Harbinger Group Inc.
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HRG GROUP, INC. filed this Form POS AM on 02/22/1994
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various permutations, due in part to the FERC's response to court review, but
have generally remained intact as promulgated.  Parts of Order No. 500
pertaining to the FERC's abandonment authority remain subject to court review,
however, and the Company is unable to predict the impact on the Company's
natural gas operations of further judicial action concerning that Order.  The
FERC's jurisdiction over natural gas transportation is unaffected by the
Decontrol Act.     
     On April 8, 1992, the FERC issued Order No. 636 requiring further
restructuring of the sales and transportation services provided by interstate
pipeline companies.  Order 636 amended certain existing regulations and adopted
certain new regulations governing all interstate pipelines that perform open
access transportation (defined to include storage), under either the NGA or the
NGPA within Part 284 of the FERC's regulations.  The FERC considers the changes
necessary to improve the competitive structure of the interstate natural gas
pipeline industry and to create a regulatory framework that will put gas sellers
into more direct contractual relations with gas buyers than has historically
been the case.  Order 636 reflects the FERC's finding that under the current
regulatory structure, such interstate pipelines and other gas merchants,
including producers, do not compete on an equal basis.  The FERC asserts that
Order 636 is designed to equalize that marketplace.  This equalization process
will be implemented through negotiated settlements in individual pipeline
service restructuring proceedings, designed specifically to "unbundle" those
services (e.g., transportation, sales and storage) provided by many interstate
pipelines so that producers of natural gas may secure services from the most
economical source, whether interstate pipelines or other parties.  In many
instances, the result of the FERC initiatives may be to substantially reduce or
bring to an end the interstate pipelines' traditional role as wholesalers of
natural gas in favor of providing only natural gas storage and transportation
services.  The restructuring proceedings resulting from Order 636 continued
throughout 1993, with all major pipelines having already received FERC orders
approving their compliance filings, subject to conditions.  Thus, the 1993-94
winter heating season will be the first such period during which the FERC's
Order 636 procedures will be operative.     
     Although Order 636 does not regulate gas producers such as the Company, the
FERC has stated that Order 636 is intended to foster increased competition
within all phases of the natural gas industry.  It is unclear what impact, if
any, increased competition within the natural gas industry under Order 636 will
have on the Company as a producer.  Furthermore, although the FERC earlier
denied a stay of the effectiveness of Order 636, thus assuring that its
requirements will be implemented, because the requirements of Order 636 are
being implemented through individual restructuring proceedings on a pipeline-by-
pipeline basis, it is impossible to predict what effect, if any, Order 636 will
have on the Company and its gas marketing efforts.  In addition, in response to
numerous requests that the FERC grant rehearing of Order 636, on August 3, 1992
and November 27, 1992 the FERC issued its Orders 636-A and 636-B, which largely
confirmed the provisions and goals previously set forth in Order 636, and
otherwise made relatively modest changes to its prior rule.  Numerous petitions
seeking judicial review of Orders 636, 636-A and 636-B have already been filed.
Because the restructuring requirements that have emerged to date from this
lengthy administrative and judicial review process are in some instances
different from those of Orders 636, 636-A and 636-B as originally promulgated,
it is not possible to predict what effect, if any, the final rule resulting from
these Orders will have on the Company.     
     The Company's domestic oil and gas operations are subject to extensive
state and federal regulations which have increased the cost of doing business by
requiring additional equipment or methods to eliminate or reduce pollution and
have increased financial exposure as in the case of federal laws and regulations
which may result in absolute liability for cleanup and removal of offshore oil
spills.  Governments may from time to time suspend or curtail operations
considered to be detrimental to the ecology or which may jeopardize public
safety.  The Company does not anticipate any material adverse effect on its
financial or competitive position as a result of compliance with such laws and
     The Company's marine protein operations involve the production and sale of
a variety of protein and oil products from menhaden, a species of fish found
along the Gulf of Mexico and Atlantic coasts.  Because the magnitude of the fish
catch depends on the availability of the natural resource, which is affected by
various factors beyond the Company's control, and because the prices for the
Company's products are established by worldwide supply and demand relationships
over which the Company has no control, the Company cannot predict the
profitability of this business segment in any given year.     


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