§ 2.102 - Policy respecting production-related activities performed by an interstate pipeline.

(a) Policy. (1) If an interstate pipeline purchases natural gas in a first sale, then in any proceeding brought under the Natural Gas Act to determine the lawfulness of the rates and charges of such pipeline, a production-related service provided by the pipeline with respect to the purchase of such gas, or by another on behalf of the pipeline, shall be deemed prudent, unless the terms of the gas sales contract governing the pipeline's purchase of the gas expressly provide that the seller perform the activity.

(2) Any production-related service not deemed prudent under paragraph (a)(1) of this section, and the level of costs to perform any production-related service, is not deemed imprudent. The prudence of such service, or of the level of costs, is to be determined in an appropriate pipeline rate or certificate proceeding brought under the Natural Gas Act.

(b) Definitions. For purposes of this section the following definitions apply:

(1) The terms first sale and interstate pipeline have the same meaning as such terms have under the NGPA.

(2) The term production-related service has the same meaning as that term has under § 271.1104(c)(6) of this part.