§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 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 secretary 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 under Subparagraphs (a), (b), (c), (d), and (e) of this
Paragraph, 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 under Subparagraphs (a), (b), (c), (d),
and (e) of this Paragraph, 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)(i) Subject to the priorities established in Subparagraphs (a) and (b) of this
Paragraph, eighth priority shall be given to industrial plants, including electrical generating
plants to the extent not provided for in Subparagraph (e) of this Paragraph, 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 secretary to convert to
alternate fuels within a reasonable time, considering all pertinent circumstances, or suffer
curtailment by order of the secretary 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 secretary
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 secretary, why the industrial plant cannot be operated on a profitable
basis with the use of alternate fuels.
(ii) The secretary 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 secretary determines that for those reasons the
industrial plant cannot reasonably be converted to the use of alternate fuel capabilities and
remain in business, the secretary 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)(i) Ninth priority shall be given to industrial plants, including electrical generating
plants to the extent not provided for in Subparagraphs (e) and (h) of this Paragraph, 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 secretary determines that alternate fuel capability
can be installed with relatively minimal cost or delay, may be curtailed in their gas supply
by the secretary, and directed by the secretary to change from use of intrastate natural gas to
use of alternate fuels within a limited time to be fixed by the secretary considering all
pertinent circumstances. The secretary may, if he determines that intrastate natural gas is
available for such use, and if the secretary determines that it is economically unfeasible to
operate a plant with alternate fuels, grant to the plant a higher priority of use.
(ii) Notwithstanding any other provision of this Chapter or any other law to the
contrary, the secretary 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.
(2) In the exercise of the powers, duties and functions granted to the secretary 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 secretary shall allocate and/or ration all such natural gas and other
hydrocarbons received as "in-kind" royalties in accordance with the priorities established in
Subparagraphs (1)(a) through (i) of this Section and, notwithstanding any other provisions
of this Section or any other law to the contrary the priorities established in Subparagraphs
(1)(a) through (i) of this Section, 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 secretary determines such priority in use is impractical under
the circumstances.