Narrative Opinion Summary
This case involves a contractual dispute between a pipeline company and a gas company concerning the termination of a gas purchase agreement and subsequent regulatory actions. The companies initially entered into a contract for the sale and purchase of gas from a specific field, with infrastructure constructed by both parties to facilitate this arrangement. Upon contract termination and failed renegotiations, the gas company sought a rate increase, which the pipeline company did not accept, ceasing its gas purchases. The Federal Power Commission (FPC) determined this cessation constituted an unlawful abandonment of services and facilities under the Natural Gas Act, which requires prior Commission consent for such actions. The FPC ordered the pipeline company to resume operations and purchase gas at the new rates. The Court of Appeals upheld the FPC's decision, and the Supreme Court affirmed, emphasizing the FPC's jurisdiction over interstate transportation and sales of natural gas. The ruling underscored the necessity of a certificate of public convenience and necessity for engaging in or abandoning these activities. Despite the pipeline company's arguments regarding property rights and due process, the courts maintained that regulatory oversight justified the Commission's order. The outcome obliges the pipeline company to continue gas purchases and operations until proper abandonment approval is obtained.
Legal Issues Addressed
Abandonment of Facilities and Services under the Natural Gas Actsubscribe to see similar legal issues
Application: United's cessation of gas purchases from the Johnson Bayou Field was deemed an abandonment of facilities and services without the required consent from the Federal Power Commission.
Reasoning: The FPC found that United's actions constituted an abandonment of its facilities and service without prior consent, violating the Natural Gas Act.
Certificate of Public Convenience and Necessitysubscribe to see similar legal issues
Application: Natural-gas companies must obtain a certificate before engaging in transportation and sales activities, and cannot abandon such activities without approval.
Reasoning: Under section 7(c), companies must obtain a certificate of public convenience and necessity before engaging in such activities.
Commission Authority over Gas Purchasessubscribe to see similar legal issues
Application: The Commission's authority extends to requiring continued gas purchases when necessary to regulate transportation and sales effectively.
Reasoning: The Commission possesses the authority to issue rules necessary for regulating transportation and sales, which may include oversight of gas purchases when they impact these areas.
Conditions for Abandonment under Section 7(b) of the Natural Gas Actsubscribe to see similar legal issues
Application: A natural-gas company must demonstrate that public convenience allows abandonment or that gas supply is depleted to obtain Commission approval.
Reasoning: Under Section 7(b) of the Act, a natural-gas company cannot abandon its facilities or services without Commission approval, which requires a finding that gas supply is depleted or that public convenience allows for such abandonment.
Federal Power Commission Jurisdiction under the Natural Gas Actsubscribe to see similar legal issues
Application: The FPC has jurisdiction over the transportation and sale of natural gas in interstate commerce, requiring consent for abandonment of facilities.
Reasoning: The Act grants the Commission jurisdiction over interstate transportation of natural gas, whether for hire or sale, emphasizing that both transportation and sale are integral services.