John Marshall Harlan II

“ It seems incontestable that if a producer consistently sells gas at the price specified in a final, permanent certificate, and does not attempt to increase its price, the Commission may not order it to make refunds simply because the just and reasonable rate for its area turns out to be below the in-line price. ”

“ The Commission has dealt with this question primarily in pipeline certification proceedings.55 This does not seem inappropriate, since any new use of significant amounts of gas will normally entail the erection of substantial new pipeline facilities, requiring certification. Persons who anticipate that a pipeline which is seeking 'budget' authority will devote the gas to inferior end uses may request that the authority be withheld or limited. We believe that these opportunities for objection are adequate to protect the public interest in conservation of gas. ”

“ We adhere to the dicta in Callery and Sunray Mid-Continent. That outcome comports better with the language of § 4 (e) than does the alternative. It is true that § 4 (e) in terms gives the Commission power to refund 'the portion of such increased rates or charges' found to be excessive, and does not expressly limit the refund to the rate increase or increment. ”

“ However, we think that in light of Callery and the other precedents the Commission was not obliged in this instance to give explicit consideration to the establishment of a distinct refund floor. The same factors are present here as in Callery. The need to speed refunds to consumers and to assure producers of a firm price are identical. We cannot say, therefore, that the Commission breached any duty in failing expressly to consider whether the prices it fixed were suitable when regarded as refund floors. ”

“ To encourage early attack on temporary certificates would diminish their utility. Yet to discourage prompt challenges and simultaneously to hold that refunds could not be ordered for the interim period would in large part frustrate the objectives of the Natural Gas Act by allowing producers to operate for long intervals33 on the basis of their own representations and with only minimal regulation by the Commission. ”

“ We cannot conclude, given the extraordinary discretion which necessarily attends such a finding as the Commission was required to make, that the Commission took into account any impermissible factors or that the resulting initial price was too high as a matter of law. The seaboard interests apparently concede that contract prices are relevant in fixing initial prices, for they do not object to the Commission's consideration of permanently certificated prices. They complain only of the weight given the guideline and temporarily certificated prices. ”

“ Moreover, to hold that a temporary certificate must be challenged immediately or not at all, as the producers suggest, might encourage appeals which would impair the usefulness of temporary certificates. Temporary certificates are intended to permit immediate delivery of gas in emergencies. To delay the issuance of the certificate and the flow of the gas until the completion of judicial review which might consume months or years would severely hamper the performance of this function. ”

“ After full briefing of the refund issue, the Commission ordered the Amerada producers to refund all sums collected under the temporary certificates in excess of the in-line rate, with the exception of amounts expended for royalties and production taxes prior to the date of the decision on appeal in Skelly and in reasonable reliance upon the Commission's orders. ”

“ Fifth, it took into account the fact that 53% of the gas in the area was presently moving at prices at or below 16¢.
In the District 3 or Hawkins proceeding, the Commission fixed an initial price of 17¢ per Mcf for the post-Policy Statement period and reaffirmed an earlier-established 16¢ initial price for previous sales. The seaboard interests attack the 17¢ price as too high. Superior Oil Company asserts that both prices are too low. We confine ourselves at present to the contention of the seaboard interests. In arriving at the 17¢ price, the Commission considered five factors. ”

“ This information will be known collectively by a number of pipelines; an individual producer cannot even know what customer of the purchasing pipeline will receive the gas it supplies.46 Although it might be possible for the Commission to require the relevant pipeline or pipelines to furnish all this information in each producer certification proceeding,47 that procedure would be cumbersome and would lengthen the producer proceedings, which we have previously commended the Commission for endeavoring to shorten. ”

“ The third and last major issue is whether the Commission erred in failing to make a reasoned finding that there was a public need for the gas certificated in the District 2 and District 3 (Sinclair and Hawkins) proceedings. ”