§ 717y. — Voluntary conversion of natural gas users to heavy fuel oil.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC717y]
TITLE 15--COMMERCE AND TRADE
CHAPTER 15B--NATURAL GAS
Sec. 717y. Voluntary conversion of natural gas users to heavy
fuel oil
(a) Transfer of contractual interests
(1) In order to facilitate voluntary conversion of facilities from
the use of natural gas to the use of heavy petroleum fuel oil, the
Commission shall, by rule, provide a procedure for the approval by the
Commission of any transfer to any person described in paragraph 2(B)(i),
(ii), or (iii) of contractual interests involving the receipt of natural
gas described in paragraph 2(A).
(2)(A) The rule required under paragraph (1) shall apply to--
(i) natural gas--
(I) received by the user pursuant to a contract entered into
before September 1, 1977, not including any renewal or extension
thereof entered into or on or after such date other than any
such extension or renewal pursuant to the exercise by such user
of an option to extend or renew such contract;
(II) other than natural gas the sale for resale or the
transportation of which was subject to the jurisdiction of the
Federal Power Commission under the Natural Gas Act [15 U.S.C.
717 et seq.] as of September 1, 1977;
(III) which was used as a fuel in any facility in existence
on September 1, 1977.
(ii) natural gas subject to a prohibition order issued under
section 717z of this title.
(B) The rule required under paragraph (1) shall permit the transfer
of contractual interests--
(i) to any interstate pipeline;
(ii) to any local distribution company served by an interstate
pipeline; and
(iii) to any person served by an interstate pipeline for a high
priority use by such person.
(3) The rule required under paragraph (1) shall provide that any
transfer of contractual interests pursuant to such rule shall be under
such terms and conditions as the Commission may prescribe. Such rule
shall include a requirement for refund of any consideration, received by
the person transferring contractual interests pursuant to such rule, to
the extent such consideration exceeds the amount by which the costs
actually incurred, during the remainder of the period of the contract
with respect to which such contractual interests are transferred, in
direct association with the use of heavy petroleum fuel oil as a fuel in
the applicable facility exceeds the price under such contract for
natural gas, subject to such contract, delivered during such period.
(4) In prescribing the rule required under paragraph (1), and in
determining whether to approve any transfer of contractual interests,
the Commission shall consider whether such transfer of contractual
interests is likely to increase demand for imported refined petroleum
products.
(b) Commission approval
(1) No transfer of contractual interests authorized by the rule
required under subsection (a)(1) of this section may take effect unless
the Commission issues a certificate of public convenience and necessity
for such transfer if such natural gas is to be resold by the person to
whom such contractual interests are to be transferred. Such certificate
shall be issued by the Commission in accordance with the requirements of
this subsection and those of section 7 of the Natural Gas Act [15 U.S.C.
717f], and the provisions of such Act [15 U.S.C. 717 et seq.] applicable
to the determination of satisfaction of the public convenience and
necessity requirements of such section.
(2) The rule required under subsection (a)(1) of this section shall
set forth guidelines for the application on a regional or national basis
(as the Commission determines appropriate) of the criteria specified in
subsection (e)(2) and (3) of this section to determine the maximum
consideration permitted as just compensation under this section.
(c) Restrictions on transfers unenforceable
Any provision of any contract, which provision prohibits any
transfer of any contractual interests thereunder, or any commingling or
transportation of natural gas subject to such contract with natural gas
the sale for resale or transportation of which is subject to the
jurisdiction of the Commission under the Natural Gas Act [15 U.S.C. 717
et seq.], or terminates such contract on the basis of any such transfer,
commingling, or transportation, shall be unenforceable in any court of
the United States and in any court of any State if applied with respect
to any transfer approved under the rule required under subsection (a)(1)
of this section.
(d) Contractual obligations unaffected
The person acquiring contractual interests transferred pursuant to
the rule required under subsection (a)(1) of this section shall assume
the contractual obligations which the person transferring such
contractual interests has under such contract. This section shall not
relieve the person transferring such contractual interests from any
contractual obligation of such person under such contract if such
obligation is not performed by the person acquiring such contractual
interests.
(e) Definitions
For purposes of this section--
(1) The term ``natural gas'' has the same meaning as provided by
section 2(5) of the Natural Gas Act [15 U.S.C. 717a(5)].
(2) The term ``just compensation'', when used with respect to
any contractual interests pursuant to the rule required under
subsection (a)(1) of this section, means the maximum amount of, or
method of determining, consideration which does not exceed the
amount by which--
(A) the reasonable costs (not including capital costs)
incurred, during the remainder of the period of the contract
with respect to which contractual interests are transferred
pursuant to the rule required under subsection (a)(1) of this
section, in direct association with the use of heavy petroleum
fuel oil as a fuel in the applicable facility, exceeds
(B) the price under such contract for natural gas, subject
to such contract, delivered during such period.
For purposes of subparagraph (A), the reasonable costs directly
associated with the use of heavy petroleum fuel oil as a fuel shall
include an allowance for the amortization, over the remaining useful
life, of the undepreciated value of depreciable assets located on
the premises containing such facility, which assets were directly
associated with the use of natural gas and are not usable in
connection with the use of such heavy petroleum fuel oil.
(3) The term ``just compensation'', when used with respect to
any intrastate pipeline which would have transported or distributed
natural gas with respect to which contractual interests are
transferred pursuant to the rule required under subsection (a)(1) of
this section, means an amount equal to any loss of revenue, during
the remaining period of the contract with respect to which
contractual interests are transferred pursuant to the rule required
under subsection (a)(1) of this section, to the extent such loss--
(A) is directly incurred by reason of the discontinuation of
the transportation or distribution of natural gas resulting from
the transfer of contractual interests pursuant to the rule
required under subsection (a)(1) of this section; and
(B) is not offset by--
(i) a reduction in expenses associated with such
discontinuation; and
(ii) revenues derived from other transportation or
distribution which would not have occurred if such
contractual interests had not been transferred.
(4) The term ``contractual interests'' means the right to
receive natural gas under contract as affected by an applicable
curtailment plan filed with the Commission or the appropriate State
regulatory authority.
(5) The term ``interstate pipeline'' means any person engaged in
natural gas transportation subject to the jurisdiction of the
Commission under the Natural Gas Act [15 U.S.C. 717 et seq.].
(6) The term ``high-priority use'' means any use of natural gas
(other than its use for the generation of steam for industrial
purposes or electricity) identified by the Commission as a high
priority use for which the Commission determines a substitute fuel
is not reasonably available.
(7) The term ``heavy petroleum fuel oil'' means number 4, 5, or
6 fuel oil which is domestically refined.
(8) The term ``local distribution company'' means any person,
other than any intrastate pipeline or any interstate pipeline,
engaged in the transportation, or local distribution, of natural gas
and the sale of natural gas for ultimate consumption.
(9) The term ``intrastate pipeline'' means any person engaged in
natural gas transportation (not including gathering) which is not
subject to the jurisdiction of the Commission under the Natural Gas
Act.
(10) The term ``facility'' means any electric powerplant, or
major fuel burning installation, as such terms are defined in the
Powerplant and Industrial Fuel Use Act of 1978 [42 U.S.C. 8301 et
seq.].
(11) The term ``curtailment plan'' means a plan (including any
modification of such plan required by the Natural Gas Policy Act of
1978 [15 U.S.C. 3301 et seq.] ), in effect under the Natural Gas Act
or State law, which provides for recognizing and implementing
priorities of service during periods of curtailed deliveries by any
local distribution company, intrastate pipeline, or interstate
pipeline.
(12) The term ``interstate commerce'' has the same meaning as
such term has under the Natural Gas Act.
(f) Coordination with this chapter
(1) Consideration in any transfer of contractual interests pursuant
to the rule required under subsection (a)(1) of this section shall be
deemed just and reasonable for purposes of sections 4 and 5 of the
Natural Gas Act [15 U.S.C. 717c, 717d] if such consideration does not
exceed just compensation.
(2) No person shall be subject to the jurisdiction of the Commission
under the Natural Gas Act [15 U.S.C. 717 et seq.] as a natural gas-
company (within the meaning of such Act) or to regulation as a common
carrier under any provision of Federal or State law solely by reason of
making any sale, or engaging in any transportation, of natural gas with
respect to which contractual interests are transferred pursuant to the
rule required under subsection (a)(1) of this section.
(3) Nothing in this section shall exempt from the jurisdiction of
the Commission under the Natural Gas Act [15 U.S.C. 717 et seq.] any
transportation in interstate commerce of natural gas, any sale in
interstate commerce for resale of natural gas, or any person engaged in
such transportation or such sale to the extent such transportation,
sale, or person is subject to the jurisdiction of the Commission under
such Act without regard to the transfer of contractual interests
pursuant to the rule required under subsection (a)(1) of this section.
(4) Nothing in this section shall exempt any person from any
obligation to obtain a certificate of public convenience and necessity
for the sale in interstate commerce for resale or the transportation in
interstate commerce of natural gas with respect to which contractual
interests are transferred pursuant to the rule required under subsection
(a)(1) of this section.
(g) Volume limitation
No supplier of natural gas under any contract, with respect to which
contractual interests have been transferred pursuant to the rule
required under subsection (a)(1) of this section, shall be required to
supply natural gas during any relevant period in volume amounts which
exceed the lesser of--
(1) the volume determined by reference to the maximum delivery
obligations specified in such contract;
(2) the volume which such supplier would have been required to
supply, under the curtailment plan in effect for such supplier, to
the person, who transferred contractual interests pursuant to the
rule required under subsection (a)(1) of this section, if no such
transfer had occurred; and
(3) the volume actually delivered or for which payment would
have been made pursuant to such contract during the 12-calendar-
month period ending immediately before such transfer of contractual
interests.
(Pub. L. 95-617, title VI, Sec. 606, Nov. 9, 1978, 92 Stat. 3167.)
References in Text
The Natural Gas Act, referred to in subsecs. (a)(2)(A)(i)(II),
(b)(1), (c), (e)(5), (9), (11), (12), (f)(2), (3), is act June 21, 1938,
ch. 556, 52 Stat. 821, as amended, which is classified generally to this
chapter (Sec. 717 et seq.). For complete classification of this Act to
the Code, see section 717w of this title and Tables.
The Powerplant and Industrial Fuel Use Act of 1978, referred to in
subsec. (e)(10), is Pub. L. 95-620, Nov. 9, 1978, 92 Stat. 3291, as
amended, which is classified principally to chapter 92 (Sec. 8301 et
seq.) of Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title note set out
under section 8301 of Title 42 and Tables.
The Natural Gas Policy Act of 1978, referred to in subsec. (e)(11),
is Pub. L. 95-621, Nov. 9, 1978, 92 Stat. 3350, as amended, which is
classified generally to chapter 60 (Sec. 3301 et seq.) of this title.
For complete classification of this Act to the Code, see Short Title
note set out under section 3301 of this title and Tables.
Codification
Section was enacted as part of the Public Utility Regulatory
Policies Act of 1978, and not as part of the Natural Gas Act which
comprises this chapter.
Section Referred to in Other Sections
This section is referred to in section 717z of this title.
