Natural Gas Reform Act of 1985

Natural Gas Reform Act of 1985 - Title I: Nondiscriminatory Transportation of Natural Gas - Amends the Natural Gas Policy Act of 1978 to require a pipeline to transport natural gas upon a shipper's request if the pipeline has firm or interruptible available capacity. Directs the Federal Energy Regulatory Commission (the Commission) to prescribe guidelines regarding such transportation. Exempts from such transportation obligation certain intrastate pipelines or field gathering systems and certain local distribution companies.

Directs the Commission to: (1) establish a methodology to determine pipeline capacity to transport the natural gas requested; and (2) prescribe regulations to allocate pipeline capacity when such pipeline is insufficient to satisfy all transportation obligations. States that such allocation regulations shall be based upon certain priorities applicable under the Natural Gas Act and this Act for curtailed deliveries.

Establishes guidelines under which the Commission shall employ methodologies for cost allocation and rate design.

Requires pipelines to provide itemized invoices for separate services.

Authorizes the Commission to establish incentive allowances. Establishes a three-year period during which an incentive allowance is provided for pipelines which voluntarily transport natural gas without protest.

States that when any pipeline, local distribution company, or direct end-user served by an interstate pipeline elects to receive services under this Act, the minimum service and shipping obligations of such interstate pipeline shall be reduced accordingly.

Sets forth rules for certain shippers who request interstate pipeline service to satisfy natural gas supplies under contract with local distribution companies.

Prohibits interstate pipelines from discriminating between existing customers and contract carriage customers regarding natural gas storage.

Directs the Commission to: (1) require interstate pipelines to publish separate, nondiscriminatory tariffs from the purchase, transportation, storage, and sale of natural gas; (2) prohibit an interstate pipeline from conditioning its transportation or storage services to a contract carriage customer upon natural gas purchases by such customer; and (3) require each pipeline to file a semiannual report regarding its available capacity.

Title II: Contract and Tariff Practices - Sets forth guidelines for a two-year period during which a purchaser may elect not to accept delivery or pay for volumes of natural gas in excess of 60 percent of the contracted volume. Exempts from such purchaser election, casinghead natural gas and occluded natural gas from coal seams. Grants such contract purchasers the option of buying such released excess natural gas within a 30-day period before it is offered for sale to the general market.

States that natural gas sales contract "minimum commodity" provisions (which require purchasers to pay for variable costs not actually incurred by the seller if deliveries to the purchaser are not made) are against public policy and unenforceable.

States that interstate pipeline contract provisions or tariffs which prevent purchases or deliveries from competing suppliers are against public policy and unenforceable.

Title III: Pipeline Accountability and Rate Procedures - Prohibits natural gas rate increases which exceed the base period inflation rate unless the Commission has held a hearing and issued a final order which specifically allows such increases.

Requires the Commission to take final action on proposed rate changes within six months after such a change is filed.

Prohibits the Commission from establishing presumptions under this Act regarding the prudence of natural gas purchase prices paid by a pipeline.

Title IV: Certain Imported Natural Gas - Prohibits the importation of natural gas unless the Secretary of Energy finds that the price is reasonable and that the contract governing such natural gas sale responds to changes in the natural gas market.

Directs the Commission to prohibit the recovery of payments made by a natural gas importer if the gas has not been imported because of a service interruption.

Limits the application of this title to facilities for the importation of liquefied natural gas which are owned by United States persons and were placed in service between September 1, 1982, and the effective date of this Act.

Title V: Effective Date - Sets forth the effective date of this Act.