Document: 390 U.S. 747 88 S.Ct. 1344 20 L.Ed.2d 312 In re PERMIAN BASIN AREA RATE CASES. Nos. 90, 95, 98—102, 105, 117, 181, 261, 262, 266, 388. Argued Dec. 5, 6 and 7, 1967. Decided May 1, 1968. Rehearing Denied June 10, See 392 917, 2050. [Syllabus from pages 747-751 intentionally omitted] Richard A. Solomon, Washington, D.C., for Federal Power commission. J. Calvin Simpson, San Francisco, Cal., Public Utilities Commission of Calif. Malcolm H. Furbush, Pacific Gas Electric Co. John Ormasa, Los Angeles, Lighting Supply others. C. Hayden Ames, Diego All in support order the Commission. Bruce R. Merrill, Houston, Tex., Continental Oil Crawford Martin, Hillsboro, State Texas. Boston E. Witt, Santa Fe, N.M., New Mexico. Herbert W. Varner, Superior Robert Henderson, Dallas, Hunt Evans Attwell, Perry Bass Justin Wolf, Standard James L. Armour, Mobil Louis Flax, Sun Carroll Gilliam, Oliver Stone, York City, Amerada Petroleum Corp. opposition to [Argument Counsel 752-754 Mr. Justice HARLAN delivered opinion Court. 1 These cases stem proceedings commenced 1960 by under § 5(a) Natural Act,1 52 Stat. 823, 15 U.S.C. 717d(a), determine maximum just reasonable rates sales interstate commerce2 natural gas produced Permian Basin.3 24 F.P.C. 1121. The conducted extended hearings,4 1965 issued a decision that both prescribed such provided various ancillary requirements. 34 159 1068. On petitions review, Court Appeals Tenth Circuit sustained part set aside Commission's orders. 375 F.2d 35. Because these began new era regulation producers, we granted certiorari consolidated briefing oral argument. 387 902, 87 1691, 18 620; 388 906, 2117, 1346; 389 817, 68, 19 67. For reasons follow, reverse affirm judgments Appeals, sustain their entirety I. 2 circumstances led ultimately should first be recalled. authority regulate is derived entirely Act 1938. 821. Act's provisions do not specifically extend producers or wellhead gas,5 declined until 1954 independent producers6 pipelines.7 Its efforts only after this held are 'natural-gas compan(ies)' within meaning 2(6) Act. 717a(6); Phillips v. Wisconsin, 347 672, 74 794, 98 L.Ed. 1035. has since labored with obvious difficulty diverse growing industry terms an ill-suited statute. 3 initially sought whether producers' were §§ 4(a)8 examination each producer's costs service.9 Although method been widely employed rate-making situations,10 it proved inappropriate producers. Producers cannot usefully classed as public utilities.11 They enjoy no franchises guaranteed areas service. intensely competitive vendors wasting commodity they have acquired costly often unrewarded search. Their unit may rise decline vagaries fortune. value services perform measured quantity character produce, resources expended its search; consumer alike concerned principally 'what (the producer) gets out ground, * what he puts into *.' FPC Hope Co., 320 591, 649, 64 281, 310, 333 (separate opinion). exploration production thus 'more erratic irregular unpredictable relation investment than any phase other utility business.' Id., at 647, S.Ct., 309. Moreover, number jurisdictional large,12 administrative burdens placed upon individual company costs-of-service standard therefore extremely heavy.13 4 consequence, became increasingly laborious, until, 1960, was described 'outstanding example federal government breakdown process.'14 acknowledged gravity difficulties,15 announced would commence series which major producing areas.16 One member subsequently 'admittedly experimental *.'17 place question validity proceeding.18 5 perimeter proceeding drawn second Statement General Policy No. 61—1. asserted possesses statutory require application throughout area sales.19 It averred adoption appreciably reduce difficulties, facilitate effective regulation, prove better suited characteristics industry. Each conclusions reaffirmed proceedings.20 tentatively designated geographical units purposes rate regulation; addition, there two guideline prices,21 expected help 'whether proposed initial certificated without price condition changes accepted suspended.'22 three listed proceeding. structure devised Basin includes prices. one wells dedicated commerce January 1961.23 created second, lower, all Basin. reasoned employ functionally, tool encourage discovery appropriate supplies gas. found could serve meaningful incentive gas-well committed 1960; associated dissolved gas,24 previously reserves gas, were, contrast, relatively unresponsive variations price. separate prices provide suitable prevent excessive producer profits. 7 calculate prevailing field Instead, composite cost data, obtained published sources through questionnaires. This information intended combination establish national finding gas; understood reflect peculiar either periods prior 1960. chiefly historical emphasis here local historical. believed uncertainties joint allocation made difficult compute accurately association oil.25 held, however, greater, must surely smaller, those incurred flowing stated exigencies administration demanded smallest possible rates. 8 adopted return 12% on average investment, calculated computations. assumed purpose commences year deplete uniformly, totally depleted years. selected study returns recently permitted pipelines, but, take fully account greater financial risks production. recognized hostages good fortune; expect programs will frequently unsuccessful, substandard quality found. 9 allowances included paralleled system Btu adjustments.26 less pipeline sold reduced prices, standards. reduction sale processing necessary raise quality; determined agreement between parties sale, subject review approval indicated accept reflects 'a faith effort approximate involved 1068, 1071. content 1,000 per cubic foot proportionately lower applicable maximum, 1,050 higher maximum. aggregate revenue consequences adjustments precisely calculated, although denying applications rehearing estimates reductions necessary. 1073. 10 calculations following Basin.27 Gas-well including residue, gas-cap 1961, 16.5¢ Mcf (including state taxes) Texas, 15.5¢ (excluding Mexico.28 Flowing oil-well before 14.5¢ 13.5¢ Further, minimum 9¢ jurisdiction existing contracts 'adversely affect interest.' Sierra 350 348, 355, 76 368, 372, 100 file 4(d), 717c(d),29 despite contractual limitations, consent purchaser. 11 data might produce hardship, declared would, cases, special relief. emphasized exceptions readily permitted, but indicate detail relief given. 12 supplemented First, exemptions whose annual United States exceed 10,000,000 Mcf. small need adjusted deficiencies. rule-making reporting filing obligations 717c, 717f. 434. 13 Second, imposed moratorium 1968, filings 4(d) excess rate. concluded imperative if benefits preserved. permanently prohibited use indefinite escalation clauses increase contract above rate.30 14 Finally, that, further order, refunds difference amounts had actually collected refund, permissible rate, adjustments.31 Small obliged make refunds, required deficiencies, unless wish advantage upward because high content. rejected examiner's conclusion exceeds formula inequitable purchasers administer effectively. impose sales. sustained, stayed enforcement of, approved two-price Nonetheless, court failed satisfy requirements supra. properly adjustments, essential findings revenue, precision 6. rehearing, also treatment erroneous; actual revenues exceeded revenues, amount excess, apportioned 'some equitable contract-by-contract basis.' ordered remanded consistent opinions. II. 16 together elected virtually every lengthy proceedings.32 said outset assessing disparate contentions, Court's essentially narrow circumscribed. 17 Section 19(b) provides qualification 'finding facts, supported substantial evidence, shall conclusive.' More important, heretofore Congress entrusted informed judgment Commission, preferences reviewing courts. A presumption attaches exercise expertise, who overturn undertake 'the heavy burden making convincing showing invalid unjust unreasonable consequences.' supra, U.S., 602, 288. We examine decision; 'total effect unreasonable, judicial inquiry end.' Ibid. Constitution adopt particular level; rather, courts 'zone reasonableness.' Pipeline 315 575, 585, 62 736, 743, 86 1037. No rule consonant broad responsibilities given Congress; free, limitations pertinent constitutional commands, devise methods capable equitably reconciling conflicting interests. premises proceed assess III. issues controversy conveniently divided four categories. questions third accuracy fourth refund turn supplementary most fundamental may, consistently Act, prescription rates, rather basis. left unanswered Wisconsin FPC, 373 294, 83 1266, 35733. solution requires consideration interrelated problems. 21 plain does forbid imposition, circumstances, commercial activities. legislative power create ceilings has, 'countries where common law prevails,' 'customary time immemorial Munn Illinois, 94 113, 133, 77. regularly See, e.g., Tagg Bros. & Moorhead States, 280 420, 50 220, 524; Bowles Willingham, 321 503, 641, 892. more prohibit determination group class proceedings. repeatedly legislatures agencies regulated evaluating position class; thought sufficient agency representative ample measure reqirements parties. supra; Acker 298 426, 56 824, 80 1257; Corrick, 435, 829, 1263. Compare England Divisions Case, 261 184, 196—199, 43 270, 275 276, 67 605; Abilene S.R. 265 274, 290—291, 44 565, 570, 68 1016; 331 284, 1207, 91 1492; Chicago N.W.R. Atchison, T. S.F.R. 326, 341, 1585, 1594, 803. 22 objection arises imposition merely 'high operators seriously affected others,' 518, property consequence regulation. 601, 287. Regulation Constitution, limit stringently recovered investors' interests variables calculus reasonableness. Govington Lexington Turnpike Road Sandford, 164 578, 596, 198, 205, 41 560. 23 is, 'power destroy,' Stone Farmers' Loan Trust 116 307, 331, 334, 345, 29 636; Covington 593, 204, conformity limitations. Price control 'unconstitutional arbitrary, discriminatory, demonstrably irrelevant policy legislature free Nebbia People York, 291 502, 539, 54 505, 517, 78 940. 'coincides' standards, 586, zone reasonableness attacked confiscatory. Accordingly, can calculation takes reconcile. suggest computed never confiscatory; hold 'balanc(e) investor interests,' constitutionally permissible. 603, additional remains. urged, certain decisions suggested, jointly area, members must, proffered opportunities withdraw activity seek rates.34 situation imperative, arrangements now them inadequate. 25 'appropriate relief' establishes 'out-of-pocket expenses connection operation well' well 226. did operating calculations.35 given, enumerate them. emphasized, inability recover unsuccessful full not, more, warrant many situations authorize abandonment 7(b), 717f(b),36 exception propriety exception, stay pending disposition 26 description intentions vague. 'guidelines followed aggrieved permit heard promptly general claim exemption decided.' F.2d, 30. agree. doubtless desirable provided, quickly prudent, precise summary conditions relief, delay guidelines drawn. quite reasonably exceptional developed experience lengthens. avowedly still uncertain ultimate consequences; later find significant modification.37 guarantees inadequate excessively imprecise. 27 Nor reason suppose expeditiously evaluated; assurance 'disposed possible.'38 If appears impermissibly dilatory, then reconsidered. 28 Furthermore, supplement permitting unprofitable urge source disregarded, conditional assent. enough present allowed abandonment,39 will, here. Indeed, already 'exceptional situations' facilities detrimental consumers, impermissible 7(b). F.P.C., agree abused discretion refusal stay, pro tanto, evidently automatically issue seeks plainly inconsistent established party ordinarily irreparable injury. Virginia Jobbers Assn. 104 U.S.App.D.C. 106, 259 921, 925. issuance motion 'modify aside, whole part' matter discretion. 19(a), (c), 717r(a), (c). believe abuse deny order. There inappropriate; minimum, entitled give careful substantiality structure. bind inflexible obligation; assume stays appropriate, authority. 30 indicated, infirmity 31 consider next claims important whether, absence deficiency, reversal below offer principal contentions question. emphasize uniformly employs singular describe requirements; 4(a), example, received 'any natural-gas company' reasonable. urged draftsman's choice indicates individually evidence own position. infer so much little; see phrase severally producer. 32 Reliance sentence Report House Committee Interstate Foreign Commerce, 1937 recommended passage remarked 'bill along standardized lines.' H.R.Rep. 709, 75th Cong., 1st Sess., 3. added bill's nothing 'novel.' statements inconclusive, particularly since, aware, even 1937. 77, 67th 10—11; 456, 66th 29—30. 33 opinions inconsistency failure majority reasoning Jackson's impliedly force. Commission; result reached employed.' 287; 743. reject repudiated instead suggestion regulatory formulae. rely dictum 'under price-fixing statutes 1938 fixing persons companies.' 648. imprecise, controlling. construction obliquely Bowles, decide cursory dicta inserted unrelated cases. Whatever dictum's meaning, regard decisive 1275. 35 are, moreover, factors persuasively create, over commerce, 'an regulating wholesale distribution service companies moving interstate'; Illinois Central Service 314 498, 506, 384, 387, 371; interests.' width conferred; see, Piedmont Northern Commerce 286 299, 541, 1115; Phelps Dodge National Labor Relations Board, 313 177, 193—194, 61 845, 852, 85 1271; Broadcasting 319 190, 63 997, 1344; American Trucking Assns. 344 298, 311, 73 315, 97 337. Surely demand generous authority.40 36 Such view taken 'legislative implied necessarily extends entire process, embracing used reaching itself.' Angeles Railroad Comm'n, 289 287, 304, 53 637, 643, 77 1180. And Land Town Jasper, 189 439, 446, 571, 574, 47 follows bound single formula; otherwise indicates, 'to pragmatic called circumstances.' 37 unwilling, presented, depart principles. asserted, history confirmed, achievement easily depend contrivance expeditious methods. believes elements '(C)onsiderations feasibility practicality certainly germane' us. cannot, conclude achieve effectiveness acted. 38 promulgation period expired, continuing effect. final increases become invalidation upheld. Brief 69, n. 44. 39 turns 4(d)41 modification schedules except days' notice When receives notice, 4(e),42 complaint motion, suspend schedule five months. suspension conduct hearings lawfulness end orders issued, becomes effective, obligation. 5(a)43 permits distributing company, reasonable, prescribe thereafter observed force investigatory powers change 40 Certain preclude moratoria 4(d). assert limited 4(e); creates unrestricted right changes, 4(e), suspended longer accepted, follow terminate disregarded months promulgation. result, observed, signal beginning next, consumers always away.' 228. construe restrictively. Nothing imposes determinations it; section 4(e) 'invincible six-month liability.' Imp. Callery Properties, 382 223, 232, 360, 366, 284 (opinion concurring dissenting part). rates; 'change proper say made.' Pipe Line Mobile Corp., 332, 339, 373, 378, 373. (Emphasis original.) restrict 5(a); preserve retroactively forbidding change; 'scope (under 5(a)) remain same 379. 42 deficiencies illustrated permanent certifications conditioned, remand, specified ceiling. At 7(e) suggests narrow. adopted, forced uncomfortable precluded provisional in-line price, formal adjudication, deliberation, enervation destruction compelling Congress' intention, unwilling action agency's purposes. here, remains been, foreseeably remain, 'remarkably steady';44 1/2 years, 'modification original docket,'45 orderly satisfactorily assure protection rights. Individual prevented seeking motions termination moratorium. case recourse face changing unchanging apparent stability costs, relative inexperience concurrent proceedings, arrangement impermissible. attempt filings; particular, intimate views costs. await clarification necessities circumstances. brief 45 collateral considered. prohibiting products varieties clauses. Unlike proscription time. most-favored-nation, spiral escalation, redetermination clauses46 1961 forbade executed April 3, 1961;47 limitation date earlier reasoned, examiner, breach implementation 'in accordance principles based.' 236. 46 Indefinite 'cause occur reference economics operation, solely happens another contract.' evidence48 design function 'incompatible interest Order 379, 380. 1962 Texaco, Inc., 377 33, 84 1105, 112. mistaken; ruge acted inconsistently Pure 383, wrongly invalidated contracts. declare unenforceable lacked severability provisions, strike 'familiar law,' destroy contracts; feared 'many times' prejudicial 388—389. error avoided Oil. rejoins stricken clauses; Alternatively, avers frustrated, neither nor suffer, as, than, 48 think rule, practice, affecting (any) unjust, unduly preferential *,' 'rule, premised private contracting, plenary proscribe contravene relevant occasion result; authorities due adapt rules policies demands Ass'n A., 397, 416, 1608, 1618. K. Davis, Administrative Law Treatise 18.09, 610 (1958). purposes, consequences, any, reaches; permissibly restricted 49 considered creation smaller difficulties differ larger integrated producer-distributors; differences importance.49 limited, activities characteristically financially hazardous.50 drill disproportionately large exploratory wells, little occurred.51 contribution search significant, correspondingly record reasons, suffered percentages dry production.52 time, minor share total production, closely producers.53 carefully improperly streamline process strengthen position.54 forms relief: first, released requirement price;55 relieve obligations. de minimis; measurably expenses.56 51 recognize language qualification, noted empowered, regulations, 'classify matters different classes matters.' 16, 717o. problems functions sufficiently classification, responsibilities. relevance expressed belief similar ameliorate difficulties. Hunt, 376 515, 527, 861, 868, 878. having area. contended argument size composition considering contention. designation stemmed Policy, September 28, intention prices; purpose, areas. areas, 'not complete accord economic factors,' 'convenient known.' 819. 'experience factors' require, prepared alter eliminate inequities. December 23, institution proceeding, merged separately Policy. unequivocally 'no useful served delaying discharge our primary responsibility entertaining delineated ratemaking purposes.' 1122. conducted, taken, inclusion 55 doubt situations, definition boundaries among might, influenced omission producers; loss retention differential success marginal complicate relating convenient familiar. us, alleged, Basin, defined fit practice regulation.57 confronted extraordinary variety impression; preferred simplify, far possible, amiss note Area Rate Proceeding (Hugoton-Anadarko Area), 888, 891. adequate request, interested obliged, case, include disputed 57 violate accordingly raised respecting IV. 58 delineate criteria structure.58 reiterate breadth complexity opportunity formulate practical overturned arbitrary result.' 743; yet generally standards evaluation orders,59 nonetheless, discriminating justice arbitrariness sensibly appraise inquiring equity owner (is) commensurate investments enterprises corresponding risks,' 'sufficient confidence integrity enterprise, maintain credit attract capital.' compare Missouri ex rel. Southwestern Bell Tel. Serv. Comm., 262 290—292, 544, 547—548, 981 (dissenting But Edgerton, Value Factor Making, Harv.L.Rev. 516. criteria, suitably modified pertinent, scarcely exhaust considerations. 59 confine inquiries computation conjectures about prospective responses capital market; step Congress. 'end result'60 protect 'maintain 60 three. viewed light facts duties, manner itself selected, order's evidence. Third, integrity, capital, fairly compensate investors assumed, interests, foreseeable. court's supplant balance nearly liking, factors. Judicial efficaciously which, chosen act, assessment future development juncture weight unusual proceeding; significantly lessen presented criteria. contention field, contract, accurate index requirements, mechanism supports competition 'lowest maintenance Atlantic Rfg. 360 388, 79 1246, 1253, 1312. recent years steadily increased.61 inelastic supply steeply rising demand; symptomatic market Producers' past clauses, leadership few producers,62 unwillingness pipelines bargain vigorously prices,63 unconnected obtained. imperfections, operative 'essentially monopsonistic environment,'64 accentuated sharply demand. Once others.65 against alternative energy few, California, increases.66 complete, bond charges.' 1253. hold, suggested,67 5(a). records subsequent clearly adequately interests.68 record, compelled basis computations Under structure, moment market, produced. simultaneously offering identical content, 65 two. 4(a) 'somebody's idea 'rate base,"69 results satisfactory exploration, productions. 66 according oil unimportant by-product. one-seventeenth 322. independently produced; effectively regulations conservation oil. examiner 'almost perfectly inelastic.' 323. hand, oil, restrictions reservoirs; cumulative drilling least direct gas.70 gaswell elastic, meaningfully incentive.71 Correspondingly, low incentive, plus return, confer windfalls. dual arrangement. 742. zone, functionally purposes; probable level forbids sales, distinctions quality, 'necessary carry Act.' 'just reasonable' simultaneous contemplated 69 future, present, found, differentials 70 symmetry program marred. 1961. how encourage, retrospectively, occurred. Commissioner Ross' logic system.72 71 constrained expectations 7.73 fairness satisfy, part, expectations. unexpected downward revision filings, accompanying diminished perhaps threatened gas.74 gave attention possibility. 188. authority.75 72 justified reliance functional pricing; suggested differential, levels turn, directly service, noncost expects product computed, additives components. temporary freeze Basin.76 hereafter formulae intends proceed, Provided 'formula formulas' wishes, moratorium, national, because, and, 'much, most, information'77 available 'vary 191. used, current guarantee obtain sources. uniform accounts, information. Many nationally statistics;78 questionnaires completed found.' 75 components back-trending. staff, offered comprehensive methods, using back-trended check staff's presentation. profits minimized data. staff submitted 75% 85% some two-thirds 15.3% 1960.79 calculating differing bases periods, selections pricing. tenable aspect old thereby disregarding explanation pragmatic. casinghead residue administratively regarded toward simplified realistic regulation.' F.P., 211. suport apportionment commodities, intrinsically unreliable.80 true apportioned, severe.81 was, great importance higher, realistically discounted, gas.82 considerations warranted imposed, historic 81 base. differed authorities. declining base net applied constant return. depletes average, capital-recovery cost, depletion, depreciation, amortization, 3.95¢ Allowing lag 43.45¢ multiplying figure 82 argue postponing discounting value; peculiarly discretion, while favorable formulae, unreasonable. assessed comparable-earnings standard. standard, earnings 'equal being country business undertakings attended uncertainties.' Bluefield Water Works Improvement 679, 692, 675, 1176; employed,83 comparable manifestly relied comparison pipelines. 6.0 6.5% yield 12%.84 long-term debt pipelines,85 somewhat transmission.86 risk reflected earned assurance, nine 12.4% investment.87 statistical 'heavy decisional process.' 203. balance, quality. likely producers') (their) 605, 289. distributors believe, industry.88 Certainly, show below, appraisal standards.89 specific standards.90 ruled fails maximum; parties, maximum.91 conceded estimates. character-istically urge, doubly erroneous. treats evades necessity adjustments. reduces unascertainable 12%, prevents sufficiency. suggestions unpersuasive. treat recalled unable reductions, suggested. method, requiring discrete transaction. findings, event, broad, 89 estimated 0.7¢ 1.5¢ plant liquids.92 adequate. previous experience. be, instance, dimension uncertainty created. Despite range result. confirmed events.93 accompanied consequences. 90 unfortunate omission, conclusions. appear, counsel estimated, 'on quality' 'as little' equity.94 figures presumably liquids. Even adjusted, apparently slightly customarily quantities small. Nevertheless, contained industry's continue capital. several places clarified,95 satisfied burden' decisions.96 V. segments argued average; denied development. Related troubled Appeals. Hope, skill scales. sustain, above, contentions. 92 Three pertinent. adequacy assessed. underestimated exploration. averaged 93 findings. perceive obligation Court, apparatus absolute dollar amounts, proffers detailed implications 345—347, 1596—1598, As show, ambiguities concern faulted imprecision reductions. assessed, incorporated factors; rides horses way knowing outcome race.' 34. exposition drawn, appropriately costs.97 Cost supposed, race other; harnessed side side. oblige values imperfectly costs; excluded immaterial projected protection. points factors, authority.98 issues.99 95 assertion ratio recoverable dangerously declined,100 jeopardize additions unsatisfactorily low,101 significance.102 minimal ratio.103 suggest, Commission,104 continuously relationship bench-mark future. discounted inadequacy 96 adjustment, equal 12.72¢ Mcf.105 contend deductions, abrogation cause (12.72¢ adjustments) Mcf, assertedly increasing placing inadequacies several. neglects understand infelicities opinion,106 13.0¢ 13.8¢, Mcf.107 reduced, above-ceiling past, synonymous; latter applicable. fidelity revenue. substantially gas;108 latter. formally receive payments liquid hydrocarbons extracted during gas.109 receipts, disregards altogether revenue.110 20% controlled Spraberry contracts, paid liquids processed gas.111 Much governed contracts.112 sources, 'substantial.' 99 ignored limits abrogate 'low adversely interest—-as impair ability cast burden, discriminatory.' 372. enough, fair return; absent injury interest, 'its improvident bargain.' 'are material respects equivalent 353, 371. Tennessee Transmission 371 145, 153, 211, 215, 199. rates.113 judgment. forbidden consider, reasonableness, Within supply, groups simply offset bargains 101 agreements voluntarily companies; contemplates unequivocal necessity. obliquely, evaluate structures. centers problems, lengthens, efficaciously. shown rates.114 VI. 102 objections determinations, derived. decided Great 343 562, 985, 994, 1142; Seaboard Air 154, 157, 277, 278, 223; persuasive reach remaining issues. Almost eight elapsed proceedings; convinced successfully terminated. briefed lenght Court; very again. 103 parallel 1585. 'presentation discussion constituted dominant hearings, thoroughly explored contested factual accounting complex peculiarities railroad Our foundation expert judgment.' 356, 1602. here; there, legal findings115 VII. Lastly, Two categories charged 1965, 243. 7% refunds.116 4(e). arise schedules. proceeding.117 Refunds 105 33. deficiency.' 36. corollary bring revenues; excess. apportion 106 course positions, orders; offers rigorously focus significance, modify incidents, unlawful; empowered refund. warrant, orders, authority; constricted fashion 107 procedure locked-in rates.118 begin reopen completely Phillips' service.' 1009. periods. urge,119 refunds; refusal, pursue burdensome 623; 306, 15, 1273. 108 conditioned accede benefiting improvident. prudent competitors escape concededly unlawful prices.120 authority.121 109 leave adduce denied, affirmed reversed herein opinion. 110 ordered. 111 Judgments remanded. 112 MARSHALL took 113 DOUGLAS, dissenting. 114 What today reconciled 333. said, determining 115 (1) 'it controlling'; (2) theory impact counts'; 117 (3) 'If 118 challenged based averages.1 risks, returns, known. 119 'result reached' 120 'impact order' 121 effect' 122 aggrieved, apply resort know govern applies respect, mouthing mere words when reasonable.' knowledge, possibly though be. 123 Jackson authorized center 'which eye typical field.' 652, 311. approach, saying 'only conventional 616, 294. 124 Group course, novel. times authorized. Aviation 1958, 1002(e), 789, 1482(e), it. Passenger-Fare Investigation, C.A.B. 291. War Power, extensive sustained. 517—519, 648 undertaken it, revealed Revenue amended, 15(3). 'typical character, quantity, justify respect division carrier.' 196—197, 275. words, fixed charges protected. charges. 607, 753, 1037 (concurring With I why sanctioned undertook averages; typicality nature averages.2 averages typical. Brandeis leading 'averages apt misleading' substitute evidence.' 291, 570. Cf. Motors FTC, 384 247, 251 259, 260—262 (C.A.6th Cir. 1967). 125 median. context, cost' up close resemblance' comes 'essential point considered.' Borden 370 460, 469, 1309, 1314. 126 compiled industry-wide representative. 127 questionnaire 'fairly ending 1960' (34 159, 213) '(t)he test 'representative' 'typical' dealt time—i.e., developing presentation deemed year. 128 professes 'representative.' Ante, 802-803, 79. plucked interpretation. 129 (representing area) responded Appendix B agreed Examiner costs,' exclusion C minimis 214. 130 statement found' read representative.' fact 'recognized, sources,' 'well-recognized authoritative,' mean averages. 131 'averages' 'misleading.' An indeed 132 invested gas.' 343. 'Production costs' 'capital invested' arrive 5.21¢ 197, 204. 'production successful lease acquisition facilities. likewise 197—198, 295, 377—382. 133 capita income Middle East kingdom $1,800 man—or family—gets money, describes mythical resident country. 134 average-cost whatever reality 135 varying year, $1 Another's 5¢ Does 52.5¢ or, indeed, producer, stable years? 136 lead done rational way. 137 Averages us Alice Wonderland. That 138 allow granted. based. 180. 139 inefficient survive. Hegeman Farms Baldwin, 293 163, 170—171, 9, 259. 140 assumes, business. abandon approval. 385 83, 265, 181. 141 says able cover out-of-pocket expenses. Do development, overhead? (375 30); not. remand get authorizes rate-making, disregard basic patterned 'conventional rate-making' (FPC 294) providing 'any' Beyond producer; beyond community individual. thrust reaches analysis disables doing duty review. 142 move 143 impossible represent 144 compounded purported therefrom, leases. therefrom Yet remove hydrocarbons. expertise 'facts' desired 145 Upward adjustment 1,000. 'energy purchasing.' 223. 146 mind 147 contains grains hydrogen sulphide 200 sulphur Mcf; 148 .009 pound water; 149 3% volume carbon dioxide; 150 (4) pressure 500 pounds square inch. 151 met, ceiling 152 90% prescribed. convert record. Perhaps deficiency almost afterthought clear, advance deal competent guess Hope. 153 approves labeled seem irrelevant. semantics concerned. 154 Any unknown risk. excuse solicit proffer concerning converting labeling 'risk.' point. 31—32, O'Connor his denial that: 'To bury overlook cent allowance: 10—12 risky operations transmission 1081. And, commentator observed: 155 'The quality—a clever avoiding discount problem. Since discounts 'risks' involved. novel doctrine, incorrect.'3 156 concedes lack omission.' 812. proceeds scratch deductions.4 correct remanding 157 Behind veneer unstated premise task leeway. bounds, concerned, passed guesswork substituted avoid 'costs' convenience calling 'risks,' happen meet 'average' specifications. 158 framework illustrate, problem returned responsible action. promote irresponsibility fiat Mexico located, codes.5 portion taxes goes school funds. 'public interest' 717(a) pricing disastrous threefold ensure use: 160 'First, needed constitute supply. Secondly, elicit development.' 161 continued uneconomical so-called 'stripper fields': 162 'Although daily fields low, combined nevertheless considerable percentage forever lost plug reasons.' 163 entertain 18) foreclosing involve 1035, giving decided. meant 1(b) gathering Wellhead case. abuses overreaching companies. said: 165 let stockholders feast states crumbs table, redesigned. project raises go province.' 614, 293. 166 Now put control, considered, appraised, weighed ingredient influences States' 689—690, 802—803 opinion).6 167 encourage' 760. weighed, contrary mandate pass hands. 168 merits know. complicated. seems plants primarily (about 80%) extract chances flared too low. purchase long gathering, processing, marketing extraction liquids, processor sell flare equipment purify salable, prohibitive. Conceivably, influence deciding install procedures salable extracted. processors maintaining equipment. 169 willing gather extracted, payment critical keeping termed 'marginal.' 170 posture developed. reason, subjected supremacy, promise 'Whenever hearing State, municipality, commission, charge, classification demanded, charged, transportation preferential, force, fix 1(b), 717(b), 'provisions chapter resale consumption domestic, commercial, industrial, shall, convenience, 'jurisdictional' 'interstate' commencing Texas Districts 7—C 8, counties Lea, Eddy, Chaves. AR61—1, 1121, 1125. 336 Hearings October 11, closed 1963. transcript 30,000 pages. 17, 1964. days argument, August 1965. 4, Independent engage markets (are) affiliated company.' 795. Columbian Fuel 200. Billings 288; Fin-Ker Production 92; 98. 717c(a), 'All made, pertaining charges, charge hereby unlawful.' 537, 542. 'most rates' publicly privately owned utilities. Bonbright, Principles Utility Rates (1961). primary, sole, distinguishing feature enterprise technology inevitably leads partial monopoly 10. Sunray Mid-Continent 364 137, 160, 1392, 1405, 1623 3,372 file; 11,091 33,231 supplements opinion, 570 3,278 awaiting decisions. 545. listings Sales Companies 1963, (1965). 'if immediately tripled, employees have, status work 2043 A.D.—eighty-two half now.' 546. plan announce lawful,' matter, law.' 547. Landis, Regulatory Agencies President-Elect, printed Senate Judiciary, 86th 2d 54. Contrast Theoretical Practical Considerations Reference Gas, 13th Inst. 401, 406 (1962). 542—548. 547; 61—1, 818. Area) AR64—1, 1354, 1359 Ross). stages These, jurisdiction. 14—15. 548. appear broadly consistent, (its) practices Nation's needs volatile, economy.' 1618, 847. increased 'prices virtue contracts.' 16¢ 11¢ filings. 'gas reservoirs condensate reservoirs, wells.' category reservoir production.' 23. Residue id., variously classified, descriptive names briefly explained. Casinghead name conjunction oil.' 208. raw stream form vapor droplets.' 210. Associated '(f)ree immediate contact, solution, crude reservoir.' Association, 1966 Facts 246 (1966). Dissolved Oil-well encompasses associated, dissolved, usage, 'old' 'flowing' 212, 31. Joint M. Adelman, following: 'Products 'truly joint' proportions. Truly variable vary (as total) output (fixed combination) products.' F. Machlup, Economics Sellers' Competition (1952). 354—357. jointly, common, petroleum, evidently, permissibly, connected uncomplicated. 214—215, 339. Btu, British thermal unit, heat temperature water degree Fahrenheit temperature. Tabular summaries Based royalty taxes, 23.24¢ 15.39¢ 357. Similar tables summarizing 192, 220. counties. 1074. 717c(d), '(u)nless thereto, thirty public.' (initial presiding examiner). consolidation attendant obligations, positions. companies, amici, authorities, Mexico, entirety. 'consumers . waited enough,' proceedings.' City County Francisco 24. below; others challenge portions below. join, oppose, position; want comment organization counsel. remark clarity consolidate argumentation behalf views. '(w)e inherent judgment, backed sound reasoning, cost-of-service feasible hopes approach solution.' 1275 (note omitted). '(o)ut-of-pocket include.' definition, fatal omission. 717f(b), '(n)o rendered means facilities, permission obtained, hearing, extent continuance unwarranted, abandonment.' Ross 1359—1362 amalgamation' Hugoton-Anadarko Gulf Coast 'identical record.' Initial Staff Proceedings AR64—1 AR64—2, 1. steps 227. Transcontinental 584. assistance 16; 'shall acts, rules, this' 29, 717c(e), '(w)henever filed authority, initiative enter service; thereon, defer effect; effect, thereto initiated effective. expiration Where furnish completion decision, justified.' 230. elsewhere definitions types 383. Two-party most-favored-nation 'activated supplier purchaser.' Three-party Spiral 'that event buyer increased, concurrently proportion buyer's increase.' Redetermination currently highest buyers suppliers conditions.' 242, CER 154.93. 242 'have laboring,' 'flood filings' 'bear them.' 340. 1858—1859. 'selling jurisdictionally annually nationwide 235. testimony witness Abel, 339—342. 250 leaving 2,000 1—6 'basic materially each.' 360. 318—319, 328—332. discussed length Royalty Owners 1655—1714, 1773—1787; 224—232, 255. Supplement 3s—6s. 'relatively hole expenses, geological geophysical expenditures'; amortization 361. 'ratios cash dividends, working 7.8, 2.5, 7.4 weighted average.' 1114—1116. 15% 'they usually producers.' 234. 363. market. '(f)ewer 50' 87% exemptions; ignore priced discussions traced 1692—1714. 233. 0.14¢ participant disputes 197. 1.,164¢ Of total, 0.039¢ administration, 0.809¢ delay, 0.316¢ contingencies. Gerwig, Production: Study Costs Regulation, Econ. 85, 86, 88. local, natuional adjacent presented. 37—41; 15e. 242—244. summarized 759—764. Economists candid Social welfare unique extreme vagueness verbal norm.' 27. Similarly, writer 'whose command purports yardstick sole socially distinguished adverse 216, 1009, 1344. substance contrasted unfavorably 'fair relationship' 1074; phrases references isolated 2.8¢ 1947 risen 9.0¢ 1954, 13.8¢ EL Paso, renegotiated ranging 17¢ 182. pointed trebled, 4.95¢ 15.61¢ 312. 423—432. one-half Fifteen accounted three-fourths Memorandum 1775, 1780. Analysis Producer Schedules, 275e—293e. distributor Kahn 410—432. He notes significance sluggishly responding supply,' 423, emphasizes imperfections. purchasing activity, Paso characterized overriding blocks uncommitted accomplish objective ever prices.' noteworthy active 1384—1388. O'Connor's. 252 issue). wider Monopsony term factor dominated Robinson, Imperfect 215 (1933). reserves. 410. usefulness model Bon-bright, 108. restricting use. Some consumed California. 174, residential once purchased equipment, inelastic. 313. industrial responsive California fuels parts 313—314. explicitly negotiated element decision.' economists sometimes works 'There competitively determined.' 39. Neuner, Industry 125—134, 238—290 (1960). Professor 'few industries economy insulated normal forces market.' 607. 217—218, 280—281. Hooley, Financing 5—25 Colorado 324 581, 612, 843, 1206 predict unassociated 325—329. accumulated experience, improvement technology. 558, 581; 56, 307 308. Useful predictability testimony. 952—955, 963, 965—967, 1079 1080. 572e—575e. sought. 933—934. Estimates directional varied; testified 1959, calculation. 56. 273. contrast Kahn, arbitrary' 635. 820. recognition 'economic factors.' Gerwig premium 1.16 rationally 85. Kitch, Cases Determination Price, U.Pa.L.Rev. 191, 207. Johnson, Certification Proceedings: CATCO Context, Col.L.Rev. 773, 784, 61. Foster, 142—144. preference convenience. 510—513, 576—585, 601—611, restraints Economic Issues Regulating Field Am.Econ.Rev. 510—514. 211—212. 339—340. list information, Appendix, 291—305, 309—310. sources.' 292. authoritative.' questionnaires, components, 377, 380, 381, 392, 393. sets used. version B, concluded, 1117—1118. addition 214, 392—393, 400. 'change(d) results.' one, completed. 731—748; 753—761. reasonably, 'proceed 'evidence quantity' 803, quoting 275—276, 605. objection. discussion, 393—400. repetitive pungency. laborious purporting divide (such) 'nonsense stilts,' famous predicting banana crop correlation expenditures Royal Navy.' 25. 25, 21; Eckstein, Patterns Harv.Bus.Rev. 126, 129—133; 510 514. By estimate, non-associated 45% separate, 31% joint, 24% common. joint. 202. 1072. None representatives 'long delays' 6; 24; 63. petition participated intervenors assuming arguendo foreclosed 19(b), excessive. equals originally representatives. 343, reasonableness' 240—283. method. 1267, 1406—1416. Decision Presiding (Southern Louisiana AR61—2, 30, 1966, 75—85. 201. 343—352. allowances, 144, 16. nonintegrated approximately 12%. debts 'sometimes percent capitalization 345. contrasting 173—177; 614—626. observe leverage borrowings risks. G. Stigler, Capital Return Manufacturing Industries 64, (1963). Hardy, Risk Risk-bearing 37—38 (1931). hazardous transmission. affairs relevant. 203—204. 349—352. 850—936. 62—64. promulgate tacitly refused centering encompassed 1124, desirability inextricably tied separated other.' 69d, 71d. Emphasis 'probably 368. 123—136. inapposite differentials; posited sale. appeared good-faith negotiation measurement 983. witnesses examiner. 1769—1771, 1867—1899, 1907—1908. forcefully unfair 267—268. questions, foot; 1,034 1,042 foot. 1,000, Decision, 180—183. sellers 'liquid pipelines.' 0.6¢ 0.8¢ allowance 0.2¢ stipulation 'substantial payments' 111, infra. 208—209. accepting 0.78¢ 52, 53. 141. 'is fraught foreign transmission,' 'greater return' allowed. note, incidental greatly insurance principle, Nelson, Percentage Depletion Security, reprinted Tax Growth Stability, papers Report, 84th 463, 470 (Comm.Print 1955). Dirlam, Gas: Cost, Conservation, Pricing, 491, 498. 907. 'we clear ourselves rates.' 190. 'there justification cost-determined price.' (non-cost) Basin.' 'non-cost considerations.' Unfortunately, paused reconcile observations non-cost four. explained by, uncomplicated restriction Fourth, cognizant, forceful circular. 195—196; 129—131. computations, compels self-fulfilling prophecies. Detroit, Michigan 260, 230 810, 'has 32.5 1946 18.7 1963 183. totaled 286.5 trillion feet; withdrawals 16.25 feet. 20—34, 76—95, 97—111, 352—360; 459—471. 5—25. '(g)ross aggregated 21.3 feet, Reserves reports 1946.' 5. '(o)ver twenty gross resulted feet nation's During period, 207 feet.' 1967 (1967). discoveries 1946, steep consistent. 319; 97—111. Cram, Introduction Problem Developing Adequate Supplies Legal Foundation, Association 1957 reserves-to-production hypothetical ratio.' (1957). 309—317. ratio. ratios intervenor 'neurotic preoccupation.' Terry, Future Life Industry, 275, 284—285; Netschert, Aspects Supply, 27, 56—68. here,' 'continue 185. figures. 96. 538e. 16.5¢, unadjusted ellipsis entered reading clear. 239. 31, 0.86¢ (Permian makes (which largest 14.5 cents 356—360. stipulation. Spraberry, 'for processes pays pipeline.' so. jurisdiction, properly, contract. 209 largely unexplained. establishment minimis.' 231. selection relying figure. rates: His 369. reconsider effects economies States. examined 607—614, 290—293. 'suggest unmindful drafted ask 'raises pendency 237. issuing certificates, 418. 226—228, 362—364, 284. unnecessary 35—36. resolve court. 355—356, 1601 commencement decision. issue, 'would unending succession covering instituted proceeding.' Orders involving arguments pressed supporting allowance, difficult, 992, incur tax liability percent.' 206. err excluding allowance. recovery regardless prudence. computing 192—193, asserts process. substance. 20, 1/2%. Transcript Record 12, 13—14. rehearing. 717r(b). imposing restored. 6% 7%. 169. 'increased superseded 'effective intervening 'locked-in' retains refundability 1269. 72, 73, 74, Term, 1962, 48—53. 152—153, 215—216, 'last clean rate.' certificate unconditioned resulting herein.' 1074—1075. 375. Given postponement question, regard. sent (Appendices A, C), 458 361 named respondents Appendices inquired covered designed (those 1960). answer Responses (Some represented company.) replies consideration. 213—214. develop study. arranged charts, arraying (e.g., allow- ances, expense costs). Then, computed—i.e., proportional responses. establishing responses, vital information,' ibid., employing cost. 191 turned authoritative (which) utilized Census Bureau's Mineral 1958 (wherever trended data), Chase Manhattan Bank's Annual Survey (a survey trade mailed companies). Various atypical disproportionate 194 196. instance 212—218. 'flowing gas' 208—212. discuss grouping considered—that concentration, symmetry, uniformity 'while individual-company basis, run tend assertion, cites refers existence compared Apart cited stands proposition instability out, representativeness Company, showed spread skewed mean. supplying (see 191) chose fact, accentuated, entering 191—207, arriving noting: 'It data.' discussing versus latter, comparing diversified computed. Company presses strongly, contending wide characteristic se disparity variation basing overall 179); forward construct subdivided arrived groupings possessed characteristics. 1314, 627. returning method; stop subdivision But, stands, findings; lacking 1016. 201 (1967) (footnote record' predicted cite exhibits range. prediction average. misleading representative, equally O'Connor's 1.0¢ 1.7 , bringing pipelines' estimate exhibits, evident opinion; ascertained exhibits. 266. 'does impact.' Examiner's 1¢ admit, defining conforming 'This differentials.' 370. translating 1.5 N.M.Stat.Ann., c. (1953); Vernon's Ann.Tex.Stat.Ann. Art. 6004—6066d 1935, Kansas, Oklahoma, compact Pub.Res. 939. compacting Congress, successive interruption, latest extension 1967, 1969. Pub.L. 90—185, H.R.Doc. 342, (1956).

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