
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC8441]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
             CHAPTER 92--POWERPLANT AND INDUSTRIAL FUEL USE
 
             SUBCHAPTER VII--ADMINISTRATION AND ENFORCEMENT
 
               Part D--Preservation of Contractual Rights
 
Sec. 8441. Preservation of contractual interest


(a) Right to transfer contractual interests

    (1) If any person receives natural gas, the use of which is 
prohibited by the provisions of subchapter III of this chapter or any 
rule or order thereunder, and if such natural gas is received pursuant 
to a contract in effect on April 20, 1977, between such person and any 
other person, such person receiving such natural gas may transfer all or 
any portion of such person's contractual interests under such contract 
and receive consideration from the person to whom such contractual 
interests are transferred. The consideration authorized by this 
subsection shall not exceed the maximum consideration established as 
just compensation under this section.
    (2) Any person who would have transported or distributed the natural 
gas subject to a contract with respect to which contractual interests 
are transferred pursuant to paragraph (1) shall be entitled to receive 
just compensation (as determined by the Commission) from the person to 
whom such contractual interests are transferred.

(b) Determination of consideration

    (1) The Commission shall, by rule, establish guidelines for the 
application on a regional or national basis (as may be appropriate) of 
the criteria specified in subsection (e)(1) of this section to determine 
the maximum consideration permitted as just compensation under this 
section.
    (2) The person transferring contractual interests pursuant to 
subsection (a)(1) of this section and the person to whom such interests 
are transferred may agree on the amount of, or method of determining, 
the consideration to be paid for such transfer and certify such 
consideration to the Commission. Except as provided in paragraph (4), 
such agreed-upon consideration shall not exceed the consideration 
determined by application of the guidelines prescribed by the Commission 
under paragraph (1).
    (3) In the event the person transferring contractual interests 
pursuant to subsection (a)(1) of this section and the person to whom 
such interests are to be transferred fail to agree, under paragraph (2), 
on the amount of, or method of determining, the consideration to be paid 
for such transfer, the Commission may, at the request of both such 
persons, prescribe the amount of, or method of determining, such 
consideration. Upon the request of either such person, the Commission 
shall make such determination on the record, after an opportunity for 
agency hearing. In any such latter case, the determination of the 
Commission shall be binding upon the party requesting that such 
determination be made on the record of the agency hearing. The 
consideration prescribed by the Commission shall not exceed the maximum 
consideration permitted as just compensation under this section. In 
prescribing the amount of, or method of determining, consideration under 
this paragraph, to the maximum extent practicable, the Commission shall 
utilize any liquidated damages provision set forth in the applicable 
contract, but in no event may the Commission prescribe consideration in 
excess of the maximum consideration permitted as just compensation under 
this section.
    (4) In the event that the consideration agreed upon under paragraph 
(2) exceeds the consideration determined by application of the 
guidelines prescribed by the Commission under paragraph (1), the 
Commission may approve such agreed-upon consideration if the Commission 
determines such agreed-upon consideration does not exceed the maximum 
consideration permitted as just compensation under this section.
    (5) If consideration is agreed upon under paragraph (2) and such 
consideration exceeds the consideration determined by application of the 
guidelines prescribed under paragraph (1), but does not exceed the 
maximum consideration permitted as just compensation under this section, 
the Commission may not require a refund of any portion of the agreed-
upon consideration paid with respect to deliveries of natural gas 
occurring prior to the Commission's action under paragraph (4) approving 
or disapproving such consideration unless the Commission determines--
        (A) such agreed-upon consideration was fraudulently established;
        (B) the processing of the request for approval of such agreed-
    upon consideration under paragraph (4) was willfully delayed by a 
    party to the transfer; or
        (C) such agreed-upon consideration exceeds the maximum 
    consideration permitted as just compensation under this section.

(c) Restrictions on transfers unenforceable

    (1) Any provision of any contract, which prohibits any transfer 
authorized by subsection (a)(1) of this section or terminates such 
contract on the basis of such transfer, shall be unenforceable in any 
court of the United States and in any court of any State.
    (2) No State may enforce any prohibition on any transfer authorized 
by subsection (a)(1) of this section.

(d) Contractual obligations unaffected

    The person acquiring contractual interests transferred pursuant to 
subsection (a)(1) of this section shall assume the contractual 
obligations which the person transferring such contractual interests has 
under such contract. This subsection 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 ``just compensation'', when used with respect to any 
transfer of contractual interests authorized by 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 (excluding capital costs) incurred, 
    during the remainder of the period of the contract with respect to 
    which contractual interests are transferred under subsection (a)(1) 
    of this section, in direct association with the use of a fuel, other 
    than natural gas, as a primary energy source by the applicable 
    existing electric powerplant, exceed
        (B) the price of natural gas under such contract during such 
    period.

For purposes of subparagraph (A), the reasonable costs associated with 
the use of a fuel, other than natural gas, as a primary energy source 
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 electric powerplant, which assets were 
directly associated with the use of natural gas and are not usable in 
connection with the use of such other fuel.
    (2) The term ``just compensation'', when used with respect to 
subsection (a)(2) 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 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 subsection (a)(1) of this section, and (B) is not offset by 
revenues derived from other transportation or distribution which would 
not have occurred if such contractual interests had not been 
transferred.
    (3) The term ``contractual interests'', with respect to a contract 
described in subsection (a)(1) of this section, includes the right to 
receive natural gas as affected by any applicable curtailment plan filed 
with the Commission or the appropriate State regulatory authority.
    (4) The term ``State'' means each of the several States, the 
District of Columbia, Puerto Rico, any territory or possession of the 
United States, and any political subdivision of any of the foregoing.
    (5) The term ``interstate pipeline'' means any person engaged in the 
transportation of natural gas in interstate commerce subject to the 
jurisdiction of the Commission under the Natural Gas Act [15 U.S.C. 717 
et seq.].
    (6) The term ``Commission'' means the Federal Energy Regulatory 
Commission.
    (7) The term ``contract'', when used with respect to a contract for 
receipt of natural gas, which contract was in existence on April 20, 
1977, does not include any renewal or extension occurring after such 
date unless such renewal or extension occurs pursuant to the exercise of 
an option by the person receiving natural gas under such contract.

(f) Coordination with Natural Gas Act

    (1) Consideration paid by any interstate pipeline pursuant to this 
section shall be deemed just and reasonable for purposes of sections 4, 
5, and 7 of the Natural Gas Act [15 U.S.C. 717c, 717d, 717f]. The 
Commission shall not deny a passthrough by such interstate pipeline of 
such consideration based upon the amount of such consideration paid 
pursuant to this section.
    (2) No person shall be subject to the jurisdiction of the Commission 
under the Natural Gas Act [15 U.S.C. 717 et seq.] 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 the transfer of contractual interests is 
authorized 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 juridiction \1\ of the Commission under such 
Act without regard to the transfer of contractual interests under 
subsection (a)(1) of this section.
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    \1\ So in original. Probably should be ``jurisdiction''.
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    (4) Nothing in this section shall exempt any person from any 
obligation to obtain a certificate of public convenience and necessity 
for the transportation by an interstate pipeline of natural gas with 
respect to which the transfer of contractual interests is authorized 
under subsection (a)(1) of this section. The Commission shall not deny 
such a certificate for the transportation in interstate commerce of 
natural gas based upon the amount of consideration paid pursuant to this 
section.

(g) Volume limitation

    No supplier of natural gas under any contract, with respect to which 
contractual interests have been transferred 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 under subsection 
    (a)(1) of this section, if no such transfer had occurred;
        (3) the volume which would have been delivered, or for which 
    payment would have been made, pursuant to such contract but for the 
    prohibition on the use of such natural gas under subchapter III of 
    this chapter or any rule or order thereunder; and
        (4) 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 pursuant to this section.

(h) Judicial review

    Any action by the Commission under this section is subject to 
judicial review in accordance with chapter 7 of title 5.

(Pub. L. 95-620, title VII, Sec. 731, Nov. 9, 1978, 92 Stat. 3336; Pub. 
L. 100-42, Sec. 1(c)(21), May 21, 1987, 101 Stat. 314.)

                       References in Text

    The Natural Gas Act, referred to in subsecs. (e)(5) and (f)(2), (3), 
is act June 21, 1938, ch. 556, 52 Stat. 821, as amended, which is 
classified generally to chapter 15B (Sec. 717 et seq.) of Title 15, 
Commerce and Trade. For complete classification of this Act to the Code, 
see section 717w of Title 15 and Tables.


                               Amendments

    1987--Subsec. (a)(1). Pub. L. 100-42, Sec. 1(c)(21)(A), struck out 
reference to subchapter II of this chapter.
    Subsec. (e)(1). Pub. L. 100-42, Sec. 1(c)(21)(B), struck out ``or 
major fuel-burning installation'' after ``powerplant'' in subpar. (A) 
and ``or major fuel-burning installation'' after ``powerplant'' in last 
sentence.
    Subsec. (g)(3). Pub. L. 100-42, Sec. 1(c)(21)(A), struck out 
reference to subchapter II of this chapter.
