Court Opinion

ID: 9339464
Source: CourtListenerOpinion
Date Created: 2022-12-16 17:48:00.617644+00
Date Added: 2024-06-11T17:15:19.686750
License: Public Domain

HOLLOWAY, Circuit Judge,
dissenting:
I respectfully dissent. While the equities favor the McCombs Group, duPont and National, usual contract rules and equitable considerations do not control in this proceeding under the Natural Gas Act, in my opinion. Instead, there are mandatory statutory requirements on abandonment of service which were imposed to protect the public interests recognized by the Act, Sunray Oil Co. v. FPC, 364 U.S. 137, 143, 80 S.Ct. 1392, 4 L.Ed.2d 1623, and these provisions convince me that we should affirm the basic holding of the Commission in this case.1
The majority opinion reasons (p. 1380) that: there was an abandonment in fact after all production ceased in 1966 on the Butler B lease from then known productive formations, as recognized by the Commission and the parties; that with this recognized abandonment the Commission’s jurisdiction ended; and that this abandonment was sufficient, as a matter of law, under § 7(b) of the Natural Gas Act, 15 U.S.C. § 717f(b), and this being a matter of law, it was not within the expertise of the Commission.
To me these conclusions are directly contrary to the plain terms of § 7(b). The statute could hardly be clearer in saying that:
No natural-gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission first had and obtained, after due hearing, and a finding by the Commission that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity permit such abandonment. (Emphasis added).
It is the Commission that must make the required findings and give approval before abandonment is legally effected, and not private parties by their agreement on the facts as to depletion and their consent to discontinuation of service. Nor does a determination by another tribunal that abandonment has occurred, as a matter of law, satisfy § 7(b). As the Supreme Court pointed out in Sunray, supra, 364 U.S. at 158 n.25, 80 S.Ct. at 1404:
25 It might be observed that in these cases the Commission issued certificates *1383without time limitations. Thus if the companies, failing to find new sources of gas supply, desired to abandon service because of a depletion of supply, they would have to make proof thereof before the Commission, under § 7(b). The Commission thus, even though there may be physical problems beyond its control, kept legal control over the continuation of service by the applicants. (Emphasis added).
See also Atlantic Refining Co. v. Public Service Commission, 360 U.S. 378, 389, 79 S.Ct. 1246, 3 L.Ed.2d 1312; Phillips Petroleum Co. v. FPC, 556 F.2d 466, 469 (10th Cir.); Mitchell Energy Corp. v. FPC, 533 F.2d 258, 261 (5th Cir.).
The majority lays stress on the fact that production from the known reserves underlying the Butler B lease was depleted in 1966, that there was testimony that neither United, the producer, nor anyone else was then aware of deeper reserves, and that as a practical matter there was no service that could be rendered thereafter from that lease. And, as the majority says, counsel for the Commission conceded that proof of such depletion and of failure of efforts to re-establish production has been accepted by the Commission in § 7(b) proceedings as a basis for permission for abandonment. Further the Commission did twice write suggesting that an application for abandonment be filed, which action the majority interprets as Commission recognition that there was in fact an abandonment.
However, there were other reserves as is now known, and United did state that while it would remove its metering equipment in 1966, it would reinstall such equipment whenever further gas might be delivered under the contract. (J.A. 137). In view of these circumstances it may not be quite certain what would have happened if application for a complete abandonment had been made, notice thereof had been given by publication,2 and a final abandonment approval had been considered by the Commission. But, in any event, permission for abandonment of all service was for the Commission and we cannot make the findings and give the approval which Congress deemed it necessary for the Commission to make. Sunray, supra, 364 U.S. at 142, 80 S.Ct. 1392.
The Commission noted in its Opinion 740 that the original 1953 contract covered merchantable natural gas produced from all wells now or hereafter drilled during the 10-year term of that contract (later extended to 1981) on specified leaseholds including the Butler B tract, and further noted that there was no mention of any particular depths in that contract. (J.A. 160-61). Further, the McCombs Group now does not contest the fact of delivery of gas from the Butler B lease to United.3 Such delivery constituted both a sale under the contract and commencement of a “service” obligation in interstate commerce under the Act. Phillips Petroleum Co. v. FPC, supra, 556 F.2d at 469. As this delivery was made under a contractual dedication without limits as to depths, there was a dedication to interstate commerce of the underlying reserves in question, and the effort to resell the same gas amounted to an attempted *1384abandonment, which could not be done without first obtaining approval of the Commission under § 7(b). Ibid.
For these reasons I would sustain the Commission’s conclusion that the commencement of service completed dedication to United in interstate commerce and thereby invoked the protection of § 7(b). (J.A. 163). And concluding that procedures made mandatory by the Act have not been complied with, I must dissent.

. The majority opinion does not reach other issues raised such as the propriety of the ruling on dissolution of the units and of the order requiring repayment to United of quantities of gas sold to duPont in the intrastate transaction, and the failure to sustain the motion challenging jurisdiction as to duPont. Thus it is unnecessary for me to address these issues. I will consider only the holding of the majority on the central abandonment issue.

. The Commission’s regulations required notice by publication and mailing to States affected by the application, see 18 CFR § 157.9 (January 1, 1969), and permitted petitions for interventions by persons desiring to participate. See 18 CFR § 157.10 (January 1, 1969). Pipeline purchasers have been permitted to intervene in such proceedings. See e. g., Transcontinental Gas Pipe Line Corp. v. FPC, 160 U.S.App.D.C. 1, 2-3, 488 F.2d 1325, 1326-27, cert. denied sub nom. Natural Gas Pipeline Co. v. Transcontinental Pipe Line Corp., 417 U.S. 921, 94 S.Ct. 2629, 41 L.Ed.2d 226.

. The McCombs Group says that the statement by United indicating that the record shows that gas was received by United from the Butler B lease should be read with some caution. The McCombs Group points to the absence of evidence in the original record that gas was actually delivered from the Butler B lease to United, but recognizes that United later presented some evidence on the point in subsequent proceedings before the Commission. The McCombs Group states that since it is not seeking merely a remand, it has not raised the delivery of Butler B gas to United as an issue in this review proceeding, except as evidence of the Commission’s partiality toward United. (Reply Brief of McCombs Group, 2).