Court Opinion

ID: 9446041
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:44:37.084877+00
Date Added: 2024-06-11T17:30:30.170522
License: Public Domain

BAZELON, Circuit Judge
(concurring in part and dissenting in part).
I agree that the order under review must be vacated for the reason stated in Part I of Judge PRETTYMAN’S opinion. But, from the balance of the opinion, holding the order otherwise proper, I am compelled to dissent.
The Commission’s order, in effect, if not in terms, authorized United unilaterally to abrogate its two contracts with Mississippi, replacing them by new rates *627and conditions — or, at least, to reform the two contracts. My brethren conclude that the Commission had the power to do what it did under § 5(a) of the Natural Gas Act and that it made the findings required by that section to support its action. I agree that § 5 (a) gives the Commission authority “to set aside and modify any rate or contract which it determines, after hearing, to be ‘unjust, unreasonable, unduly discriminatory, or preferential.’ ” United Gas Pipe Line Co. v. Mobile Gas Corp., 1956, 350 U.S. 332, 341, 76 S.Ct. 373, 379, 100 L.Ed. 373. I do not agree, however, that the Commission made the findings necessary to support an exercise of § 5(a) power.
The Supreme Court held in Mobile, supra, that a utility may not, by filing a new rate under § 4 of the Natural Gas Act, unilaterally change a rate to which it has bound itself by contract. The contract rate remains in force until the parties change it by agreement or until the Commission, after hearing under § 5 (a), determines it to be unreasonable. A Commission determination that the unilaterally proposed new rate is a reasonable one does not amount to a determination that the old rate is unreasonable. Federal Power Comm. v. Sierra Pacific Power Co., 1956, 350 U.S. 348, 354-355, 76 S.Ct. 368, 100 L.Ed. 388.1 If the contract rate is to be determined to be illegal, it must be upon a finding, supported by evidence, that the rate adversely affects the public interest — “as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden, or be unduly discriminatory.” Id. 350 U.S. at page 355, 76 S.Ct. at page 372.
Here there are two contract rates. United’s conversion tariff proposed a continuation of a two-rate schedule, but an increase of the rate specified in the earlier of the two contracts. The Commission rejected this proposal and ordered filing of a single rate, higher than the rate of the first contract and higher even than the rate to which United proposed to increase it,2 but lower than the rate of the second contract.
The Commission’s order adopted the examiner’s Initial Decision of July 18, 1955, with a modification to which I shall refer later. That decision, which occupies 111 pages in the joint appendix, culminates in 24 combined “Findings and Conclusions.” In No. 2, the examiner declared that “United’s rates, charges, classifications, and services * * * are subject to the jurisdiction of the Federal Power Commission under the provisions of Section U of the Natural Gas Act.” 3 In No. 17, he found the “just and reasonable” rates to be those earlier agreed upon in the settlement to which Mississippi was not a party, such rates being “the same as made to all other pipe-line customers served from United’s trans*628mission system in the Central Rate Zone.” In No. 19, he said that to have two rates to Mississippi would “constitute the maintenance of an unreasonable difference in rates and charges for the same service at the same delivery point, contrary to the provisions of Section 4 (b) of the Natural Gas Act.” Finally, in No. 20, he declared that “ [compliance with Section 4 of the Natural Gas Act will be effected by the making of a filing by United which will eliminate unjust, unreasonable and unduly discriminatory rates to Mississippi and which will apply to Mississippi the same rates which are now applicable to all its other pipe-line customers served from United’s transmission system in the Central Rate Zone.”
A fair reading of the Initial Decision supports the following observations:
Item 1 — The examiner treated the proceeding before him as one under § 4 to determine the reasonableness of proposed new rates; not one under § 5(a) to determine the reasonableness of existing rates.
Item 2 — He made no findings as to the reasonableness of the existing rates.
Item 3 — He concluded that the proposed rates to Mississippi, to be reasonable, must not be different from the rates to United’s other customers in the same rate zone.
Item 4 — He concluded that maintenance of dual rates to a single customer for the same service at the same point is unreasonable per se.5
Items 1 and 2 above are, in my view, enough to call for reversal of the Order under the decisions in Mobile and Sierra, supra.6 It is true that the Commission, in adopting the examiner’s decision as its own, did seek to bring it within Mobile and Sierra7 by amending Finding No. 2 to cite § 5 of the Natural Gas Act, as well as § 4. This afterthought cannot suffice, however, for the findings which would be necessary to support a § 5 determination are altogether lacking. See Sierra Pacific Power Co. v. Federal Communications Comm., 96 U.S.App.D.C. at page 144, 223 F.2d at page 609.
Even if Items 1 and 2 were not enough to dispose of this case and we were required to address ourselves to the sufficiency of the determinations referred to in Items 3 and 4, I would hold that they do not support the order.
As to Item 3, I think the Supreme Court pointed out clearly enough in Mobile that mere difference in rates between customers is not unreasonable under the Natural Gas Act, as it is under the Interstate Commerce Act. “The Natural Gas Act * * * recognizes the need for private contracts of varying terms and expressly provides for the filing of such contracts as a part of the rate schedules.” 350 U.S. at page 345, 76 S.Ct. at page 381.
Similar considerations, I think, apply to Item 4. If the nature of the industry is such as to cause a gas buyer to make a long-term contract with a pipe-line for his requirements, it seems obvious that the buyer may revise his conception *629of his future requirements and seek to contract for additional gas and the seller, in those circumstances, may ask a higher price under the new contract. There is as little wrong with two contract rates to one customer as with different contract rates to different customers. Any •of these rates may be stricken as unreasonable, if found so to be in a proceeding under § 5(a). But, in neither case are the rates unreasonable %>er se.

. Affirming our decision in Sierra Pacific Power Co. v. Federal Power Comm., 1955, 96 U.S.App.D.C. 140, 223 F.2d 605. We there pointed out, citing Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 1951, 341 U.S. 246, 251, 71 S.Ct. 692, 95 L.Ed. 912, that “fs]ince ‘statutory reasonableness is an abstract quality represented by an area rather than a pinpoint’, the statutory purpose may be satisfied by more than one rate.” 96 U.S.App.D.C. at page 142, 223 F.2d at page 607.

. Mississippi argues that, since § 5(a) forbids the Commission to order a rate increase “unless such increase is in accordance with a new schedule filed by such natural gas company * * the order is invalid with respect to the gas purehased under the first contract. But, as the Supreme Court said in Mobile, “if the Commission, after hearing, determines the contract rate to be so low as to conflict with the public interest, it may under § 5(a) authorize the natural gas company to file a schedule increasing the rate.” 350 U.S. at page 345, 76 S.Ct. at page 381. The order here, instead of authorizing the filing of a new schedule, orders it. Since it is obvious that United wishes to file such a schedule, the use of “order” instead of “authorize” is in this case insignificant. Hence, if the Commission had made a § 5(a) determination to support its order, I would have no difficulty sustaining the order.

. Emphasis supplied throughout.

. The Commission also relies upon the examiner’s Finding and Conclusion No. 13 that all gas delivered by United to Mississippi was commingled before delivery, so that a two-rate system was not feasible. To the extent that this is a finding, rather than a conclusion, it completely ignores the facts that (1) as of the date of the Commission’s order United was in fact delivering gas to Mississippi on a two-rate schedule; and (2) United’s proposal was for a continuation of a two-rate schedule. What metering system was employed by the parties to compute payments does not appear. That there was a system which they considered feasible seems clear.

. I would hold the Commission’s order as ineffective to change the other terms of the contract, referred to in Part III of Judge PRETTYMAN’S opinion, as it is to change the rates.

. Mobile and Sierra had not yet been decided by the Supreme Court when the initial and final decisions in this case were issued. Both cases had, however, been decided by the respective circuit courts of appeals.