One of the most critical energy issues facing the state of Louisiana is federal regulation of the sale and distribution of natural gas. Louisiana produces a significant portion of the entire nation's natural gas supply. On the other hand, Louisiana consumes more natural gas on a per capita basis than any other state. Furthermore, due to market distortions created by federal regulation, Louisiana consumers and industry may again find themselves in the perplexing situation of being unable to obtain supplies of natural gas or having to pay far more for natural gas than consumers and industries in other states receiving Louisiana gas via interstate pipelines.

Unfortunately, State government has few options open to it to alleviate the problems of natural gas price and supply. The following report examines some of the options the State may have and provides a reference document on the legal constraints posed by the U.S. Constitution and the U.S. Congress.

I. Introduction

II. The Primary Federal Constraints On Louisiana Actions

A. Commerce Clause Constraints

   1. The State Participant in Market Exception

   2. The Incidental Effect on Interstate Commerce Exception

   3. Summary of Commerce Clause Constraints

B. Supremacy Clause Constraints

   1. Direct Conflicts

   2. Potential Conflicts

   3. Implicit Preemption Through Failure to Regulate

   4. Frustration of Federal Goals

   5. Intent to Occupy the Field

   6. Summary of Supremacy Clause Constraints

III. Results Of Interviews Of State Officials And Market Participants

IV. Evaluation Of Potential Actions

A. Senate Bill 332

B. Actions that Prefer Intrastate Pipelines and Consumers

   1. Application to Privately Owned Gas

   2. Application to State Owned Gas

C. Price Controls on Old Intrastate Gas

D. Notice of Supply Availability

E. Assistance in Obtaining Access to Gas Supplies

F. Off System Sales

G. Requirement of Prior Permission Before Abandoning Service to an Intrastate Purchaser

V. Summary And Conclusion

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