Source: https://supreme.justia.com/cases/federal/us/365/1/case.html
Timestamp: 2017-07-25 10:42:57
Document Index: 369632022

Matched Legal Cases: ['§ 7', '§ 717', '§ 7', '§ 7', '§ 7', '§ 7', '§ 1', '§ 717', '§ 7', '§ 11', '§ 7', '§ 7', '§ 7', '§ 1', '§ 1']

FPC v. Transcontinental Gas Pipe Line Corp. (full text) :: 365 U.S. 1 (1961) :: Justia US Supreme Court Center Log In
› FPC v. Transcontinental Gas Pipe Line Corp.
FPC v. Transcontinental Gas Pipe Line Corp. 365 U.S. 1 (1961)
U.S. Supreme CourtFPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1 (1961)Federal Power Commission v.Transcontinental Gas Pipe Line Corp.No. 45Argued November 15, 1960Decided January 23, 1961*365 U.S. 1CERTIORARI TO THE UNITED STATES COURT OF APPEALS
(a) The desirability of the use to which the gas would be put and the possibility of preemption of pipeline capacity and gas Page 365 U. S. 2 reserves by sales to industrial users were properly of concern to the Commission in passing on this application. Pp. 365 U. S. 8-22.
271 F.2d 942 reversed. Page 365 U. S. 3
The question in these cases is whether the Federal Power Commission has gone beyond the scope of its delegated authority in denying a certificate of public convenience and necessity under § 7(e) of the Natural Gas Act of 1938, 52 Stat. 821, as amended, 15 U.S.C. § 717 et seq. [Footnote 1] The principal respondents [Footnote 2] are Transcontinental Gas Pipe Line Corp. (Transco), a pipeline company Page 365 U. S. 4 engaged in transporting natural gas in interstate commerce, and Consolidated Edison Co. (Con. Ed.), a public utility in New York City which uses gas under its boilers and also sells gas to domestic consumers. In 1957, Con. Ed. contracted to purchase gas from producers in the Normanna and Sejita fields in Texas at 19 1/4 cents per Mcf., the contracts of sale containing a prohibition on resale of the gas by Con. Ed. This transaction is commonly labeled a "direct" sale and, because it does not entail a sale for resale in interstate commerce, is not subject to the Commission's jurisdiction except insofar as § 7 requires the Commission to certificate the transportation of gas pursuant to the sale.
Before the hearing examiner, Transco's application was opposed by the FPC staff and groups representing the coal industry. Con. Ed. intervened in favor of Transco's proposal. Transco offered proof that its application met all the conventional tests -- adequate gas reserves, pipeline facilities and market for the gas -- and this showing, with one immaterial exception, has never been challenged. However, the FPC's staff argued vigorously Page 365 U. S. 5 that the public interest would suffer were Transco's petition granted. Among the grounds advanced were that the gas was to be transported for use under industrial boilers, this disposition being an "inferior" use from the standpoint of conserving a valuable natural resource; that authorization of this and similar direct sales to major industrial users would result in preemption of pipeline capacity and gas reserves to the detriment of domestic consumers competing for gas supply; and that the effect of this sale, as well as the resulting increase in direct sales, would effect a general rise in field prices. These contentions were presented as "policy" arguments, and no testimony was taken in support. Con. Ed. contended, in return, that certification was in the public interest, principally because a firm supply of natural gas under the Waterside boilers would reduce the air pollution problem then being aggravated by fly-ash and sulphur dioxide emissions from these boilers. The Waterside station is located near the headquarters building of the United Nations, and Con. Ed. introduced expert testimony indicating that the Waterside boilers were major contributors to the air pollution problem in the area. Respondents also contended that the factors propounded by the FPC's staff were not open for consideration in a § 7 proceeding. The hearing examiner agreed with respondents that his determination was limited to conventional factors, and consequently recommended certification. He qualified his recommendation, however, with a statement that, if he were authorized to consider the policy argument related to the end use of the gas advanced by the FPC staff, he would come to the opposite conclusion. He indicated that respondents' proof concerning the air pollution problem was not sufficiently compelling to overcome this contrary argument.
On review before the full FPC, the Commission held that the broad considerations advanced by its staff Page 365 U. S. 6 were cognizable in a § 7 proceeding. The Commission agreed with respondents that the "idea of ameliorating a smoke condition found unpleasant and annoying . . . is an attractive one," but concluded that "more weighty considerations compel the denial of the grant." 21 F.P.C. 138, 142. Respondents sought a rehearing before the Commission, and, upon denial of that petition, 21 F.P.C. 399, appealed to the Court of Appeals. The Court of Appeals reinstated the conclusion of the hearing examiner that the policy considerations advanced by the FPC were outside the scope of a § 7 proceeding. The court relied principally on § 1(b) of the Natural Gas Act, 15 U.S.C. § 717(b), which provides:
The principal question before this Court, then, is whether Congress intended to preclude the Commission from denying certification on the basis of the policy considerations advanced by its staff. For purposes of analysis, the litigants have grouped these factors into two broad categories. The first has been labeled the "end use" factor, and reflects and Commission's concern that Con. Ed.'s Page 365 U. S. 7 proposed "inferior" use of gas under its industrial boilers would be wasteful of gas committed to the Commission's jurisdiction, and, by the same token, would preempt space in pipelines that might otherwise be used for transportation of gas for superior uses. The second may be called the "price" consideration, and involves the Commission's fear that this sale -- which was executed at a price higher than the maximum fixed by the Commission in the producing districts here involved -- would increase the price of natural gas in the field, thus triggering a rise in the price provisions in other contracts.
See Interstate Commerce Commission v. Railway Labor Executives Assn., 315 U. S. 373, 315 U. S. 376-377. Page 365 U. S. 8 In fact, in interpreting this very section, we said that "§ 7(e) requires the Commission to evaluate all factors bearing on the public interest." Atlantic Refining Co. v. Public Service Commission, 360 U. S. 378, 360 U. S. 391. (Emphasis added.) However, respondents correctly point out that Congress, in enacting the Natural Gas Act, did not give the Commission comprehensive powers over every incident of gas production, transportation and sale. Rather, Congress was "meticulous" only to invest the Commission with authority over certain aspects of this field, leaving the residue for state regulation. Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U. S. 507. Therefore, it is necessary to consider with care whether, despite the accepted meaning of the term "public convenience and necessity," the Commission has trod on forbidden ground in making its decision.
End use. No one disputes that natural gas is a wasting resource, and that the necessity for conserving it is paramount. [Footnote 3] As we see it, the question in this case is whether the Commission, through its certification power, may prevent the waste of gas committed to its jurisdiction. One apparent method of preventing waste of gas is to limit the uses to which it may be put, uses for which another more abundant fuel may serve equally well. Thus, the Commission in this case, as it often has in the past, [Footnote 4] has declared that the use of gas under industrial boilers is an "inferior" use, the assumption being that other fuels, particularly coal, are an adequate substitute [Footnote 5] in areas Page 365 U. S. 9 where such other fuels abound. However, respondents, while conceding the premise that gas may be wasted where coal is readily available, argue that Congress has not awarded the Commission any powers over conservation; rather, this authority has been reserved to the States. This contention is based on the legislative history of the Natural Gas Act.
When Congress initially enacted the Natural Gas Act in 1938, all the indications were that Congress intended the States to be the primary arbiters of conservation problems. The 1938 Act was based on a 1936 report rendered by the Federal Trade Commission, [Footnote 6] and the section in that report devoted to conservation stresses the powers of state bodies to adopt corrective measures. The final recommendation of the Federal Trade Commission in regard to conservation contemplated primary state authority, with federal agencies being relegated to a reporting function. This recommendation formed the basis for § 11 of the Act as ultimately passed, and that section reveals a secondary role for the Commission in this regard. [Footnote 7] Page 365 U. S. 10
"The Natural Gas Act, as presently drafted, does not enable the Commission to treat fully the serious implications of such a problem. The question should be raised as to whether the proposed use of natural gas would not result in displacing a less valuable fuel Page 365 U. S. 11 and create hardships in the industry already supplying the market, while at the same time rapidly depleting the country's natural gas reserves. Although, for a period of perhaps 20 years, the natural gas could be so priced as to appear to offer an apparent saving in fuel costs, this would mean simply that social costs which must eventually be paid had been ignored."
20 F.P.C.Ann.Rep. 79 (1940). The Commission implemented its recommendation by submitting to Congress a proposed amendment to § 7 with the restrictive language eliminated, and an amendment substantially similar to the one drafted by the Commission was enacted in 1942. [Footnote 8] During the course of the Page 365 U. S. 12 hearings on the amendment, the Commission reiterated the position it had taken in its 1940 report, Hearings before the House Committee on Interstate and Foreign Commerce on H.R. 5249, 77th Cong., 1st Sess. 82, and the language used by the Committees reporting the bill indicates that the amendment was framed in response to the Commission's complaint. H.R.Rep. No. 1290, 77th Cong., 1st Sess. 3; S.Rep. No. 918, 77th Cong., 2d Sess. 1-2.
It is true, of course, that the Committee reports do not set out the Commission's position in haec verba. For Page 365 U. S. 13 example, the pertinent language of the House Committee Report states that:
H.R.Rep. No. 1290, supra. Page 365 U. S. 14 Consequently, respondents argue that Congress only authorized the Commission to look at one side of the coin -- the health of the coal industry -- because that is the only point mentioned explicitly. However, this contention does not take adequate account of the position the Commission had consistently pressed upon Congress both prior to and during the hearings on the amendment -- that the use of gas for purposes adequately served by other fuels was undesirable not only because it injured the competing industry, but, what is more important, because it was wasteful to use a fuel in short supply in place of an abundant fuel. See 20 F.P.C.Ann.Rep. 79 (1940). The history of the amendment reveals no voice raised in opposition to the Commission's position, and there is no other indication that Congress was unwilling to give the chief proponent of the amendment anything less than it sought. Thus, it would be curious were we to infer such an intent from the language of the House Committee Report quoted above. Rather, we think it plain the Congress acquiesced in the Commission's position, and the excerpted language signifies acquiescence. It should be noted that this is not the first time this Court has addressed itself to the effect of the 1942 amendment to § 7. See Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591, 320 U. S. 617, note 30, and Federal Power Commission v. East Ohio Gas Co., 338 U. S. 464, 338 U. S. 468-469. And, while it must be conceded that the language pertinent here was not necessary to the decision in either Hope or East Ohio, the clear conclusion of the Court in those cases is directly opposed to respondents' present argument.
Respondents, however, vigorously contend that, subsequent to the 1942 amendment, the Commission itself has made statements on occasion which are inconsistent with the Commission's position in this case. In particular, respondents point to an excerpt from the Commission's Page 365 U. S. 15 1944 Report to Congress, entitled The First Five Years Under the Natural Gas Act, where the Commission stated:
F.P.C., The First Five Years Under the Natural Gas Act 15. This statement was relied on heavily by the Court of Appeals, and it would be idle to contend that the report is irrelevant to the present inquiry. However, it is necessary to note the precise limit of the Commission's admissions. The Commission said that it had not been given "comprehensive" authority to deal with "the end uses for which natural gas is consumed," and that it would not Page 365 U. S. 16 deny certification on that ground alone. [Footnote 10] The Commission did not say that it had no authority over the use to which certificated gas might be put, nor did it say that end use was a factor beyond its power of notice. In view of contemporaneous statements by the Commission which would be inconsistent with the reading respondents press upon us, [Footnote 11] we think that the 1944 report Page 365 U. S. 17 should be construed as admitting only a lack of comprehensive power to formulate a flat rule against direct sales for use under industrial boilers.
". . . the public interest requires the establishment of, and adherence to, a policy with respect to the Page 365 U. S. 18 transportation of natural gas and the sale thereof in interstate commerce, which will --"
"* * * *" "(2) Conserve the reserves of natural gas for utilization which affords the highest social benefits to the public, consistent with reasonable rates and adequate service;"
In light of this language, it is clear that the Commission fully realizes the distinction between the power it enjoys Page 365 U. S. 19 under § 7 and complete allocation power. [Footnote 16] And we feel that this distinction entirely disposes of those contentions of respondents based on the Commission's purported ambivalent behavior.
There is a broader principle here which also stands in opposition to respondents' contentions. When Congress enacted the Natural Gas Act, it was motivated by a desire "to protect consumers against exploitation at the hands of natural gas companies." Sunray Mid-Continent Oil Co. v. Federal Power Commission, 364 U. S. 137, 364 U. S. 147. To that end, Congress "meant to create a comprehensive and effective regulatory scheme." Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U. S. 507, 332 U. S. 520. See Public Utilities Commission of Ohio v. United Fuel Gas Co., 317 U. S. 456, 317 U. S. 467. It is true, of course, that Congress did not desire comprehensive federal regulation; much authority was reserved for the States. But it is equally clear that Congress did not desire that an important aspect of this field be left unregulated. See Panhandle Eastern Pipe Line Co. v. Public Service Commission, supra. Therefore, when a dispute arises over whether a given transaction is within the scope of federal or state regulatory authority, we are not inclined to approach the problem negatively, thus raising the possibility that a "no-man's land" will be created. Compare Guss v. Utah Labor Board, 353 U. S. 1. That is to say, in a borderline case where congressional authority is not explicit, we must ask whether state authority can practicably regulate a given areas and, if we Page 365 U. S. 20 find that it cannot, then we are impelled to decide that federal authority governs.
In the 1936 Federal Trade Commission Report, upon which respondents so heavily rely, there was some mention of control of the end use of gas, and, as we have said, this report was strongly oriented towards state regulation. However, as the Court of Appeals pointed out, the primary emphasis was on physical waste of gas within the producing State, and the reference to end use probably contemplated the use of gas in gasoline extraction and the manufacture of carbon black. 271 F.2d at 947. There is no indication that the Federal Trade Commission or Congress was thinking in terms of state-controlled "economic" conservation of gas committed to interstate commerce. Moreover, it is questionable whether any State could be expected to take the initiative in enforcing this type of "economic" conservation. A producing State might wish to prolong its gas reserves for as long as possible, but producing States have no control over the use to which gas is put in another State. See Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157; Pennsylvania v. West Virginia, 262 U. S. 553; Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229. Consuming States may control the end use of gas, Panhandle Eastern Page 365 U. S. 21 Pipe Line Co. v. Michigan Public Service Commission, 341 U. S. 329, but the deficiencies of this system in the present context are apparent -- unless all States cooperate in enforcing a common regulation, the producer may pick a State which is sufficiently anxious for this scarce resource that it will take gas irrespective of the use. [Footnote 17] Therefore, Page 365 U. S. 22 it appears that, consistent with the congressional purpose of leaving no "attractive gap" in regulation, we must conclude that the "end-use" factor was properly of concern to the Commission. Page 365 U. S. 23
Were respondents correct in their interpretation of the Commission's action in this case, we would be forced to agree that the Commission had overstepped its bounds. Certainly such action would be contrary to our previous statements that the term "public convenience and necessity" connotes a flexible balancing process, in the course of which all the factors are weighed prior to final determination. United States v. Detroit & Cleveland Navigation Co., supra. [Footnote 19] Indeed, as respondents argue, such a flat rule would be doubly objectionable here because Page 365 U. S. 24 Congress has not given the Commission jurisdiction over direct sales. However, we cannot agree that the Commission propounded an absolute rule in this case. Examination of the opinion reveals recurrent reference to the absence of any one controlling factor; as the Commission stated, "countervailing factors suffice to tip the balance against the grant of the authority requested by Transco." 21 F.P.C. at 141. (Emphasis added.) It is difficult to find any indication of the flat rule mentioned by respondents in language such as this. Furthermore, if there were any lingering doubt on this point, it is dispelled by the fact that the Commission has, on many occasions, held that transportation of gas sold directly to the consumer is in the public interest when the reasons advanced by the applicant have been sufficiently strong. See, e.g., Houston Texas Gas & Oil Corp., 16 F.P.C. 118. On this point, the Commission's actions speak louder than respondents' unsupported allegations. See Northern Natural Gas Co., 15 F.P.C. 1634. [Footnote 20]
Respondents also argue that the Commission is opposed to this transaction merely because the underlying sale is a direct sale not subject to the Commission's primary jurisdiction. However, a fair reading of the Commission's opinion as a whole reveals that the Commission did not exalt form over substance in an attempt to aggrandize the scope of its jurisdiction; rather, whenever the Commission discussed the nonjurisdictional nature of this sale, it tied this discussion into an analysis of one or Page 365 U. S. 25 the other of the substantive evils it was seeking to prevent -- "inferior" use or increased prices to consumers generally. [Footnote 21]
"[T]he proposed price is not in keeping with the public interest because it is out of line or because its approval might result in a triggering of general price rises. . . . "Page 365 U. S. 26
These cases, while not in themselves controlling, indicate at least that respondents' argument is overly broad. However, to decide a particular case, we must return to the consideration discussed in the previous section -- the Act contemplates comprehensive regulation in the public Page 365 U. S. 27 interest, and the critical inquiry is whether Congress intended state or federal authority to govern.
In the present case, the Commission was concerned with the effects this certification might have in the future on field prices generally. The Commission was attempting to consider not only the interests of consumers in New York, but those in all States. To be compared with the problem before the Commission are the determinations that a consuming state commission may properly make in exercising authority over a direct sale. Certainly, the consuming State can regulate retail rates at which gas can be sold within the State. E.g., Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U. S. 507. This power was recognized at the time the Act was passed, see Powell, Note, Physics and Law -- Commerce in Gas and Electricity, 58 Harv.L.Rev. 1072, and it is clear that Congress excepted federal regulation of direct sales precisely for this reason. See H.R.Rep. No. 709, 75th Cong., 1st Sess. 1-2. But, in this case, the Commission has not objected to the retail rate, and we need not decide whether there are limits on the Commission's power in this hypothetical situation. The very nature of the present problem, entailing as it does considerations that overstep the bounds of any one State, illustrates the improbability that state commissions could or would attempt to deal with it; it seems clear that considerations of this sort are uniquely fitted for federal scrutiny. Particularly relevant in this connection in this Court's decision in Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U. S. 507. In that case, it was held that a state commission may regulate retail sales, even though the gas was brought from out-of-state sources. The pipeline company argued that conflicting regulations enforced by different state bodies, particularly regulations concerned with interruption of service, might place it in an Page 365 U. S. 28 untenable position. The Court answered this argument by stating that:
Respondents' final argument on this point is that the Commission abused its discretion in denying certification because it took cognizance of facts dehors the record and because it did not pay sufficient attention to the recorded testimony of respondents' expert concerning air pollution. The first objection -- that the Commission erred in going outside the record -- was rejected by the Court of Appeals, and we concur in that conclusion. According to the statute, the Commission is required to determine whether certification is in the "present or future public convenience Page 365 U. S. 29 and necessity." (Emphasis added.) Obedient to this command, the Commission did forecast the future, and concluded that widespread direct sales at high prices would probably result in price increases. Respondents appear to be claiming that the Commission should have adduced testimonial and documentary evidence to the effect that this forecast would come true. However, we do not think that the Commission is so limited in its formulation of policy considerations. Rather, we think that a forecast of the direction in which future public interest lies necessarily involves deductions based on the expert knowledge of the agency. See Atlantic Refining Co. v. Public Service Commission, supra, at 360 U. S. 391. [Footnote 22] It should also be noted that there has been a considerable showing made by the petitioners and state regulatory commissions appearing as amici curiae to the effect that the Commission's forecast is well founded. [Footnote 23] Moreover, Page 365 U. S. 30 as a matter of common sense, it would seem difficult to deny that the channeling of vast quantities of a wasting resource into unregulated transactions at a high price will result in scarcity to other consumers and a general price increase. Cf. Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U. S. 507, 332 U. S. 521, note 19.
Neither this Court nor the Commission holds in this case that sales to pipelines are generally more in accord with the public interest than other sales; nor do we authorize the elimination of direct sales of gas under appropriate circumstances nor the denial of a certificate Page 365 U. S. 31 to any arbitrarily chosen group of purchasers. All we hold is that the Commission did not abuse its discretion in considering, among other factors, those of end use, preemption of pipeline facilities, and price in deciding that the public convenience and necessity did not require the issuance of the certificate requested. The judgment of the Court of Appeals must be
As will be shown, those conclusions were bottomed almost entirely on the proposition that most, if not all, direct purchases, at least those of substantial magnitude, would be against the public interest. Since I believe that Page 365 U. S. 32 the denial of a certificate in this case had to be premised on factors present in this particular transaction, I think the proper course is to remand the case to the Commission for further consideration on proper postulates.
"The proposal is obviously an attempt to evade the jurisdiction of the Commission over the sale of natural Page 365 U. S. 33 gas for use in the large consuming centers of the country, and thus may be contrary to the public interest; . . ."
"* * * *" "How much more serious is that impact [of large demand on limited supply] when it is in the form of multiple bidders. . . ."
Id., p. 141. Page 365 U. S. 34 In its denial of a rehearing, [Footnote 2/2] the Commission acknowledged that it considered the "adverse effects on the public" of granting this "and similar such authorizations," including
It is clear, then, that the Commission was concerned with the adverse effects it felt characterized most sales to distributing companies or consumers, rather than with anything offensive about this particular sale (excepting of course the proposed end use). What were these adverse effects of all direct sales? Two are central to the Page 365 U. S. 35 Commission's opinion. First,
Thus, the Commission has quite evidently asserted a power to frown upon any transaction which does not take the form of a sale to a pipeline for resale. On that basis, it was in this case, and would hereafter be, unnecessary for the Commission to decide whether a particular sale to a consumer or distributing company results in a waste of jurisdictional resources or an unwarranted boosting of field prices. Since, in the Commission's view, sales not to pipelines, as a class, generally have these unfortunate characteristics, it is sufficient that the particular transaction is one of that class. The Commission has made clear that it was the harms inherent in the form this sale took that weighed against the issuance of a transportation certificate, not the unfortunate effects of the transaction itself. I cannot agree that the Commission had discretion to adopt this position when it had available to it far less drastic alternatives. Page 365 U. S. 36
Without purporting to exhaust the full reach of its discretion, the premises on which the Commission, in my view, should have proceeded will be now indicated. Basically, I think it was open to the Commission to decide whether the particular transportation service before it would tend to waste gas, unduly preempt pipeline capacity, or raise field prices. I think the Commission can properly assert this more limited power as an incident of its transportation certificating powers. [Footnote 2/5] It is quite true, of course, that Consolidated Edison need not have resorted to the Federal Power Commission if the purchase transaction had been possible without the interstate transportation of the gas in jurisdictional pipelines, since this was not a purchase of natural gas for resale. Note 1, supra. However, it does not follow that the Commission had to blind itself to the effects of the purchase and use of the gas when its authority to certificate the transportation of the gas was invoked. To recognize that the transaction was, as a practical matter, impossible without the use of jurisdictional facilities for the interstate transportation Page 365 U. S. 37 of the purchased gas is to acknowledge that this transportation is as integral a part of the transaction as was the sale itself. Whether the adverse effect of the transaction be a waste of a scarce resource, or preemption of pipeline capacity, or a substantial boosting of field prices, the transportation is as responsible for the effects as is the original sale. I see no reason why the Commission must certify, as in accord with the "public convenience and necessity," transportation which tends materially to further such undesirable results which are within the area of the Commission's legitimate concern when it is considering the public convenience and necessity of certificating a jurisdictional sale.
Assuming that it is results only made possible by jurisdictional transportation that the Commission wishes to consider, an attempted distinction between transportation and sale certification proceedings simply obscures the important question: what undesirable results are envisioned by § 1(b) to be the concern of the States, and not the concern of the Federal Power Commission? We hold in this case that the economic waste of natural gas that might otherwise be available for jurisdictional transactions ending in superior uses is such a legitimate concern. Similar considerations pertain to the preemption of pipeline capacity. Note 4, supra. Finally, we have held in Atlantic Refining Co. v. Public Service Commission, 360 U. S. 378, 360 U. S. 379, that the Commission must consider the effect on field prices for future jurisdictional sales of an excessive purchase price. Asserting power to consider these effects does not involve assuming jurisdiction over matters that Congress has reserved to the States in § 1(b), for it does not involve protecting citizens of either the producing or consuming State against harms that local regulatory bodies have the power to prevent. These effects being the legitimate concern of the Federal Power Commission, they are no less so in a certification proceeding for transportation Page 365 U. S. 38 than in such a proceeding for the sale of natural gas. Each of these effects, if materially furthered by the transportation being considered, can properly be relied upon, on a case-by-case basis, in the denial of a transportation certificate.
The Commission's consideration of the impact on field prices is more refined, although no more solidly grounded. The Commission did not merely consider that the price of these sales would be unregulatable and argue that, therefore, all sales to consumers or distributors must be forbidden. So it is not a complete answer to repeat what has just been said about the Commission's consideration of inferior "end use" and pipeline preemption -- that those factors can be fully considered on a case-by-case basis. The Commission passed beyond the possible problem of Page 365 U. S. 39 unregulatable prices to an economic argument, namely, that increasing even the number of theoretically regulatable bidders for gas in the field must, as a practical matter, create a "difficult to control and regulate" upward pressure on field prices. I consider reasonable the economics of the Commission's position, [Footnote 2/6] but unreasonable its finding of statutory authority for the Draconian solution it proposes.
To the contrary, the discrimination against nonpipeline purchasers flouts the statutory structure by permitting Page 365 U. S. 40 the Commission to exercise greater regulatory power over transactions with one nonjurisdictional aspect (the direct sale) than the Commission has over transactions of which both aspects (sale for resale and transportation) are jurisdictional. Moreover, to recognize the discrimination against direct sales that the Commission proposes in order to reduce the upward price pressure resulting from increased numbers of bidders is to ignore the fact that the statute contemplates and provides regulation for the use of pipelines both as wholly transportation or carrier facilities. There is no indication that this "carrier" function of pipelines was to be limited to carrying for producers who would then sell in the destination. It also properly extends to carrying for and to wholesalers or consumers in the destination. [Footnote 2/7]
These, then, in my opinion, are the considerations which require a holding that it was an abuse of discretion for the Commission to hold sales to pipelines generally more in accord with the public interest than other sales. There is absolutely no rational basis, as I see it, for selecting distributing companies and consumers as the group of bidders to be sacrificed and eliminated in order to reduce the pressure toward higher field prices. There is no harmful characteristic of these bidders that is not fully shared by pipeline purchasers. Even worse, the purposeful Page 365 U. S. 41 elimination of this entire class of prospective purchasers clashes with the structure of a statute that was largely motivated by a desire to reduce the power of the pipeline companies.
Since the Commission regarded as necessary to its decision factors beyond its discretion to consider, the proceeding should be remanded to that agency for reconsideration. We cannot order the certificate granted, for there are results of this particular transportation which the Commission can and should properly consider, but which were left unconsidered because of the erroneous broader grounds of the denial. On remand, the Commission should not only consider and support with adequate fact findings the particular effects of this transaction on field prices and on Transco's future capacity to expand its pipeline services, but the way should be left open for it to give more careful consideration to the "end use" factor in its decision. I must say that its previous consideration of this aspect of the matter seems to me to leave much to be Page 365 U. S. 42 desired, doubtless because of the over-all mistaken premises on which the Commission proceeded. In a reconsideration of the case upon correct premises, the air pollution problem may take on a different significance, and whatever conclusions the Commission may reach on this score should, in any event, be accompanied with more convincing particularized findings.
"* * * *" "In the Commission's view, the new market which this and further X-20 transactions would establish (1) portends definite and lasting inflationary impact on gas prices generally, (2) would probably be devoted to end uses inappropriate to the Act's purposes, (3) would disrupt patterns of industry growth carefully evolved during 20 years of congressionally directed regulation, and (4) would be beyond effective state regulation."