Law Academy Course 101

FERC Regulation of Natural Gas

Course 101

The goal of Course 101 is to provide an overview of the federal regulation of the natural gas industry by the Federal Energy Regulatory Commission. Taught by industry practitioners and regulators from FERC, the course begins with a brief overview of the natural gas industry, including the production, gathering, transportation, distribution, and storage of natural gas. The course describes key statutes governing and affecting the interstate transportation of natural gas and discusses key legal milestones. Instructors explain important regulatory concepts, pipeline services, and the scope and limits of FERC jurisdiction. The course covers key sections of the NGA, including imports and exports under Section 3; construction and abandonment under section 7; ratemaking under sections 4 and 5; and enforcement issues.

Energy Law Academy Certificate of Achievement: Course 101 is a requirement to obtain the Energy Law Academy Certificate of Achievement.


What is Natural Gas?

  • Where is it Produced?
  • How is it Used?

Historical Perspective and Industry Overview

  • Who’s Who in the Industry?
  • What is FERC?
  • Physical and Financial Markets

Legal Overview: Key Statutes

  • Natural Gas Act
  • Natural Gas Policy Act of 1978
  • Wellhead Decontrol Act of 1989
  • Energy Policy Act of 2005
  • Pipeline Safety Act

Pipeline Services

Scope and Limits of FERC Jurisdictions

  • Traditional Bundled Pipeline Services
  • Pipeline Services Unbundle

Anatomy of a FERC Pipeline Tariff

  • Pipeline Configurations (long-line vs. reticulated)

Scope and Limits of FERC’s Jurisdiction

  • Natural Gas Act: FERC’s Regulation of “Natural Gas Companies” and What FERC Does Not Regulate
  • FERC’s Jurisdiction Under § 311 of the Natural Gas Policy Act

Regulation of Pipeline Safety/PHMSA

  • Pipeline and Hazardous Materials Safety Administration (PHMSA)
  • Current Rules and Recent History
  • Pending or Upcoming Rules
  • State Regulation of Pipeline Safety

Natural Gas Act Section 3:  Imports and Exports

  • Role of FERC
  • Role of Department of Energy
  • Statutory Standard
  • LNG Exports

Natural Gas Act Section 7:  Constructing and Abandoning Pipelines

  • Statutory Standards
  • Construction Policy Statement
  • Pre-Application Requirements (Open Seasons, Pre-Filing Requirements)
  • Initial Rate-Setting Authority
  • Abandonment issues
  • Storage

Key Regulatory Concepts

  • Just and Reasonable
  • Undue Preferences
  • Undue Discrimination
  • Similarly Situated

Natural Gas Act Sections 4 & 5:  Setting Rates and Terms and Conditions of Service

  • Sections 4 & 5
  • Filed Rate and Mobile-Sierra Doctrines
  • Rate Setting Objectives
  • Cost-Based Rates vs. Market-Based Rates
  • Recourse Rates, Discounted Rates and Negotiated Rates

Cost of Service Ratemaking

  • Determining Regulated Rates
  • Revenue Requirement
  • Cost Functionalization
  • Cost Classification and FERC Uniform System of Accounts
  • Cost Allocation
  • Rate and Tariff Design

Key Rate Case Issues (DEPR, ROR, Cost Allocation for Expansions)

  • Depreciation
  • Rate of Return/Impact of MLPs
  • Cost Allocation for System Expansions

Emerging Rate Case Issues

  • Impact of Shale
  • Recovery of Regulatory Compliance and Infrastructure Upgrade Costs

Enforcement Issues

  • Secondary Market Issues (shipper must have title requirement, prohibition on flipping and buy/sells)