US SUPREME COURT DECISIONS

Under § 5(a) of the Natural Gas Act, the Federal Power Commission conducted a general investigation of the lawfulness of the rates charged by the Phillips Petroleum Co., an independent producer, in its sales of natural gas in interstate commerce. Later, the Commission consolidated with that investigation 12 proceedings under § 4(e) of the Act which involved the lawfulness of certain rate increases filed by the Company under § 4(d) prior to the end of 1956. After extensive hearings and the filing of a report by the Examiner, the Commission concluded that the individual company cost of service method of fixing rates was not a workable method of fixing rates of independent producers of natural gas, and that such rates should be established on an area basis, rather than on an individual company basis. As initial steps toward this end, the Commission promulgated area-by-area price levels for initial and increased rate filings by producers; stated that, in the absence of compelling evidence, it would not certificate initial rates, and would suspend increased rates, which exceeded these price levels; and announced that it would begin a series of hearings, each designed to cover a major producing area. It also terminated ten of the pending proceedings under § 4(e); left two others open only for limited purposes; and terminated its investigation under § 5(a).

Held:

1. Although the Commission announced prospectively that it would not accept for filing future contracts containing spiral escalation clauses, it did not err in refusing to reject as void ab initio certain past rate increases because they were based on such clauses. Pp. 373 U. S. 303-304.

2. The Commission did not abuse its discretion in terminating ten proceedings under § 4(e) and in leaving two others open only for a limited purpose, since it found, on the basis of substantial chanrobles.com-red

Page 373 U. S. 295

evidence, that the increases did not bring revenues up to the cost of service and that, therefore, no refund obligation could be imposed, and since these increases had been superseded by subsequent increases which (with one minor exception) had been suspended and made the subject of separate proceedings under § 4(e), which were continuing. Pp. 373 U. S. 304-307.

3. The Commission did not abuse its discretion in terminating its investigation under § 5(a) of the lawfulness of the Company's current rates. Pp. 373 U. S. 307-314.

112 U.S.App.D.C. 369, 303 F.2d 380, affirmed.