Task: sc_lcdisposition

What follows is an opinion from the Supreme Court of the United States. Your task is to determine the treatment the court whose decision the Supreme Court reviewed accorded the decision of the court it reviewed, that is, whether the court below the Supreme Court (typically a federal court of appeals or a state supreme court) affirmed, reversed, remanded, denied or dismissed the decision of the court it reviewed (typically a trial court). Adhere to the language used in the "holding" in the summary of the case on the title page or prior to Part I of the Court's opinion. Exceptions to the literal language are the following: where the Court overrules the lower court, treat this a petition or motion granted; where the court whose decision the Supreme Court is reviewing refuses to enforce or enjoins the decision of the court, tribunal, or agency which it reviewed, treat this as reversed; where the court whose decision the Supreme Court is reviewing enforces the decision of the court, tribunal, or agency which it reviewed, treat this as affirmed; where the court whose decision the Supreme Court is reviewing sets aside the decision of the court, tribunal, or agency which it reviewed, treat this as vacated; if the decision is set aside and remanded, treat it as vacated and remanded.

Mr. Justice Brennan
delivered the opinion of the Court.
We review here the affirmance by the Court of Appeals for the Fifth Circuit of a 1971 order of the Federal Power Commission that established an area rate structure for interstate sales of natural gas produced in the Southern Louisiana area. The Southern Louisiana area is one of seven geographical areas defined by the Commission for the purpose of prescribing areawide price ceilings. This is the second area rate case to reach this Court. The first was the Permian Basin Area Rate Cases, 390 U. S. 747 (1968), in which the Court sustained the constitutional and statutory authority of the Commission to adopt a system of area regulation and to impose supplementary requirements in the discharge of its responsibilities under §§ 4 and 5 of the Natural Gas Act to determine whether producers’ rates are just and reasonable.
The Court of Appeals affirmed the 1971 order in its entirety as an appropriate exercise of administrative discretion supported by substantial evidence on the record as a whole. Placid Oil Co. v. PPC, 483 F. 2d 880 (1973). We granted the petitions for certiorari in these three cases to review the correctness of the Court of Appeals’ holding sustaining the 1971 order as in all respects within the Commission’s statutory powers, and to determine whether the Court of Appeals misapprehended or grossly misapplied the substantial-evidence standard. 414 U. S. 1142 (1974). We affirm.
I
The Commission first instituted proceedings to establish an area rate structure for the Southern Louisiana area on May 10, 1961. 25 F. P. C. 942. The area consists of the southern portion of the State of Louisiana and the federal and state areas of the Gulf of Mexico off the Louisiana coast. The area accounts for about one-third of the Nation’s domestic natural gas production and has been described as “the most important gas-producing area in the country.” Southern Louisiana Area Rate Cases, 428 F. 2d 407, 418 (CA5 1970) (hereafter SoLa I). Proceedings continued over seven years. On September 25, 1968, the Commission issued an order establishing an area rate structure, 40 F. P. C. 530, and, on March 20, 1969, a modified order on rehearing, 41 F. P. C. 301. Refunds under this structure for overcharges during the pendency of the proceeding amounted to some $375 million.
An appeal was taken to the Court of Appeals for the Fifth Circuit. On March 19, 1970, the Court of Appeals affirmed the FPC orders but with "serious misgivings/’ SoLa I, supra, at 439. Noting that “[a] serious shortage, in fact, may already be unavoidable id., at 437, the Court of Appeals was critical of the Commission’s failure adequately to assess “supply and demand in either a semi-quantitative or qualitative way,” id., at 436. It was reinforced in this view by the evidence, including an FPC Staff Report, issued while the appeal was pending, that the Nation was faced with “a severe gas shortage, with disastrous effects on consumers and the economy alike.” Id., at 435 n. 87.
Therefore, although determining “that affirmance is the best course,” id., at 439, the Court of Appeals declared that the judgment was not in any wise to foreclose the Commission from making such changes in its orders, as to both past and future rates, as it found to be in the public interest. The court noticed the fact that, while the appeal was pending, the Commission, in March 1969, had instituted proceedings to reconsider rates for the offshore portion of Southern Louisiana, see 41 F. P. C. 378, and later that year expanded the procedure to include the entire area, 42 F. P. C. 1110. Thus, it stated:
“The mandate of this Court should not, however, be interpreted to interfere with Commission action that would change the rates we have approved here. We specifically and emphatically reject the contention advanced... that the Commission has no power to set aside rates once determined by it to be just and reasonable when it has reason to believe its determinations may have been erroneous. In fact, the existence of the new proceedings, which as we understand them will take into account many of the issues whose absence has concerned us here, has been one of the factors we have considered in deciding to affirm the Commission’s decisions.” 428 F. 2d, at 444-445.
Pending decision on petitions for rehearing, however, the Commission advised the Court of Appeals, in a letter requested by the court, that, unless that court otherwise directed, it did not believe that it had authority to modify, rescind, or set aside a rate order or moratorium affirmed by the court. The Court of Appeals answered in its opinion denying rehearing, 444 F. 2d 125, 126-127 (1970):
“We wish to make crystal clear the authority of the Commission in this case to reopen any part of its order that circumstances require be reopened. Under section 19 (b) of the Natural Gas Act, this Court has the broad remedial powers that inhere in a court of equity, and pursuant to our equitable powers we make it part of the remedy in this case that the authority of the Commission to reopen any part of its orders, including those affecting revenues from gas already delivered, is left intact. The Commission can make retrospective as well as prospective adjustments in this case if it finds that it is in the public interest to do so.
“At the same time, we emphasize that our judgment is an affirmance and not a remand. The appropriate place for originally considering what parts of the orders must be reopened in light of new evidence is before the Commission. It may be that the Commission will decide that the refunds it has ordered are just and reasonable or at least that their significance to the public interest is outweighed by the confusion and delay that would result from their reopening. In this event, the Commission will allow its refund orders to stand as they are. Or it may be that the refunds are too burdensome in light of new evidence to be in the public interest. In that case, it is our judgment that the Commission shall have the power and the duty to remedy the situation by changing its orders.”
The Commission thereupon formally reopened the 1961 proceeding and consolidated it with the new proceeding, 44 F. P. C. 1638 (1970). An extensive record of many thousands of pages of testimony and more than a hundred exhibits was compiled between April 1970 and March 1971. Pursuant to the instructions of the Court of Appeals, much of the evidence focused on the gas shortage, projected levels of demand, and estimates of new supply needed to alleviate the problem. Evidence was also adduced bearing upon rate levels needed to induce additional supply, the potential industry consequences of any new order, and new cost trends based on data unavailable at the time of the earlier proceedings.
Contemporaneously with the hearings, settlement conferences were instituted, on motion, by the Presiding Examiner, 46 F. P. C. 86, 103 (1971), and those conferences were attended by producers, pipelines, distributors, state commissions, municipally owned utilities, and the Commission staff. Eventually, a settlement proposal was submitted by one of the parties, and, after being placed on the record for comments, it was agreed to by a large majority of all interests. An intermediate decision of the Presiding Examiner was waived, and the Commission took up the case.
At the outset, the Commission stated that it believed that adoption of the settlement proposal was precluded unless the Commission found the terms to be in the public interest and supported by substantial evidence. Accordingly, the Commission evaluated the proposal in the light of the massive record that had been compiled in the decade since 1961, including the additional year of hearings directed in large part to the terms of the settlement proposal and the nature of the supply shortage. The Commission concluded that the terms of the proposed settlement were just and reasonable, and found them to be supported by substantial evidence in the record. The ceiling rates established in the 1968 orders, which because of Commission and court stays had never gone into effect, were held “now [to] perform no office,” 46 F. P. C., at 102.
The effective date of the 1971 order was August 1, 1971. By the terms of this order “flowing gas,” i. e., gas delivered after August 1, 1971, under contracts dated prior to October 1, 1968, receives treatment different from “new gas,” i. e., gas delivered after August 1, 1971, under contracts dated after October 1, 1968. The established flowing gas price ceilings are 22.2750 per thousand cubic feet (Mcf) for gas produced onshore and 21.3750 per Mcf for gas produced offshore. The established new gas price ceilings are 260 for both onshore and offshore gas.
Flowing gas ceilings automatically increased 0.50 per Mcf on October 1, 1973, and, as a further incentive for increasing the gas supply, the Commission also established increases up to 1.50 per Mcf, contingent upon the industry’s finding and dedicating new gas reserves. New gas rates automatically increase H per Mcf on October 1, 1974. A moratorium is imposed upon the filing of producer rate increases for flowing gas until October 1, 1976, and for new gas until October 1, 1977.
The Commission also established minimal pipeline rates to be charged producers by pipelines for the transportation of certain liquid and liquefiable hydrocarbons, and eliminated the price differential between casinghead gas (gas dissolved in or associated with the production of oil) and new gas-well gas that it had imposed in earlier cases. 46 F. P. C., at 144. See Permian Basin, 390 U. S., at 760-761.
The problem of refunds concerns deliveries of flowing gas prior to August 1, 1971. The rates established by the 1971 order were higher than those that would have been established under the 1968 order had they been put into effect. If refunds had been calculated on the basis of the 1968 order, they would have aggregated over $375 million. If they had been calculated upon the basis of the 1971 flowing gas ceiling rates, refunds would have aggregated less than $150 million. However, the proposed settlement stipulated a refund obligation of $150 million, with a proviso that this could be worked off by the commitment by a refund obligor of additional gas reserves to the interstate market. The Commission adopted this proposal as an integral part of the 1961-1971 rate structure and established a schedule aggregating $150 million of refunds from those that were owed but not yet paid by producers who had collected rates in excess of certain prescribed levels lower than the established flowing gas rates.
II
Before addressing petitioners’ arguments, we must consider briefly the situation in which the Commission has found itself in its attempts to regulate the natural gas market; the teachings of Permian Basin and other decisions of this Court as to the extent of the Commission’s statutory authority in this area; the limitations upon review by the Court of Appeals of the Commission’s order; and the limitations upon review by this Court of the Court of Appeals’ affirmance of the order.
The history of the Commission’s early experience with the Natural Gas Act, 15 U. S. C. § 717 et seq., >has been fully developed in our first area rate opinion, Permian Basin, supra, at 755-759, and may be merely summarized here. With the passage of the Act in 1938, 52 Stat. 821, Congress gave the Commission authority to determine and fix “just and reasonable rate[s],” § 5 (a), 15 U. S. C. § 717d (a), for the “sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use....” § 1 (b), 15 U. S. C. § 717 (b). The Act was patterned after earlier regulatory statutes that applied to traditional public utilities and transportation companies, and that provided for setting rates equal to such companies’ costs of service plus a reasonable rate of return.
Until 1954, the Commission construed its mandate as requiring that it regulate the chain of distribution of natural gas only from the point where an interstate pipeline acquired it. Because such pipelines were relatively few in number and fell within the transportation company model, the Commission was able to apply a traditional regulatory approach, using individualized costs of service as a basis for determining price.
In 1954, however, this Court ruled in Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672, that independent producers are “[n]atural-gas companies]” within the meaning of § 2 (6) of the Act, 15 U. S. C. § 717a (6). In response, the Commission at first attempted to extend to this new industry its old regulatory methods, including establishment of individual rates based on each producer’s costs of service. The effort foundered on the sheer size of the task — thousands of independent producers being engaged in jurisdictional sales of gas at that time.
In the early 1960's the Commission discontinued its attempts to deal with individual companies, and turned to the area rate method. The Commission established a number of discrete geographical areas within which it believed that costs and general operating conditions were reasonably similar, and set out to establish, by convening hearings and compiling massive records, uniform rate schedules that would govern all producers within each area. Upon the conclusion of the first of these undertakings, we reviewed the Commission's efforts and found no reversible error. Permian Basin Area Rate Cases, 390 U. S. 747 (1968). See Wisconsin v. FPC, 373 U. S. 294 (1963).
But, the Commission was soon confronted with indications, both from data available to it, and from criticism of its effort, that its cost emphasis in rate determination was being accompanied by a severe shortage in the supply of natural gas being dedicated to the interstate market. Since the Commission's subsequent area rate orders, including both its 1968 and 1971 orders, are adapted from the initial Permian Basin model and are governed by the same statutory provisions concerning ratemaking and judicial review, we will preface our discussion of the Commission’s response to these difficulties with a brief review of the Permian Basin order and the applicable rules laid down in our opinion sustaining that order.
Subsequent to its establishment of geographical areas in 1961, the Commission consolidated three of those areas to form the Permian Basin area. The rate structure devised for this area set two ceiling prices, the higher one for gas produced from gas wells and dedicated to interstate commerce after January 1, 1961, and the other for gas-well gas dedicated to interstate commerce before January 1, 1961, and all gas produced from oil wells (casinghead gas) either associated with the production of the oil or dissolved in it. The Commission derived the higher rate for the newer “vintage” gas-well gas from composite cost data obtained both from answers to producer questionnaires and from published data said to reflect the national costs of finding and producing gas-well gas in I960. It derived the lower rate from Permian Basin historical cost data for the older vintage gas-well gas, and applied that rate to both that and casinghead gas without distinction. To these composite costs, the Commission added a return of 12% on the producers’ average production investment, obtained by examining the cost data, imputing a rate base, and assuming that gas wells deplete at a constant rate beginning one year after investment and ending 20 years later. Finally, an adjustment up or down from the area ceiling rates was specified for gas of higher or lower quality and energy content than set by a selected standard. The resulting ceiling rates, including allowances for state taxes, were 14.50 per Mcf for first vintage and casinghead gas, and 16.50 for second vintage gas. For those producers who individually might suffer hardship under this fate schedule, the Commission indicated that it would on rare occasions provide special relief, but it declined to specify what circumstances would justify such action.
On review, the Court of Appeals refused to approve the Commission’s order, holding that certain determinations of the ultimate effects of the order had not been made as required by FPC v. Hope Natural Gas Co., 320 U. S. 591 (1944), that more precise delineation of the requirements for relief from the order must be set forth, and that the Commission could not require that producers refund excess charges during the pendency of the proceeding unless it concluded that aggregate actual area revenues exceeded aggregate permissible area revenues, and then apportioned only the excess among producers on an equitable basis. 375 F. 2d 6, 36 (1967).
On certiorari, this Court initially noted that judicial review of the Commission’s orders is extremely limited:
“Section 19 (b) of the Natural Gas Act provides without qualification that the ‘finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.’ More important, we have heretofore emphasized that Congress has entrusted the regulation of the natural gas industry to the informed judgment of the Commission, and not to the preferences of reviewing courts. A presumption of validity therefore attaches to each exercise of the Commission’s expertise, and those who would overturn the Commission’s judgment undertake ‘the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.’ FPC v. Hope Natural Gas Co., supra, at 602. We are not obliged to examine each detail of the Commission’s decision; if the ‘total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end.’ Ibid.
“Moreover, this Court has often acknowledged that the Commission is nqt required by the Constitution or the Natural Gas Act to adopt as just and reasonable any particular rate level; rather, courts are without authority to set aside any rate selected by the Commission which is within a ‘zone of reasonableness.’ FPC v. Natural Gas Pipeline Co., 315 U. S. 575, 585. No other rule would be consonant with the broad responsibilities given to the Commission by Congress; it must be free, within the limitations imposed by pertinent constitutional and statutory commands, to devise methods of regulation capable of equitably reconciling diverse and conflicting interests.” Permian Basin, 390 U. S., at 767.
Applying these limitations in the context of review of area rate regulation, Permian Basin defined the criteria governing the scope of judicial review as follows:
“First, [the reviewing court] must determine whether the Commission’s order, viewed in light of the relevant facts and of the Commission’s broad regulatory duties, abused or exceeded its authority. Second, the court must examine the manner in which the Commission has employed the methods of regulation which it has itself selected, and must decide whether each of the order’s essential elements is supported by substantial evidence. Third, the court must determine whether the order may reasonably be expected to maintain financial integrity, attract necessary capital, and fairly compensate investors for the risks they have assumed, and yet provide appropriate protection to the relevant public interests, both existing and foreseeable. The court’s responsibility is not to supplant the Commission’s balance of these interests with one more nearly to its liking, but instead to assure itself that the Commission has given reasoned consideration to each of the pertinent factors.” Id., at 791-792 (emphasis supplied).
Where application of these criteria discloses no infirmities in the Commission’s order, the order cannot be said to produce an “arbitrary result,” and must be sustained. FPC v. Hops Natural Gas Co., 320 U. S., at 602.
Applying these criteria, Permian reversed the Court of Appeals and sustained the Commission’s order, although noting that the Commission had not adhered rigidly to a cost-based determination of rates, much less to one that based each producer’s rates on his own costs. Each deviation from cost-based pricing was found not to be unreasonable and to be consistent with the Commission’s responsibility to consider not merely the interests of the producers in “maintain [ing] financial integrity, attracting] necessary capital, and fairly compensating] investors for the risks they have assumed,” but also “the relevant public interests, both existing and foreseeable.” 390 U. S., at 792. “The Commission’s responsibilities necessarily oblige it,” the Court said, “to give continuing attention to values that may be reflected only imperfectly by producers’ costs; a regulatory method that excluded as immaterial all but current or projected costs could not properly serve the consumer interests placed under the Commission’s protection.” Id., at 815.
Permian Basin teaches that application of the three criteria of judicial review of Commission orders is primarily the task of the courts of appeals. For “this [the Supreme] Court’s authority is essentially narrow and circumscribed.” Id., at 766. The'responsibility to assess the record to determine whether agency findings are supported by substantial evidence is not ours. Section 19 (b) of the Act provides that “[t]he judgment and decree of the [Court of Appeals] affirming, modifying, or setting aside, in whole or in part, any such order of the Commission, shall be final, subject to review by the Supreme Court... upon certiorari... We have held as to a like provision in the National Labor Relations Act, 29 U. S. C. § 160 (e), that thus “[w]hether on the record as a whole there is substantial evidence to support agency findings is a question which Congress has placed in the keeping of the Courts of Appeals. This Court will intervene only in what ought to be the. rare instance when the standard appears to have been misapprehended or grossly misapplied.” Universal Camera Corp. v. NLRB, 340 U. S. 474, 491 (1951).
Ill
Before reviewing the Court of Appeals’ affirmance of the Commission’s 1971 order for compliance with Permian’s requirements, we address contentions that challenge the statutory authority of the Commission to adopt the order, rather than the terms of the order itself. The first of these challenges, made by New York and MDG, is that the Commission had no statutory authority to change rates and refund obligations fixed in the Commission’s 1968 order after that order was affirmed by the Court of Appeals in SoLa I. Brief for MDG 18; Brief for New York 15. The argument is that the affirmance was “unqualified” and therefore exhausted the Court of Appeals’ powers of review under § 19 (b), thus rendering its authorization to the Commission to reopen its 1968 orders without legal effect. But the affirmance of the 1968 order was not “unqualified.” Although the Commission could not have reopened the order on its own, see Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U. S. 246, 254 (1951); FPC v. Hope Natural Gas Co., 320 U. S., at 618, the Court of Appeals’ opinion on rehearing made it “crystal clear” that, despite the form of the court’s judgment, the Commission was fully authorized to reopen any part of the 1968 order that seemed appropriate and necessary if evidence as to the future supply problem indicated that this should be done.
The Court of Appeals properly took this step in light of new information, unavailable at the time of the 1968 order, that suggested the possible inadequacy of the 1968 determination, although not necessarily an inadequacy that justified setting aside the order. See Baldwin v. Scott County Milling Co., 307 U. S. 478 (1939). Moreover, the 1968 order had not been made effective, being continuously stayed until withdrawn by the 1971 order. See 46 F. P. C., at 101. In these circumstances, we cannot say that the action of the Court of Appeals exceeded its powers under § 19 (b) “to affirm, modify, or set aside [an] order in whole or in part.”
This jurisdiction to review the orders of the Commission is vested in a court with equity powers, Natural Gas Pipeline Co. v. FPC, 128 F. 2d 481 (CA7 1942), see Ford Motor Co. v. NLRB, 305 U. S. 364, 373 (1939), and we cannot say that the Court improperly exercised those powers in the circumstances. Dolcin Corp. v. FTC, 94 U. S. App. D. C. 247, 255-258, 219 F. 2d 742, 750-752 (1954). Indeed, § 19 (b) provides that the Court of Appeals may authorize the Commission in proper cases to take new evidence, upon which the Commission may modify its findings of fact and make recommendations, concerning the disposition of its original order. Under the Court of Appeals disposition, the 1968 order was therefore not final and thus it was within the power of the Commission to reconsider and change it. See United Gas Improvement Co. v. Callery Properties, 382 U. S. 223, 229 (1965).
Only New York presses the second challenge to the Commission’s statutory authority to adopt the 1971 order. New York contends that the Commission is without power to adopt as a rate order a settlement proposal that lacks unanimous agreement of the parties to the proceeding. That contention has no merit.
The Commission clearly had the power to admit the agreement into the record — indeed, it was obliged to consider it. That it was admitted for the record did not, of course, establish without more the justness and reasonableness of its terms. But the Commission did not treat it as such. As we have noted, the Commission weighed its terms by reference to the entire record in the Southern Louisiana area proceeding since 1961, and further supplemented that record with extensive testimony and exhibits directed at the proposal’s terms. We think that the Court of Appeals correctly analyzed the situation and stated the correct legal principles:
“No one seriously doubts the power — indeed, the duty — of FPC to consider the terms of a proposed settlement which fails to receive unanimous support as a decision on the merits. We agree with the D. C. Circuit that even 'assuming that under the Commission’s rules [a party’s] rejection of the settlement rendered the proposal ineffective as a settlement, it could not, and we believe should not, have precluded the Commission from considering the proposal on its merits.’ Michigan Consolidated Gas Co. v. FPC, 1960, 108 U. S. App. D. C. 409, 283 F. 2d 204, 224.....
“As it should FPC is employing its settlement power under the APA, 5 U. S. C. A. § 554 (c), and its own rules 18 C. F. R. § 1.18 (a), to further the resolution of area rate proceedings. If a proposal enjoys unanimous support from all of the immediate parties, it could certainly be adopted as a settlement agreement if approved in the general interest of the public. But even if there is a lack of unanimity, it may be adopted as a resolution on the merits, if FPC makes an independent finding supported by'substantial evidence on the record as a whole’ that the proposal will establish 'just and reasonable’ rates for the area.” 483 F. 2d, at 893. (Emphasis in original.)
The choice of an appropriate structure for the rate order is a matter of Commission discretion, to be tested by its effects. The choice is not the less appropriate because the Commission did not conceive of the structure independently.
New York presents a final argument against the Commission’s authority. It contends that the Court of Appeals’ opinion on rehearing in SoLa I authorized modification of the 1968 refund provisions only if the 1968 refunds “are too burdensome in light of new evidence to be in the public interest.” 444 F. 2d, at 127. It argues that this means the Commission was required first to find, based on substantial new evidence, that refunds “would substantially and adversely affect the producers’ ability to meet the continuing gas needs of the interstate market,” Brief for New York 18, and contends that the revision of the refund terms is therefore unauthorized because the Commission made no such finding. New York’s premise is unsupportable. The opinion on rehearing is explicit that the Commission was to have “great flexibility,” and could “make retrospective as well as prospective adjustments in this case if it finds that it is in the public interest to do so.” 444 F. 2d, at 126-127. Moreover, in the opinion under review, the Court of Appeals flatly rejected the argument New York has repeated in this Court. “[W]e categorically rejected [in SoLa I] the notion that the label 'affirmance’ could possibly impair FPC’s ability to alter or modify any of the provisions, particularly the refund provisions, of its SoLa I rate scheme if it believed that the exigencies of the gas industry required more effective remedial measures.” 483 F. 2d, at 904 (emphasis in original).
IV
We turn now to petitioners’ challenges to the rate order itself. We treat these contentions in three groups: challenges to the established price levels, challenges to the Commission’s allocation of gas and receipts among pipelines and producers through the refund credits and contingent escalations, and, finally, claims that certain specific provisions of the rate order lack substantial evidence.
A
Petitioner Mobil contends that the rates fixed for both flowing or first vintage gas and new or second vintage gas are too low. New York and MDG attack the rates for flowing gas as too high, but do not attack the new-gas rates. Each of the arguments is premised on a common error: that certain provisions of the order can be isolated and viewed without regard to the total effect the order is designed to achieve.
Mobil’s attack on the Commission’s evidence of costs is clearly frivolous. The Commission took extensive evidence of costs in its 1968-order hearings for flowing gas, and in both its 1968-order and 1971-order hearings for new gas. In response to the Commission’s rates, selected from the final cost “range” it found to be justifiable on the basis of the entire record, Mobil points to selected fragments of the record. We have examined the testimony cited and do not think that it sustains Mobil’s heavy burden of showing that the final Commission choice was outside what the Court of Appeals could have found to lie within the Commission’s authority. FPC v. Natural Gas Pipeline Co., 315 U. S. 575, 585 (1942).
Mobil further contends that the inclusion of refund workoff credits and contingent escalations in the Commission’s just and reasonable rates indicates that producers unable to gain part or all of their share of such payments will receive merely their “bare-bones” costs, which constitute illegally low prices. We do not question that such producers may receive less per unit of gas than will others. But that hardly invalidates the Commission’s order. See Permian Basin, 390 U. S., at 818-819. Mobil’s argument assumes that there is only one just and reasonable rate possible for each vintage of gas, and that this rate must be based entirely on some concept of cost plus a reasonable rate of return. We rejected this argument in Permian Basin and we reject it again here. The Commission explicitly based its additional “non-cost” incentives on the evidence of a need for increased supplies. Obviously a price sufficient to maintain a producer, while not itself necessarily required by the Act, may not be sufficient also to encourage an increase in production. As we said in Permian Basin, supra, at 796-798:
“The supply of gas-well gas is therefore relatively elastic, and its price can meaningfully be employed by the Commission to encourage exploration and production....
“... We have emphasized that courts are without authority to set aside any rate adopted by the Commission which is within a ‘zone of reasonableness.’... The Commission may, within this zone, employ price functionally in order to achieve relevant regulatory purposes; it may, in particular, take fully into account the probable consequences of a given price level for future programs of exploration and production. Nothing in the purposes or history of the Act forbids the Commission to require different prices for different sales, even if the distinctions are unrelated to quality, if these arrangements are ‘necessary or appropriate to carry out the provisions of this Act.’... We hold that the statutory ‘just and reasonable’ standard permits the Commission to require differences in price for simultaneous sales of gas of identical quality, if it has permissibly found that such differences will effectively serve the regulatory purposes contemplated by Congress.”
Plainly the Court of Appeals did not err in deciding that it was well within Commission discretion and expertise to conclude that the refund workoff credits and contingent escalations could provide opportunity for increased prices that would help in generating capital funds and in meeting rising costs, while assuring that such increases would not be levied upon consumers unless accompanied by increased supplies of gas. It is true that the Commission concluded that it could not determine the precise amount of additional gas supply that would be found and dedicated to interstate sales as a result of this formula. But this was also true of any change it might have made in gas prices. The Commission took massive evidence on supply, demand, and the relation between the two. Its difficulties, while not minor, did not stem from any failure to seek answers. Rather, the Commission pointed out that the results of exploratory activity are by nature dependent to some extent on chance, and the level of exploratory activity in turn may be influenced by many other factors besides price, including, the Commission said, “monetary inflation, changes in real cost of input resources, availability of input resources, changes in alternative investment opportunities, development of new producing areas, size of prospective reservoirs, changes in business confidence, degree of directionality of exploratory effort [toward gas or oil], changes in industry technology, and other factors influencing business decisions.” We think the record sufficiently supports the Commission’s conclusion:
“Summarizing, there exists a positive relationship between gas contract price levels and exploratory effort; no reliable quantitative forecasts may be made by increments of additional gas supply resulting from specific increased gas prices; increases in ceiling prices which yield increases in producer revenues will result in expanded gas exploration activity; and the adequacy of expanded gas exploratory activity in terms of sufficiency of gas supply in relation to gas demands must be determined by continued Commission observation of the results of our decisions.” 46 F. P. C., at 124.
New York’s contention that the rates on flowing or first vintage gas are not supported by substantial evidence is also predicated on an erroneously limited view of the permissible range of the Commission’s authority to employ price to encourage exploration or production. Reduced to simplest form, New York’s contention is that the 1968 order set just and reasonable rates for first vintage gas, that no new evidence was introduced as to the cost of that gas, and that the 1971-order prices for that gas are consequently excessive. Again, as we said in Permian, the Commission is not so limited in its construction of rate formulae. Its justification here for increasing the price of flowing or first vintage gas was not that new evidence showed that the conditions of producing that gas differed from the conditions found in the 1968 opinion, but, as the Commission frankly acknowledged, new revenues were deemed necessary to expand future production. As between placing the burden of that expansion on new or second vintage gas alone or spreading it over both old and new gas, it judged the latter more equitable and more likely to lead to the immediately increased capital necessary in the face of a crisis. We see nothing in New York’s argument to suggest that the Commission could not — in view of its finding that increased revenues were necessary — place the burden of those payments on all users rather than on those alone who purchased gas in the future. Indeed, it is worth noting that the Commission’s rate orders in Permian included in the cost components of gas a noncost price element for future expansion of exploratory effort.
In this situation, the Commission could reasonably choose its formula as an appropriate mechanism for protecting the public interest. And, against the background of a serious and growing domestic gas shortage, the Court of Appeals could certainly conclude that the Commission might reasonably decide that, as compared with adjustments in the rate ceilings for gas producers to induce more exploration and production, its responsibility to maintain adequate supplies at the lowest reasonable rate could better be discharged by means of the contingent escalation and refund credit provisions. We therefore agree with the Court of Appeals’ holding that “these periodic escalations were a proper subject for the exercise of administrative discretion and clearly fall within that 'zone of reasonableness’ which we allow FPC on review

Question: What treatment did the court whose decision the Supreme Court reviewed accorded the decision of the court it reviewed?
A. stay, petition, or motion granted
B. affirmed
C. reversed
D. reversed and remanded
E. vacated and remanded
F. affirmed and reversed (or vacated) in part
G. affirmed and reversed (or vacated) in part and remanded
H. vacated
I. petition denied or appeal dismissed
J. modify
K. remand
L. unusual disposition
Answer:

Answer: B