Four independent producers applied to the Federal Power
Commission under § 7(e) of the Natural Gas Act for a certificate of
convenience and necessity authorizing the sale to an interstate
pipeline company of an enormous quantity of natural gas from wells
in the Gulf of Mexico off the shore of Louisiana at a much higher
rate than the pipeline company was then paying for gas. The
pipeline company intervened, as did some of its distributor
customers and other interested parties, the latter urging a lower
rate. After twice refusing to issue the certificate on the ground
that the record was insufficient to support a finding that public
convenience and necessity required the sale at the proposed rate,
the Commission was told that the producers would not dedicate the
gas to the interstate market unless a permanent certificate was
granted unconditionally and at the rate proposed. Upon rehearing,
but without additional evidence, the Commission then issued such a
certificate.
Held:
1. The facts that the producers limited their application to a
firm price agreed upon between them and the pipeline company,
refused to accept certification at a lower price, and threatened to
cancel the contract and withhold the gas from interstate commerce
did not deprive the Commission of jurisdiction. Pp.
360 U. S.
387-388.
2. The order of the Commission granting the certificates was in
error, and it must be vacated and the case remanded to the
Commission for further proceedings. Pp.
360 U. S. 382,
360 U. S.
388-394.
(a) In view of the framework in which the Commission is
authorized and directed to act and the inordinate delay presently
existing in proceedings under § 5 to review rates initially
certificated, the initial certificating of a proposal under § 7(e)
as being
Page 360 U. S. 379
required by public convenience and necessity is crucial, and a
permanent certificate should not be issued unless the proposed rate
has been shown to be in the public interest. Pp.
360 U. S.
388-391.
(b) When the price proposed in an application under § 7(e) is
not in keeping with the public interest because it is out of line
or because its approval might trigger general price rises or an
increase in the applicant's existing rates, the Commission, in the
exercise of its discretion, may attach such conditions as it may
deem necessary. P.
360 U. S.
391.
(c) In granting such conditional certificates, the Commission
does not determine initial prices, nor does it overturn those
agreed upon by the parties. Rather it so conditions the
certificates that the consuming public may be protected while the
justness and reasonableness of the prices fixed by the parties are
being determined under other sections of the Act. Pp.
360 U. S.
391-392.
(d) If unconditional certificates are issued where the rate is
not clearly shown to be required by the public convenience and
necessity, relief is limited to § 5 proceedings, and full
protection of the public interest is not afforded. P.
360 U. S.
392.
(e) The record contains insufficient evidence to support a
finding of public convenience and necessity prerequisite to the
issuance of permanent certificates. Pp.
360 U. S.
392-394.
257 F.2d 717 affirmed on different grounds.
Page 360 U. S. 380
MR. JUSTICE CLARK delivered the opinion of the Court.
This proceeding tests the jurisdiction, as well as the
discretion, of the Federal Power Commission in the certificating of
the sale of natural gas under § 7(e) of the Natural Gas Act of
1938, as amended, 15 U.S.C. § 717
et seq. [
Footnote 1] The Commission has issued a
certificate of public convenience and necessity to petitioners,
producers of natural gas, [
Footnote
2] to sell to petitioner Tennessee Gas Transmission Co. 1.67
trillion cubic feet of natural gas at an initial price of 224 cents
per MCF,
Page 360 U. S. 381
including a tax of 1 cent per MCF.
Continental Oil Co.,
17 F.P.C. 880. In the same proceeding and on the same evidence, it
had twice refused to issue such an unconditional certificate
because of insufficient evidence or testimony
"on which to base a finding that the public convenience and
necessity requires the sale of these volumes of gas at the
particular rate level here proposed."
On the second occasion, it proposed to petitioners that the
certificates be conditioned upon an initial price of 18 cents per
MCF (including the 1-cent tax), to be increased to 22.4 cents per
MCF (including the 1-cent tax) after the first 24-hour delivery
period, the latter rate to be subjected to the "just and
reasonable" provisions of § 4 of the Act, 15 U.S.C. § 717c. The
petitioners refused this proposal, and Tennessee advised the
Commission that, unless the certificates were issued without such
conditions, CATCO would not dedicate its gas to the interstate
market. Upon rehearing, after argument but without additional
evidence, the Commission issued the certificates declaring
"important as is the issue of price, that, as far as the public
is concerned, the precise charge that is made initially is less
important than the assurance of this great supply of gas"
for interstate markets. 17 F.P.C. at 881.
The respondents, other than the Public Service Commission of the
State of New York, are public utilities in New York and New Jersey.
They buy gas from petitioner Tennessee for distribution in those
States. They and the New York Commission oppose the issuance of the
certificates on the ground that their issuance will increase the
price of gas to consumers in those States, of whom there are over a
million, using Tennessee's gas. Upon the issuance of the
certificates, the respondents filed petitions for review with the
Court of Appeals. It held that
"Congress has not given the Commission power to inquire into the
issue of public convenience and necessity where, as
Page 360 U. S. 382
here, the applicant circumscribes the scope of that inquiry by
attaching a condition to its application requiring the Commission
to forego the consideration of an element which may be necessary in
the formulation of its judgment."
Public Service Comm'n of New York v. Federal Power
Comm'n, 3 Cir., 257 F.2d 717, 723. Concluding that the
Commission had no jurisdiction to conduct such "a limited inquiry,"
ibid., it vacated the order granting the certificates and
remanded the case to the Commission. The importance in the
administration of the Act of the questions thus posed required the
granting of certiorari, 358 U.S. 926 (1959). We have concluded that
the Court of Appeals was in error in deciding that the Commission
had no jurisdiction. However, for reasons hereafter developed, we
hold that the order of the Commission in granting the certificates
was in error, and we therefore affirm the judgment of the Court of
Appeals.
The natural gas involved here is of a Miocene sand located below
seabed out in the Gulf of Mexico some 15 to 25 miles offshore from
Cameron and Vermilion Parishes, Louisiana. The petitioners in No.
518 are each independent natural gas producers. They jointly own
oil and gas leases (25% to each company) which they obtained from
Louisiana covering large acreages of the Continental Shelf off the
Louisiana coast. Jurisdiction over the Continental Shelf is claimed
by the United States, and the question is now in litigation. The
Congress has continued existing leases in effect pending the
outcome of the controversy over the title. 67 Stat. 462, 43 U.S.C.
(Supp. I, 1954) §§ 1331-1343. The four companies' joint venture has
resulted in the discovery of huge fields of natural gas, and they
have dedicated some 1.75 trillion cubic feet of gas from 95,000
acres of their leases to the petitioner Tennessee Gas Transmission
Company, a natural gas company subject to the jurisdiction of
the
Page 360 U. S. 383
Commission. [
Footnote 3] The
latter is the petitioner in No. 536, which has been consolidated
with No. 518.
The four contracts dedicating the gas to Tennessee run from each
of the petitioner producers. The contracts call for an initial
price of 22.4 cents per MCF for the gas, including 1-cent tax, with
escalator clauses calling for periodic increases in specific
amounts. [
Footnote 4] In
addition, they provide for Tennessee to receive the gas at
platforms on the well sites out some 15 to 25 miles in the Gulf.
This requires it to build approximately 107 miles of pipeline from
its nearest existing pipeline point to the offshore platforms at
wellhead. The estimated cost was $16,315,412. It further appears
that the necessity for the certificates was based on an application
of Tennessee, Docket G-11107, in which Tennessee requested
certification to enlarge and extend its facilities. This program
included the building of a pipeline from southeast Louisiana to
Portland, Tennessee, which would carry a large proportion of the
gas from these leases. Its cost was estimated at $85,000,000. In
addition, the contracts provide that Tennessee give free carriage
from the wells to the shore of all condensate or distillate in the
gas for the account of producers who have the option to separate it
from the gas at shore stations. We need not discuss the contract
provisions more minutely, though respondents do claim that
Page 360 U. S. 384
other requirements place a greater burden on Tennessee and, in
practical effect, increase the stated price of the gas to it.
The Presiding Examiner, on March 29, 1957, found that the sales
were required by the public convenience and necessity.
Continental Oil Co., 17 F.P.C. 563. While he found that
the proposed price was higher than any price Tennessee was then
paying, he pointed to other prices currently paid for onshore sales
"for smaller reserves and smaller future potentials."
Id.
at 571. The average weighted cost of gas to Tennessee he found
would be increased, if the contract price was certificated, by .97
cent per MCF. [
Footnote 5]
However, he said that no showing had been made that this would lead
to an increase in Tennessee's rates to jurisdictional customers or
result in an increase in the price governing its other purchases.
He refused to condition the certificates on the acceptance of a
lower price by the parties on the ground that no "showing of
imprudence or of abuse of discretion by management,"
ibid., had been made that indicated the proposed price
could not be accepted temporarily as consistent with the public
convenience and necessity, pending review in a § 5(a) proceeding.
However, he did condition
Page 360 U. S. 385
his recommendation on the approval of Tennessee's application in
Docket G-11107 above mentioned.
The Commission, as we have indicated, took three strikes at the
recommendations of the Examiner. On April 22, it reversed his
finding on public convenience and necessity because the evidence
was insufficient as to price. It said:
"The importance of this issue in certificating this sale cannot
easily be overemphasized. This is the largest reserve ever
committed to one sale. This is the first sale from the newly
developed offshore fields from which large proportions of future
gas supplies will be taken. This is the highest price level at
which the sale of gas to Tennessee Gas has been proposed."
"These factors make it abundantly evident that, in the public
interest, this crucial sale should not be permanently certificated
unless the rate level has been shown to be in the public
interest."
Id. at 575. The Commission granted petitioners
temporary certificates and remanded the proceeding to the Examiner
"to determine at what rates the public convenience and necessity
requires these sales" of natural gas to Tennessee under a permanent
certificate.
Id. at 576. The producers immediately moved
for modification, asserting that they could not present sufficient
evidence "within any reasonable period in the future" to meet the
necessities of the remand and, further, could not "afford to
commence construction until at least the initial rate [question] is
resolved." The Commission, on May 20, however, reiterated its
belief that
"the record does not contain sufficient evidence on which to
base a finding that the public convenience and necessity requires
the sale of the gas at that particular rate level."
17 F.P.C. 732, 733-734. In an
Page 360 U. S. 386
effort to ameliorate the situation represented by the producers,
the Commission did grant the certificates, but conditioned them
upon the producers' acceptance of an initial price of 17 cents per
MCF (plus the 1-cent tax), which was the highest price theretofore
paid by Tennessee in the Southwest. It also agreed that, one day
after the commencement of deliveries of gas, the 17-cent price
would be escalated to 21.4 cents (plus 1 cent for taxes), the
increase to be collected under bond, subject to proof and refund
under the provisions of § 4 of the Act. This time, Tennessee sought
rehearing, advising the Commission that the producers would not
accept the 17-cent initial price order of May 20, and that "the
contracts will be terminated," with the consequent "loss of natural
gas supplies" required for Tennessee's customers. The Commission,
after oral argument, did not withdraw its previous findings in the
matter, but predicated its third order on
"the primary consideration that the public served through the
Tennessee Gas system is greatly in need of increased supplies of
natural gas. . . . In view of these circumstances and the fact that
the record does not show that the 21.4-cent (plus 1 cent for taxes)
rate is necessarily excessive, we agree with the presiding examiner
that this certificate proceeding . . . should not assume the
character of a rate proceeding under Section 5(a)."
17 F.P.C. 880, 881. Asserting that it was of the opinion that it
would be able "to adequately protect the public interest with
respect to the matter of price,"
ibid., it ordered the
certificates issued and directed that, since the price
"is higher than Tennessee Gas is paying under any other
contract, it should be subject to prompt investigation under
Section 5(a) as to its reasonableness."
Id. at 882.
We note that the Commission did not seek certiorari here, but
has filed a brief
amicus curiae. [
Footnote 6] It does not urge
Page 360 U. S. 387
reversal of the judgment, but attacks the ground upon which the
Court of Appeals bottomed its remand, namely, lack of Commission
jurisdiction to consider the limited proposal of petitioners. The
Commission's brief suggests that the Court not reach the issue
tendered by petitioners,
i.e., must the Commission, in a §
7 proceeding, decide whether the proposed initial rate is just and
reasonable? Instead, the Commission says, if the judgment must be
affirmed, it would be better to base the affirmance on the ground
that its order "was not supported by sufficient evidence, and hence
constituted an abuse of discretion in the circumstances of the
particular case. . . ." Brief for the Federal Power Commission, p.
31. Petitioners oppose such a disposition, contending the evidence
was quite substantial.
I
. JURISDICTION OF THE COMMISSION
The Court of Appeals thought that the Commission had no
jurisdiction to consider petitioners' proposal because it was
limited to a firm price agreed upon by the parties applicant. Their
refusal to accept certification at a lower price, even to the
extent of canceling their contracts and withholding the gas from
interstate commerce, the court held, resulted in the Commission's
losing jurisdiction. We do not believe that this follows. No sales,
intrastate or interstate, of gas had ever been made from the leases
involved here. The contracts under which the petitioners proposed
to sell the gas in the interstate market were all conditioned on
the issuance of certificates of public convenience and necessity. A
failure by either party to secure such certificates rendered the
contracts subject to termination. Certainly the filing of the
application for a certificate did not constitute a dedication to
the interstate market of the gas recoverable under these leases.
Nor is there doubt that the producers were at liberty to refuse
conditional certificates proposed by
Page 360 U. S. 388
the Commission's second order. While the refusal might have been
couched in more diplomatic language, it had no effect on the
Commission's power to act on the rehearing requested. Even though
the Commission did march up the hill only to march down again upon
reaching the summit, we cannot say that this about-face deprived it
of jurisdiction. We find nothing illegal in the petitioners'
rejection of the alternative price proposed by the Commission and
their standing firm on their own.
II
. THE VALIDITY OF THE ORDER
The purpose of the Natural Gas Act was to underwrite just and
reasonable rates to the consumers of natural gas.
Federal Power
Commission v. Hope Natural Gas Co., 320 U.
S. 591 (1944). As the original § 7(c) provided, it
was
"the intention of Congress that natural gas shall be sold in
interstate commerce for resale for ultimate public consumption for
domestic, commercial, industrial, or any other use at the lowest
possible reasonable rate consistent with the maintenance of
adequate service in the public interest."
52 Stat. 825. [
Footnote 7]
The Act was so framed as to afford consumers a complete, permanent
and effective bond of protection from excessive rates and charges.
The heart of the Act is found in those provisions requiring
initially that any
"proposed service, sale, operation, construction, extension, or
acquisition . . . will be required by the present or future public
convenience and necessity,"
§ 7(e), 15 U.S.C. § 717f(e), and that all rates and charges
"made, demanded, or received" shall be "just and reasonable," § 4,
15 U.S.C. § 717c. The Act prohibits such movements unless and until
the Commission
Page 360 U. S. 389
issues a certificate of public convenience and necessity
therefor, § 7(c), 15 U.S.C. § 717f(c). Section 7(e) vests in the
Commission control over the conditions under which gas may be
initially dedicated to interstate use. Moreover, once so dedicated,
there can be no withdrawal of that supply from continued interstate
movement without Commission approval. The gas operator, although to
this extent a captive subject to the jurisdiction of the
Commission, is not without remedy to protect himself. He may,
unless otherwise bound by contract,
United Gas Pipe Line Co. v.
Mobile Gas Service Corp., 350 U. S. 332
(1956), file new rate schedules with the Commission. This rate
becomes effective upon its filing, subject to the 5-month
suspension provision of § 4 and the posting of a bond, where
required. This not only gives the natural gas company opportunity
to increase its rates where justified, but likewise guarantees that
the consumer may recover refunds for moneys paid under excessive
increases. The overriding intent of the Congress to give full
protective coverage to the consumer as to price is further
emphasized in § 5 of the Act, 15 U.S.C. § 717d, which authorizes
the Commission,
sua sponte or otherwise, to institute an
investigation into existing rates and charges and to fix them at a
just and reasonable level. Under this section, however, the rate
found by the Commission to be just and reasonable becomes effective
prospectively only. Gas purchasers, therefore, have no protection
from excessive charges collected during the pendency of a § 5
proceeding.
In view of this framework in which the Commission is authorized
and directed to act, the initial certificating of a proposal under
§ 7(e) of the Act as being required by the public convenience and
necessity becomes crucial. This is true because the delay incident
to determination in § 5 proceedings through which initial
certificated rates are reviewable appears nigh interminable.
Although
Page 360 U. S. 390
Phillips Petroleum Co. v. Wisconsin, 347 U.
S. 672, was decided in 1954, cases instituted under § 5
are still in the investigative stage. This long delay, without the
protection of refund, as is possible in a § 4 proceeding, would
provide a windfall for the natural gas company, with a consequent
squall for the consumers. This the Congress did not intend.
Moreover, the fact that the Commission was not given the power to
suspend initial rates under § 7 makes it the more important, as the
Commission itself says, that "this crucial sale should not be
permanently certificated unless the rate level has been shown to be
in the public interest." 17 F.P.C. 563, 575.
This is especially true where, as here, the initial price will
set a pattern in an area where enormous reserves of gas appear to
be present. We note that, in petitioners' proof, a map of the
Continental Shelf area off of the coast of Louisiana shows that the
leases here involved cover but 17 out of a blocked-out area
covering some 900 blocks of 5,000 acres each. The potential of this
vast acreage, in light of discoveries already made as shown by the
record, is stupendous. The Commission has found that the
transaction here covers the largest reserve ever committed to
interstate commerce in a single sale. Indications are that it is
but a puff in comparison to the enormous potentials present under
the seabed of the Gulf. The price certificated will, in effect,
become the floor for future contracts in the area. This has been
proven by conditions in southern Louisiana, where prices have now
vaulted from 17 cents to over 23 cents per MCF. New price plateaus
will thus be created as new contracts are made, and, unless
controlled, will result in "exploitation" at the expense of the
consumer, who eventually pays for the increases in his monthly
bill.
It is true that the Act does not require a determination of just
and reasonable rates in a § 7 proceeding as it does in one under
either § 4 or § 5. Nor do we hold that a
Page 360 U. S. 391
"just and reasonable" rate hearing is a prerequisite to the
issuance of producer certificates. What we do say is that the
inordinate delay presently existing in the processing of § 5
proceedings requires a most careful scrutiny and responsible
reaction to initial price proposals of producers under § 7. Their
proposals must be supported by evidence showing their necessity to
"the present or future public convenience and necessity" before
permanent certificates are issued. This is not to say that rates
are the only factor bearing on the public convenience and
necessity, for § 7(e) requires the Commission to evaluate all
factors bearing on the public interest. The fact that prices have
leaped from one plateau to the higher levels of another, as is
indicated here, does make price a consideration of prime
importance. This is the more important during this formative period
when the ground rules of producer regulation are being evolved.
Where the application, on its face or on presentation of evidence,
signals the existence of a situation that probably would not be in
the public interest, a permanent certificate should not be
issued.
There is, of course, available in such a situation a method by
which the applicant and the Commission can arrive at a rate that is
in keeping with the public convenience and necessity. The Congress,
in § 7(e), has authorized the Commission to condition certificates
in such manner as the public convenience and necessity may require.
Where the proposed price is not in keeping with the public interest
because it is out of line or because its approval might result in a
triggering of general price rises or an increase in the applicant's
existing rates by reason of "favored nation" clauses or otherwise,
the Commission, in the exercise of its discretion, might attach
such conditions as it believes necessary.
This is not an encroachment upon the initial ratemaking
privileges allowed natural gas companies under the
Page 360 U. S. 392
Act,
United Gas Pipe Line Co. v. Mobile Gas Service Corp.,
supra, but merely the exercise of that duty imposed on the
Commission to protect the public interest in determining whether
the issuance of the certificate is required by the public
convenience and necessity, which is the Act's standard in § 7
applications. In granting such conditional certificates, the
Commission does not determine initial prices, nor does it overturn
those agreed upon by the parties. Rather, it so conditions the
certificate that the consuming public may be protected while the
justness and reasonableness of the price fixed by the parties is
being determined under other sections of the Act. Section 7
procedures in such situations thus act to hold the line awaiting
adjudication of a just and reasonable rate. Thus, the purpose of
the Congress "to create a comprehensive and effective regulatory
scheme,"
Panhandle Eastern Pipe Line Co. v. Public Service
Comm'n of Indiana, 332 U. S. 507,
332 U. S. 520
(1947), is given full recognition. And § 7 is given only that scope
necessary for
"a single statutory scheme under which all rates are established
initially by the natural gas companies, by contract or otherwise,
and all rates are subject to being modified by the Commission. . .
."
United Gas Pipe Line Co. v. Mobile Gas Service Corp.,
supra, at
350 U. S. 341.
On the other hand, if unconditional certificates are issued where
the rate is not clearly shown to be required by the public
convenience and necessity, relief is limited to § 5 proceedings,
and, as we have indicated, full protection of the public interest
is not afforded.
Our examination of the record here indicates that there was
insufficient evidence to support a finding of public convenience
and necessity prerequisite to the issuance of the permanent
certificates. The witnesses tendered developed little more
information than was included in the printed contracts. As the
proposed contract price was higher than any paid by Tennessee,
including offshore
Page 360 U. S. 393
production in the West Delta area of Louisiana, it is surprising
that evidence, if available, was not introduced as to the relative
costs of production in the two submerged areas. Moreover, the
record indicates that the proposed price was some 70% higher than
the weighted average cost of gas to Tennessee; still, no effort was
made to give the "reason why." More damaging, was the evidence that
this price was greatly in excess of that which Tennessee pays from
any lease in southern Louisiana. Likewise the $16,000,000 pipeline
to the producers' wells was unsupported by evidence of practice or
custom. Respondents contend -- and it stands undenied -- that this
alone would add 2 cents per MCF to the cost of the gas. Again, the
free movement of distillates retained by the producers was
"shrugged off" as being
de minimis without any supporting
data whatever. Nor was the evidence as to whether the certification
of this price would "trigger" increases in leases with "favored
nation" clauses convincing, and the claim that it would not lead to
an increase in rates by Tennessee was not only unsupported, but has
already proven unfounded. [
Footnote
8]
Nor do we find any support whatever in the record for the
conclusory finding on which the order was based that "the public
served through the Tennessee Gas system is greatly in need of
increased supplies of natural gas." 17 F.P.C. 880, 881. Admittedly
any such need was wrapped up in the Commission's action in Docket
G-11107, where Tennessee was asking for permission to enlarge its
facilities. However, the two dockets were not consolidated, and the
Presiding Examiner conditioned his approval here on the granting of
the application in Docket G-11107, no part of which record is here.
Neither is
Page 360 U. S. 394
there evidence supporting the finding that the producers "would
seek to dispose of their gas elsewhere than to Tennessee Gas and
the interstate market,"
ibid. While the Commission says
that statements were made in argument, apparently by counsel, that
this was the case, we find no such testimony. Since some 90% of all
commercial gas moves into the interstate market, the sale of such
vast quantities as available here would hardly be profitable except
interstate.
These considerations require an affirmance of the judgment with
instructions that the applications be remanded to the Commission
for further proceedings.
It is so ordered.
* Together with No. 536,
Tennessee Gas Transmission Co. v.
Public Service Commission of New York et al., also on
certiorari to the same Court.
[
Footnote 1]
Section 7(e), 15 U.S.C. § 717f(e) provides:
"(e) Except in the cases governed by the provisos contained in
subsection (c) of this section, a certificate shall be issued to
any qualified applicant therefor, authorizing the whole or any part
of the operation, sale, service, construction, extension, or
acquisition covered by the application, if it is found that the
applicant is able and willing properly to do the acts and to
perform the service proposed and to conform to the provisions of
the Act and the requirements, rules, and regulations of the
Commission thereunder, and that the proposed service, sale,
operation, construction, extension, or acquisition, to the extent
authorized by the certificate, is or will be required by the
present or future public convenience and necessity; otherwise such
application shall be denied. The Commission shall have the power to
attach to the issuance of the certificate and to the exercise of
the rights granted thereunder such reasonable terms and conditions
as the public convenience and necessity may require."
[
Footnote 2]
These are the Atlantic Refining Company, Cities Service
Production Company, Continental Oil Company, and Tidewater Oil
Company, all petitioners in No. 518 and sometimes known as
CATCO.
[
Footnote 3]
Tennessee operates a pipeline system extending from gas fields
in Texas and Louisiana through Arkansas, Mississippi, Tennessee,
Kentucky, West Virginia, Ohio, Pennsylvania, New Jersey, New York
and into Massachusetts, New Hampshire, Rhode Island, and
Connecticut. It serves some 80 distributing companies which, in
turn, serve millions of consumers in the various States which its
pipeline traverses.
[
Footnote 4]
These increases were later limited to 2 cents per MCF. The
escalator clauses apparently were inserted in lieu of "favored
nation" clauses, but by letter, not a part of the contracts,
"favored nation" clauses were to be substituted at a later date on
certain contingencies.
[
Footnote 5]
The exact finding is as follows:
"Including the gas which Tennessee proposes to purchase under
these contracts, some 240,000 M.c.f. per day (14.73 p.s.i.a.), it
is estimated that the weighted average cost of all gas to Tennessee
in 1958 will be some 13.70 cents per M.c.f., as compared with 12.73
cents if the gas here proposed to be purchased is excluded."
17 F.P.C. 563, 570. Thus is the .97-cent figure derived. It is,
however, a misleading figure, for the estimate for 1958 includes
the 22.4-cent gas for only two months of 1958, November and
December. There is no indication in the record as to what the cost
increase would be if the weighted average were calculated by
including the 22.4-cent gas for the full year.
[
Footnote 6]
The brief is not signed by the Solicitor General, but by both
the General Counsel and the Solicitor of the Federal Power
Commission.
[
Footnote 7]
The 1942 amendments to § 7, 56 Stat. 83, were not intended to
change this declaration of purpose.
See Hearings, House
Interstate and Foreign Commerce Committee, on H.R. 5249, 77th
Cong., 1st Sess. 18-19; H.R.Rep. No. 1290, 77th Cong., 1st Sess.;
S.Rep. No. 948, 77th Cong., 2d Sess.
[
Footnote 8]
Tennessee has subsequently filed an application with the F.P.C.
requesting higher rates designed to produce some $19,000,000
additional annual revenue. Tennessee Gas Transmission Co., Docket
G-17166.
MR. JUSTICE HARLAN, whom MR. JUSTICE FRANKFURTER joins,
concurring.
I agree with the judgment of the Court on the ground that the
findings upon which the Commission based its conclusion that the
public convenience and necessity required the issuance to
petitioners of unconditional final certificates find no support in
the record. There is no evidence supporting what appear to be the
crucial findings that (1) "the public served through the Tennessee
Gas system is greatly in need of increased supplies of natural
gas," particularly insofar as this finding implies that this need
is immediate and cannot be satisfied from Tennessee's existing
reserves, and that (2) there was serious danger that producer
petitioners' gas would be permanently lost to the interstate market
unless an unconditional certificate were granted on their terms.
This makes it unnecessary to consider at this stage any of the
other questions sought to be presented by the parties.