[Code of Federal Regulations]
[Title 18, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 18CFR2.76]

[Page 32]
 
           TITLE 18--CONSERVATION OF POWER AND WATER RESOURCES
 
  CHAPTER I--FEDERAL ENERGY REGULATORY COMMISSION, DEPARTMENT OF ENERGY
 
PART 2_GENERAL POLICY AND INTERPRETATIONS--Table of Contents
 
Sec. 2.76  Regulatory treatment of payments made in lieu of take-or-pay 
obligations.

    With respect to payments made to a first seller of natural gas as 
consideration for waiving or revising any agreement for the first sale 
of natural gas, as defined by section (2)(21) of the Natural Gas Policy 
Act (NGPA), the Commission sets forth the following statement of general 
policy and interpretation of law.
    (a) Payments in consideration. A first seller of natural gas that 
receives payments as consideration for amending or waiving the take-or-
pay or similar minimum payment provisions of a contract for the first 
sale of natural gas is not in violation of section 504(a) of the NGPA.
    (b) Recovery in rates. A pipeline that makes any payments referred 
to under paragraph (a) of this section, to first sellers may file to 
recover such costs in any section 4(e) rate filing other than a filing 
to recover purchased gas costs.
    (c) Case-specific review. A pipeline's method of recovering these 
costs and how it should apportion them among customers will be addressed 
on a case-by-case basis in the context of individual rate case filings.
    (d) Customers' rights. When a pipeline seeks to recover payments 
referred to under paragraph (a) of this section, its customers will have 
the full opportunity contemplated by section 4 of the Natural Gas Act to 
raise questions as to the prudence of such payments, the apportionment 
of costs among customers proposed by the filing pipeline, and any other 
reasonably related matters.
    (e) Certificate amendments and abandonment. With regard to natural 
gas the sale of which is subject to the Commission's jurisdiction under 
the Natural Gas Act, if any payments referred to under paragraph (a) of 
this section are accompanied by a change in or a termination of, the 
first seller's contractual obligation to provide natural gas service, 
the Commission will, as a general policy under sections 7(c) and 7(b) of 
the Natural Gas Act, expeditiously grant any certificate amendments or 
abandonment authorizations, required to effectuate such contractual or 
service modifications.
    In cases where a producer abandonment application is based on 
payments made pursuant to this policy statement, the interstate pipeline 
making the payments will be deemed to have waived any right to oppose 
the abandonment.

[50 FR 16080, Apr. 24, 1985, as amended by Order 436, 50 FR 42487, Oct. 
18, 1985]