Opinion ID: 357159
Heading Depth: 1
Heading Rank: 1

Heading: Abandonment Authorization

Text: 4 Under 15 U.S.C. § 717f(b), no natural gas company may abandon all or any portion of any source rendered by means of facilities subject to the jurisdiction of the FERC without Commission approval. This provision has been most recently construed by the Supreme Court in California v. Southland Royalty Co., --- U.S. ----, 98 S.Ct. 1955, 56 L.Ed.2d 505, a case which is directly relevant to the issue before us. Southland Royalty restated the established rule that once natural gas is dedicated to interstate commerce under a certificate of public convenience and necessity, that gas may not be withdrawn from the interstate market without prior Commission approval. 98 S.Ct. at 1958, citing Sunray Mid-Continent Oil Co. v. FPC, 364 U.S. 137, 156, 80 S.Ct. 1392, 4 L.Ed.2d 1623. The Tribe asserts this rules is inapplicable in this case because their royalty gas has never been dedicated to the interstate market. Their argument is premised on the fact that they reserved the option to take their royalty in kind in the lease. El Paso and Northwest, being at all times subject to this provision as lessees, had no legal power to dedicate this gas to interstate commerce. This argument is made despite the fact that all the gas produced from the wells is either sold, or commingled with gas being sold, interstate by El Paso and Northwest under FERC certificate. 5 We believe the Supreme Court's opinion in Southland Royalty, supra, requires rejection of the Tribe's arguments. The respondents in Southland made the identical claim as is made by the Tribe in this case, that is,  'no man can dedicate what he does not own.'  98 S.Ct. at 1960. The Supreme Court rejected this argument on the grounds that dedicating gas to the interstate market . . . does not effect a gift or even a sale of that gas, but only changes its regulatory status. Id. (footnote omitted). The basic thrust of the Court's opinion was that the service obligation imposed by the Natural Gas Act is paramount to any private contractual arrangement. This obligation, once imposed, requires the flow of gas to the interstate market until abandonment authorization has been obtained. Id. at 1958. 3 We hold that the FERC did not err in that portion of its ruling regarding abandonment.