William O. Douglas

“ At that stage the petitioner merely asserted that the Commission erred (1) in taking the proceeds from the direct industrial sales into consideration in determining the amount of its profits and in ordering the rate reduction; and (2) in failing reasonably to allocate petitioner's earnings between regulated sales and unregulated sales. That precludes an attack in the courts on the Commission's order for failure to make a segregation of property. ”

“ The Commission, while it lacks authority to fix rates for direct industrial sales, may take those rates into consideration when it fixes the rates for interstate wholesale sales which are subject to its jurisdiction. ”

“ That is an extremely relevant consideration for the Commission to take into account when it determines what costs are fairly attributable to each business and what the resultant rate for the wholesale business should be. ”

“ The industrial rates in force here produce revenues of $1,500,527 with expenses of $499,699 which, according to petitioner, result in earnings of $1,000,828 before income taxes. That is an apparent profit of more than 200 per cent. It is a fairly obvious indication that the regulated business is being saddled with costs which in fairness should be borne by direct industrial sales. ”

“ Otherwise the profits or losses, as the case may be, of the unregulated business would be assigned to the regulated business and the Commission would transgress the jurisdictional lines which Congress wrote into the Act. [4] The Commission recognizes this necessity. As it stated in Re Cities Service Gas Co., 50 P.U.R. (N.S.) 65, 89: 'The company's facilities and operations are devoted in part to natural gas service which is not subject to our jurisdiction. This service consists principally of gas sales made directly to large industrial consumers. ”

“ The respondents' markets are rapidly expanding and embrace the large metropolitan area of Detroit, which alone takes 40 per cent of the entire output under a long-term contract. Panhandle Eastern's president testified that the demand for service is so great that within the next year the respondents will be called upon to sell every cubic foot of gas that can possibly be delivered through the lines, and that the capacity factor will increase from 70 per cent to 90 per cent. ”

“ Federal Power Commission, supra. We need not repeat what we said there. It is clear that the value of producing properties and gathering facilities is affected whenever rates are fixed. That is inevitably true whether the leaseholds are put into the rate base or whether as petitioner urges the gas is valued as a commodity. That result is not avoided unless Congress puts a floor under production properties and gathering facilities of natural gas companies and fixes a minimum return on them. That Congress has not done. ”

“ See 8 Fed.Reg. 16101.↑ Petitioner produces approximately 50 per cent of the gas which it transports and sells, the remainder being purchased. The payments for gas purchased were allowed by the Commission as an operating expense.↑ See note 4, supra.↑ The market value is alleged to be about $8,400,000 as compared with some $955,000 which the Commission found to be the actual legitimate cost.↑ The Commission stated on this phase of the case: 'The evidence discloses that the respondents' business is exceptionally free from serious business hazards. ”

“ Commissioner, supra. It may be waived by any party, including the government. Peoria & P.U. Ry. Co. v. United States, 263 U.S. 528, 535, 536, 44 S.Ct. 194, 197, 68 L.Ed. 427; Industrial Addition Ass'n v. Commissioner, supra. The objection of the City of Cleveland which came after judgment had been rendered came too late. Cf. United States v. ”