permian basin area rate cases argued decided may continental oil et al federal power commission superior oil federal power commission new mexico et al federal power commission sun oil federal power commission et al california et al skelly oil et al hunt oil et al federal power commission pacific gas electric et al skelly oil et al bass et al federal power commission federal power commission skelly oil et al city los angeles skelly oil et al city county san francisco skelly oil et al city san diego skelly oil et al standard oil texas division chevron oil federal power commission mobil oil et al federal power commission following decision phillips petroleum wisconsin holding independent producers natural gas compan ies within meaning natural gas act federal power commission fpc struggled heavy administrative burden attempting determine whether producers rates reasonable examining producer cost service fpc announced begin series proceedings determine maximum producers rates major producing area statement general policy issued fpc asserting authority determine require application throughout producing area maximum rates producers interstate sales tentatively designating certain areas producing units rate regulation three areas consolidated proceeding providing two series area guideline prices initial filings increased rates first area proceeding initiated fpc issued decision devising permian basin area rate structure two area maximum prices one natural gas produced gas wells dedicated interstate commerce january lower price natural gas produced area fpc found price incentive exploration production new gas supplies associated dissolved gas previously committed reserves gas relatively unresponsive price variations fpc use prevailing field prices calculating rates utilized composite cost data published sources producers cost questionnaires establishing national costs finding producing gas gas deriving reasonable rate historical costs gas produced permian basin local historical emphasis uncertainties joint cost allocation made difficult compute cost gas produced association oil fpc found costs gas less incurred producing flowing gas maximum rate includes return producer average production investment based fpc two series cost computations system quality btu adjustments provided following rates determined per mcf including state production taxes texas excluding state production taxes new mexico gas dedicated interstate commerce january per mcf including taxes texas per mcf excluding taxes new mexico flowing gas including gas gas dedicated interstate commerce per mcf minimum gas pipeline quality fpc declared provide special relief hardship cases small producers annual national sales mcf need adjust prices quality btu deficiencies require moratorium january filing prices applicable area maximum use indefinite escalation clauses increase prevailing contract prices area maximum thereafter prohibited refunds required difference amounts collected producers periods subject refund amounts permitted area rate appeals held fpc authority impose maximum area rates sustained stayed enforcement moratorium filings approved system exemption small producers concluded requirements fpc hope natural gas satisfied held fpc properly calculated financial consequences quality btu adjustments made essential findings aggregate revenue precisely indicated circumstances individual producers obtain relief area rates rehearing also held refunds permissible aggregate actual area revenues exceeded aggregate permissible area revenues amount excess apportioned equitable basis held presumption validity attaches exercise fpc expertise overturn judgment undertake heavy burden making convincing showing invalid unjust unreasonable consequences fpc hope natural gas supra pp fpc constitutional statutory authority adopt system area regulation impose supplementary requirements pp area maximum rates determined conformity natural gas act intended balance investor consumer interests constitutionally permissible pp circumstances fpc broad guarantees special relief inadequate excessively imprecise pp fpc abuse discretion refusal stay pro tanto enforcement area rates pending dispositions producers petitions special relief pp area regulation consistent terms act within statutory authority granted fpc carry broad responsibilities pp fpc may act impose moratorium filing proposed rates higher determined reasonable relatively brief moratorium declared exceed abuse fpc authority pp authority fpc permissibly restricted application indefinite escalation clauses pp problems public functions small producers differ sufficiently permit separate classification exemptions created fpc comport terms purposes statutory responsibilities pp regulatory area designated first area proceeding convenient familiar fpc obliged circumstances include among disputed issues questions proper size composition regulatory area pp rate structure devised natural gas produced permian basin exceed fpc authority heavy burden attacking validity rate structure satisfied pp responsibilities reviewing determine whether fpc abused exceeded authority whether order essential elements supported substantial evidence whether order may reasonably expected maintain financial integrity attract needed capital fairly compensate investors risks assumed appropriately protecting relevant public interests existing foreseeable pp field prices may relevance calculation reasonable rates fpc compelled record adopt field prices basis computations area rates pp rate structure permissible act provide useful incentive exploration prevent excessive producer profits thus protect present future consumer interests pp fpc may employ formula combination formulas wishes free make pragmatic adjustments may called particular circumstances long consequences arbitrary unreasonable fpc natural gas pipeline calculating cost data two maximum rates selections differing geographical bases time periods fpc abuse authority selections comported logic system incentive pricing pp fpc use flowing gas cost data calculate rate old gas disregarding costs gas produced association oil essentially pragmatic judgment warranted circumstances pp computation rate base determining average net production investment fpc applied constant rate return within fpc discretion arbitrary unreasonable pp selection proper rate return gas pipeline quality supported substantial evidence rate likely maintain financial integrity attract capital compensate investors risks assumed pp impermissible fpc treat quality adjustments risk production promulgation quality standards accompanied adequate findings revenue consequences pp fpc rate structure shown deny producers revenues consonant reasonable rates pp fpc need provide formal findings absolute dollar amounts revenue revenue requirements enough proffers findings conclusions sufficiently detailed permit reasoned evaluation purposes implications order fpc permissibly discounted producers reliance upon relationship gas reserves production establish inadequacy rate structure pp contention since area maximum rates derived average costs without adjustment provide aggregate revenue equal producers aggregate requirements sustained pp fpc authority abrogate existing contract prices depends upon conclusion adversely affect public interest properly applied authority setting minimum area price per mcf declining apply prices less two area maximum rates pp since almost eight years since proceedings commenced remaining issues decided appeals briefed argued length useful purpose served proceedings appeals pp fpc orders requiring refunds amounts charged excess applicable area rates periods following effective date order amounts collected excess area rates previous periods producers prices subject refund within authority reasonably concluded adoption system refunds conditioned findings aggregate area revenues prove inequitable consumers difficult administer effectively pp richard solomon argued cause federal power commission brief solicitor general marshall ralph spritzer richard posner peter schiff leo forquer david bardin alan roth calvin simpson argued cause public utilities commission california malcolm furbush argued cause pacific gas electric john ormasa argued cause pacific lighting gas supply et hayden ames argued cause san diego gas electric support order federal power commission simpson brief public utilities commission california mary moran pajalich furbush ormasa ames brief pacific gas electric et al frederick searls roger arnebergh filed brief city los angeles edward butler thomas filed brief city san diego city county san francisco support order federal power commission bruce merrill argued cause continental oil crawford martin attorney general argued cause state texas boston witt attorney general argued cause state new mexico herbert varner argued cause superior oil robert henderson argued cause hunt oil et al evans attwell argued cause bass et al justin wolf argued cause standard oil texas james armour argued cause mobil oil louis flax argued cause sun oil carroll gilliam oliver stone argued cause amerada petroleum et opposition order federal power commission merrill brief continental oil et al thomas burton cecil cook neal powers lloyd thanhouser martin witt brief state texas et al george cowden first assistant attorney general texas houghton brownlee linward shivers daniel jones assistant attorneys general texas carubbi william cooley special assistant attorney general new mexico varner brief superior oil homer penn murray christian henderson brief hunt oil et al paul hicks donald young attwell brief bass et al drushel wolf brief standard oil texas francis kirkham armour brief mobil oil et al thomas hamill robert haworth william tabb flax brief sun oil phillip endom robert may gilliam stone brief amerada petroleum et al joseph morris edwin nail edward kremer robert wade bernard foster graydon luthey warren sparks martin erck clayton orn joseph diver rowe heard hammond mccorkle william emerson kenneth heady john rebman jerome alper thomas johnson charles mcgee sherman poland richard remmers homer mcewen william tell william slye john snodgrass john davenport filed brief texas independent producers royalty owners association et opposition order federal power commission briefs amici curiae filed louis lefkowitz attorney general new york kent brown morton simons public service commission state new york david mann john holtzinger bertram moll william coleman robert maris william cooper edward kirby james lacey edwin russell barbara suchow john glendening john schmid dale wright associated gas distributors group vincent mcdevitt samuel graff miller philadelphia electric justice harlan delivered opinion cases stem proceedings commenced federal power commission natural gas act stat determine maximum reasonable rates sales interstate commerce natural gas produced permian basin commission conducted extended hearings issued decision prescribed rates provided various ancillary requirements petitions review appeals tenth circuit sustained part set aside part commission orders proceedings began new era regulation natural gas producers granted certiorari consolidated cases briefing extended oral argument reasons follow reverse part affirm part judgments appeals sustain entirety commission orders commission initially sought determine whether producers rates reasonable within meaning examination producer costs service although method widely employed various situations ultimately proved inappropriate regulation independent producers producers natural gas usefully classed public utilities enjoy franchises guaranteed areas service intensely competitive vendors wasting commodity acquired costly often unrewarded search unit costs may rise decline vagaries fortune value public services perform measured quantity character natural gas produce resources expended search commission consumer alike concerned principally producer gets ground puts fpc hope natural gas separate opinion exploration production natural gas thus erratic irregular unpredictable relation investment phase utility business moreover number independent producers jurisdictional sales large administrative burdens placed upon commission individual company standard therefore extremely heavy consequence commission regulation producers sales became increasingly laborious described outstanding example federal government breakdown administrative process commission acknowledged gravity difficulties announced commence series proceedings determine maximum producers rates major producing areas one member commission subsequently described efforts admittedly experimental cases place question validity first proceeding perimeter proceeding drawn commission second phillips decision statement general policy commission phillips asserted possesses statutory authority determine require application throughout producing area maximum rates producers interstate sales averred adoption area maximum rates appreciably reduce administrative difficulties facilitate effective regulation ultimately prove better suited characteristics natural gas industry conclusions reaffirmed commission opinion proceedings statement general policy tentatively designated various geographical areas producing units purposes rate regulation addition commission provided two series area guideline prices expected help determine whether proposed initial rates certificated without price condition whether proposed rate changes accepted suspended commission consolidated three producing areas listed statement general policy purposes proceeding rate structure devised commission permian basin includes two area maximum prices commission provided one area maximum price natural gas produced gas wells dedicated interstate commerce january created second lower area maximum price natural gas produced permian basin commission reasoned may employ price functionally tool encourage discovery production appropriate supplies natural gas found price serve meaningful incentive exploration production gas committed interstate commerce since supplies associated dissolved gas previously committed reserves gas contrast found relatively unresponsive variations price commission expected adoption separate maximum prices provide suitable incentive exploration prevent excessive producer profits commission declined calculate area rates prevailing field prices instead derived maximum reasonable rate new gas composite cost data obtained published sources producers series cost questionnaires information intended combination establish national costs finding producing gas understood reflect variations cost peculiar either permian basin periods prior maximum reasonable rate gas derived chiefly historical costs gas produced permian basin emphasis entirely local historical commission believed uncertainties joint cost allocation made difficult compute accurately cost gas produced association oil held however costs gas greater must surely smaller incurred production flowing gas addition commission stated exigencies administration demanded smallest possible number separate area rates area maximum rates adopted permian basin includes return producer average production investment calculated commission two series cost computations commission assumed purpose production commences one year investment gas wells deplete uniformly totally depleted years rate return selected study returns recently permitted interstate pipelines addition intended take fully account greater financial risks exploration production commission recognized producers hostages good fortune must expect programs exploration frequently prove unsuccessful gas substandard quality found allowances included return uncertainties exploration however paralleled system quality btu adjustments commission held gas less pipeline quality must sold reduced prices provided purpose system quality standards price reduction appropriate sale measured cost processing necessary raise gas pipeline quality costs determined agreement parties sale subject review approval commission commission ultimately indicated accept agreement reflects good faith effort approximate processing costs involved addition commission prescribed gas btu content less per cubic foot must sold price proportionately lower applicable area maximum gas btu content greater per cubic foot may sold price proportionately higher area maximum commission acknowledged aggregate revenue consequences adjustments precisely calculated although opinion denying applications rehearing provided estimates average price reductions necessary commission derived calculations following rates permian basin gas including residue gas dedicated interstate commerce january may sold per mcf including state production taxes texas excluding state production taxes new mexico flowing gas including gas gas dedicated interstate commerce january may sold per mcf including taxes texas per mcf excluding taxes new mexico commission created minimum reasonable rate per mcf gas pipeline quality sold jurisdiction within permian basin found existing contracts included lower rates adversely affect public interest fpc sierra pacific power commission permitted producers file area minimum rate despite existing contractual limitations without consent purchaser commission acknowledged area maximum rates derived composite cost data might individual cases produce hardship declared cases provide special relief emphasized exceptions area rates readily frequently permitted declined indicate detail circumstances relief given rate structure supplemented series ancillary requirements first commission provided various special exemptions producers whose annual jurisdictional sales throughout exceed mcf prices sales relatively small producers need adjusted quality btu deficiencies moreover commission separate order commenced proceeding reduce small producers reporting filing obligations second commission imposed moratorium january upon filings prices excess applicable area maximum rate commission concluded moratorium imperative administrative benefits area proceeding preserved permanently prohibited use indefinite escalation clauses increase prevailing contract prices applicable area maximum rate finally commission announced order require refunds difference amounts individual producers actually collected periods subject refund amounts permissible applicable area rate including necessary quality adjustments small producers although obliged make refunds required take account price reductions quality deficiencies unless wish take advantage upward adjustments price high btu content commission rejected examiner conclusion refunds appropriate aggregate area revenue actually collected exceeds aggregate area revenue permissible applicable area rates held formula prove inequitable purchasers difficult commission administer effectively petitions review appeals tenth circuit held commission authority natural gas act impose maximum area rates upon producers jurisdictional sales sustained stayed enforcement commission moratorium upon filings excess applicable area maximum rate approved commission system exemptions small producers nonetheless concluded commission failed satisfy requirements devised fpc hope natural gas supra held commission properly calculated financial consequences quality btu adjustments made essential findings aggregate revenue indicated appropriate precision circumstances relief area rates may obtained individual producers rehearing also held commission treatment refunds erroneous concluded refunds permissible aggregate actual area revenues exceeded aggregate permissible area revenues amount excess apportioned equitable basis appeals ordered cases remanded commission proceedings consistent opinions ii section natural gas act provides without qualification finding commission facts supported substantial evidence shall conclusive important heretofore emphasized congress entrusted regulation natural gas industry informed judgment commission preferences reviewing courts presumption validity therefore attaches exercise commission expertise overturn commission judgment undertake heavy burden making convincing showing invalid unjust unreasonable consequences fpc hope natural gas supra obliged examine detail commission decision total effect rate order said unjust unreasonable judicial inquiry act end ibid moreover often acknowledged commission required constitution natural gas act adopt reasonable particular rate level rather courts without authority set aside rate selected commission within zone reasonableness fpc natural gas pipeline rule consonant broad responsibilities given commission congress must free within limitations imposed pertinent constitutional statutory commands devise methods regulation capable equitably reconciling diverse conflicting interests premises proceed assess commission orders iii turn first questions commission constitutional statutory authority adopt system area regulation impose various supplementary requirements fundamental whether commission may consistently constitution natural gas act regulate producers interstate sales prescription maximum area rates rather proceedings conducted individual producer basis question left unanswered wisconsin fpc solution requires consideration series interrelated problems plain constitution forbid imposition appropriate circumstances maximum prices upon commercial activities legislative power create price ceilings countries common law prevails customary time immemorial munn illinois exercise regularly approved see tagg bowles willingham constitution prohibit determination rates group class proceedings repeatedly recognized legislatures administrative agencies may calculate rates regulated class without first evaluating separate financial position member class thought sufficient agency representative evidence ample quantity measure appropriate precision financial requirements pertinent parties see tagg supra acker corrick compare new england divisions case abilene new york chicago constitutional objection arises imposition maximum prices merely high cost operators may seriously affected others bowles willingham supra value regulated property reduced consequence regulation fpc hope natural gas supra regulation may consistently constitution limit stringently return recovered investment investors interests provide one variables constitutional calculus reasonableness covington lexington turnpike sandford however plain power regulate power destroy stone farmers loan trust covington lexington turnpike sandford supra maximum rates must calculated regulated class conformity pertinent constitutional limitations price control unconstitutional arbitrary discriminatory demonstrably irrelevant policy legislature free adopt nebbia new york nonetheless reasonable standard natural gas act coincides applicable constitutional standards fpc natural gas pipeline supra rate selected commission broad zone reasonableness permitted act properly attacked confiscatory accordingly constitutional objection commission calculation rates takes fully account various interests congress required reconcile suggest maximum rates computed group geographical area never confiscatory hold rates determined conformity natural gas act intended balanc investor consumer interests constitutionally permissible fpc hope natural gas supra one additional constitutional consideration remains producers urged certain decisions might understood suggested maximum rates jointly determined group area members regulated class must constitution proffered opportunities either withdraw regulated activity seek special relief group rates need determine whether every situation constitutionally imperative arrangements provided commission hold inadequate commission declared producer permitted appropriate relief establishes expenses connection operation particular well exceed revenue well applicable area price indicate operating expenses pertinent calculations commission acknowledged might circumstances relief given declined enumerate emphasized however producer inability recover either unsuccessful exploration costs full return production investment without warrant relief announced many situations authorize abandonment rather exception area maximum price finally commission held burden upon producer establish propriety exception therefore stay enforcement area rates pending disposition individual petitions special relief appeals held arrangements inadequate found commission description intentions vague require commission provide guidelines followed aggrieved producer permit heard promptly stay general rate order claim exemption decided agree doubtless desirable commission provided quickly may prudent precise summary conditions special relief obliged delay area regulation guidelines properly drawn commission quite reasonably believed terms exceptional relief developed experience area regulation lengthens moreover area regulation producer prices avowedly still experimental terms uncertain ultimate consequences entirely possible commission may later find area rate structure permian basin requires significant modification hold circumstances commission broad guarantees special relief inadequate excessively imprecise reason suppose petitions relief expeditiously evaluated commission given assurance disposed promptly possible subsequently appears commission provisions special relief reason impermissibly dilatory question may reconsidered furthermore pertinent commission may supplement provisions special relief permitting abandonment unprofitable activities producers urge source relief must disregarded since entirely conditional upon commission assent enough present purposes commission circumstances allowed abandonment indicated appropriate cases authorize indeed commission already acknowledged exceptional situations abandonment unprofitable facilities prove detrimental consumers thus impermissible finally agree commission abused discretion refusal stay pro tanto enforcement area rates pending disposition producers petitions special relief appeals evidently require commission automatically issue stay time producer seeks relief plainly inconsistent established rule party ordinarily granted stay administrative order without appropriate showing irreparable injury see virginia petroleum jobbers assn fpc moreover issuance stay administrative order pending disposition commission motion modify set aside whole part order matter committed natural gas act commission discretion reason believe cases prove abuse discretion commission deny stay area rate order might many situations stay inappropriate minimum commission entitled give careful consideration substantiality claim relief consequences delay full administration area rate structure therefore decline bind commission inflexible obligation shall assume situations stays prove appropriate properly exercise statutory authority reasons indicated find constitutional infirmity commission adoption area maximum rate system permian basin consider next claims commission exceeded authority given natural gas act first important questions whether despite absence constitutional deficiency area regulation inconsistent terms act producers seek reversal judgments offer three principal contentions question first emphasize act uniformly employs singular describe subject requirements example provides rates received company must reasonable urged draftsman choice number indicates producer rates must individually computed evidence financial position infer much little see draftsman choice phrase act obligations imposed severally upon producer reliance next placed upon one sentence report house committee interstate foreign commerce recommended passage natural gas act committee remarked bill provides regulation along recognized less standardized lines added bill provisions included nothing novel ibid find statements entirely inconclusive particularly since committee doubtless aware regulation group class recognized administrative method even compare tagg supra new england divisions case supra see also finally producers urge two opinions establish inconsistency area regulation natural gas act asserted failure majority adopt reasoning justice jackson separate opinion fpc hope natural gas supra impliedly rejected system regulation selected commission find without force hope emphasized may impose methods regulation upon discretion commission purposes judicial review validity rate order determined result reached method employed see also fpc natural gas pipeline supra reject area regulation repudiated instead suggestion courts may properly require commission employ particular regulatory formula combination formulae producers next rely upon dictum opinion bowles willingham supra remarked statutes natural gas act congress provided fixing rates reasonable application particular persons companies dictum imprecise even agree controlling construction natural gas act even obliquely issue bowles decide important questions law cursory dicta inserted unrelated cases whatever dictum meaning regard decisive compare wisconsin fpc moreover factors indicate persuasively natural gas act understood permit area regulation act intended create exercise national power interstate commerce agency regulating wholesale distribution public service companies natural gas moving interstate illinois gas public service purpose expected balanc investor consumer interests fpc hope natural gas supra repeatedly held width administrative authority must measured part purposes conferred see piedmont northern phelps dodge labor board national broadcasting american trucking assns surely commission broad responsibilities therefore demand generous construction statutory authority construction consistent view administrative rate making uniformly taken said legislative discretion implied rate making power necessarily extends entire legislative process embracing method used reaching legislative determination well determination los angeles gas railroad see san diego land town jasper follows agencies bound service single regulatory formula permitted unless statutory authority otherwise plainly indicates make pragmatic adjustments may called particular circumstances fpc natural gas pipeline supra unwilling circumstances presented depart principles commission asserted history producer regulation confirmed ultimate achievement commission regulatory purposes may easily depend upon contrivance expeditious administrative methods commission believes elements methods may found area proceedings onsiderations feasibility practicality certainly germane issues us bowles willingham supra circumstances conclude congress given authority inadequate achieve reasonable effectiveness purposes acted must consider whether commission exceeded statutory authority promulgation various supplementary requirements first imposition moratorium january upon filings prices excess applicable area maximum rate although period moratorium effective expired order without continuing effect appeals stayed enforcement moratorium final disposition petitions review number rate increases therefore become effective subject invalidation refund moratorium order upheld see brief federal power commission validity moratorium order turns principally upon construction act section provides modification existing rate schedules may made natural gas company except days notice commission commission receives notice permitted upon complaint motion suspend proposed rate schedule period exceed five months commission employ period suspension conduct hearings upon lawfulness proposed rates end suspension period appropriate orders issued proposed rate schedule becomes effective subject refund obligation contrast permits commission upon complaint public agency gas distributing company motion conduct proceedings determine whether existing rates reasonable prescribe rates thereafter observed force investigatory powers conditional upon filing natural gas company proposed change existing rates certain producers urge must combination understood preclude moratoria upon filings assert period effectiveness rate determination limited reason creates unrestricted right file rate changes changes may suspended period longer five months construction accepted follow area proceedings terminate rate limitations disregarded producers five months promulgation result commission observed conclusion one area proceeding signal beginning next reasonable rates consumers always one area proceeding away construe commission statutory authority restrictively nothing imposes limitations time upon effectiveness rate determinations issued rather section provides rates held reasonable observed moreover already declined find invincible right raise prices subject delay refund liability gas callery properties opinion concurring part dissenting part section merely requires notice commission condition modification existing rates provides change made without proper notice commission say circumstances change made gas mobile gas emphasis original restrict commission authority permits commission preserve existing situation pending consideration proposed change rates thereafter issue order retroactively forbidding change scope purpose commission review remain deficiencies producers construction illustrated gas callery properties supra held callery permanent certifications issued may conditioned even upon remand moratorium upon filings rates excess specified ceiling issue conditions imposed prior determination reasonable rates nothing pertinent statutory provisions suggests commission authority narrow indeed producers construction adopted forced uncomfortable result filings may precluded commission relatively summary determination provisional price formal adjudication full deliberation reasonable price consequences construction commission observed enervation effective destruction area regulation absence compelling evidence congress intention unwilling prohibit administrative action imperative achievement agency ultimate purposes found evidence therefore hold commission may restrict filings proposed rates higher determined commission reasonable question remains whether imposition commission moratorium january permissible exercise authority commission found costs gas production recently foreseeably remain remarkably steady reasoned circumstances moratorium years subject modification original decision appropriate proceedings held docket facilitate orderly administration satisfactorily assure protection producers rights individual producers prevented moratorium seeking relief maximum area rates relief possible commission provisions special exemptions motions modification termination moratorium case commission sought bind producers without recourse face changing circumstances unchanging rate structure given apparent stability production costs commission relative inexperience area regulation administrative burdens concurrent area proceedings hold arrangement impermissible need attempt prescribe limitations commission authority impose moratoria upon filings particular intimate views propriety moratoria created circumstances changing costs difficult issues may properly await clarification commission intentions necessities particular circumstances hold relatively brief moratorium circumstances presented exceed abuse commission authority collateral issue statutory authority must considered commission supplemented moratorium prohibiting price increases exceed area maximum rates increases products certain varieties contractual price escalation clauses unlike general moratorium upon filings proscription without limit time commission order applicable spiral escalation redetermination clauses entirely forbade contracts executed april additional limitation provided commission intended restrict use clauses included contracts executed date effectiveness commission earlier orders commission reasoned examiner permit producers breach area maximum rates implementation clauses accordance principles upon rate structure based indefinite escalation clauses cause price increases occur without reference circumstances economics particular operation solely happens another contract substantial evidence design function incompatible public interest order indeed already entirely sustained commission order fpc texaco producers suggest commission mistaken urge instead commission acted inconsistently decision pure oil wrongly invalidated existing contracts commission declined pure oil declare unenforceable escalation clauses included previously executed contracts reasoned since contracts lacked severability provisions strike escalation clauses familiar principles law destroy contracts feared prove many times prejudicial public interest escalation clauses producers assert commission committed error avoided pure oil commission rejoins stricken escalation clauses merely limited application prices higher area maximum rates alternatively commission avers even contracts frustrated neither public producers suffer since producers prices may high higher area maximum think commission exceed abuse authority section provides without qualification exception commission may determine whether rule regulation practice contract affecting rate unjust unreasonable unduly discriminatory preferential prescribe rule regulation practice contract thereafter observed although natural gas act premised upon continuing system private contracting gas mobile gas supra commission plenary authority limit proscribe contractual arrangements contravene relevant public interests compare fpc sierra pacific power may order properly set aside merely commission earlier occasion reached another result administrative authorities must permitted consistently obligations due process adapt rules policies demands changing circumstances compare american trucking see davis administrative law treatise need present purposes calculate collateral consequences commission order may terms validity contracts reaches hold commission permissibly restricted application indefinite escalation clauses next supplementary order considered commission creation various exemptions smaller producers difficulties smaller producers differ emphasis larger independent producers integrated differences without relevant importance although resources small producers ordinarily limited activities characteristically financially hazardous appears drill disproportionately large number exploratory wells frequently areas relatively little exploration previously occurred contribution search new gas reserves therefore significant made correspondingly greater financial risks higher unit costs record commission included evidence reasons small producers regularly suffered higher percentages dry wells higher average costs per mcf production time commission found small producers source minor share total national gas production prices received followed closely obtained larger producers commission reasoned circumstances carefully selected special arrangements small producers improperly increase consumer prices moreover concluded exemptions might usefully streamline administrative process strengthen small producers financial position commission provided two forms special relief first released small producers requirement quality adjustments made price second commenced proceeding intended relieve various filing reporting obligations see commission asserted consequences consumer prices first de minimis expected second measurably reduce small producers regulatory expenses conclude arrangements exceed commission statutory authority recognize language without exception qualification must also noted commission empowered purposes rules regulations classify persons matters within jurisdiction prescribe different requirements different classes persons matters problems public functions small producers differ sufficiently permit separate classification exemptions created commission fully consistent terms purposes statutory responsibilities without relevance previously expressed belief similar arrangements ameliorate commission administrative difficulties see fpc hunt finally consider one additional question certain producers urged adopted system area regulation commission improperly designated permian basin regulatory area contended commission failed provide appropriate opportunities briefing argument questions size composition area must considering rate structure devised permian basin commission examine contention commission designation permian basin regulatory area stemmed statement general policy issued september commission announced intention regulate producers interstate sales imposition maximum area prices provided purpose provisional system guideline prices principal producing areas commission averred areas although necessarily complete accord geographical economic factors convenient well known declared experience changing factors require prepared alter areas eliminate inequities ibid december commission ordered institution proceeding merged three producing areas separately listed statement general policy unequivocally announced useful purpose served time delaying discharge primary responsibility entertaining issues areas delineated might appropriate ratemaking purposes appears hearings conducted evidence taken propriety areas thus designated commission inclusion proceeding doubt significant economic consequences may certain situations result definition boundaries among regulatory areas calculation average costs might example influenced inclusion omission given group producers loss retention price differential regulatory areas might prove decisive success marginal producers nonetheless hold commission abuse statutory authority refusal complicate still first area proceeding inclusion issues relating proper size composition regulatory area must first emphasized regulatory area designated commission evidently convenient familiar evidence us producers alleged permian basin defined commission fit either prevailing industry practice programs state federal regulation moreover commission already confronted extraordinary variety difficult issues first impression quite reasonably preferred simplify far possible proceedings finally amiss note commission evidently recently permitted consideration similar questions area proceedings compare area rate proceeding area assume consistent practice terms statement general policy commission upon adequate request permit interested parties offer evidence argument propriety modification permian basin regulatory area hold commission obliged circumstances case include among disputed issues questions proper size composition regulatory area therefore conclude commission proceedings violate pertinent constitutional limitations adoption system area price regulation supplemented provisions moratorium upon certain price increases exceptions smaller producers abuse exceed authority accordingly turn various questions raised respecting propriety rate structure devised commission permian basin iv commission confine inquires either computation costs service conjectures prospective responses capital market instead obliged step regulatory process assess requirements broad public interests entrusted protection congress accordingly end result commission orders must measured much success protect interests effectiveness maintain credit attract capital follows responsibilities reviewing essentially three first must determine whether commission order viewed light relevant facts commission broad regulatory duties abused exceeded authority second must examine manner commission employed methods regulation selected must decide whether order essential elements supported substantial evidence third must determine whether order may reasonably expected maintain financial integrity attract necessary capital fairly compensative investors risks assumed yet provide appropriate protection relevant public interests existing foreseeable responsibility supplant commission balance interests one nearly liking instead assure commission given reasoned consideration pertinent factors judicial review commission orders therefore function accurately efficaciously commission indicates fully carefully methods purposes chosen act well assessment consequences orders character future development industry addition obliged juncture give weight unusual difficulties first area proceeding must however emphasize weight must significantly lessen commission experience area regulation lengthens shall examine various issues presented rate structure light interrelated criteria first issue whether commission properly rejected producers contention area rates derived field contract prices producers urged prevailing contract prices provide accurate index aggregate revenue requirements appropriate mechanism protection consumer interests record commission however supports conclusion competition expected reduce field prices permian basin lowest possible reasonable rate consistent maintenance adequate service public interest atlantic rfg public service field price natural gas produced permian basin recent years steadily significantly increased increases part products relatively inelastic supply steeply rising demand also symptomatic deficiencies market mechanism permian basin producers contracts past characteristically included indefinite escalation clauses clauses combination price leadership large producers inability unwillingness interstate pipelines bargain vigorously reduced prices created circumstances price increases unconnected changes cost may readily obtained market imperfections operative despite essentially monopsonistic environment accentuated consequences inelastic supply sharply rising demand increase obtained larger producers escalation clauses guaranteed similar increases others contrast consumers left without effective protection steadily rising prices alternative sources energy practice demand natural gas particularly california therefore relatively unresponsive price increases consumer thus obliged rely upon commission provide complete permanent effective bond protection excessive rates charges atlantic rfg public service supra hold commission suggested field prices without relevance commission calculation reasonable rates records subsequent area proceedings may clearly establish market mechanism adequately protect consumer interests hold record commission compelled adopt field prices basis computations area rates next examine commission decision create two maximum area rates permian basin commission rate structure applicable maximum price producer sale determined moment gas first dedicated interstate market method gas produced follows two producers simultaneously offering gas identical quality btu content may confronted different maximum prices premises arrangement two first commission evidently believed price employed functionally tool encourage production appropriate supplies natural gas price thus reasonable within meaning merely somebody idea return rate base results satisfactory programs exploration development production second commission concluded price usefully serve incentive exploration production computed according method gas produced natural gas produced jointly oil necessarily relatively unimportant value gas average oil produced see separately sought independently produced production effectively restricted state regulations intended encourage conservation oil accordingly supply gas examiner observed almost perfectly inelastic hand gas produced independently oil state restrictions oil production important commission found separate search conducted gas reservoirs cumulative drilling experience permits least larger producers direct programs exploration development search gas supply gas therefore relatively elastic price meaningfully employed commission encourage exploration production commission reasoned higher maximum rate gas dedicated interstate commerce approximate moment separate search became widely possible provide effective incentive correspondingly commission adopted relatively low price natural gas produced permian basin since price serve incentive since price average historical costs plus appropriate return merely confer windfalls find objection natural gas act dual arrangement emphasized courts without authority set aside rate adopted commission within zone reasonableness fpc natural gas pipeline supra commission may within zone employ price functionally order achieve relevant regulatory purposes may particular take fully account probable consequences given price level future programs exploration production nothing purposes history act forbids commission require different prices different sales even distinctions unrelated quality arrangements necessary appropriate carry provisions act hold statutory reasonable standard permits commission require differences price simultaneous sales gas identical quality permissibly found differences effectively serve regulatory purposes contemplated congress commission responsibilities include protection future well present consumer interests found basis substantial evidence rate structure provide useful incentive exploration prevent excessive producer profits circumstances objection natural gas act price differentials required commission symmetry commission incentive program however marred commission held higher maximum rate applicable gas committed interstate commerce since january difficult see higher rate reasonably expected encourage retrospectively exploration production already occurred thus force commissioner ross contention arrangement fully consistent logic system nonetheless constrained hold permissible exercise commission discretion commission believed statement general policy issued september created reasonable expectations among producers higher rates thereafter permitted initial filings commission evidently concluded fairness obliged satisfy least part expectations must also recognize unexpected downward revision guideline price initial filings accompanying refunds might seriously diminished producers confidence interstate prices perhaps threatened future interstate supply natural gas assume commission gave attention possibility compare factors provide permissible basis exercise commission authority must next examine methods commission reached two maximum rates created gas produced permian basin commission justified adoption rate structure reliance upon functional pricing suggested two prices appropriate differential may used provide incentive exploration restrict reasonable levels producers profits turn computed two area maximum prices directly costs service without allowances noncost factors price differential commission expects serve incentive product differences time periods geographical areas costs computed noncost additives cost components finally commission adoption moratorium january created temporary price freeze permian basin although expect commission hereafter indicate precisely formulae intends proceed see objection use variety regulatory methods provided together produce arbitrary unreasonable consequences commission may employ formula combination formulas wishes free make pragmatic adjustments may called particular circumstances fpc natural gas pipeline supra already considered commission adoption system moratorium concluded reasonably calculated achieve appropriate regulatory purposes remains examine computation area maximum prices producers costs service commission derived maximum rate new gas composite cost data intended evidence national costs finding producing gas reasoned costs computed national area data first larger producers conduct national programs exploration second much relevant information available national basis held addition costs permian basin vary sufficiently national average warrant different treatment commission found cost data used historical data disregarded relatively current cost data adequately guarantee effective incentive future exploration production commission obliged obtain relevant cost data variety sources natural gas producers yet required adopt uniform system accounts private public agency collected pertinent information many data taken nationally published statistics balance derived questionnaires completed producers commission concluded sources combination provide adequate basis costs found ibid maximum reasonable rate permian basin gas calculated cost data intended reflect historical costs gas produced permian basin examiner computed rate essentially method used new gas certain cost components adjusted commission staff hand offered comprehensive study historical costs service commission adopted methods using examiner cost computations check upon accuracy staff presentation commission reasoned excessive producer profits minimized rate flowing gas derived precise available evidence actual historical costs therefore held costs taken area national data commission staff obtained data necessary computation historical costs questionnaires completed producers information used staff ultimately adopted commission taken questionnaires submitted major producers together account gas produced basin gas nonetheless gas produced permian basin gas sun oil estimates staff gas data thus applicable total production natural gas basin hold commission calculating cost data two maximum rates differing geographical bases time periods abuse authority commission use separate sources data two rates permitted creation price differential without inclusion noncost components selections time periods geographical bases entirely consistent logic system incentive pricing circumstances find tenable objection aspect commission rate structure contended commission impermissibly used flowing gas cost data calculate maximum rate old gas thereby disregarding entirely costs gas produced association oil commission explanation essentially pragmatic reasoned uncertainties joint cost allocation preclude accurate computations cost casinghead residue gas commission averred administratively imperative simplify far possible area rate structure commission regarded adoption single area maximum price gas except new gas residue gas important step toward simplified realistic area price regulation say arrangements impermissible ample support commission judgment apportionment actual costs two jointly produced commodities one regulated commission intrinsically unreliable true certain costs gas must also apportioned commission reasonably concluded difficulties relatively less severe commission addition entitled give great weight administrative importance simplified rate structure finally relevant commission found cost casinghead residue gas higher exploration development costs realistically discounted must surely lower costs flowing gas considerations combination warranted commission judgment single area maximum price gas new gas imposed maximum rate derived entirely historic costs flowing gas turn commission computation proper rate base commission method differed significantly frequently preferred regulatory authorities use declining rate base return instead computed average net production investment applied constant rate return commission assumed purpose gas well depletes uniform rate average totally depleted years found annual cost including depletion depreciation amortization per mcf allowing one year lag investment first production commission obtained average production investment per mcf proper return per mcf calculated multiplying figure rate return producers argue effect postponing revenue thus discounting present value suggest commission properly employed declining investment base return question peculiarly within commission discretion method adopted commission evidently less favorable producers various possible formulae hold arbitrary unreasonable next consider whether rate return adopted commission permissible exercise regulatory authority commission first asserted rates return must assessed standard standard earnings permitted equal generally made time general part country investments business undertakings attended corresponding risks uncertainties bluefield public service fpc hope natural gas supra although standards might properly employed commission decision examine comparable earnings fully consistent prevailing administrative practice manifestly abuse authority commission relied purposes comparison chiefly upon rates return recently permitted interstate pipelines found pipelines given returns net investment yield equity commission noted producers characteristically less debt pipelines financial risks production somewhat greater transmission reasoned differences warranted generous rate return producers addition commission stated risk finding gas less pipeline quality created commission promulgation quality btu standards reflected rate return finally commission sought determine rate return recently earned producers natural gas found accurate rates return calculated assurance although commission staff offered evidence average return nine companies five years net investment commission concluded despite statistical deficiencies similar evidence must given heavy consideration decisional process balance commission selected proper rate return gas pipeline quality think judgment supported substantial evidence exceed abuse commission authority evidence commission fairly suggests rate likely maintain producers financial integrity attract capital compensate investors risks assumed fpc hope natural gas supra distributors public agencies suggested find reason believe return exceed proper requirements industry certainly shall show return comparable characteristically allowed interstate pipelines nonetheless remains one issue essential accurate appraisal return permitted commission commission computation rate return specifically premised part additional financial risks created producers commission promulgation quality btu standards opinion proceedings included series specific quality standards commission ruled gas fails satisfy standards must sold prices lower applicable area maximum amount reduction necessary sale initially determined parties subject review commission natural gas btu content less per cubic foot must sold price proportionately lower applicable area maximum gas btu content per cubic foot may sold price proportionately higher area maximum commission conceded precisely determine revenue consequences adjustments although opinion denying applications rehearing provided various estimates appears conceded quality gas produced basin characteristically lower commission standards standards therefore likely significant might producing areas producers urge appeals held arrangement doubly erroneous first treats risk properly cost thus evades necessity appropriate findings revenue consequences quality adjustments second reduces rate return actually permitted individual producers unascertainable figure less thus prevents accurate appraisal sufficiency find suggestions unpersuasive hold impermissible commission treat quality adjustments risk production must recalled commission first area rate case unable determine precision average amount necessary price reductions thus difficult included costs appeals suggested recognize commission method premised agreement parties sale least advantage requiring discrete accurate adjustments transaction finally shall show treatment adjustments risks production case result inadequate findings prevent proper appraisal rate return permitted commission event commission discretion matters necessarily broad choice said abused discretion commission estimated opinion denying applications rehearing quality adjustments result average price reductions per mcf turn amount adjustments reduced price increases high btu content revenue plant liquids believe circumstances presented estimates adequate commission information existing contracts evidently sufficiently complete permit precise calculations previous experience moreover since adjustments first instance product agreement parties dimension uncertainty necessarily created despite difficulties commission provided reasonably specific estimates range adjustments believed result entitled take notice confirmed subsequent events hold commission promulgation quality standards accompanied adequate findings revenue consequences commission provide specific findings effect revenue adjustments upon producers rate return unfortunate omission preclude evaluation commission conclusions appear counsel commission estimated rate return average quality natural gas sold permian basin might quality adjustments yield little equity figures presumably must adjusted upward sales pipeline quality gas sales gas high btu content revenue plant liquids even adjusted however aggregate return permitted producers apparently exceed slightly customarily allowed pipelines quantities pipeline quality high btu content gas produced permian basin evidently quite small nevertheless record commission contained evidence sufficient establish rates adjusted maintain industry credit continue attract capital although commission position might several places usefully clarified producers satisfied heavy burden placed upon set aside decisions three interrelated questions pertinent first adequacy commission aggregate revenue findings must assessed second must consider producers contentions commission significantly underestimated deficiencies present programs exploration finally must determine whether commission use averaged costs created rate structure unjust unreasonable consequences turn initially adequacy commission revenue findings must emphasized perceive imperative obligation upon commission either natural gas act decisions provide apparatus formal findings terms absolute dollar amounts aggregate revenue aggregate revenue requirements enough commission proffers findings conclusions sufficiently detailed permit reasoned evaluation purposes implications order compare chicago shall show commission revenue findings circumstances proceedings unduly imprecise ambiguities appeals expressed concern two first faulted commission imprecision findings revenue consequences quality btu adjustments already found adequate commission estimates necessary price reductions second stated rate structure accurately assessed since commission incorporated calculations cost noncost factors believed commission decision rides two horses way knowing outcome race find unpersuasive although commission exposition questions might carefully drawn quite appropriately incorporated calculations factors producers costs cost noncost factors appeals supposed race one must harnessed side side commission responsibilities necessarily oblige give continuing attention values may reflected imperfectly producers costs regulatory method excluded immaterial current projected costs properly serve consumer interests placed commission protection already considered points commission given weight noncost factors found judgments consistent terms purposes statutory authority reason return cases commission clarification issues hold commission deficiencies current programs exploration producers argument uniformly premised upon assertion ratio proved recoverable reserves current production accurate index industry financial requirements producers urge ratio dangerously declined conclude reduction prevailing field prices jeopardize essential programs exploration however substantial evidence additions reserves unsatisfactorily low recent variations ratio reserves production quite limited significance nothing record establishes proper even minimal particular ratio suggest commission commission continuously assess level success exploration relationship reserves production useful benchmark industry future hold commission permissibly discounted producers reliance upon relationship establish inadequacy rate structure finally turn contention area maximum rates derived averaged costs therefore without adjustment provide aggregate revenue equal producers aggregate requirements producers support judgments emphasize revenue jurisdictional sales permian basin averaged per mcf contend revenue commission order reduced amount necessary quality deductions refunds loss revenue abrogation contract prices area maximum rates producers conclude commission rate structure necessarily cause revenue deficiencies measured difference actual average revenue less adjustments per mcf rate assertedly found commission reasonable flowing gas urge commission properly obliged balance revenue costs either increasing area minimum rate placing area maximum rates average costs inadequacies reasoning several first neglects important characteristics rate structure understand commission despite certain infelicities opinion hold reasonable rate old gas pipeline quality per mcf less cost processing necessary raise pipeline quality commission net reasonable rate gas therefore per mcf average unit revenue simultaneously reduced producers suggested refunds abrogation field prices past two large part synonymous future latter applicable moreover commission computation area rates intended reflect complete fidelity either producers average costs sources revenue first actual average unit costs casinghead residue gas substantially lower average unit costs flowing gas yet maximum rate associated flowing gas derived entirely latter follows producers net revenues sales casinghead residue gas prove higher return formally permitted commission second producers receive significant payments liquid hydrocarbons extracted pipelines processing gas maximum rate new gas evidently takes account part receipts old gas disregards altogether source additional revenue third gas sold commission jurisdiction permian basin controlled spraberry contracts producers paid liquids processed pipelines gas much gas sold prices applicable area maximum rate governed contracts source revenue incorporated commission calculation maximum rate gas commission unable compute precision revenue obtained producers disparate sources estimated substantial finally producers ignored limits commission statutory authority held federal power act commission may abrogate existing contractual arrangements unless contract price low adversely affect public interest might impair financial ability public utility continue service cast upon consumers excessive burden unduly discriminatory fpc sierra pacific power enough held contract price permits less fair return commission may absent evidence injury public interest relieve regulated company improvident bargain ibid pertinent provisions federal power act material respects substantially identical equivalent provisions natural gas act follows commission without authority abrogate existing contract prices unless first concluded adversely affect public interest see fpc tennessee gas commission found field prices less per mcf consequences declined hold prices less two area maximum rates evidence commission required different result permit set aside commission judgment however necessarily follow commission forbidden consider selected maximum rates within zone reasonableness aggregate revenue deficiencies might result improvident contractual limitations within zone commission permitted give weight consequences upon producers thereby upon supply limitations nonetheless commission permissibly declined make adjustments area rates prevailing contract prices recognized adjustments increase cost natural gas groups consumers order simply offset bargains previously obtained others regulatory system created act premised contractual agreements voluntarily devised regulated companies contemplates abrogation agreements circumstances unequivocal public necessity see gas mobile gas evidence financial difficulties required commission relieve producers even obliquely burdens contractual obligations suggest commission need continuously evaluate revenue consequences area rate structures principal advantage area regulation centers attention upon industry aggregate problems may expect commission experience area regulation lengthens treat important questions precisely efficaciously hold circumstances presented commission rate structure shown deny producers revenues consonant reasonable rates vi moreover circumstances parallel closely chicago said presentation discussion evidence cost issues constituted dominant part lengthy administrative hearings issues thoroughly explored contested commission factual findings treatment accounting problems concerned matters relating entirely special complex peculiarities railroad industry previous description commission disposition matters sufficient show conclusions reasoned foundation within area expert judgment reasoning entirely applicable circumstances presented hold useful purpose served proceedings appeals legal infirmity commission findings vii appeals initially sustained commission refund orders petitions rehearing however held refund obligation may imposed period group revenue deficiency believed essential corollary commission asserted obligation bring balance group costs group revenues permitted commission order refunds periods aggregate revenue found exceed aggregate revenue requirements amount excess commission expected apportion refunds equitable basis ibid find reasoning unpersuasive commission may course examination producers financial positions consider possible refund consequences orders power order refunds limited situations group revenues exceed group revenue requirements area regulation offers expeditious method calculation reasonable rates necessarily rigorously focus commission attention upon producers common problems however lessen significance modify incidents findings specific rate levels reasonable within meaning rate found unjust unreasonable declared unlawful rate subject rate schedule modification commission empowered order refund see warrant either act terms commission orders impose additional limitations upon commission authority hold commission discretion constricted fashion described appeals wisconsin fpc supra require different result appeals evidently supposed create imperative procedure disposition refunds rates commission held given decision begin system area regulation public interest reopen proceedings determine cost service basis completely new evidence attempt determine rates basis phillips individual cost service reasonable rates calculated phillips sales relevant periods commission urge hold phillips revenue deficiencies imposed limitation upon commission authority require refunds merely sustained commission refusal circumstances presented pursue lengthy burdensome series proceedings see also hunt oil wisconsin fpc supra commission reasonably concluded adoption system refunds conditioned findings aggregate area revenues prove inequitable consumers difficult administer effectively arrangements require consumers accede unjust unreasonable prices merely prices perhaps ultimately benefiting consumers proved improvident arrangements necessarily serve interests improvident producers might merely permit prudent competitors escape refunds concededly unlawful prices hold commission refund orders exceed abuse statutory authority motions leave adduce additional evidence denied judgments appeals affirmed part reversed part herein indicated cases remanded proceedings consistent opinion ordered footnotes section provides part provisions chapter shall apply sale interstate commerce natural gas resale ultimate public consumption domestic commercial industrial use shall convenience hereafter describe sales within commission regulatory authority jurisdictional interstate sales permian basin defined commission order commencing proceedings include texas railroad commission districts nos new mexico counties lea eddy chaves area rate proceeding parties commission including gas producers hearings began october closed september final transcript included pages examiner decision issued september commission heard three days oral argument issued decision august supplementary opinion denying applications rehearing issued october indeed provides part provisions chapter shall apply production gathering natural gas independent producers engage interstate transmission gas producing fields consumer markets affiliated interstate pipeline company phillips petroleum wisconsin position first adopted commission columbian fuel see also billings gas oil gas production tennessee gas transmission section provides rates charges made demanded received company connection transportation sale natural gas subject jurisdiction commission rules regulations affecting pertaining rates charges shall reasonable rate charge reasonable hereby declared unlawful see generally phillips petroleum observed standards generally accepted regulation levels rates charged publicly privately owned utilities bonbright principles public utility rates said primary even though sole distinguishing feature public utility enterprise found technology production transmission almost inevitably leads complete partial monopoly market service bonbright supra see also sunray oil fpc dissenting opinion commission second phillips opinion stated independent producers rates file producers file rate schedules supplements schedules moment commission opinion producers involved rate increase filings awaiting hearings decisions see listings sales natural gas producers federal power commission sales producers natural gas natural gas pipeline companies commission stated second phillips opinion present staff immediately tripled new employees competent reach current status independent producer rate work one half years added plan rate regulation announce lawful follow practical matter adequate regulation producers appears impossible existing law landis report regulatory agencies printed use senate committee judiciary contrast landis theoretical practical considerations reference price regulation production transmission natural gas oil gas inst phillips petroleum supra statement general policy area rate proceeding area dissenting opinion commissioner ross informed four area proceedings pending various stages commission combination present proceeding reach sales natural gas subject commission jurisdiction brief federal power commission phillips petroleum supra proper note certain commission statements phillips concerning difficulties unit cost computations appear entirely reaffirmed opinion proceedings two opinions however broadly consistent commission event forbidden adapt rules practices nation needs volatile changing economy american trucking statement provided separate guideline prices initial filings increased rates commission said merely prices new contracts many cases virtue economic factors must higher prices contained old contracts guideline prices applicable producing areas subsequently included proceedings case per mcf higher price initial filings statement general policy supra commission defined gas gas dry gas reservoirs gas condensate reservoirs gas wells added gas special category gas oil reservoir produced free influence oil production residue gas derived new gas also subject higher maximum rate see natural gas variously classified certain descriptive names employed opinion briefly explained casinghead gas common name gas produced oil wells conjunction production oil residue gas gas remaining casinghead gas gas processed remove liquids present raw gas stream form vapor droplets associated gas ree natural gas immediate contact solution crude oil field reservoir american gas association gas facts dissolved gas solution crude oil reservoir ibid gas encompasses associated dissolved casinghead gas together residue derived casinghead gas addition shall adopt commission usage occasion describe gas subject lower maximum rate old flowing gas joint costs incurred products separately produced adelman supply price natural gas compare following products truly joint must produced together constant proportions truly joint costs variable costs vary total output entire set fixed combination joint products machlup economics sellers competition see bonbright supra appears conceded even gas costs jointly well common petroleum commission evidently permissibly believed difficulties allocation connected gas relatively uncomplicated see btu british thermal unit amount heat required raise temperature one pound water one degree fahrenheit stated conditions pressure temperature tabular summaries cost components distributors producers derived recommended rates new gas may found examiner opinion based allowances production investment costs return exploratory costs royalty production taxes factors producers recommended rate per mcf distributors derived factors rate per mcf see also similar tables summarizing commission findings included opinion commission excluded new mexico state production taxes uniform throughout three counties see commission opinion denying applications rehearing section provides part nless commission otherwise orders change shall made company rate charge classification service rule regulation contract relating thereto except thirty days notice commission public restricted contract provisions include spiral escalation redetermination clauses see pure oil said examiner cause price increase occur without reference circumstances economics initial decision presiding examiner many refund obligations question stem consolidation proceedings conducted connection filings rate increases purposes filings attendant refund obligations proceedings conducted area rate proceeding various parties taken quite disparate positions distributing companies exception amici public authorities exceptions texas new mexico supported commission orders entirety urge consumers waited long enough assert good purpose served proceedings see joint brief city san diego city county san francisco certain producers support judgment others challenge validity portions commission orders sustained nonetheless frequently indicated parties join oppose various contentions suggest recognize differences position want merely simplify far possible already lengthy opinion one comment pertinent organization presentation issues course matter judgment counsel nonetheless proper remark effectiveness clarity issues presented cases complexity might significantly increased even greater efforts made focus consolidate argumentation behalf parties essentially similar views opinion stated simply recognize unusual difficulties inherent regulating price commodity natural gas respect commission considered judgment backed sound persuasive reasoning individual company method feasible suitable one regulating rates independent producers share commission hopes area approach may prove ultimate solution note omitted compare bowles willingham supra appeals remarked expenses defined know include certainly true commission proffered definition regard fatal omission section provides company shall abandon portion facilities subject jurisdiction commission service rendered means facilities without permission approval commission first obtained due hearing finding commission available supply natural gas depleted extent continuance service unwarranted present future public convenience necessity permit abandonment indeed commissioner ross already urged commission modify area proceedings reflect essentially national character relevant issues area rate proceeding area dissenting opinion moreover note essential amalgamation texas gulf coast area proceedings commission identical issues heard joint record joint initial staff brief area rate proceedings nos finally must emphasize understand present proceeding merely first many steps toward expeditious effective system regulation see transcontinental gas pipe line obtain additional assistance provides commission shall power perform acts prescribe orders rules regulations may find necessary appropriate carry provisions act section set supra section provides part henever new schedule filed commission shall authority either upon complaint upon initiative enter upon hearing concerning lawfulness rate charge classification service pending hearing decision thereon commission may suspend operation schedule defer use rate longer period five months beyond time otherwise go effect full hearings either completed rate charge classification service goes effect commission may make orders reference thereto proper proceeding initiated become effective proceeding concluded order made expiration suspension period proposed change rate shall go effect increased rates charges thus made effective commission may order require company furnish bond upon completion hearing decision order company refund interest portion increased rates charges decision found justified see supra commission elsewhere provided brief definitions pertinent types clauses see generally pure oil clauses activated higher prices paid supplier purchaser clauses activated higher prices paid supplier purchaser spiral escalation clauses provide event price buyer receives gas increased price concurrently paid buyer supplier contract shall increased proportion buyer increase redetermination clauses provide price currently paid contract shall subject upward adjustment certain specified times reflect average highest prices paid buyers suppliers gas delivered substantially similar terms conditions order subsequently modified order see cfr commission stated order indefinite escalation clauses created significant portion administrative burdens commission laboring produce flood almost simultaneous filings bear apparent relationship economic requirements producers file see also joint appendix commission defined small producer one selling jurisdictionally less mcf annually nationwide basis see testimony producer witness abel joint appendix include filing producers permian basin leaving large producers definition small producers large producers see also federal power commission sales producers natural gas natural gas pipeline companies examiner observed basic difference small large producer risks business materially different compare joint appendix questions discussed length testimony examiner behalf texas independent producers royalty owners association others see generally joint appendix see supplement joint appendix examiner stated small producers relatively larger dry hole expenses smaller proportion geological geophysical expenses smaller proportion lease acquisition expenditures added relatively larger depletion depreciation amortization expenses examiner also found ratios income available income taxes cash dividends working capital net investment large producers small producers weighted average ibid see also testimony joint appendix commission found provide total supply natural gas moving interstate commerce usually obtain gas regulated price fix major producers see hand commission noted specific situations small producers might important portion relevant market examiner indicated ewer large producers sell gas sold permian basin commission jurisdiction noted small producers first wish special exemptions evidently feared exemptions might cause commission ignore difficulties ultimately perhaps permit priced industry discussions may traced joint appendix correspondingly small producers need take quality adjustments account purposes refunds unless wish take advantage upward price adjustments high btu content pertinent commission estimated regulatory expenses purposes calculation area maximum rates per mcf commission stated participant disputes inclusion contrast estimated total costs producers commission regulation per mcf total said arise administration delay contingencies see gerwig natural gas production study costs regulation law econ pertinent much cost data upon commission relied reflected national area local circumstances commission found production costs permian basin vary sufficiently national average warrant different treatment moreover party offered comprehensive cost study premised larger permian basin although certain information relevant adjacent areas presented see joint appendix see rate structure summarized economists frequently proved candid difficulties social welfare public interest standards described almost unique extreme vagueness ultimate verbal norm bonbright supra similarly said writer whose views public utility rates command respect purports find single yardstick sole reference rates reasonable socially desirable distinguished rates unreasonable adverse public interest compare national broadcasting phrase taken appeals substance opinion fpc hope natural gas supra contrasted unfavorably commission assertion found fair relationship consumer interests producers costs see unable find verbal differences two phrases objection commission orders commission exercise regulatory authority must assessed light purposes consequences references isolated phrases previous cases commission found per mcf paid average price risen el paso dominant pipeline company basin renegotiated contracts offered prices ranging per mcf examiner pointed average price paid nationally pipelines trebled per mfc see joint appendix appears five producers responsible natural gas sold basin commission regulation fifteen producers accounted almost sales see memorandum texas independent producers royalty owners association joint appendix see also analysis independent producer rate schedules joint appendix questions usefully discussed distributor witness kahn joint appendix notes significance sharply rising demand operating sluggishly responding supply also emphasizes importance escalation clauses various market imperfections commission stated entire history pipeline purchasing activity since end el paso monopoly permian basin characterized overriding needs pipelines contract large blocks uncommitted reserves essential maintain competitive position developing markets inability accomplish objective except ever increasing prices noteworthy despite obvious importance proceedings pipeline companies take active part appeals commission see also joint appendix see phrase commissioner opinion concurring dissenting limited issue proper note made much wider use field prices calculation area rates monopsony term used describe situation relevant market factor production dominated single purchaser see robinson economics imperfect competition relevant market uncommitted reserves see joint appendix finally general examination usefulness competitive model regulation see bonbright supra observed significance escalation clauses presumably diminished commission series orders restricting use gas sold interstate commerce permian basin ultimately consumed california demand natural gas among residential commercial consumers purchased necessary equipment relatively inelastic demand among industrial consumers responsive price restrictions california use various industrial fuels left industrial demand less responsive price parts country indeed commission explicitly stated recognize history negotiated prices area important element considered reaching decision note economists sometimes concluded market mechanism works satisfactorily natural gas industry question field price gas competitively determined adelman supra see also neuner natural gas industry contrast professor kahn said oil gas industries entire economy insulated normal forces market joint appendix see see hooley financing natural gas industry colorado interstate fpc concurring opinion examiner found larger producers predict high accuracy whether drilling particular area likely produce associated unassociated gas appears primarily consequence accumulated experience improvement technology see also joint appendix useful statistical evidence predictability may found producer testimony see see noted commission staff denied gas separately sought estimates moment directional search became possible varied one witness testified phillips regarded january appropriate date calculation joint appendix see contrast testimony distributor witness kahn recognized measure arbitrary give lower price gas wells began production commission final decision proceedings joint appendix statement provided guideline price per mcf initial filings per mcf previously committed gas commission indicated recognition economic factors pertinent gerwig found premium per mcf necessary producers rationally enter interstate market gerwig supra see also kitch permian basin area rate cases regulatory determination price rev compare johnson producer rate regulation natural gas certification proceedings catco context rev finally see testimony producer witness foster joint appendix see objection commission preference january instead december date issued order commencing proceedings choice adequately justified administrative convenience observed witness chiefly responsible contrivance system ultimately adopted commission see joint appendix elsewhere described need close restraints increases price natural gas kahn economic issues regulating field price natural gas econ rev see also kitch supra see noted parties proffered list sources information examiner gave approval see joint appendix said parties recognized published statistical data sources commission described authoritative nonetheless careful efforts made determine whether sources evidence including producers questionnaires various cost components accurately representative relevant groups producers see three sets questionnaires used appendix applicable producers concerned chiefly drilling costs appendix required large producers concerned costs revenues production appendix simplified version appendix small producers permitted use producers argued vigorously questionnaires provide sufficient basis commission findings agree commission reasonably concluded examiner appendix questionnaires received small producers necessarily representative see joint appendix moreover addition appendix data small producers evidently produced significant change ultimate cost components see commission found responses appendix questionnaires received small producers change results large producers filed appendix questionnaires staff commission disregarded one properly completed see generally joint appendix circumstances commission concluded think reasonably data provided major producers respect permian production fully representative area costs repeatedly held administrative agencies may proceed group basis evidence commission assumed typical character ample quantity justify findings chicago quoting new england divisions case commission reasonably found evidence satisfied requirements therefore find objection see generally examiner discussion economists described difficulties repetitive pungency make laborious computations purporting divide costs nonsense stilts meaning famous example predicting banana crop correlation expenditures royal navy adelman supra see also machlup supra bonbright supra compare eckstein natural gas patterns regulation harv bus rev kahn supra one estimate costs nonassociated gas separate joint common see costs associated gas joint ibid see kitch supra none distributors public agencies except amici argued permits excessively generous returns producers indeed representatives consumers ultimately purchase gas produced permian basin urged us avoid long extensive delays affirm commission orders entirety see brief city los angeles joint brief city san diego city county san francisco brief people state california parties petition appeals review commission orders participated intervenors full support commission position even assuming arguendo questions foreclosed find basis set aside area rates excessive shall show rate return permitted producers substantially exceed ordinarily allowed pipelines must recalled area maximum rates even adjustment quality btu deficiencies intended approximate average unit costs finally note commission area rate new gas adjustment average quality deficiencies nearly equals originally proposed distributor consumer representatives compare say commission rates zone reasonableness permitted natural gas act questions usefully discussed bonbright supra see also commission discussion true yield method compare joint appendix see initial decision presiding examiner area rate proceeding southern louisiana area issued december compare see estimates recent equity allowances brief federal power commission examiner found nonintegrated producers average debt approximately pipelines found debts sometimes large percent total capitalization see also contrasting testimony joint appendix proper observe sometimes argued leverage high borrowings creates certain financial risks see stigler capital rates return manufacturing industries finally noted risk occasion regarded cause reduction rate return see hardy risk appear find commission discussion relative financial risks imprecise however plain statement commission opinion effect exploration production financially hazardous transmission see commission indicate clearly whether considered production taken aggregate hazardous affairs individual pipeline company indeed even whether considered aggregate calculations relevant see discussion see finally see joint appendix see kitch supra see also stigler supra argued force producers given fair notice commission might promulgate standards appears commission announce terms might create quality standards tacitly denied motion consolidate proceeding proceeding intended devise national quality standards say commission impermissibly refused complicate still proceeding addition issues centering national quality standards moreover general terms commission order commencing proceeding reasonably encompassed questions quality standards regard commission denial consolidation motion foreclosing ultimate adoption standards producers motion premised desirability national standards explicitly recognized prices differences quality inextricably tied together meaningfully separated one joint appendix hold commission denied producers fair notice might consequence hearings impose quality standards argued vigorously standards adopted commission lack substantial basis record emphasis placed chiefly examiner statement probably impossible record establish complete set differentials various value quality characteristics gas see also joint appendix believe statement inapposite issues us commission create set differentials merely posited series pipeline standards placed responsibility reaching specific price differentials upon parties sale indicated accept agreement appeared effort determine pertinent processing costs noted least one witness testified negotiation among relevant parties proper method measurement processing costs see joint appendix various estimates quality adjustments provided witnesses examiner see conclude commission findings questions adequately supported record commissioner argued forcefully concurring dissenting opinion commission adoption high low btu standards unfair producers appeals indicated unable understand reasons dual standard agree commission might dealt clearly questions found basis set aside judgment commission found prevailing practice minimum btu standard permian basin per cubic foot average btu content however range per cubic foot concluded require downward price adjustments btu content less permit upward adjustment exceeds per cubic foot although evidently less favorable producers possible formulae found evidence suggests arbitrary abuse commission authority compare initial decision area rate proceeding southern louisiana area issued december commission pointed sellers gas receive payments liquid hydrocarbons extracted gas pipelines payments may amount per mcf permian basin ibid allowance per mcf incorporated stipulation new gas rate moreover producers receive substantial payments liquids extracted gas sold spraberry contracts see infra compare commission order accepting quality statements filed producers permian basin indicates adjustments average per mcf old gas per mcf old residue gas brief federal power commission commission emphasized exploration fraught uncertainties foreign transmission greater return allowed nonetheless found rate return actually permitted commission allowance quality adjustments substantially exceed permitted pipelines note however risks incidental exploration always thought greatly excess incidental transmission see kitch supra see insurance principle nelson percentage depletion national security reprinted federal tax policy economic growth stability papers submitted joint committee economic report comm print see also dirlam natural gas cost conservation pricing econ rev compare joint appendix fpc hope natural gas supra commission first emphasized make clear confine cost calculation determining reasonable rates later said justification area adjustment ceiling price added noncost adjustments required permian basin yet quite plain commission rate structure intended significantly influenced considerations unfortunately commission never paused reconcile general observations specific terms rate structure understand principal points commission employed noncost factors four used logic functional pricing justify rate structure selections sources cost data second explained imposition single maximum rate upon old gas among reasons importance relatively uncomplicated rate structure third commission justified adoption temporary period price restriction exigencies area regulation fourth commission based calculation rate return upon risk factors directly reduce cost components cognizant presumably commission forceful argument computation rates costs ultimately circular see kitch supra compare kahn supra see also eckstein supra commission however relied simply upon cost computations found basis properly set aside commission orders assume commission continue examine premises regulatory methods consequences industry future orders nothing act cases compels commission reduce regulatory functions prophecies compare city detroit fpc ratio high steadily declined year end proved recoverable reserves totaled trillion cubic feet withdrawals trillion cubic feet american gas association gas facts questions may traced testimony joint appendix see also hooley supra ross additions reserves aggregated trillion cubic feet third highest since natural gas reserves committee initiated reports american gas association supra ver past twenty years gross additions resulted trillion cubic feet added nation proved reserves natural gas period net production natural gas totaled trillion cubic feet ibid see similar evidence american gas association gas facts however proper recognize ratio new discoveries annual net production generally declined since although decline neither steep consistent see joint appendix see generally cram introduction problem developing adequate supplies natural gas southwestern legal foundation economics gas industry pertinent american gas association observed ratio long new additions exceed production need little cause concern hypothetical ratio gas facts see similar evidence producers argued vigorously minimum ratio however ample evidence support commission judgment lower ratios permissible one intervenor witness forcefully described concern ratio neurotic preoccupation joint appendix see also questions usefully discussed terry future life natural gas industry southwestern legal foundation supra netschert economic aspects natural gas supply indeed commission described adequacy reserves important factor determination said continue important factor reviewing area rates future appears uncertainty appropriate figures compare brief federal power commission producers use per mcf supported joint appendix certain producers urge commission described unadjusted quality deficiencies reasonable rates permian basin ellipsis may sometimes entered commission opinion fair reading intentions seem entirely clear see pertinent reiterate commission recently calculated actual adjustments required quality statements filed producers permian basin august per mcf old gas per mcf old residue gas area rate proceeding permian basin area commission stated evidence record makes clear respect casinghead gas residue gas derived therefrom together make far largest share permian gas subject quality adjustments costs substantially cents per mcf ceiling price see commission pointed evidence suggested payments average per mcf gas permian basin new gas rate includes credit per mcf plant liquids figure determined stipulation credit included flowing gas rate spraberry el paso contract one provides purchase casinghead gas pipeline processes gas pays producer percentage proceeds sale extracted liquids plus fixed price residue gas delivered pipeline presiding examiner essentially prohibited contracts permian basin commission declined nonetheless asserted jurisdiction think properly sale casinghead gas contract commission indicated producers revenue contracts extracted liquids substantial compare commission calculation minimum rate however left largely unexplained commission clearly found establishment minimum rates case public interest price impact consumer de minimis failed offer explanation selection minimum rate relying entirely examiner preference figure examiner adopted two minimum rates per mcf residue gas per mcf casinghead gas calculations evidently premised computation revenue standard various classes natural gas see composite explanation choice area minimum rate thus imprecise nonetheless commission reasonably concluded minimum rate imperative evidence us permits conclusion selection unjust unreasonable two additional issues properly separately considered first texas new mexico urged reconsider hope require commission give special weight probable effects orders economies producing examined contentions decline modify treatment similar question hope see said suggest congress unmindful interests producing drafted natural gas act go far texas new mexico ask raises questions policy go beyond province second commission indicated apply area rates sales initiated pendency proceedings see order issuing certificates effect order impose rates rate permian basin periods prior commission decision proceedings see generally gas callery properties appeals found unnecessary decide propriety arrangement nonetheless believe circumstances presented appropriate resolve issue without awaiting consideration compare chicago hold commission forbidden employ area rates rate purposes sales initiated commencement proceedings final decision area rates properly calculated reasonable rates permian basin periods subsequent periods issue basis cost factors believed stable throughout periods commission observed prevent use rate require unending succession section area rate proceedings covering sales instituted prior institution proceeding need however determine periods circumstances commission may use unadjusted area rates rates orders involving proceedings commenced commission decision proceedings commission however proper take special notice various arguments vigorously pressed certain producers first urged commission included allowance federal income taxes rate new gas appears producers originally presented evidence supporting allowance producer witnesses include costs computations evidence computation allowance difficult see joint appendix event producers incur federal income tax liability return percent circumstances think commission err excluding allowance second urged commission failed include adequate allowance exploration costs must emphasize perceive obligation upon commission constitution natural gas act permit recovery exploration costs regardless amount prudence although methods computing costs might used commission see found nothing properly permit reversal commission judgment finally sun oil asserts various points denied due process enough say examined contentions find without substance note terms stay entered appeals january reduce rate interest see transcript record offered explanation modification commission orders perceive basis order particularly since question evidently raised producers applications commission rehearing see see wisconsin fpc hold commission order imposing interest must restored understand interest rates cases others brief federal power commission rate one increased rate later superseded increase thus effective limited intervening period called period retains significance proceedings respect refundability found unlawful wisconsin fpc supra see brief federal power commission nos october term compare fpc tennessee gas note mobil others argued vigorously commission refund formulae impose obligations refund amounts last clean rate latter rate established final permanent certificate unconditioned refund obligation either commission concluded need reach question since situation presented resulting order herein see gulf oil given commission postponement question intimate views proper limitations commission authority regard justice douglas dissenting result reached method employed controlling theory impact rate order counts total effect rate order said unjust unreasonable judicial inquiry act end area rate orders challenged based averages single producer actual costs actual risks actual returns known result reached producer known impact rate order producer known total effect rate order single producer known said however producer aggrieved may apply relief fails obtain relief resort courts unless know standards govern case applies relief respect mouthing mere words say rate reasonable absence knowledge possibly perform function judicial review limited though urged separate opinion justice jackson hope system regulation authorized center producer product regulated eye average typical producing conditions field rejected approach saying natural gas act contained conventional standards natural gas companies group regulation rates course novel times authorized federal aviation act stat permits see general investigation war power extensive price regulation group basis sustained bowles willingham interstate commerce commission undertaken revealed divisions revenue cases new england divisions case abilene chicago see also interstate commerce act amended stat requirement divisions revenue cases group evidence typical character ample quantity justify finding made respect division rate every carrier words rates fixed recover typical group cost service individual producer right minimum operating expenses capital charges protected cost service includes operating expenses capital charges fpc natural gas pipeline concurring opinion protection see reason group rates may sanctioned required commission undertook cases present cases commission found averages findings typicality representative nature averages certainly take judicial notice averages typical justice brandeis leading divisions revenue case said averages apt misleading accepted substitute typical evidence cf american motors ftc cir commission found median moreover observed another context find average cost groups made individual members close resemblance comes essential point points determine costs considered borden respect cost new gas commission determine whether average costs complied questionnaires derived data typical representative finding cost flowing gas commission noted level costs compiled staff large part questionnaire responses fairly representative costs three year period ending test year typical current future costs flowing gas ibid reference representative typical costs however dealt question time staff use data developing composite cost presentation deemed permissible since found typical representative year professes find commission adequately determined averages employed typical representative ante statements plucked commission opinion support interpretation commission also observed respect questionnaire data major producers representing one major producers permian area responded appendix questionnaires commission agreed examiner data provided major producers respect permian production fully representative area costs exclusion appendix returns small producers de minimis effect although data submitted major producers found typical data area assume also major producers area findings whether averages compiled data typical representative costs major producers producers area commission statement sources used combination provide adequate basis costs found certainly read finding sources typical representative fact sources recognized published statistical data sources authoritative mean also contained typical representative averages average cost apt misleading may indeed representative producer commission allowed rate return return capital invested finding new gas well gas production investment costs constituted capital invested bases commission applied rate arrive return per mcf included rate base new gas production investment costs included successful well costs lease acquisition costs cost production facilities likewise determined basis averages see average per capita income middle east kingdom said year since one man family gets money year describes mythical resident country return allowed commission computed basis may likewise relation whatever reality actual costs producer one producer cost though varying year year may average per mcf another may average per mcf make per mcf representative either producer typical producers indeed typical producer even per mcf stable entire period years commission follow lead interstate commerce commission produce rates group basis simply done rational way averages apt take us alice wonderland one reason case remanded commission findings commission allow individual application relief new rates prescribed terms conditions relief granted said however individual producer must show cost service greater averages rate based regulated industry constitutional guarantee inefficient survive hegeman farms baldwin assumes however ability withdraw business producer natural gas may abandon existing facilities supply interstate market without commission approval gas pipe line fpc commission says producer able obtain relief cover expenses include return depreciation depletion exploration development overhead appeals know certainly remand appeals definition therefore clearly necessary even need know precise impact new group rate producer time group rate order certainly must know conditions producer get relief say rate reasonable although assume act authorizes group disregard basic structure act patterned conventional standards fpc hope natural gas supra providing rates natural gas company reasonable beyond group single producer beyond community producers individual ultimate thrust act reaches individual producer unless know group rate final analysis disables perform duty judicial review ii impossible say whether proper revenue requirements group satisfied rate order costs represent averages way us find record whether averages typical impact rates group error compounded costs used purported costs gas include costs casinghead gas residue gas derived therefrom gas combination leases commission concluded costs casinghead gas residue gas produced therefrom exceed costs gas yet time rejected proffered evidence higher costs processing gas remove liquid hydrocarbons commission expertise allowed make facts justify desired result beyond quality adjustments upward price adjustments permitted btu content per cubic foot downward adjustment btu content commission concerned value energy content gas reality consumer purchasing standard mind allowed price reductions gas contains grains hydrogen sulphide grains total sulphur per mcf contains pound per mcf water contains volume carbon dioxide gas pressure less pounds per square inch standards met applicable ceiling price adjusted downward net cost processing gas bring standard commission standards flowing gas moving interstate permian basin pipeline quality commission prescribed costs convert gas new standards found record perhaps deficiency due fact commission almost afterthought clear advance notice decided deal detailed quality standards without knowing costs competent evidence neither commission way even guess whether new rates satisfy criteria hope iii unknown cost risk commission permitted excuse failure solicit proffer appropriate evidence concerning cost converting gas pipeline quality labeling cost risk appeals recognized point see commissioner noted opinion concurring denial rehearing bury quality impact rate return determination overlook basis per cent allowance comparable return equity per cent far less risky operations transmission companies one commentator recently observed commission stated rate return also reflected risk finding gas less pipeline quality clever way avoiding quality discount problem since evidence record discounts one say risks involved novel doctrine indeed rate return adjusted reflect risk regulatory cost computations incorrect behind veneer opinion may unstated premise complexity task regulating wellhead price gas sold producers great novel commission must given great leeway permissible bounds far judicial review concerned passed guesswork substituted reasoned findings commission avoid finding costs convenience calling risks rates return computed mythical producers happen meet average specifications task regulating producer sales within framework natural gas act difficult present cases illustrate perhaps problem returned congress certainly little today advance cause responsible administrative action respect promote administrative irresponsibility making agency fiat adequate substitute supported findings iv first commission must determine quantity gas needed constitute adequate future supply secondly must make conclusion level exploration development produce needed gas supply finally must prescribe rate elicit level exploration development although daily per well production fields relatively low combined remaining recoverable reserves nevertheless constitute considerable percentage total reserves area forever lost becomes necessary plug abandon fields economic reasons hope however involve regulation producers natural gas interstate pipelines time phillips petroleum wisconsin giving commission authority producers decided hope assumed act meant said extend federal control production gathering natural gas reviewing federal order fixing wellhead gas prices producers wellhead gas even involved hope case concerned abuses overreaching pipeline companies said commission compelled let stockholders natural gas companies feast producing may receive crumbs table present act must redesigned project raises questions policy go beyond province today says another context price functional terms tool encourage production gas ante effect price regulatory responsibilities several must therefore weighed unless contrary mandate act regulation production pass federal hands merits may issue know matter complicated example seems revenues processing plants derived primarily liquids extract casinghead gas rather sale residue gas know appraise chances gas flared rather processed price low example might processing plants continue purchase process casinghead gas long revenues liquids extracted plus residue gas processed exceeded cost gathering processing marketing gas long market residue gas remaining extraction liquids might processor sell almost price rather flare order recover least part costs assumes course processor already made investment equipment necessary purify residue gas make salable operating costs process prohibitive conceivably price residue gas influence processing plants deciding whether maintain install equipment procedures necessary make salable quality residue gas liquids extracted know many processors necessary equipment cost operating maintaining equipment processor willing gather process gas value liquids extracted might producer willing sell casinghead gas rather flare order obtain payment gas hand price casinghead gas might well critical marginal producers whose revenues sale casinghead gas justify keeping oil wells production evidence concerning many oil producers permian basin area termed marginal may posture hope reason phase case developed whatever reason must developed interest producing judicial fiat subjected entirely complete federal supremacy contrary promise natural gas act effort determine costs production commission sent questionnaires appendices producers permian basin area named respondents proceedings appendices inquired production costs appendix covered drilling costs appendix comprehensive questionnaire designed major producers appendix simplified form small producers mcf nationwide jurisdictional sales small producers however answer either appendix commission received complete responses appendix producers small producers responses appendix filed small producers responses represented composite data one company commission excluded appendix replies consideration commission staff used responses develop composite cost service study staff arranged appendix replies various charts arraying data high low respect various categories total unit costs allowances cash expense unit costs weighted cost averages computed replies appendix given weight proportional volume mcf covered responses establishing rate new gas commission elected proceed determining costs national rather area basis used permian questionnaire responses however vital source information employing determining various components final national average cost see commission also turned various authoritative industry data sources utilized various witnesses proceeding included sources census bureau census mineral industries wherever source used figures trended basis permian questionnaire data chase manhattan bank annual analysis petroleum industry joint association survey survey made three industry trade groups based questionnaires mailed member companies various adjustments made factors atypical years permian questionnaire data disproportionate national figures see commission rate flowing gas based primarily questionnaire data compiled staff composite cost service study commission instance based ceiling price permian basin area costs although used nationwide data determining exploration development costs see although term flowing gas defined include casinghead gas residue gas derived therefrom old gas commission used costs old gas determining area rate commission discuss distribution data within grouping considered matters concentration symmetry uniformity data commission asserts producer costs vary widely year year basis long run costs producers tend approximate industry average support assertion cites record testimony refers existence fairly stable industry averages drilling costs successful wells compared erratic figures individual companies apart fact testimony cited stands proposition stated commission indicates less instability individual producers costs time rather tend average conflicting testimony point representativeness offered witness sun oil company showed certain averages representative basic data distribution data widely spread skewed mean fact comprehensive cost data suitable supplying necessary elements cost study see excuse commission finding whether data chose use typical representative fact necessity making finding accentuated number different sources entering computation virtually individual cost components see commission stated use national rather area data arriving cost new gas noting may areas production costs may vary sufficiently national average warrant different treatment record case agree cost new gas determined basis nationwide data since commission discussing use area versus national costs statement suggests permian basin composite costs vary sufficiently national average costs warrant using latter rather commission comparing national average individual producer costs permian basin perhaps group large diversified involved case typical representative averages computed hunt oil company presses point strongly contending wide variations unit costs inherent characteristic gas uniform ceiling rate fixed average composite cost level unlawful per se wide disparity costs among different categories gas well among different producers commission noted fact wide variation individual costs part justification basing costs overall producer experience see pointed failed go forward determine whether averages used construct overall producer experience typical representative perhaps commission subdivided group arrived groupings whose members possessed essentially similar characteristics cf borden mean commission effect returning individual producer regulatory method rather commission stop subdivision point group averages became typical representative case stands commission made necessary findings course lacking required expertise undertake supply findings commission function see abilene kitch permian basin area rate cases regulatory determination price rev omitted counsel commission observe brief precise determination possible state record range average adjustment quality predicted commission opinion denying rehearing see counsel also cite certain record testimony exhibits support commission determination range noted first prediction average already discussed misleading nature averages found typical representative observations equally pertinent moreover idea whether commission relied making prediction sources cited commission counsel computing range opinion denying rehearing commission apparently relied commissioner statement concurring opinion initial decision average adjustment adjusted figures allow certain changes made respect quality standards decision denying rehearing time commission initial decision commissioner know costs incurred pipelines bringing gas pipeline quality pipelines processing costs record commissioner based estimate large part contract exhibits evident opinion noted precise adjustment quality ascertained exhibits see view evidence point clearly stated opinion concurring denial rehearing observed record permit meaningful determination impact commission counsel also note examiner finding represented reasonable estimate bringing new gas pipeline quality old gas counsel admit finding made conjunction defining pipeline quality standards costs conforming quality gas based fact examiner concluded record permit determination complete set quality value differentials percentage calculations translating range terms rate return relied upon presented commission counsel appear commission opinion record see stat tex stat art texas new mexico kansas oklahoma illinois colorado agreed upon interstate compact conservation oil gas congress subsequently gave consent compact august period two years pub res stat compact extended compacting consent congress successive periods without interruption latest extension september september pub stat see also doc