United Gas Pipe Line Co. v. Federal Power Commission
Headline: Federal authority to block pipeline abandonment upheld: Court orders gas company to resume buying and transporting interstate gas, making it harder for companies to stop service without agency approval.
Holding: The Court ruled that the company abandoned interstate gas facilities and services without approval and must reactivate them, affirming the federal commission’s authority to require resumed transportation and purchases as part of its regulatory power.
- Stops companies from unilaterally halting interstate gas deliveries without agency approval.
- Allows federal commission to order resumption of pipeline service and required purchases.
- Leaves open process for companies to seek formal permission to abandon facilities.
Summary
Background
A pipeline company that transported gas (United) and an oil company that sold the gas (Continental) entered a ten-year contract beginning January 31, 1953. Each built facilities and received federal certificates to transport and sell the gas across state lines. Continental ended the contract at the end of its primary term in October 1962 and filed a rate increase effective January 31, 1963. United stopped buying and transporting the Johnson Bayou gas on that date and refused to resume under Continental’s new rate. The federal Gas Commission held a hearing, found that United had abandoned the facilities and service, and ordered United to restart operations and buy gas at the newly filed rate and in prior contract volumes. The Court of Appeals affirmed and this Court granted review.
Reasoning
The central question was whether stopping purchases and transport without removing equipment counts as an abandonment under the law that bars abandoning certificated facilities or any service they provide, and whether the Commission could force resumption. The Court held the facilities were built for interstate transportation and sale and that the law covers both the physical facilities and the services they render. It agreed that rendering facilities “operationally dormant” is abandonment even without physical removal. The Court also said the Commission’s broad statutory powers let it order reactivation and require purchases when necessary to restore interstate transportation or sale, treating purchases as incidental to regulating those services. United’s constitutional and economic claims were deemed premature; it may apply to the Commission for approval to abandon with appropriate findings.
Real world impact
The decision prevents companies from unilaterally stopping the transport or purchase of gas dedicated to the interstate market without federal approval. The Commission can compel resumption of service and purchases to protect interstate supply. The ruling leaves open the formal Commission process for seeking permission to abandon facilities.
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