[Code of Federal Regulations]
[Title 18, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 18CFR2.300]

[Page 37-38]
 
           TITLE 18--CONSERVATION OF POWER AND WATER RESOURCES
 
  CHAPTER I--FEDERAL ENERGY REGULATORY COMMISSION, DEPARTMENT OF ENERGY
 
PART 2_GENERAL POLICY AND INTERPRETATIONS--Table of Contents
 
Sec. 2.300  Statement of policy concerning allegations of fraud, abuse, 
or similar grounds under section 601(c) of the NGPA.

    Recognizing the potential for an increasing number of intervenor 
complaints predicated on the fraud, abuse, or similar grounds exception 
to guaranteed passthrough, the Commission sets forth the elements of a 
cognizable claim under section 601(c)(2) which it expects to apply in 
cases in which fraud, abuse, or similar grounds is raised. The 
provisions of this policy statement do not establish a binding norm but 
instead provide general guidance. In particular cases, both the 
underlying validity of the policy and its application to particular 
facts may be challenged and are subject to further consideration. The 
procedure prescribed conforms with the NGPA's general guarantee of 
passthrough by placing the burden of pleading the elements and proving 
the elements of a case on intervenors who would allege fraud, abuse, or 
similar grounds as a basis for denying passthrough of gas prices 
incurred by an interstate pipeline.
    (a) In order for the issue of fraud, as that term is used in section 
601(c) of the NGPA, to be considered in a proceeding, an intervenor or 
intervenors must file a complaint alleging that:
    (1) The interstate pipeline, any first seller who sells natural gas 
to the interstate pipeline, or both acting together, have made a 
fraudulent misrepresentation or concealment; and
    (2) Because of that fraudulent misrepresentation or concealment, the 
amount paid by the interstate pipeline to any first seller of natural 
gas was higher than it would have been absent the fraudulent conduct.

[[Page 38]]

    (b) In order for the issue of abuse, as that term is used in section 
601(c) of the NGPA, to be considered in a proceeding, an intervenor or 
intervenors must file a complaint alleging that:
    (1) The interstate pipeline, a first seller who sells to the 
interstate pipeline, or both acting together, have made a negligent 
misrepresentation or concealment, or other misrepresentation or 
concealment in disregard of a duty; and
    (2) Because of that negligent misrepresentation or concealment, or 
other misrepresentation or concealment in disregard of a duty, the 
amount paid by the interstate pipeline to any first seller of natural 
gas was higher than it would have been absent the negligent 
misrepresentation or concealment, or other misrepresentation or 
concealment made in disregard of a duty.
    (c) In order for the issue of similar grounds, as that term is used 
in section 601(c) of the NGPA, to be considered in a proceeding, an 
intervenor or intervenors must file a complaint alleging that:
    (1) The interstate pipeline, any first seller who sells natural gas 
to the interstate pipeline, or both acting together, have made an 
innocent misrepresentation of fact; and
    (2) Because of that innocent misrepresentation of facts, the amount 
paid by the interstate pipeline to any first seller of natural gas was 
higher than it would have been absent the innocent misrepresentation of 
fact.

(Natural Gas Policy Act of 1978, Pub. L. 95-621, 92 Stat. 3350, (15 
U.S.C. 3301-3432))

[47 FR 6262, Feb. 11, 1982]

Statement of Interpretation Under the Public Utility Regulatory Policies 
                               Act of 1978