Atlantic Refining Company v. Public Service Commission of New York

PETITIONER: Atlantic Refining Company
RESPONDENT: Public Service Commission of New York
LOCATION: Sherry Frontenac

DOCKET NO.: 518
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 360 US 378 (1959)
ARGUED: May 20, 1959 / May 21, 1959
DECIDED: Jun 22, 1959

Facts of the case

Question

Media for Atlantic Refining Company v. Public Service Commission of New York

Audio Transcription for Oral Argument - May 20, 1959 in Atlantic Refining Company v. Public Service Commission of New York

Audio Transcription for Oral Argument - May 21, 1959 in Atlantic Refining Company v. Public Service Commission of New York

Earl Warren:

-- et al. petitioners versus Public Service Commission of the State of New York et al. and number 536, Tennessee Gas Transmission Co. petitioner versus Public Service Commission of the State of New York Et Al.

Mr. Kirby, you may proceed.

Edward S. Kirby:

Mr. Chief Justice and may it please the Court.

In these cases I represent Public Service Electric & Gas Company which is a gas distribution public utility in the State of New Jersey.

We serve over 1,100,000 customers and have large purchases of natural gas from three pipeline companies.

We purchased for example a 1958 already 8 million MCF of natural gas, which by coincidence is slightly larger than the entire amount which will be delivered at Tennessee under these contracts per year.

Now, we are rightly interested in the field price of gas in these cases because the field price of gas is a large element in the price which the pipeline company charges the distribution company.

Now, in my argument, first, I would like to try and cover two points which I felt were prompted by questions from the bench yesterday and these two points are (A) the rate making standard of the act in connection with the Commission's discretion in a Section 7 proceeding and 2 or (B), what's a touch off Commission action, and what evidence is necessary where it appears a producer is seeking too high of price?

Taking up the first point, I agree that the Commission has a certain amount of discretion which it may use in the Section 7 proceeding.

And in the exercise of that discretion, it need not make a finding of just and reasonableness with respect to the initial rate in every case.

What this discretion must be exercised within the framework and policy of the Natural Gas Act.

The cases for example which express that policy are the Hope case and the Phillips case, and the policy as this Court interpreted was namely to protect consumers from exploitation at the hands of natural gas companies.

Felix Frankfurter:

May I trouble you to repeat exactly the words you said that it need not find what at the rate --

Edward S. Kirby:

Yes, Mr. Justice Frankfurter, I said it need not make a finding of just and reasonableness in a Section 7 proceeding with respect to the initial rate.

Felix Frankfurter:

But, the contention of the respondent is that it can't issue a certificate without making some provision for rates (Inaudible).

Edward S. Kirby:

Not in every case, if for example --

Felix Frankfurter:

In this case.

Edward S. Kirby:

In this case, yes.

That is our position, in this case, they should not issue the certificate without (Inaudible)

Felix Frankfurter:

It doesn't find what the reasonable rate is, but it must make some what shall I say --

Edward S. Kirby:

Some provision to protect the consumer.

Felix Frankfurter:

Pardon me?

Edward S. Kirby:

Some provision to protect the consumer in the meantime.

Felix Frankfurter:

If determination of that would be and just and reasonable rate.

Edward S. Kirby:

No, that's right Your Honor.

Felix Frankfurter:

What is the significance of the rate?

Is this an outside gas or what is it?

Edward S. Kirby:

All right.

I think I can answer that right here Your Honor.

I say that the Commission's discretion in a Section 7(4) proceeding must recognize that Section 4 points out that this is a price oriented statute and that Section 7 provides all rates must be just and reasonable, and if they are not, they are declared to be unlawful.