Colorado-Wyoming Gas Co. v. Federal Power Commission

delivered the opinion of the Court.

This case is a companion case to Colorado Interstate Gas Co. v. Federal Power Commission and Canadian River

The investigation and hearings on the interstate wholesale rates of Canadian, Colorado Interstate and petitioner were consolidated. As we have seen, the Commission ordered Canadian to reduce its rates by $561,000 per year. That amount made up part of the $2,065,000 annual reduction which the Commission ordered in the rates of Colorado Interstate. In the present case the Commission found that petitioner’s revenues were $159,000 in excess of costs and a fair return and that $119,000 of that excess were allocable to petitioner’s sales for resale. The Commission ordered petitioner to reduce its wholesale rates by $119,000 a year ( 43 P. U. R. (N. S.) 205 , 234). That does not represent the net decrease in revenue, since the Commission ordered Colorado Interstate to reduce its

The Commission in this case as in Colorado Interstate Gas Co. v. Federal Power Commission and Canadian River Gas Co. v. Federal Power Commission did not make a separation of properties used in the regulated business from those used in the unregulated. It used instead the same method of allocation of costs as it did in those other cases. Petitioner contends that the Commission’s method of allocation of costs included in the regulated business a part of its business which Congress has not subjected to regulation- by the Commission. As we have noted, petitioner’s transmission line commences in Colorado near Littleton where it connects with the pipeline of Colorado Interstate. Petitioner sells some of its gas in Colorado for resale to domestic users in certain towns in Colorado. The Commission held that those wholesale sales were subject to its jurisdiction. Petitioner contends that those sales are made in intrastate commerce and are not subject to the Commission’s rate-making powers. Its position is that the one and only sale for resale by it in interstate commerce is the sale at the city gate in Cheyenne, since none of the Colorado sales involve interstate commerce so far as petitioner is concerned.

The answer turns on the meaning of § 1 (b) of the Act ( 52 Stat. 821 , 15 U. S. C. § 717 ) which provides:

“(b) The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial,

Accordingly, we conclude that if petitioner’s pipeline were to be constructed today from Littleton, Colorado to the city gates of the Colorado towns where petitioner’s gas is resold, § 7 (c) would require that a certificate of public convenience and necessity be obtained from the Commission. For in this case as in Illinois Gas Co. v. Central Illinois Co., supra, the gas which petitioner purchases from Colorado Interstate moves in a continuous stream across state lines to local distributing companies in Colorado as well as Wyoming. If petitioner is engaged in “the transportation of natural gas in interstate com

Most of the other objections which petitioner raises to the Commission’s method of allocation of costs have been considered in the cases of Colorado Interstate Gas Co. v. Federal Power Commission and Canadian River Gas Co. v. Federal Power Commission. We need not repeat what we said there. But there are a few distinct phases of this case which must be separately stated.

Petitioner says that the Commission treated it along with Canadian and Colorado Interstate as an integrated unit for purposes of the allocation of costs. The inference is that the Commission combined petitioner’s costs with those of the other two companies and allocated the combined costs three ways. . That is not the fact. Petitioner is independent in management and control from the other two. Its system was not constructed as part of Canadian’s and Colorado Interstate’s system but was started independently and connected with the others at a later stage. The Commission recognized that in operation the three-company project was a single one in the sense that an alteration in Canadian’s rates affected the reasonableness of the rates of Colorado Interstate and in turn the reasonableness of the rates of petitioner. But when it came to an allocation of costs among petitioner’s classes of business the Commission considered petitioner’s costs alone.

Here as in the cases of Canadian and Colorado Interstate the findings of the Commission leave much to be desired. The findings are general and incorporate by reference the staff exhibits, on which reliance is put for the subsidiary findings. But in this case there are added dif-

(1) The “system peak day” is February 9, 1939 — the same day chosen for Canadian and Colorado Interstate. We know from our search of the record that is not the actual peak day in 1939 for petitioner’s business. We are told by the Commission in its brief that it is the ratio of deliveries to the regulable and non-regulable customers rather than total deliveries that determines the allocation of capacity costs. But there are no findings which indicate why the system peak day for other companies should be taken as the system peak day for this company. Nor are there any findings which indicate that the ratio on the system peak day is a more reliable guide in the allocation of costs than the ratio on the actual peak day of this company.

We do not know why the lower figure was rejected. There are no findings to guide us. In the record there is testimony which may suffice as a partial reconciliation of the difference and which casts some doubts on the accuracy of the lower figure. But we have been unable completely to reconcile the difference. We do know from a reading of the record that the staff exhibit from which the-1,777 Mcf item was obtained was based at least in

The review which Congress has provided for these rate orders is limited. Sec. 19 (b) says that the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” But we must first know what the “finding” is before we can give it that conclusive weight. We have repeatedly emphasized the need for clarity and completeness in the basic or essential findings-on which administrative orders rest. Florida v. United States, 282 U. S. 194 , 215; United States v. Baltimore & Ohio R. Co., 293 U. S. 454 , 464; United States v. Chicago, M., St. P. & P. R. Co., 294 U. S. 499 , 504-505, 510-511; United States v. Carolina Carriers Corp., 315 U. S. 475 , 488-489. Their absence can only clog the administrative function and add to the delays in rate-making. We cannot dispense with them for Congress has provided the standards for judicial review under this Act. § 19 (b). The courts cannot perform the function which Congress assigned to them in absence of adequate findings. Nor are they authorized under § 19 (b) to make findings and substitute them for those of the Commission. -

We think it is plain that $98,000 of the rate decrease ordered by the Commission in this case is valid since it reflects the reduction in the rates of. Colorado Interstate from whom petitioner purchases practically all of its gas. But the balance of the $119,000 rate decreasé which was

Accordingly, we affirm the judgment below insofar as it sustained the order of the Commission directing petitioner to reduce its rates by $98,000. As to the balance of the rate reduction, we reverse the judgment below, set aside the order of the Commission, and remand the cause for further proceedings in conformity with this opinion. See § 19 (b).

It is so ordered.

The Chief Justice, Mr. Justice Roberts, Mr. Justice Reed, and Mr. Justice Frankfurter are of the opinion that the case should be remanded to the Commission for separate allocation of investment and operating cost between the regulable and nonregulable properties, as well as for the clarification of findings directed in the opinion. They agree that the deliveries to wholesalers in Colorado are in interstate commerce.