Opinion ID: 252068
Heading Depth: 1
Heading Rank: 3

Heading: The Criteria for Abandonment

Text: 37 1. The statute: Petitioners assert that the Commission rested its action on an erroneous construction of 7(b) of the Natural Gas Act. That section provides that 'No natural-gas company shall abandon all or any portion of its facilities (or service) subject to the jurisdiction of the Commission' without Commission approval based on a finding, after due hearing, either (1) that the supply of gas is depleted, or (2) that 'the present or future public convenience or necessity permit such abandonment.' 25 Panhandle sought and the Commission approved total abandonment solely upon a finding in accordance with the second provision. 38 The fact that abandonment of public service requires Government approval symbolizes the special legal status and obligations of common carriers and public utilities. This includes an obligation, deeply embedded in the law, to continue service. When Panhandle sought and obtained a certificate of public convenience and necessity to serve the Detroit market, it became the exclusive supplier for that market. If it wants to abandon service because it must now share that market, or because it prefers to use that gas for more profitable unregulated sales, or because it wants to be rid of what it considers a vexatious servitude, these are not reasons for granting its request. Abandonment may be allowed only if the 'public convenience or necessity permit.' And the word 'permit,' instead of 'require,' does not shift the burden to those opposing the application. An applicant for abandonment under 7(b) of the Act has the burden of making the factual showing which will assure the Commission, charged with protecting the public interest, that that interest will in no way be disserved; just as the applicant under 7(c) for a certificate to commence service must bear the burden of proving that that public interest will be served. 26 39 2. The Commission's rationale: Our responsibility for determining whether the Commission properly concluded that the public interest would not be jeopardized by abandonment is hampered at the outset. For the Commission's opinions in this case are not models of clarity as to the standards it applied in determining that the 'public convenience and necessity permit such abandonment.' In its original opinion the Commission said: 40 'An appropriate standard is set forth in our (previous) Opinion    denying partial abandonment where we said that Panhandle had 'made no showing that the needs of the consuming public served by these other customers for natural gas are greater than, or as great as, the needs of the consuming public in the areas served by Michigan Consolidated and Michigan Wisconsin in the event of the cutback at Detroit' or no showing 'of benefits to the consuming public along the Panhandle system    which would offset the injury and damage to the consuming public   ' served by the other systems.' 27 41 The Commission's starting point in applying this 'appropriate standard' was its finding that 'There is sufficient gas available from the capacity of American Louisiana's pipeline that has not been permanently allocated    to permit abandonment without depriving Michigan Consolidated or the American Natural System of gas allocated to them other than on a temporary basis.' 28 This conclusion was based, in part, on statistics showing that, even without Panhandle, the American Natural system had enough (but barely enough) gas on an annual basis to meet the past demands of its presently attached loads. 29 The Commission nonetheless recognized that 'the record contains extensive testimony on the needs of both the American Natural    (and) Panhandle (systems) for additional supplies of gas. An objective way to approach this problem,' said the Commission, 'is to compare the heating saturation of    Michigan Consolidated    with the heating saturations of other customers of Panhandle   .' 30 Finding that fewer Panhandle customers heated with gas, it ordered the abandonment 42 On rehearing the Commission appears to have shifted its ground. It declared that under the statute, 'abandonment will be permitted unless inconsistent with the public convenience and necessity.' 31 In reaching this conclusion, said the Commission, 'the standards mentioned here and in our previous order were but partial criteria used in reaching a result within criteria used in reaching a result Utilizing this broadened test, the Commission recognized the relevance of at least two factors militating against abandonment-- the added costs to Michigan Consolidated and the unconsidered needs of Michigan Wisconsin customers. But it concluded that 'whatever detriments there may (be) to Michigan Consolidated    and Michigan Wisconsin    consumers,' they were outweighed by the 'great demands for service on Panhandle's system.' 33 Panhandle's greater need was further demonstrated by a comparison of each system's ability to supply its customers on days of maximum demand. Finally the Commission averted to the advantages of separating the two systems as another factor supporting abandonment. 34 43 Although the Commission's rationale is not altogether clear to us, we are able to glean from its opinions three ultimate determinations upon which it rested the abandonment and allocation orders: (1) that the gas supply in question could be used 'to greater advantage' by Panhandle's customers than by the customers of American Natural; 35 (2) 'that each system will more efficiently procure gas supplies and serve its own customers if separated from the other one;' 36 and (3) that there was sufficient unallocated gas on the American Natural system to replace the supply which Michigan Consoldiated would lose by the abandonment order. 44 If valid, these determinations are sufficient to establish that 'the present or future convenience and necessity permits    abandonment.' 37 Petitioners contend, however, that these determinations are fatally defective. We shall discuss their objections to each. 45