Administrative Law – Procedure – Consideration of Initial Rate in Natural Gas Act Sale Certification

In a Natural Gas Act sale certification proceeding the Federal Power Commission twice refused to issue an unconditional certificate, finding public convenience and necessity unproved because the unprecedented initial contract rate was not “shown to be in the public interest.” Applicants declined to present evidence of the reasonableness of the initial contract rate. A commission proposal to certify at a lower rate, with increase to the contract price after twenty-four hours of delivery but under the public protection provisions of section 4 of the act, was refused. After being informed that the applicants would not dedicate the gas to the interstate market unless an unconditional permanent certificate was granted at their proposed rate, the commission on rehearing issued an unconditional certificate to prevent loss to the interstate market, which was found in great need. Public utilities purchasing gas from the certified vendee obtained review in the Court of Appeals for the Third Circuit, which reversed the commission’s decision on the ground that the commission had power only to conduct a full hearing and therefore lost jurisdiction when the applicant circumscribed the scope of inquiry by refusing additional evidence. A On certiorari to the United States Supreme Court, held, affirmed. Although the commission did not lose jurisdiction, it was error not to consider the reasonableness of the initial rate. Atlantic Refining Co. v. Public Service Commission of New York, 360 U.S. 378 (1959).