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John C. Lemaster
Ryley Carlock & Applewhite
I. INTRODUCTION
The interstate distribution of natural gas is governed by two federal statutes: The Natural Gas Act, 15 U.S.C. §§ 717 to 717Z (the "NGA") and the Natural Gas and Hazardous Materials Pipeline Safety Act, 49 U.S.C. §§ 60101 to 60125 (the NGPSA"). The NGA is a comprehensive scheme regulating the interstate transportation and sale of natural gas for ultimate distribution to the public. 15 U.S.C. § 717.[1] The NGPSA is a comprehensive federal statute regulating the safety of natural gas pipelines. 49 U.S.C. § 60102.
The NGA provides that a natural gas company must obtain a certificate of public convenience and necessity from the Federal Energy Regulatory Commission ("FERC") in order to transport, sell, construct, extend, acquire or operate any natural gas facility. 15 U.S.C. §717f(c). To obtain a certificate, a natural gas company must submit an application to FERC to engage in these activities. 15 U.S.C. §717f(d). The process FERC uses to determine whether to issue a certificate of public conference and necessity is subject to extensive federal regulation. 18 C.F.R. Part 157. The nature of the FERC proceedings is beyond the scope of this paper. For purposes of this paper, the FERC process analyzes all aspects of the proposed action including the location, construction, and environmental impacts of the proposed action.
Once this administrative process is completed, FERC will issue a certificate if two conditions are satisfied: 1) the natural gas company is able and willing to do the acts and perform the services proposed, to conform to the provisions of the NGA, and to conform to the regulations of FERC, and 2) the service, sale, operation, construction, extension, or acquisition is or will be required by the present or future public convenience and necessity to the extent authorized by the certificate. 15 U.S.C. § 717f(e).
The NGA specifically provides that a natural gas company has the power of eminent domain to construct natural gas pipelines and facilities:
When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipeline or pipelines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary for the proper operation of such pipeline or pipelines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice or procedure in any action or proceeding for that purpose in the district court of the United States shall confirm as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the state where the property is situated: Provided, that the United States district courts shall have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.
15 U.S.C. § 717f(h) (emphasis in original). This paper examines several issues arising under the condemnation procedures authorized by the NGA.
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