What is the Natural Gas Act of 1938, and what did it accomplish?

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mwestwood eNotes educator| Certified Educator

The Natural Gas Act was passed by the U.S. Congress in 1938 in order to control the interstate transmission of natural gas. In the 1900s, state regulatory commissions controlled the shipments of natural gas, but when pipelines crossed state lines, the U.S. Supreme Court ruled that this transmission violated the interstate commerce clause of the Constitution. Therefore, the Natural Gas Act was passed.

One of the benefits of the Natural Gas Act was that it gave the Federal Power Commission control of the regulation over rates that transmission companies could charge, thus providing uniformity of rates. This act also served to control the monopolistic tendencies of companies who had more pipelines to charge higher than competitive prices or of one company infringing upon another that was already established in a location. It is worthy of note that in 1977, the Federal Power Commission was done away with, and the Federal Energy Regulatory Commission was designated as the authority to regulate natural gas.