Document: 360 U.S. 378 79 S.Ct. 1246 3 L.Ed.2d 1312 See 80 42. ATLANTIC REFINING CO., Cities Service Production Company, Continental Oil et al., Petitioners, v.PUBLIC SERVICE COMMISSION OF STATE NEW YORK, Long Island Lighting Co., al. TENNESSEE GAS TRANSMISSION Petitioner, v. PUBLIC Nos. 518, 536. Argued May 20, 21, 1959. Decided June 22, Motion to Amend Judgment Denied Oct. 12, [Syllabus from pages 378-379 intentionally omitted] Mr. David T. Searls, Houston, Tex., for petitioners Atlantic Refining Co. Harry S. Littman, Washington, D.C., petitioner, Tennessee Comm. Kent H. Brown, Albany, N.Y., respondent, Public Commission of State New York. Edward Kirby, Newark, N.J., (Messrs. K. Kadane and Bertram D. Moll, Mineola, on the brief), respondents Electric & Gas Justice CLARK delivered opinion Court. 1 This proceeding tests jurisdiction, as well discretion, Federal Power in certificating sale natural gas under § 7(e) Natural Act 1938, 52 Stat. 821, 56 84, amended, 15 U.S.C. 717 seq., U.S.C.A. seq.1 The has issued a certificate public convenience necessity petitioners, producers gas,2 sell petitioner Transmission 1.67 trillion cubic feet at an initial price 224 c ents per MCF, including tax cent MCF. 17 F.P.C. 880. In same evidence it had twice refused issue such unconditional because insufficient or testimony 'on which base finding that requires these volumes particular rate level here proposed.' On second occasion proposed certificates be conditioned upon 18 cents MCF (including 1-cent tax), increased 22.4 tax) after first 24-hour delivery period, latter subjected 'just reasonable' provisions 4 Act, 717c, 717c. this proposal, advised unless were without conditions, CATCO would not dedicate its interstate market. Upon rehearing, argument but additional evidence, declaring 'important is price, far concerned, precise charge made initially less important than assurance great supply gas' markets. F.P.C., 881. 2 respondents, other York, are utilities York Jersey. They buy distribution those States. oppose issuance ground their will increase consumers States, whom there over million, using Tennessee's gas. filed petitions review with Court Appeals. It held 'Congress given power inquire into where, here, applicant circumscribes scope inquiry by attaching condition application requiring forego consideration element may necessary formulation judgment.' Commission, Cir., 257 F.2d 717, 723. Concluding no jurisdiction conduct 'a limited inquiry,' ibid., vacated order granting remanded case Commission. importance administration questions thus posed required certiorari, 1959, 358 926, 317, 300. We have concluded Appeals was rro r deciding jurisdiction. However, reasons hereafter developed we hold error we, therefore, affirm judgment involved Miocene sand located below seabed out Gulf Mexico some 25 miles offshore Cameron Vermilion Parishes, Louisiana. No. 518 each independent producers. jointly own oil leases (25% company) they obtained Louisiana covering large acreages Shelf off coast. Jurisdiction claimed United States question now litigation. Congress continued existing effect pending outcome controversy title. 67 462, 43 (Supp. I, 1954) §§ 1331—1343, 1331—1343. four companies' joint venture resulted discovery huge fields dedicated 1.75 95,000 acres company subject Commission.3 536 been consolidated 518. contracts dedicating run call gas, tax, escalator clauses calling periodic increases specific amounts.4 addition, provide receive platforms sites Gulf. build approximately 107 pipeline nearest point wellhead. estimated cost $16,315,412. further appears based Tennessee, Docket G 11107, requested certification enlarge extend facilities. program included building southeast Potland, carry proportion leases. Its $85,000,000. addition give free carriage wells shore all condensate distillate account who option separate stations. need discuss contract more minutely, though do claim requirements place greater burden practical stated it. 5 Presiding Examiner March 29, 1957, found sales necessity. 563. While he higher any then paying, pointed prices currently paid onshore 'for smaller reserves future potentials.' Id., 571. average weighted increased, if certificated, .97 MCF.5 said showing hd b een lead rates jurisdictional customers result governing purchases. He acceptance lower parties 'showing imprudence abuse discretion management,' indicated could accepted temporarily consistent necessity, 5(a) proceeding. did his recommendation approval G—11107 above mentioned. 6 indicated, took three strikes recommendations Examiner. April 22 reversed price. said: 7 'The cannot easily overemphasized. largest reserve ever committed one sale. newly proportions supplies taken. highest proposed. 8 'These factors make abundantly evident that, interest, crucial should permanently certificated shown interest.' 575. 9 granted temporary 'to determine what sales' permanent certificate. 576. immediately moved modification, asserting present sufficient 'within reasonable period future' meet necessities remand and, further, 'afford commence construction until least (question) resolved.' however, reiterated belief 'the record does contain level.' 732, 733 734. effort ameliorate situaton represented producers, grant them producers' (plus theretofore Southwest. also agreed day commencement deliveries 17-cent escalated 21.4 taxes), collected bond, proof refund Act. time sought rehearing advising accept 20 terminated' consequent 'loss supplies' customers. afer oral argument, withdraw previous findings matter predicated third primary ubl ic served through system greatly * view circumstances fact show 21.4-cent taxes) necessarily excessive, agree presiding examiner assume character Section 5(a).' 880, Asserting able adequately protect interest respect price,' ordered directed since 'is paying contract, prompt investigation reasonableness.' 882. 10 note seek certiorari brief amicus curiae.6 urge reversal attacks bottomed remand, namely, lack consider proposal petitioners. Commission's suggests reach tendered i.e., must proceeding, decide whether just reasonable? Instead, says, affirmed better affirmance 'was supported hence constituted *.' Brief p. 31. Petitioners disposition, contending quite substantial. I. 11 thought petitioners' firm applicant. Their refusal even extent canceling withholding commerce, court held, losing believe follows. No sales, intrastate interstate, here. market A failure either party secure rendered termination. Certainly filing constitute dedication recoverable Nor doubt liberty refuse conditional order. might couched diplomatic language, act requested. Even Commisson march up hill only down again reaching summit say about-face deprived find nothing illegal rejection alternative standing own. 12 II. Validity Order. 13 purpose underwrite Hope 1944, 320 591, 64 281, 88 L.Ed. 333. As original 7(c) provided, intention shall sold commerce resale ultimate consumption domestic, commercial, industrial, use lowest possible maintenance adequate erv ice 825.7 so framed afford complete, effective bond protection excessive charges. heart 'proposed service, sale, operation, construction, extension, acquisition necessity,' 7(e), 717f(e), charges 'made, demanded, received' reasonable,' 4, prohibits movements issues therefor, 7(c), 717f(c), 717f(c). vests control conditions use. Moreover, once can withdrawal movement approval. operator, although captive remedy himself. may, otherwise bound Pipe Line Mobile Corp., 1956, 350 332, 76 373, 100 file new schedules becomes filing, 5-month suspension provision posting where required. gives opportunity justified likewise guarantees consumer recover refunds moneys increases. overriding intent full protective coverage emphasized 717d, authorizes sua sponte, otherwise, institute fix level. Under section, prospectively only. purchasers, during pendency 14 framework authorized act, being crucial. true delay incident determination proceedings reviewable nigh interminable. Although Phillips Petroleum Wisconsin, 347 672, 74 794, 98 1035, decided 1954, cases instituted still investigative stage. long delay, refund, windfall squall consumers. intend. suspend makes important, itself 'this 563, especially set pattern area enormous appear present. map coast shows cover blocked-out ove ring 900 blocks 5,000 each. potential vast acreage, light discoveries already record, stupendous. transaction covers single Indications puff comparison potentials become floor area. proven southern vaulted 23 plateaus created controlled 'exploitation' expense consumer, eventually pays monthly bill. 16 require 5. hearing prerequisite producer certificates. What inordinate presently processing most careful scrutiny responsible reaction proposals 7. necessity' before issued. factor bearing evaluate interest. leaped plateau levels another, prime importance. formative when rules regulation evolved. Where face presentation signals existence situation probably There is, course, available situation, method arrive keeping Congress, manner require. line triggering general rises applicant's reason 'favored nation' exercise attach believes necessary. encroachment rate-making privileges allowed companies supra, merely duty imposed determining Act's standard applications. certificates, nor overturn parties. Rather, consuming protected while justness reasonableness fixed determined sections procedures situations awaiting adjudication rate. Thus create comprehensive regulatory scheme,' Panhandle Eastern Indiana, 1947, 332 507, 520, 68 190, 197, 92 128, recognition. And statutory scheme established companies, modified page 341, 379. hand, clearly relief proceedings, afforded. 19 Our examination indicates support witnesses little information printed contracts. production West Delta Louisiana, surprising available, introduced relative costs two submerged areas. Moreover 70% Tennessee; 'reason why.' More damaging, excess lease Likewise $16,000,000 unsupported practice custom. Respondents contend—and stands undenied alone add Again distillates retained 'shrugged off' de minimis, supporting data whatever. 'trigger' convincing, unfounded.8 whatever conclusory gas.' Admittedly wrapped action G—11107, asking permission dockets part Neither 'would dispose elsewhere market,' ibid. says statements apparently counsel, case, testimony. Since 90% commercial moves market, quantities hardly profitable except interstate. 21 These considerations instructions applications proceedings. ordered. instructions. HARLAN, FRANKFURTER joins, concurring. 24 I conclusion final record. apear (1) gas,' particularly insofar implies immediate satisfied reserves, (2) serious danger lost terms. unnecessary stage presented provides: '(e) Except governed provisos contained subsection (c) qualified authorizing whole covered application, willing properly acts perform service conform requirements, rules, regulations thereunder, acquisition, certificate, necessity; denied. rights thereunder terms require.' Tidewater sometimes known CATCO. operates extending Texas Arkansas, Mississippi, Kentucky, Virginia, Ohio, Pennsylvania, Jersey, Massachusetts, Hampshire, Rhode Connecticut. serves distributing turn serve millions various traverses. later inserted lieu clauses, letter, contracts, substituted date certain contingencies. exact follows: 'Including proposes purchase 240,000 M.c.f. (14.73 p.s.i.a.), 1958 13.70 M.c.f., compared 12.73 purchased excluded.' 570. .97-cent figure derived. misleading figure, estimate includes 22.4-cent months 1958, November December. indication calculated year. signed Solicitor General both Counsel 1942 amendments 7, 83, intended change declaration purpose. Hearings, House Interstate Foreign Commerce Committee, H.R. 5249, 77th Cong., 1st Sess. 18—19; H.R.Rep. 1290, Sess.; S.Rep. 948, 2d subsequently requesting designed produce $19,000,000 annual revenue. G—17166.

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