Effect of the Natural Gas Policy Act of 1978 on administrative interpretation of natural-gas sales contracts

Journal Article · Thu Jan 01 04:00:00 EST 1981 · Public Land Resour. Law Dig.; (United States)

OSTI ID:5714178

Veis, B T

This comment examines the Federal Energy Regulatory Commission's (FERC) natural gas regulatory authority and its policies and procedures for the interpretation of natural gas sales contracts and settlement agreements. It concludes that the FERC has prescribed a workable method for the post Natural Gas Policy Act (NGPA) interpretation of area rate clauses. The procedures and guidelines established in the Independent Oil and Gas Association, with the exception of the exclusion of evidence of settlement negotiations, promise to be fair to all parties in litigation over the meaning of area rate clauses. The FERC recognized that the limitations of drafting placed on the natural gas industry by the NGA and FERC regulations may have inhibited the free expression of intent in the words of the contract, thus requiring the use of extrinsic evidence. The FERC's formulation of objective textual standards for the interpretation of area rate clauses, when evidence of the parties' intent is absent or inconclusive, provides administrative law judges with clear guidelines and generally allows contracts to be interpreted in accordance with the parties' intent. The author feels the FERC's exclusion of evidence of settlement negotiations is misguided, however, and should be reconsidered. The negotiation of contracts in the context of settlement proceedings should not be a bar to the admissibility of evidence necessary to interpret an ambiguous contract provision. The FERC's position is not supportable in law or policy and should therefore be reversed.

• OSTI ID: 5714178
• Journal Information: Public Land Resour. Law Dig.; (United States), Journal Name: Public Land Resour. Law Dig.; (United States) Vol. 18:2; ISSN PRLDD
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
031000 -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294003* -- Energy Planning & Policy-- Natural Gas
BUSINESS
CONTRACTS
IMPLEMENTATION
INDUSTRY
LAWS
LEGAL ASPECTS
NATIONAL ENERGY ACT
NATURAL GAS INDUSTRY
NATURAL GAS POLICY ACT
PRICING REGULATIONS
REGULATIONS