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FPC v. J. M. HUBER CORP.

August 16, 1955

FEDERAL POWER COMMISSION, Plaintiff,
v.
J. M. HUBER CORPORATION, Defendant



The opinion of the court was delivered by: FORMAN

The defendant, J. M. Huber Corporation, is a New Jersey corporation which holds leasehold interests in twelve natural gas wells in Carson County, Texas. *fn1" The gas produced from these wells is sold by Huber to the Northern Natural Gas Company pursuant to a contract between Huber and Northern entered into on April 21, 1936. The contract is to remain effective during the life of Huber's leaseholds. However, the contract has an escape clause, whose terms are not here relevant, which Huber is trying to invoke.

Pursuant to what it regarded as its right under the contract, Huber gave Northern notice on September 1, 1954 in writing that it intended to cancel the gas purchase contract made April 21, 1936 in 180 days thereafter. It is the contention of the Commission that Huber cannot cease operation under its contract with Northern since Section 7(b) of the Natural Gas Act provides:

'No natural-gas company shall abandon * * * 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.' 15 U.S.C. ยง 717f(b).

 Notwithstanding its expressed desire to cancel its contract with Northern, on September 24, 1954 Huber set in motion with the Federal Power Commission applications for certificates of public convenience or necessity. Apparently to fulfill technical requirements it first asked for approval of its sale of gas to Northern, specifically however, reserving its right to protest the legality of and applicability to it of Commission Order 174-a (regulations governing the filing of rate schedules and applications for certificates of public convenience and necessity by producers and gatherers of natural gas * * *). This application was designated Docket G-3038 by the Commission. On the same day Huber filed with the Commission a 'notice of cancellation' of the rate schedule, consisting of copies of its letter to Northern of September 1, 1954 terminating its contract. It covered the copies with a letter to the Commission in which it said: Reserving our protest that the sale of gas to Northern Natural Gas Company is not a sale subject to the jurisdiction of the Commission, we request that, in the event that the Commission does have jurisdiction over the sale, it grant express permission and approval to the cancellation and abandonment of said sale on March 1, 1955, pursuant to the terms and provisions of said Contract dated April 21, 1936.' This was given Docket No. G-4957 by the Commission as an application pursuant to Section 7(b) of the Natural Gas Act for permission to abandon service.

 Northern filed a petition to intervene in Docket No. G-3038 and a complaint designated Docket No. G-4326 against Huber for its cancellation of its contract and threatened termination of deliveries. It also filed a protest and a petition to intervene with respect to Huber's cancellation of rate schedules designated No. G-4957. Northern was permitted to intervene.

 On December 30, 1954 an order (adopted December 15, 1954) was issued by the Commission rejecting Huber's 'notice of Cancellation of its rate schedule covering its sale to Northern,' fixing the date of hearing on January 26, 1955, and consolidating Docket Nos. G-4326 and G-4957 for purposes of hearing on that date.

 On January 14, 1955, Huber filed a document entitled 'Withdrawal of Application for Public Convenience and Necessity' in which it stated that 'it is not now and has not been since September 1, 1954, willing to do the acts and perform the services proposed * * *'. It further stated that if Huber was not permitted to withdraw its application in Docket G-3038 that it be amended to state that it was not willing to do the acts or perform the services proposed and is not willing to conform to the provisions of Section 7(e) of the Natural Gas Act and the requirements, rules and regulations thereunder. It further stated by way of amendment that it was not willing to accept a certificate covering the sale and also that the application for a certificate of public convenience and necessity was filed because of the possibility that Huber would be subject to penalties under the Natural Gas Act for failure to do file.

 On January 25, 1955 Huber filed two petitions, one for a declaratory order to terminate the controversy and remove uncertainty with reference to the above-entitled proceedings and the other complaining against Northern for failure to obtain a certificate of public convenience and necessity for the facilities used primarily for the purpose of transporting the gas purchased from Huber. They were respectively designated Docket Nos. G-8111 and G-8112.

 On January 26, 1955 hearings were commenced in G-3038, G-4326 and G-4957.

 On January 27, 1955 Huber filed a withdrawal of the Notice of Cancellation which it had filed on September 24, 1954, designated Docket No. G-4957, on the ground that Northern's facilities had not been certificated.

 The hearing was concluded on January 28, 1955, and briefs were filed by all parties on March 23, 1955.

 After being notified of Huber's intention to discontinue its sale to Northern on March 10, 1955 without Commission approval and prior to a determination of the matters before it, the Commission, on March 9, 1955, began this proceeding seeking an injunction under Section 20(a) of the Natural Gas Act *fn2" restraining Huber from violating Section 7(b) of the Act by proceeding to discontinue its sale to Northern.

 A temporary restraining order was issued and extended. A stipulation of facts has been filed by the parties and they have agreed that it, the oral argument and their briefs submitted on the motion for preliminary injunction shall serve as the basis for decision as if on final hearing.

 This Court cannot enjoin Huber from discontinuing its sale to Northern unless the jurisdictional provision -- Section 1(b) -- has given the Commission power to apply Section 7(b) to ...


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