Opinion ID: 396140
Heading Depth: 3
Heading Rank: 2

Heading: Review Criteria

Text: 26 The Natural Gas Act fails to prescribe specific standards for ratemakers to follow. In fact, the only requirement is that a rate be just and reasonable. 30 This paucity of statutory guidance has resulted in judicial deference to administrative ratesetting. 31 However deferential the judiciary may be, courts have never given regulators carte blanche. While the Act itself may be lacking in standards for the Commission to follow, the judiciary has inferred certain requirements from the just and reasonable standard. 27 Judicial review evolved from the end result test enunciated by Justice Douglas in Federal Power Comm. v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944): 28 Under the standard of just and reasonable, it is the result reached and not the method employed which is controlling. (citation omitted).... If the total effect of the rate order cannot be said to be unjust and reasonable, judicial inquiry is at an end. 29 320 U.S. at 602, 64 S.Ct. at 287. Experience has taught that a determination of whether the result reached is just and reasonable requires an examination of the method employed in reaching that result. Permian Basin Area Cases, 390 U.S. 747, 791-92, 88 S.Ct. 1344, 1372-1373, 88 L.Ed. 333 (1968). 32 In examining Commission methodology, (w)hat is basic is the requirement that there be support in the public record for what was done. American Public Gas Ass'n v. Federal Power Comm'n, 567 F.2d 1016, 1029 (D.C.Cir.1977). 30 In reviewing the record, this Court engages in an inquiry akin to the substantial evidence inquiry mandated by the Administrative Procedure Act, 5 U.S.C. § 706(2)(E) (1976). City of Chicago v. Federal Power Comm'n, 458 F.2d 731, 743 (D.C.Cir.1971). 33 Indeed, this Court has required the Commission to specify the evidence on which it relied and to explain how that evidence supports the conclusion it reached. Columbia Gas Transmission Corp. v. FERC, 628 F.2d 578, 589 n.51 (D.C.Cir.1979). In every case, the object of review is to determine whether a reasoned conclusion from the record as a whole could support the premise on which the Commission's action rests. City of Chicago, 458 F.2d at 744. 34 31 These propositions on the standard of review apply to this case. An even more particular standard applies when the Commission seeks, as here, to encourage exploration and development through increased rates to consumers. This Court in City of Detroit v. FPC, 230 F.2d 810 (D.C.Cir.1955) stated that: 32 (i)f the Commission contemplates increasing rates for the purpose of encouraging exploration and development ... it must see to it that the increase is in fact needed and is no more than is needed for the purpose. Further than this we think the Commission cannot go without additional authority from Congress. 33 Id. at 817. 34 Our task is to determine whether there is factual support in the record for the rate order that issued and the resulting change in policy. 35 As to that part of the rate order premised on the encouragement of exploration and development, we must determine whether there is evidentiary support for the proposition that a stand-alone tax cost in the rate base, with a resulting increase in rates, will directly result in such development.