Natural Gas Act

Natural Gas Act of 1938

Long title	An Act to regulate the transportation and sale of natural gas in interstate commerce, and for other purposes.
Acronyms (colloquial)	NGA
Enacted by	the 75th United States Congress
Effective	June 21, 1938
Citations
Public law	75-688
Statutes at Large	52 Stat. 821
Codification
Titles amended	15 U.S.C.: Commerce and Trade
U.S.C. sections created	15 U.S.C. ch. 15b § 717 et seq.
Legislative history
Introduced in the House as H.R. 6586 by Clarence F. Lea (D-CA) on June 16, 1937 Committee consideration by House Interstate and Foreign Commerce, Senate Interstate Commerce Passed the House on July 1, 1937 (Passed) Passed the Senate on June 7, 1938 (Passed) with amendment House agreed to Senate amendment on June 13, 1938 (Agreed) with further amendment Senate agreed to House amendment on June 14, 1938 (Agreed) Signed into law by President Franklin D. Roosevelt on June 21, 1938
United States Supreme Court cases
FPC v. Natural Gas Pipeline Co., 315 U. S. 575 (1942)

The Natural Gas Act of 1938 was the first occurrence of the United States federal government regulating the natural gas industry. It was focused on regulating the rates charged by interstate natural gas transmission companies. In the years prior to the passage of the Act, concern arose about the monopolistic tendencies of the transmission companies and the fact that they were charging higher than competitive prices. The passage of the Act gave the Federal Power Commission (FPC) control over the regulation of interstate natural gas sales. Later on, the FPC was dissolved and became the Federal Energy Regulatory Commission (FERC). FERC continues to regulate the natural gas industry to this day.

Regulation in the natural gas market has been in place since the very beginnings of the industry. Originally in the mid-1800s, natural gas was manufactured out of coal, and delivered locally in the same area in which it was produced. Local governments saw the monopolistic tendencies of the market and began to enforce regulations. It was decided that there would be one distribution network but the rates that could be charged would be regulated by the local governments.

In the 1900s, natural gas was not only used in the locations it was produced, it began to be shipped between municipalities. Intrastate pipelines between cities began to develop and local governments no longer had the authority to regulate rates. The solution to this problem was to enlist state level public utilities commissions to oversee regulation.

In the years to follow, new technology finally allowed interstate transportation of natural gas. This brought more problems to the ease of regulation. Between the years of 1911 and 1928, states attempted to regulate many of these interstate pipelines. However, the U.S. Supreme Court ruled that state oversight of these pipelines violated the interstate commerce clause of the U.S. Constitution. This left a large gap for monopolistic business practices to occur in natural gas transmission.

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