SEC. 312. ASSIGNMENT OF CONTRACTUAL RIGHTS TO RECEIVE SURPLUS NATURAL GAS.

(a) AUTHORIZATION OF ASSIGNMENTS.-The Commission may, by rule or order, authorize any intrastate pipeline to assign, without compensation, to any interstate pipeline or local distribution company all or any portion of such intrastate pipeline's right to receive surplus natural gas at any first sale, upon such terms and conditions as the Commission determines appropriate.

(b) EFFECT OF AUTHORIZATION UNDER SUBSECTION (a).-For the effect of an authorization under subsection (a), see section 601 (relating to the coordination of this Act with the Natural Gas Act).

(c) SURPLUS NATURAL GAS.-For purposes of this section, the term "surplus natural gas" means any natural gas

(1) which is not committed or dedicated to interstate commerce on the day before the date of the enactment of this Act;

(2) the first sale of which is subject to a maximum lawful price established under title I of this Act; and

(3) which is determined, by the State agency having regulatory jurisdiction over the intrastate pipeline which would be entitled to receive such natural gas in the absence of any assignment to exceed the then current demands on such pipeline for natural gas.

SEC. 313. EFFECT OF CERTAIN NATURAL GAS PRICES ON INDEFINITE PRICE ESCALATOR CLAUSES.

(a) HIGH-COST NATURAL GAS.-No price paid in any first sale of high-cost natural gas (as defined in section 107 (c)) may be taken into account in applying any indefinite price escalator clause (as defined in section 105(b) (3) (B)) with respect to any first sale of any natural gas other than high-cost natural gas (as defined in section 107(c)). (b) OTHER TRANSACTIONS.-No price paid

(1) in any sale authorized under section 302 (a), or

(2) pursuant to any order issued under section 303 (b), (c), (d), or (g),

may be taken into account in applying any indefinite price escalator clause (as defined in section 105(b) (3) (B)).

SEC. 314. CLAUSES PROHIBITING CERTAIN SALES, TRANSPORTATION, AND COMMINGLING.

(a) GENERAL RULE.-Any provision of any contract for the first sale of natural gas is hereby declared against public policy and unenforceable with respect to any natural gas covered by this Act if such provision

(1) prohibits the commingling of natural gas subject to such contract with natural gas subject to the jurisdiction of the Commission under the provisions of the Natural Gas Act;

(2) prohibits the sale of any natural gas subject to such contract to, or transportation of any such natural gas by, any person subject to the jurisdiction of the Commission under the Natural Gas Act, or otherwise prohibits the sale or transportation in interstate commerce (within the meaning of the Natural Gas Act) of natural gas subject to such contract; or

(3) terminates, or grants any party the option to terminate, any obligation under any such contract as a result of such commingling, sale, or transportation.

(b) NATURAL GAS COVERED BY THIS ACT.-For purposes of subsection (a), the term “natural gas covered by this Act" means

(1) natural gas which is not committed or dedicated to interstate commerce as of the day before the date of the enactment of this Act;

(2) natural gas, the sale in interstate commerce of which-
(A) is authorized under section 302 (a) or 311(b); or
(B) is pursuant to an assignment under section 312(a);

and (3) natural gas, the transportation in interstate commerce of which is

(A) pursuant to any order under section 302 (c) or section 303 (b), (c), (d), or (h); or

(B) authorized by the Commission under section 311(a). SEC. 315. CONTRACT DURATION; RIGHT OF FIRST REFUSAL; FILING OF CONTRACTS AND AGREEMENTS.

(a) CONTRACT DURATION.

(1) GENERAL RULE.-The Commission may, by rule or order, specify the minimum duration of any contract (other than any existing contract) for the purchase of natural gas to which section 601(a)(1) (A) or (B) is applicable. In no case may the minimum contract duration specified under this paragraph applicable to natural gas produced from any reservoir exceed 15 years or, if less, the commercially producible life of such reservoir. The provisions of this paragraph shall not apply to contracts of natural gas subject to the requirements of paragraph (3).

(2) NONDISCRIMINATORY APPLICATION.—

(A) IN GENERAL.-Except as provided in subparagraph (B), the Commission may not exercise the authority provided under paragraph (1) in a manner which

(i) provides an advantage to interstate pipelines by diverting supplies of natural gas to interstate pipelines and thereby denying adequate supplies of natural gas to intrastate pipelines; or

(ii) otherwise discriminates between purchases by interstate pipelines and intrastate pipelines of natural gas.

(B) SPECIAL CIRCUMSTANCES.-The Commission may vary any requirement established under paragraph (1) with respect to any contract by an interstate pipeline or intrastate pipeline to the extent necessary to respond to special circum

stances.

(3) CONTRACTS FOR PURCHASE OF OCS NATURAL GAS.-The Commission shall prescribe a rule which shall require that any first sale contract (other than any existing contract) for the purchase of natural gas which is produced from any reservoir on the Outer Continental Shelf and which is new natural gas (as defined in section 102(b)) or high-cost natural gas (as defined in section 107(c) (1), (2), (3), or (4)) shall be for a duration of not less than 15 years or, if less, the commercially producible life of the

reservoir.

(b) OFFERS; RIGHT OF FIRST REFUSAL.—

(1) APPLICATION.-This subsection shall apply with respect to any natural gas which is committed or dedicated to interstate commerce on the day before the date of the enactment of this Act and which is—

(A) high-cost natural gas (as defined in section 107(c) (1), (2), (3), or (4));

(B) new natural gas (as defined in section 102 (c)); or (C) natural gas produced from any new, onshore production well (as defined in section 103 (c)).

This subsection shall not apply to any natural gas committed or dedicated to interstate commerce solely by reason of section 2(18) (A) (i).

(2) OFFER OF SALE. The Commission shall, by rule, require that if natural gas subject to the requirements of this subsection is produced on or after the first day of the first month beginning after the date of the enactment of this Act, a bona fide offer to sell such natural gas must be made to the person who, but for the provisions of section 601(a)(1) (B) (relating to deregulation), would have been entitled pursuant to the commitment or dedication of such natural gas to interstate commerce to receive such natural gas if such natural gas were sold (or any successor in interest to such person).

(3) RIGHT OF FIRST REFUSAL-The Commission shall, by rule, require that following

(A) the expiration or termination of any contract with respect to the first sale of natural gas subject to the requirements of this subsection to the person who, but for the provisions of section 601(a)(1)(B) (relating to deregulation), would have been entitled pursuant to the commitment or dedication of such natural gas to interstate commerce to receive such natural gas if such natural gas were sold (or any successor in interest to such person), or

(B) any rejection of any bona fide offer, described in paragraph (2), to sell natural gas subject to the requirements of this subsection,

such person who would have been entitled to receive such natural gas shall be granted a right of first refusal of the first offer to sell such natural gas which, subject to the exercise of any right of first refusal under this paragraph, has been substantially accepted in principle by another person in an arms-length transaction. (c) FILING OF CONTRACTS AND ANCILLARY AGREEMENTS.-The Commission may, by rule or order, require any first sale purchaser of natural gas under a new contract, a successor to an existing contract, or a rollover contract to file with the Commission a copy of such contract, together with all ancillary agreements and any existing contract ap plicable to such natural gas.

TITLE IV-NATURAL GAS CURTAILMENT POLICIES

SEC. 401. NATURAL GAS FOR ESSENTIAL AGRICULTURAL USES. (a) GENERAL RULE.-Not later than 120 days after the date of the enactment of this Act, the Secretary of Energy shall prescribe and make effective a rule, which may be amended from time to time, which provides that, notwithstanding any other provision of law (other than subsection (b)) and to the maximum extent practicable, no curtailment plan of an interstate pipeline may provide for curtailment of deliveries of natural gas for any essential agricultural use, unless such

curtailment

(1) does not reduce the quantity of natural gas delivered for such use below the use requirement specified in subsection (c); or (2) is necessary in order to meet the requirements of highpriority users.

(b) CURTAILMENT PRIORITY NOT APPLICABLE IF ALTERNATIVE FUEL AVAILABLE.-If the Commission, in consultation with the Secretary of Agriculture, determines, by rule or order, that use of a fuel (other than natural gas) is economically practicable and that the fuel is reasonably available as an alternative for any agricultural use of natural gas, the provisions of subsection (a) shall not apply with respect to any curtailment of deliveries for such use.

(c) DETERMINATION OF ESSENTIAL AGRICULTURAL USE REQUIREMENTS.-The Secretary of Agriculture shall certify to the Secretary of Energy and the Commission the natural gas requirements (expressed either as volumes or percentages of use) of persons (or classes thereof) for essential agricultural uses in order to meet the requirements of full food and fiber production.

(d) AUTHORITY OF SECRETARY OF AGRICULTURE TO INTERVENE.-The Secretary of Agriculture may intervene as a matter of right in any proceeding before the Commission which is conducted in connection with implementing the requirements of the rule prescribed under subsection (a).

(e) LIMITATION.-The Secretary of Agriculture may not exercise any authority under this section for the purpose of restricting the production of any crop.

(f) DEFINITIONS.-For purposes of this section

(1) ESSENTIAL AGRICULTURAL USE.-The term "essential agricultural use", when used with respect to natural gas, means any use of natural gas

(A) for agricultural production, natural fiber production, natural fiber processing, food processing, food quality maintenance, irrigation pumping, crop drying, or

(B) as a process fuel or feedstock in the production of fertilizer, agricultural chemicals, animal feed, or food,

which the Secretary of Agriculture determines is necessary for full food and fiber production.

(2) HIGH-PRIORITY USER.-The term "high-priority user" means any person who

(A) uses natural gas in a residence;

(B) uses natural gas in a commercial establishment in amounts of less than 50 Mcf on a peak day;

(C) uses natural gas in any school, hospital, or similar institution; or

(D) uses natural gas in any other use the curtailment of which the Secretary of Energy determines would endanger life, health, or maintenance of physical property.

SEC. 402. NATURAL GAS FOR ESSENTIAL INDUSTRIAL PROCESS AND

FEEDSTOCK USES.

(a) GENERAL RULE-The Secretary of Energy shall prescribe and make effective a rule which provides that, notwithstanding any other provision of law (other than subsection (b)) and to the maximum extent practicable, no interstate pipeline may curtail deliveries of natural gas for any essential industrial process or feedstock use, unless such curtailment

(1) does not reduce the quantity of natural gas delivered for such use below the use requirement specified in subsection (c); (2) is necessary in order to meet the requirements of high-priority users; or

(3) is necessary in order to meet the requirements for essential agricultural uses of natural gas for which curtailment priority is established under section 401.

(b) CURTAILMENT PRIORITY APPLICABLE ONLY IF ALTERNATIVE FUEL NOT AVAILABLE.-The provisions of subsection (a) shall apply with respect to any curtailment of deliveries for any essential industrial process or feedstock use only if the Commission determines that use of à fuel (other than natural gas) is not economically practicable and that no fuel is reasonably available as an alternative for such use.

(c) DETERMINATION OF ESSENTIAL INDUSTRIAL USE REQUIREMENTS.— The Secretary of Energy shall determine and certify to the Commission the natural gas requirements (expressed either as volumes or percentages of use) of persons (or classes thereof) for essential industrial process and feedstock uses (other than those referred to in section 401 (f) (1) (B)).

(d) DEFINITIONS.-For purposes of this section—

(1) ESSENTIAL INDUSTRIAL PROCESS OR FEEDSTOCK USE.-The term "essential industrial process or feedstock use" means any use of natural gas in an industrial process or as a feedstock which the Secretary determines is essential.

(2) HIGH-PRIORITY USER.-The term "high-priority user" has the same meaning as given such term in section 401 (f) (2).

SEC. 403. ESTABLISHMENT AND IMPLEMENTATION OF PRIORITIES. (a) ESTABLISHMENT OF PRIORITIES.-The Secretary of Energy shall prescribe the rules under sections 401 and 402 pursuant to his authority under the Department of Energy Organization Act to establish and review priorities for curtailments under the Natural Gas Act.

(b) IMPLEMENTATION OF PRIORITIES.-The Commission shall implement the rules prescribed under sections 401 and 402 pursuant to its authority under the Department of Energy Organization Act to establish, review, and enforce curtailments under the Natural Gas Act. SEC. 404. LIMITATION ON REVOKING OR AMENDING CERTAIN PRE1969 CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY.

(a) GENERAL RULE.-The Commission may not, during the 10-year period beginning on the date of the enactment of this Act, revoke or amend any certificate of public convenience and necessity issued before January 1, 1969, under section 7 of the Natural Gas Act for the transportation of natural gas owned by any electric utility except upon the application of the person to whom such certificate was issued.

(b) COMMISSION CURTAILMENT AUTHORITY.-The limitation under subsection (a) shall not affect the authority of the Commission to enforce any curtailment of deliveries of natural gas under the Natural Gas Act.

TITLE V-ADMINISTRATION, ENFORCEMENT, AND REVIEW

SEC. 501. GENERAL RULEMAKING AUTHORITY.

(a) IN GENERAL.-Except where expressly provided otherwise, the Commission shall administer this Act. The Commission, or any other Federal officer or agency in which any function under this Act is vested or delegated, is authorized to perform any and all acts (including any appropriate enforcement activity), and to prescribe, issue, amend, and rescind such rules and orders as it may find necessary or appropriate to carry out its functions under this Act.