2006 Louisiana Laws - RS 30:572 — Priorities

§572.  Priorities

The allocation or rationing and conservation program under the plan provided for by this Part shall include the following:

(1)  A priority system and plan to be implemented without delay, for conservation, allocation, and/or rationing of intrastate natural gas qualitatively and quantitatively among distributors and consumers.  To the extent practicable, such priority allocation or rationing programs shall include, but not be limited to, measures to insure that available intrastate natural gas will be distributed on a priority basis to users within the state to avoid or minimize adverse impacts on the public health, welfare, and economic well-being of the state; provided, however, that unless the assistant secretary rules otherwise, in the event of a serious emergency and until hearings can be had as hereinafter provided for, the priorities of mandatory allocations and rationing shall, to the maximum extent practicable, be as follows:

(a)  First priority shall be given to the protection of public health, safety, and welfare including maintenance of gas and electrical service for hospitals, juvenile and adult correctional institutions, nursing homes, dormitories, educational facilities, hotels, motels, and residences such as individual homes, apartments and similarly occupied dwelling units, publicly owned water, sewerage, and storm water drainage systems producing their own energy, which systems supply services to the aforesaid, and property owners who, through contract, lease, or otherwise, reserve unto themselves a share of the natural gas produced from their property to serve their needs.  In order to ensure the protection of public health, safety, and the environment, the petroleum, petrochemical, and chemical industry that uses intrastate natural gas to operate facilities shall have a priority as long as the gas is used to the extent necessary to ensure the protection of public health, safety, and the environment.

(b)  Second priority shall be given to the maintenance of agricultural operations, and the processing of agricultural products, including farming, ranching, dairy, water conservation and commercial fishing activities, and services directly related thereto, operations of food processing plants, businesses and facilities processing products for human consumption;

(c)  Third priority shall be given to exploration, production, processing, and refining efforts to attain maximum production or extraction of oil, natural gas, other hydrocarbons, and minerals mined by the Frasch process;

(d)  Fourth priority shall be given to the maintenance of commercial and industrial business activities utilizing less than 1 1/2 million cubic feet of gas on a peak day;

(e)  Fifth priority shall be given to the maintenance of all public services, including facilities and services provided by municipal, cooperative, or investor-owned utilities required for customers who come under Paragraphs (b), (c) and (d) next above, or by any state or local government or authority, and including transportation facilities and services which serve the public at large.  This priority shall not apply to those publicly owned water, sewer and storm water drainage systems referred to under Paragraph (a) next above, since those are of the first priority;

(f)  Sixth priority shall be given to the preservation of an economically sound and competitive petroleum, petrochemical, and chemical industry, provided that, except in cases where the commissioner finds that an extreme emergency exists and the above priority needs cannot be substantially otherwise provided for, those industries requiring the use of intrastate natural gas for plant protection, feedstock or process needs, and public utilities generating electricity for sale to consumers listed above under Paragraphs (a), (b), (c), (d), and (e), which own or have acquired at the wellhead their own source of intrastate natural gas supply or which acquires such gas supply or any portion thereof from a wholly owned subsidiary company and which are using such supply in the operation of their own facilities, shall, as long as they continue to use said gas for plant protection, feedstock or process needs, or for generating electricity for sale to consumers listed above under Paragraphs (a), (b), (c), (d), and (e), have and be recognized as possessing first priority, above all others, for use of said gas.  Industrial companies not owning intrastate natural gas reserves for their own use for plant protection, feedstock or process needs shall be subject to curtailment first, and those companies owning intrastate natural gas reserves for their own use or which acquires such gas supply or any portion thereof from a wholly owned subsidiary company for such purposes shall be subject to curtailment second; provided, further, that any person to whom those industries requiring the use of intrastate natural gas for plant protection, feedstock or process needs which own their own source of intrastate natural gas may have heretofore contracted to sell a portion of their own gas for plant protection, feedstock or process needs shall have a priority for the use of said gas for plant protection, feedstock or process needs equal to the priority accorded to their vendor by this Paragraph;

(g)  Seventh priority shall be given to the maintenance of industrial requirements not specified in Paragraph (f) next above, except for boiler fuel;

(h)  Subject to the priorities established in R.S. 30:572(1)(a) and (b), eighth priority shall be given to industrial plants, including electrical generating plants to the extent not provided for in Paragraph (e) above, having a present requirement for use of intrastate natural gas for boiler fuel not possessing present alternate fuel capabilities.  Such plants may, however, be required by the commissioner to convert to alternate fuels within a reasonable time, considering all pertinent circumstances, or suffer curtailment by order of the commissioner of its use of intrastate natural gas.  Provided that, if a plant shall have commenced reasonable preparations to so convert, it shall not be required to convert or suffer curtailment as a consequence thereof before July 1, 1975.  The commissioner may require the industry affected to submit to him evidence as to why the industrial plant cannot convert to alternate fuels within the delay specified; and, if the user alleges otherwise, and if required by the commissioner, why the industrial plant cannot be operated on a profitable basis with the use of alternate fuels.

The commissioner may authorize the use of intrastate natural gas for use as boiler fuel if the industry demonstrates that it cannot convert to alternate fuel capability by reason of the fact that it is economically unfeasible, that the industrial plant would otherwise have to close, because it could not operate with a margin of profit considered reasonable in the particular industry, or that the cost of converting to alternate fuels is totally disproportionate to the existing investment in plant facilities.  If the commissioner determines that for those reasons the industrial plant cannot reasonably be converted to the use of alternate fuel capabilities and remain in business, the commissioner may, if he determines that intrastate natural gas is available for such use, grant to that industry a higher priority of use than is herein provided;

(i)  Ninth priority shall be given to industrial plants, including electrical generating plants to the extent not provided for in Paragraphs (e) and (h) above, having a present requirement for boiler fuel use, in those instances where alternate fuel capabilities now exist, or may be installed with relatively minimal cost and delay.  Industries possessing existing alternate fuel capabilities or, if the commissioner determines that alternate fuel capability can be installed with relatively minimal cost or delay, may be curtailed in their gas supply by the commissioner, and directed by the commissioner to change from use of intrastate natural gas to use of alternate fuels within a limited time to be fixed by the commissioner considering all pertinent circumstances.  The commissioner may, if he determines that intrastate natural gas is available for such use, and if the commissioner determines that it is economically unfeasible to operate a plant with alternate fuels, grant to the plant a higher priority of use.

Notwithstanding any other provision of this Chapter or any other law to the contrary, the commissioner shall have the authority to order the husbanding and storage of intrastate natural gas to the extent that he deems necessary to protect the public interest.

In the exercise of the powers, duties and functions granted to the commissioner in this Chapter, with respect to the production, transportation, distribution and delivery of natural gas and hydrocarbons received as royalties "in-kind" by private land or mineral owners under private leases and by the state pursuant to mineral leases by the state, its agencies and political subdivisions, the commissioner shall allocate and/or ration all such natural gas and other hydrocarbons received as "in-kind" royalties in accordance with the priorities established in Paragraphs (a) through (i), inclusive, of R.S. 30:572 and, notwithstanding any other provisions of R.S. 30:572 or any other law to the contrary the priorities established in said Paragraphs (a) through (i), without any change or modification thereof whatsoever, shall govern the allocation and/or rationing of natural gas and other hydrocarbons received as "in-kind" royalties unless the commissioner determines such priority in use is impractical under the circumstances.

Added by Acts 1973, Ex.Sess., No. 16, §1, emerg. eff. Dec. 8, 1973, at 9:55 A.M.  Amended by Acts 1977, No. 576, §1; Acts 1977, No. 611, §1; Acts 2006, No. 295, §1, eff. June 8, 2006.