FPC v. Sunray DX Oil Co.
391 U.S. 9 (1968)

Annotate this Case

U.S. Supreme Court

FPC v. Sunray DX Oil Co., 391 U.S. 9 (1968)

Federal Power Commission v. Sunray DX Oil Co.

No. 60

Argued January 22-23, 1968

Decided May 6, 1968*

391 U.S. 9




The Federal Power Commission (FPC) has decided to rely on area rate proceedings to establish just and reasonable rates for producer sales under §§ 4 and 5 of the Natural Gas Act. Pending completion of those proceedings the FPC has rested interim producer regulation on § 7. Under that section, natural gas may be sold only pursuant to an FPC certificate of public convenience and necessity, which, under § 7(e), may be conditioned "in such manner as the public convenience and necessity may require." In Atlantic Rfg. Co. v. Public Serv. Comm'n (CATCO),360 U. S. 378, this Court held that the FPC should use its § 7 conditioning power to prevent large initial contract price advances, pending the determination under §§ 4 and 5 of just and reasonable rates, which would become effective only prospectively. The FPC thereafter began to use its conditioning power to determine maximum initial prices at which sales could occur, basing these "in-line" prices upon current prices in the area of the proposed sale but excluding current prices which for various reasons were "suspect." In United Gas Improvement Co. v. Callery Properties, Inc.,382 U. S. 223, this Court generally approved this regulatory approach, holding that the FPC might properly refuse to hear cost evidence in such "in-line" price proceedings, and that,

Page 391 U. S. 10

when issuance of permanent certificates was held erroneous on judicial review, the FPC might, on remand, impose new certificate conditions for refunds of amounts previously collected above the subsequently determined in-line price. On September 28, 1960, the FPC began its post-CATCO regulation of sales in Texas Railroad Commission Districts 2, 3, and 4, the three Texas Gulf Coast districts which are involved in these proceedings, by issuing its General Policy Statement, announcing a guideline ceiling price for new sales in each district of 18

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