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OSP-76-15 1 (1976-02-25)

handle is hein.gao/gaobaabgm0001 and id is 1 raw text is: 
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                     -SISTANT COMPTPOLLER GENERAL OF THE UNI.TED STA=S
   J)ELEA              D WASrINGTC D.C. ZOUS
                                                  ebruary 25, 1976


                                                  bi o e refeaseig -eurd i:he Get
          B-1 78205             Ai7C omcp~ct on the basis e? sp cfic ap mve
                               FAW ~e

          The Honorable Edward M. Kennedy
          Chairan, Subcommittee on Administrative
             Practice and Procedure              -    (  J C-
          Com ittee on the Judiciary
          Ur.ie StCates Senate

          Dear Mr, Chairman:                   ->

               Your letzer of May 17, 1975, requested that we irdicat the majr
           problems in 'developing, implementing, and enforcing the Federal Energy
           Administration's (FE.As) regulation of the price of na-_ral gas liquids
           (;'GLs), such as propane, butare, and natural caso'ine. We e aninod
           program documents and industry co.ments cn prcposed reculatcry changes,
           and we interviewed officials at FEA Headquarzers in  ' asiingzon, D.C.,
           and the FEA reoional office in- Dallas, Texas.

               The natural cas liquid industry is a iarce, extre-ely comDlex
          portion of the energy industry. Propane alone is produced in over 750
          gas processing plants and 250 refineries across the country. Various
          processes are used to produce !'Ls, and the processing zparts operate
          under differing contractual arran-ements involving procers, trans-
          Porters, and plant owners. Thn agreemer :s conCernln- tI'e ,v rershin arc
          operation of NGL plants are co,. lex and sometimes involve merous
          participants.

               The Emergency PetroleurA ilocation Act of 1973 (Pjlic Law 93-1591
          and the Federal Energy Administration Act of 1974 (Public Law 93-2751
          direct FEA to reaulate and control industry pricing of at least two
          NGLs--butane and propane. However, the legislation was not specific
          and FEA price regulaticns were poorly-suited for application to NGL
          plants. As a result, there was considerable confusion within the
          industry. FEA did not implement a meaningful complianCe and enfcrcement
          prograr; however, they indicated that many processors .ere either
          unaware that the price regulations applied to their sa-es activities
          Cr unsure as to the effect of the regulations on the prices which could
          legally be charged for their products.



                                                           OSP-76-15




                           -65

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