and Claude L. Draper (cited as Olds-Draper Report). The Smith-Wimberly Report of 498 pages has numerous tables and charts, and includes the eleven staff reports summarizing and analyzing the testimony and exhibits presented in the hearings. The Olds-Draper Report is a 158-page presentation of their interpretations and conclusions regarding the investigation.

4 Olds-Draper Report, p. 85. See the discussion of the testimony presented by the consuming areas in Sec. VIII of this report.

5 Testimony of James W. Clark, executive director of the Minnesota Resources Commission, Tr., p. 5335.

6 Statement of National Coal Association, United Mine Workers of America, Railway Labor Executives Association, Brotherhood of Locomotive Engineers, American Retail Coal Association. Statements of a similar character were filed by the Anthracite Institute and the Operators of Coal Docks on Lake Michigan and Lake Superior.

7 Ibid., p. 27; Exhibit 360.

8 Ibid., p. 28; Exhibit 464.

9 Ibid., p. 29.

10 Testimony of Olin Culberson, Tr., pp. 3534–3535.

11 For a list of the industry groups, see the testimony of E. H. Poe, Tr., pp. 12408–12413.

12 Testimony of Stevenson, Tr., p. 3333; Culberson, Tr., pp. 3538–3539.

13 Testimony of Culberson, Tr., pp. 3604–3605, 3624–3625.

14 Tr., p. 3334.

15 Testimony of Culberson, Tr., p. 3605.

16 Tr., p. 3537.

17 Tr., pp. 3317–3318.

18 Tr., pp. 4911–4930.

19 Tr., pp. 4874–4879.

20 Tr., pp. 3449–3450.

21 Tr., pp. 5140–5144, 5226–5228; Exhibit 231.

22 The identical portions of the statements are found in that of Commissioner Thompson at pp. 3382–3385, in that of Governor Dempsey at pp. 3444–3449, and in that of Governor Bailey at pp. 5071–5074.

23 Tr., p. 3324.

24 Tr., p. 3327.

25 Tr., pp. 3371–3372.

26 Tr., p. 3680.

27 Tr., p. 3414.

28 Tr., p. 3507.

29 Tr., pp. 3497, 3503.

30 Tr., pp. 3518–3526.

31 The Louisiana argument may have been hurt by the fact that much wastage of natural gas was occurring in Louisiana, as in other producing states, despite the State's clear jurisdiction over production and distribution of gas. Louisiana in effect was asking the federal government to curtail the flow of Louisiana gas to other states, while Louisiana itself failed to implement adequately its own conservation policy. But the problem posed here by Jones is a separate (though related) one; the quantities of gas saved from physical wastage still could be contracted for exportation without hindrance from the State. For analysis of the complex problems of conservation, see Smith-Wimberly Report, pp. 65–154; Olds-Draper Report, pp. 75–84.

32 Tr., pp. 2108–2129.

33 Tr., p. 2278.

34 Tr., pp. 2276, 2305, 2341.

35 Tr., p. 2154.

36 Tr., pp. 2319, 2328–2331.

37 Tr., pp. 2283–2284.

38 Tr., p. 2157.

39 West v. Kansas Natural Gas Company, 221 U.S. 229.

40 Tr., pp. 1068–1069, 1073–1074, 1078–1081.

41 Tr., pp. 1673–1683.

42 Olds-Draper Report, pp. 12–13.

43 Smith-Wimberly Report, p. 28.

44 Testimony of Samuel H. Crosby, Tr., pp. 9473–9474.

45 There is a good analysis of the problem in Smith-Wimberly Report, pp. 31–61.

46 Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 608 (1944).

47 Cf. Natural Resources Committee, Energy Resources and National Policy (Washington, 1939)Google Scholar.

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