---
kind: "section"
citation: "42 U.S.C. § 8441"
title: "42"
title_heading: "The Public Health and Welfare"
number: "8441"
heading: "Preservation of contractual interest"
release: "119-102"
url: "https://uscodex.org/usc/42/8441"
units:
  - "Chapter 92 — Powerplant and Industrial Fuel Use"
  - "Subchapter VII — Administration and Enforcement"
  - "Part D — Preservation of Contractual Rights"
---

# §8441. Preservation of contractual interest

- (a) **Right to transfer contractual interests—**
  - (1) If any [person](/usc/42/8302.md?p=a-2) receives [natural gas](/usc/42/8302.md?p=a-3-A), the use of which is prohibited by the provisions of subchapter III or any rule or order thereunder, and if such [natural gas](/usc/42/8302.md?p=a-3-A) is received pursuant to a [contract](#e-7) in effect on April 20, 1977, between such [person](/usc/42/8302.md?p=a-2) and any other [person](/usc/42/8302.md?p=a-2), such [person](/usc/42/8302.md?p=a-2) receiving such [natural gas](/usc/42/8302.md?p=a-3-A) may transfer all or any portion of such [person](/usc/42/8302.md?p=a-2)’s [contractual interests](#e-3) under such [contract](#e-7) and receive consideration from the [person](/usc/42/8302.md?p=a-2) to whom such [contractual interests](#e-3) are transferred. The consideration authorized by this subsection shall not exceed the maximum consideration established as [just compensation](#e-1) under this section.
  - (2) Any [person](/usc/42/8302.md?p=a-2) who would have transported or distributed the [natural gas](/usc/42/8302.md?p=a-3-A) subject to a [contract](#e-7) with respect to which [contractual interests](#e-3) are transferred pursuant to [paragraph (1)](#a-1) shall be entitled to receive [just compensation](#e-1) (as determined by the [Commission](#e-6)) from the [person](/usc/42/8302.md?p=a-2) to whom such [contractual interests](#e-3) are transferred.
- (b) **Determination of consideration—**
  - (1) The [Commission](#e-6) 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)](#e-1) to determine the maximum consideration permitted as [just compensation](#e-1) under this section.
  - (2) The [person](/usc/42/8302.md?p=a-2) transferring contractual interests pursuant to [subsection (a)(1)](#a-1) and the [person](/usc/42/8302.md?p=a-2) 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](#e-6). Except as provided in [paragraph (4)](#b-4), such agreed-upon consideration shall not exceed the consideration determined by application of the guidelines prescribed by the [Commission](#e-6) under [paragraph (1)](#b-1).
  - (3) In the event the [person](/usc/42/8302.md?p=a-2) transferring contractual interests pursuant to [subsection (a)(1)](#a-1) and the [person](/usc/42/8302.md?p=a-2) to whom such interests are to be transferred fail to agree, under [paragraph (2)](#b-2), on the amount of, or method of determining, the consideration to be paid for such transfer, the [Commission](#e-6) may, at the request of both such [persons](/usc/42/8302.md?p=a-2), prescribe the amount of, or method of determining, such consideration. Upon the request of either such [person](/usc/42/8302.md?p=a-2), the [Commission](#e-6) shall make such determination on the record, after an opportunity for agency hearing. In any such latter case, the determination of the [Commission](#e-6) 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](#e-6) shall not exceed the maximum consideration permitted as [just compensation](#e-1) under this section. In prescribing the amount of, or method of determining, consideration under this paragraph, to the maximum extent practicable, the [Commission](#e-6) shall utilize any liquidated [damages](/usc/42/9601.md?p=6) provision set forth in the applicable [contract](#e-7), but in no event may the [Commission](#e-6) prescribe consideration in excess of the maximum consideration permitted as [just compensation](#e-1) under this section.
  - (4) In the event that the consideration agreed upon under [paragraph (2)](#b-2) exceeds the consideration determined by application of the guidelines prescribed by the [Commission](#e-6) under [paragraph (1)](#b-1), the [Commission](#e-6) may approve such agreed-upon consideration if the [Commission](#e-6) determines such agreed-upon consideration does not exceed the maximum consideration permitted as [just compensation](#e-1) under this section.
  - (5) If consideration is agreed upon under [paragraph (2)](#b-2) and such consideration exceeds the consideration determined by application of the guidelines prescribed under [paragraph (1)](#b-1), but does not exceed the maximum consideration permitted as [just compensation](#e-1) under this section, the [Commission](#e-6) may not require a refund of any portion of the agreed-upon consideration paid with respect to deliveries of [natural gas](/usc/42/8302.md?p=a-3-A) occurring prior to the [Commission](#e-6)’s action under [paragraph (4)](#b-4) approving or disapproving such consideration unless the [Commission](#e-6) 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)](#b-4) was willfully delayed by a party to the transfer; or
    - (C) such agreed-upon consideration exceeds the maximum consideration permitted as [just compensation](#e-1) under this section.
- (c) **Restrictions on transfers unenforceable—**
  - (1) Any provision of any [contract](#e-7), which prohibits any transfer authorized by [subsection (a)(1)](#a-1) or terminates such [contract](#e-7) on the basis of such transfer, shall be unenforceable in any court of the [United States](/usc/42/403.md?p=k) and in any court of any [State](#e-4).
  - (2) No [State](#e-4) may enforce any prohibition on any transfer authorized by [subsection (a)(1)](#a-1).
- (d) **Contractual obligations unaffected—** The [person](/usc/42/8302.md?p=a-2) acquiring contractual interests transferred pursuant to [subsection (a)(1)](#a-1) shall assume the contractual obligations which the [person](/usc/42/8302.md?p=a-2) transferring such contractual interests has under such [contract](#e-7). This subsection shall not relieve the [person](/usc/42/8302.md?p=a-2) transferring such contractual interests from any contractual obligation of such [person](/usc/42/8302.md?p=a-2) under such [contract](#e-7) if such obligation is not performed by the [person](/usc/42/8302.md?p=a-2) 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)](#a-1), 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](#e-7) with respect to which contractual interests are transferred under [subsection (a)(1)](#a-1), in direct association with the use of a fuel, other than [natural gas](/usc/42/8302.md?p=a-3-A), as a [primary energy source](/usc/42/8302.md?p=a-15) by the applicable [existing electric powerplant](/usc/42/8302.md?p=a-9-A), exceed
    - (B) the price of [natural gas](/usc/42/8302.md?p=a-3-A) under such [contract](#e-7) during such period.

    For purposes of [subparagraph (A)](#e-1-A), the reasonable costs associated with the use of a fuel, other than [natural gas](/usc/42/8302.md?p=a-3-A), as a [primary energy source](/usc/42/8302.md?p=a-15) 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](/usc/42/8302.md?p=a-7-A), which assets were directly associated with the use of [natural gas](/usc/42/8302.md?p=a-3-A) and are not usable in connection with the use of such other fuel.

  - (2) The term “[just compensation](#e-1)”, when used with respect to [subsection (a)(2)](#a-2), means an amount equal to any loss of revenue, during the remaining period of the [contract](#e-7) with respect to which contractual interests are transferred pursuant to [subsection (a)(1)](#a-1), to the extent such loss (A) is directly incurred by reason of the discontinuation of the transportation or distribution of [natural gas](/usc/42/8302.md?p=a-3-A) resulting from the transfer of contractual interests pursuant to subsection [(a)(1)](#a-1), 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](#e-7) described in [subsection (a)(1)](#a-1), includes the right to receive [natural gas](/usc/42/8302.md?p=a-3-A) as affected by any applicable curtailment plan filed with the [Commission](#e-6) or the appropriate [State regulatory authority](/usc/42/8302.md?p=a-21).
  - (4) The term “State” means each of the several States, the District of Columbia, Puerto Rico, any territory or possession of the [United States](/usc/42/403.md?p=k), and any political subdivision of any of the foregoing.
  - (5) The term “interstate pipeline” means any [person](/usc/42/8302.md?p=a-2) engaged in the transportation of [natural gas](/usc/42/8302.md?p=a-3-A) in interstate [commerce](/usc/42/6311.md?p=7) subject to the jurisdiction of the [Commission](#e-6) under the Natural Gas Act [[15 U.S.C. 717](/usc/15/717.md) et seq.].
  - (6) The term “Commission” means the Federal [Energy](/usc/42/6311.md?p=7) Regulatory Commission.
  - (7) The term “contract”, when used with respect to a contract for receipt of [natural gas](/usc/42/8302.md?p=a-3-A), 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](/usc/42/8302.md?p=a-2) receiving [natural gas](/usc/42/8302.md?p=a-3-A) under such contract.
- (f) **Coordination with Natural Gas Act—**
  - (1) Consideration paid by any [interstate pipeline](#e-5) 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](/usc/15/717c.md), 717d, 717f]. The [Commission](#e-6) shall not deny a passthrough by such [interstate pipeline](#e-5) of such consideration based upon the amount of such consideration paid pursuant to this section.
  - (2) No [person](/usc/42/8302.md?p=a-2) shall be subject to the jurisdiction of the [Commission](#e-6) under the Natural Gas Act [[15 U.S.C. 717](/usc/15/717.md) et seq.] or to regulation as a common carrier under any provision of Federal or [State](#e-4) law solely by reason of making any sale, or engaging in any transportation, of [natural gas](/usc/42/8302.md?p=a-3-A) with respect to which the transfer of contractual interests is authorized under [subsection (a)(1)](#a-1).
  - (3) Nothing in this section shall exempt from the jurisdiction of the [Commission](#e-6) under the Natural Gas Act [[15 U.S.C. 717](/usc/15/717.md) et seq.] any transportation in interstate [commerce](/usc/42/6311.md?p=7) of [natural gas](/usc/42/8302.md?p=a-3-A), any sale in interstate [commerce](/usc/42/6311.md?p=7) for resale of [natural gas](/usc/42/8302.md?p=a-3-A), or any [person](/usc/42/8302.md?p=a-2) engaged in such transportation or such sale to the extent such transportation, sale or [person](/usc/42/8302.md?p=a-2) is subject to the juridiction[^1] of the [Commission](#e-6) under such Act without regard to the transfer of contractual interests under [subsection (a)(1)](#a-1).
  - (4) Nothing in this section shall exempt any [person](/usc/42/8302.md?p=a-2) from any obligation to obtain a certificate of public convenience and necessity for the transportation by an [interstate pipeline](#e-5) of [natural gas](/usc/42/8302.md?p=a-3-A) with respect to which the transfer of contractual interests is authorized under [subsection (a)(1)](#a-1). The [Commission](#e-6) shall not deny such a certificate for the transportation in interstate [commerce](/usc/42/6311.md?p=7) of [natural gas](/usc/42/8302.md?p=a-3-A) based upon the amount of consideration paid pursuant to this section.
- (g) **Volume limitation—** No [supplier](/usc/42/1395cc–4.md?p=a-2-I) of [natural gas](/usc/42/8302.md?p=a-3-A) under any [contract](#e-7), with respect to which contractual interests have been transferred under [subsection (a)(1)](#a-1), shall be required to supply [natural gas](/usc/42/8302.md?p=a-3-A) 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](#e-7);
  - (2) the volume which such [supplier](/usc/42/1395cc–4.md?p=a-2-I) would have been required to supply, under the curtailment plan in effect for such [supplier](/usc/42/1395cc–4.md?p=a-2-I), to the [person](/usc/42/8302.md?p=a-2), who transferred contractual interests under [subsection (a)(1)](#a-1), 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](#e-7) but for the prohibition on the use of such [natural gas](/usc/42/8302.md?p=a-3-A) 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](#e-7) 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](#e-6) under this section is subject to judicial review in accordance with [chapter 7](/usc/5/chptI-ch7.md) of title 5.

## Footnotes

[^1]: So in original. Probably should be “jurisdiction”.

## Source credit

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

## Notes

### Editorial Notes

### 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, which is classified generally to chapter 15B (§ 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, § 1(c)(21)(A), struck out reference to subchapter II of this chapter.

Subsec. (e)(1). Pub. L. 100–42, § 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, § 1(c)(21)(A), struck out reference to subchapter II of this chapter.