Document: 363 U.S. 263 80 S.Ct. 1122 4 L.Ed.2d 1208 TEXAS GAS TRANSMISSION CORPORATION and Louisville Gas Electric Company Federal Power Commission, Petitioners,v.SHELL OIL COMPANY. FEDERAL POWER COMMISSION, Petitioner, v. SHELL Nos. 167, 170. Argued April 20, 21, 1960. Decided June 13, Mr. Mathias F. Correa, New York City, for petitioners in No. 167. Willard W. Gatchell, Washington, D.C., petitioner Oliver L. Stone, respondent both cases. Justice BRENNAN delivered the opinion of Court. 1 One series orders issued by Commission after this Court's decision Phillips Petroleum Co. State Wisconsin, 347 672, 74 794, 98 L.Ed. 1035, required affected independent producers natural gas to submit rate schedules effect on 7, 1954, date was decided.1 The respondent. Shell Oil Company, November 18, submitted its contract dated May 1, 1951, with Texas Transmission Corporation,2 as a schedule from Chalkley Field, Cameron Parish, Louisiana. March 1957, accepted but ordered hearing purpose determining fixing price effective thereunder 1954.3 2 At hearing, contended that paragraph Article VI specifying 8.997 cents per thousand cubic feet (Mcf.) period which included established date.4 This at billing time. However, when Gas, prior began paying 12.5 Mcf. Atlantic Refining produced nearby Acadia became entitled receive same under so-called 'favored nation' clause contract. That clause, 3 VI, provides '(i)f any time December 31, (Texas Gas) shall enter into providing purchase it gas' higher (than currently being paid this—the contract), will be increased equal 'price payable such other contract.'5 When made selling former Parish production concluded 1943 25-year term. specified first five years provided during succeeding five-year periods, 'prices determined beginning each period. * *' 'The is agreed upon survey prevailing prices sold similar quantities southwestern part Louisiana.' further '(i)n event parties are unable agree determination arbitration'; arbitrators selected agreement.6 Negotiations between September 1953, terminated letter agreement February 17, recited: '(I)t hereby August 1958, inclusive, 12.2 net' plus .3 cent severance tax, or cents. It contends triggered contract's clause. Commission's examiner his 9, 1957. He held making 'enter(ed) within meaning had escalated reversed examiner's Mcf., fixed VI. 18 F.P.C. 617. Shell's petition rehearing denied. 19 74. Court Appeals Third Circuit, review, vacated order. F.2d 223. We granted separate petitions certiorari 170, particularly moved do so contention exceeded appropriate scope judicial review determination. 361 811, 68, 59. 5 may assume did not treat order one accept if reasonably supported record, instead considered could examine de novo question proper interpretation given petitioners' argument allowable limits based premise reflects application expert knowledge judgment highly technical field, "warrant record' 'reasonable basis law," citing Unemployment Compensation Territory Alaska Aragon, 329 143, 153—154, 67 245, 250, 91 136. But record nowhere discloses arrived specialized gained experience regulation business, trade practice concerning clauses. On contrary opinions show treated simply ordinary rules construction. stated '(t)he language (of clause) clear enough reveal intent without resort parole evidence self-serving memoranda. (I)ts plain sought cause rise called Buyer an date. evidently broad; narrowly character.' 'elemental principles law too commonly known legal profession require citations support thereof' compelled he reached. turn, relying authority entirely court decisions texts, construed applicable only entered 'new' 'agreement does constitute new escalation merely represents action taken pre-existing Atlantic.' F.P.C., 618—619. apparent rested construction words supposed would interpret them.7 6 grounds administrative must judged those based.' Securities & Exchange Chenery Corp., 318 80, 87, 63 454, 459, 87 626. Therefore, since professed dispose case solely view result canons employed courts, wise rely matters special competence, fully justified own correct governing principles. See Communications RCA Communications, Inc., 346 86, 91, 73 998, 97 1470. There applies here what said Chenery: 'Since explicitly applicability interpretation) announced validity likewise basis.' page 459. 7 In circumstances, considerations determinations need deter us reviewing deciding proceed presented petitions, our grant limited exclude it, has been briefed argued. 8 decided is: mean nature should 'enter(ing) (by *'? consider agreement. pricing provisions specify period, provide four periods parties, failing agreement, arbitration.8 either 'after Pursuant provision October 29, 1948, modification 16, 1949, 1953. setting 1953—1958 thus second 9 urges actuality incorporates inferential reference terms nothing otherwise substantiate contention. contrary, affirmatively states 'in accordance with' contract.9 10 To sure, have 'contract' insofar therein gave up right determine them. their act performance undertaking they assumed chose binding method periodic adjustments some foreordained precise amounts. discharge obligation 'executory (1943) parties.' Cir., 227 470, 475. therefore holding 'merely 619. 11 light this, we think party virtually used several times very outset sense there reveals and, interpreted, begins: 12 'This Contract, 1951 *. 13 'Whereas, 1943, sale 14 Seller now desire rescind *.' (Emphasis added.) 15 What follows nine Articles detail many aspects parties' relationship 20-year term captioned 'Sale Gas,' 'Quantity 'Pressure Decline,' 'Point Delivery,' 'Warranty Title 'Prices,' 'Arbitration,' 'Term Contract,' 'Miscellaneous.' addition exhibit deals 'Quality 'Measurements,' 'Billing Payment,' 'Regulatory Bodies' 'Force Majeure.' meant full-fledged containing all defining complete relationship. 16 conclusion borne out 'Prices' itself. divides until January 1952, others years. Paragraph specifies according automatic step-increases. Adjustment two ways: (1) 3, (2) last periods—if requests redetermination.' Upon request 'determination or, agree, arbitrators' 'the three (3) highest operating interstate transporters gas, including Gas)' purchased named Louisiana fields. 17 probability redetermination' evidenced writing stating Surely who contract' preamble conceive gas.' No more adjustment partake gas,' Appeals, came intendment stressed objective assure itself 'top facts tended 'that intention another producer trigger figure 225. demonstrates find barren conclusion. Of course, recognize desired protect extended increases; so. Indeed respect one-way street. guaranteed step-increases addition, term, option, redetermined reflect market prices. Then clause—also protection afforded Shell. these methods yield. contrast, no allowing possibility decrease. Even assuming assigned paramount importance giving price,' written broad might been. contracts clauses every buyer producers.10 concedes way increases mathematically determined. most reasonable explanation inclusion concededly distinguish contractually bound pay pre-1951 voluntarily 1951. irrational distinction were focus mechanics chosen conclude activated post-1951 contract, although pursuant formula. essential respects different latter, powerless prevent it. 20 hold erred correctly effecting increase reason 21 remains mention found unnecessary because rationale adopted. beyond state enforceability suspended particular supplied arbitration. From argued end neither nor enforceable continue signed acting exercising free choice writ doubt about issue immaterial Shell, stranger say legally enforceable. suggested reverse premised assumption imposed entire material, remand decision. maintained material but, statement, enforceability. address issue, circumstances decide materiality.11 proceedings consistent opinion. ordered. 22 Judgment remanded directions. 23 BLACK concurs result. jurisdiction over Order 174—B incorporated Regulations Natural Act, U.S.C.A. § 717 et seq., CFR §§ 154.92 154.93. actually Corporation, wholly owned subsidiary petitioner, Corporation. merged parent 1955. filed 11, 16.75 tax reimbursement. pending before proceeding. noted herein 'necessary connection proceeding suspension rates know previously 617, 618. customer, permitted intervene proceedings. pertinent part: '1. hereunder follows: 'For through 1956 ... 8.9970¢ 1000 cu. ft.' 'If field fields located, Buyer, radius fifth (50) miles point delivery hereunder, forthwith notify fact, (1000) than less immediately whether 'higher' due consideration compared quality pressures, gathering compressing arrangements, quantity, regarding measurement deviation Boyle's Law, taxes factors.' III reading agrees received computed '(b) reach '(c) During manner (b) above. '(d) arrangements set forth paragraphs (c) above, arbitration Condition XII.' reached dissent. dissent, Commissioner Connole, alternative ground decision, namely, charge collected Gas. 621. merit saying 'What depends contract-established rather fortuity date.' 224. present among Questions Presented intimate merits. For purposes 'assumed fact impose agreement-to-agree year periods.' 226. text 'Under Defense Plant Seller, Seller's leases North Tepetate pool Louisiana, subsequently amended 1949. Corporation pipe line operated aforesaid 'In net 1,000 pressure base 15.025 psia central points original regardless government plant not; reimburse taxes, obligated example denying rehearing, 77, states: instance Rate Schedule provided: "If Mcf dry (the Buyer) whomever greater (Shell) hereunder. "Buyer if, purchases place distance twenty-five (25) will, seller's request, thereafter seller paid.' 'There numerous examples record.' read following statement foreclosing material: 'We periods. Thus necessary questions raised arguments directed phase case. course agreement-to-agree, circumstance alone February, 1954 contract.'

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