UNITED STATES SUPREME COURT DECISIONS ON-LINE

Petitioner, United Gas Pipe Line Co. (United), contracted to buy gas produced by respondent Continental Oil Co. (Continental) from the Johnson Bayou Field in Louisiana. Continental constructed delivery facilities, and United provided facilities to receive the gas into its interstate system. The contract parties, on application to respondent Federal Power Commission (FPC), were granted certificates of public convenience and necessity. Continental's certificate covered sale of Johnson Bayou gas; United's certificated covered construction of its facilities and continued transportation of the gas. Continental elected to terminate at the end of the contract's primary term, refused United's offer to continue purchasing on a day-to-day basis at the old contract rate, and filed with the FPC a rate increase effective on the contract expiration date which was accepted over United's protest. United, after notice to Continental, ceased purchasing Johnson Bayou gas on the contract expiration date. Following Continental's petition for a show cause order and a full hearing, the FPC found United's ceasing to take gas from that field an abandonment of its facilities for that purpose and of its service rendered thereby, in violation of § 7(b) of the Natural Gas Act, which forbids such abandonments without the FPC's prior consent. The FPC issued an order, thereafter upheld by the Court of Appeals, that United renew operation of its Johnson Bayou facilities and buy gas at Continental's new rate.

Held: Petitioner's refusal to continue receiving Johnson Bayou gas for transportation in interstate commerce constituted an abandonment of "facilities" and "service" which, under § 7(b) of the Act, required FPC approval. Pp. 385 U. S. 86-91.

(a) The "facilities subject to the jurisdiction" of the FPC to which § 7(b) applies are those required for the interstate transportation of natural gas and for the interstate sale of gas for resale to the ultimate consumer. P. 385 U. S. 87. clubjuris

Page 385 U. S. 84

(b) "Abandonment" of facilities does not require their physical alteration, but can be accomplished, as here, by allowing them to become operationally dormant for an indefinite time. Pp. 385 U. S. 87-88.

(c) "Service" includes the taking and transportation of gas from a particular field as well as its sale. Pp. 385 U. S. 88-89.

(d) The FPC has power to regulate the purchase of gas where necessary to the exercise of its authority over the transportation and sale thereof. Pp. 385 U. S. 89-90.

(e) Though United must reactivate its Johnson Bayou facilities and restore service, it may ask the FPC to permit abandonment upon a proper showing of justification therefore. P. 385 U. S. 91.

350 F.2d 689.