Court Opinion

ID: 6923196
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:09:06.808388+00
Date Added: 2024-06-11T16:06:51.523191
License: Public Domain

FAHY, Circuit Judge
(dissenting, with partial concurrence).
I am not able to agree that the order of the Commission terminating the section 4(e)1 and section 5(a)2 proceedings should be affirmed. I think the cases should be remanded to the Commission for decision.
While the Commission advances strong reasons for abandoning cost of service as a method of determining the justness and reasonableness of the rates of independent producers of gas, a careful reading of the Commission’s opinion demonstrates that the Commission’s conclusion that such a method is unworkable follows from a generalized view of the problem of producer rates rather than from the inability of the Commission to utilize the cost of service method in these Phillips cases.
Embarkation upon the area method preferred by the Commission does not necessitate judicial intervention, certainly not at this time; for judicial review must await a Commission order based upon that method. We should not seek to deter the Commission from pursuing such a method in future proceedings, or from using it in any proceedings already initiated along those lines. But it does not follow in my opinion that the Commission should be affirmed in failing to decide the present cases, though it may need to update the record. In the same breath as it were in which it describes the unworkability of the cost of service method the Commission itself accepts that precise method in finding that no refunds are to be required in the section 4(e) proceedings, stating:
“While we have found that the rate base method is not an effective means of regulating the producers’ prices, evidence in this proceeding was presented almost entirely upon the cost basis and, of course, there were no ceiling prices issued by us at the time of the hearing. There was some field price evidence introduced, but if field prices could be employed in arriving at rates for Phillips, the evidence was incomplete and unrepresentative of Phillips’ diverse sales. Therefore we shall proceed on the basis of the evidence adduced in this case to reach conclusions, as reasonable, intelligent and logical as possible even though we know and have herein stated the difficulties inherent in determining a cost of service for Phillips using the rate method. This is clearly a lawful way to determine rates for Phillips as illustrated by the City of Detroit case,11 and under
the present record is the only possible method, and therefore we shall make every effort to reach a result by this means.”
*391The Commission could as well have proceeded, with supplemental data, to decide the question of justness and reasonableness of the rates in the section 4(e) proceedings, and, also, to have determined under section 5(a) the just and reasonable rates to be thereafter observed and enforced.
This view is strongly fortified by the able decision of the Presiding Examiner. After an illuminating analysis of the voluminous record made on a cost of service basis he was able to propose definitive decisions. The record had been made with the cooperation of all parties, Phillips itself affirmatively acquiescing in the position that cost of service was the appropriate basis on which to proceed. Phillips’ position, as the Examiner points out, was that its jurisdictional rates should be determined upon the basis of an overall cost of service.
It is one thing to say, as the Commission does, that the area method should hereafter be adopted, or even adopted in other cases which have not proceeded as far as those before us. It is quite another thing to say that the latter should not be decided under the standards of the Act because the area method was not used in preparing the record. Unless decided Phillips’ challenged rates are left undetermined under the standards of the Act since 1948, and apparently will continue to remain undetermined until some future day when new proceedings, now in an' inchoate status with no end in sight, are concluded. Difficult and complicated as the tasks of the Commission admittedly are I cannot agree after reading the Examiner’s decision or the Commission’s findings that the congressional mandate of section 4(e), which requires that these matters shall be decided “as speedily as possible,” is being complied with, or that the responsibilities of the Commission under the Act are discharged in the situation resulting from the termination order.
These cases need not be treated as if they were ventures initiated in search of an ideal method of regulating the rates of independent gas producers. Having in mind the history of these proceedings, and the primary congressional purpose of consumer protection, it seems to me that decisions on the present record, supplemented as may be found to be reasonably necessary, would be far more likely to approximate fulfillment of the purposes of the Act than are the termination order and the resulting situation.
The Commission says it has a discretion to terminate as well as to initiate; but once it has exercised its discretion to initiate and has pursued the matter to the extent we find here its discretion to terminate is not as broad as was its discretion to initiate. The former becomes limited by the conditions existing at the time of its exercise. Minneapolis Gas Co. v. Federal Power Comm., 111 U.S.App.D.C. 16, 294 F.2d 212. Compare, Eastern Air Lines, Inc. v. Civil Aeronautics Board, 111 U.S.App.D.C. 39, 294 F.2d 235.
The Commission has actually found Phillips’ cost of service on the basis of the record made and has arrived on the same record at a proper rate of return, stating “this is clearly a lawful way to determine rates for Phillips as illustrated by the City of Detroit case, * * * and under the present record is the only possible method * * *." In this manner the Commission has come so close to doing what it says it should not do as to demonstrate that it is able to do what it has failed to do.
The finding of the Commission in the section 4(e) proceedings that there could be no refunds because the cost of service exceeded the revenues on the basis of the data for the 1954 test year, I think does not justify the order terminating all but two of the section 4(e) proceedings, or the Commission’s invitation to Phillips to move to terminate all others which are still pending. The absence of a decision on the issue of justness and reasonableness of rates has the effect of leaving all rates subsequent to 1954 untested under the standards of the Act. Substance is not achieved merely by finding whether or not refunds were due on the basis of the 1954 data. A finding in *392that regard should not be independent of a finding of the just and reasonable rates. The former should follow from the fact that the just and reasonable rates are not exceeded by those in effect.
The decision of these cases under the standards of the Act not only would not preclude the Commission from embarking upon the area method, but it also would not preclude the Commission from correcting or modifying the decision should the area proceeding show such correction or modification to be desirable; nor do I think a decision on the present record, supplemented as may be needed, would preclude the Commission, pending conclusion of an area proceeding, from establishing guides, formulated, however, with the aid of a decision in the present proceedings.
I agree with Judge Prettyman as to the prematurity of the request for action on two section 4(e) proceedings which have not been terminated.

. City of Detroit v. F. B. C., (CADC), 230 F.2d 810, certiorari denied, 352 U.S. 829.

. 52 Stat. 822 (1938), 15 U.S.C. § 717c, 15 U.S.C.A. § 717c (1958).

. 52 Stat. 823 (1938), 15 U.S.C. § 717d, 15 U.S.C.A. § 717d (1958).