MR. JUSTICE CLARK, with whom THE CHIEF JUSTICE, MR. JUSTICE BLACK and MR. JUSTICE BRENNAN join, dissenting.
The Sisyphean labors of the Commission continue as it marches up the hill of producer regulation only to tumble down again with little undertaken and less done. After 16 years without regulation under the Act, resulting from the Commission's position that it had no jurisdiction over the production of gas, this Court decided Phillips Petroleum Corp. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954). The Court there charged the Commission with supervision over Phillips' operating expenses, both producing and gathering, and directed the Commission to fix a just and reasonable rate for the sale of Phillips' gas. Five years later the Presiding Examiner determined Phillips' 1954 cost of service to be 11.662¢ per Mcf. and allowed it a 9.25% rate of return. He directed and Phillips filed a preliminary rate per Mcf. for 1954 and an adjusted rate for subsequent years. A year and a half later the Commission handed down its decision. It found Phillips' 1954 cost of service to be 11.1009¢ per Mcf. and determined that a fair return would be 11%. It found Phillips' jurisdictional revenues substantially less in 1954 than these allowables and, contra to the recommendation of the Examiner and its own staff, it terminated all save two of the § 4(e) proceedings, discharged Phillips from further refund obligation thereunder and dismissed its own § 5 investigation of these and subsequent rates covering some 95 substantial rate increases made by Phillips. In addition, it assumed from these 1954 figures that the rates were 'probably' not excessive through 1958 and invited motions to dismiss these proceedings, thus approving existing and increased rates for the 1955-1959 period on the sole basis of 1954 costs and revenues. It also concluded that there was 'nothing in the record to show that these past rates * * * are unduly discriminatory or preferential,' 24 F.P.C., at 576, despite the fact that they varied from 5.5¢ per Mcf. to 13.5¢, with one at 17¢ per Mcf. But this is not all. Concurrently with this action the Commission issued sua sponte a Statement of General Policy No. 61-1, 24 F.P.C. 818, 25 Fed.Reg. 9578, in which it discarded its long-established cost method in favor of an area basis of fixing rates. It promulgated two lists of area prices, one covering initial rates under § 7 certificates and another for increasing rates for gas sold under existing contracts subject to § 4(e). In arriving at these price levels the Commission said that it considered 'all of the relevant facts available to us,' including cost information, 'existing and historical price structures, volumes of production, trends in production, price trends in the various areas over a number of years, trends in exploration and development, trends in demands, and the available markets for the gas.' 24 F.P.C., at 819. For the new gas level § 7 certification price, there can be no doubt that the level established as a guide is the highest permanently certificated rate in the respective areas as of September 1960. The other gas level announced (for § 4(e) contracts) was but the average weighted price for gas sold from the respective areas in 1959. It is therefore accurate to say that both levels were based on existing price structures as of September 1960, i.e., averaged field prices. The Examiner, contrary to the Commission, had found the cost method not only more accurate but entirely feasible and, in comparison with the area method, no more delaying. The parties themselves, including Phillips, concurred in the conclusion that Phillips' rates should be determined by the Examiner on the basis of its over-all cost of service. Nevertheless the Commission held to the contrary and, in addition, issued the statement of policy and accompanying price levels without notice, hearing or record and has since amended them several times in like manner. In this summary fashion the Commission junked its cost-of-service regulation program, wasted a half-dozen years of work thereon and is now experimenting with a new, untried, untested, inchoate program which, in addition, is of doubtful legality. As a consequence the consumers of gas all over the United States and particularly in the large metropolitan cities of the Eastern Seaboard, the Midwest and the West Coast will pay for the Commission's area pricing wildgoose chase. I predict that in the end the consumer will find himself to be the biggest goose of the hunt and the small producer the dead duck.