Phillips Petroleum Company, a Delaware Corporation v. Federal Power Commission, the State of New Mexico, Intervenors

WILLIAM E. DOYLE, Circuit Judge.

The Phillips Petroleum Company, together with the several intervenors, all independent producers of natural gas in the Rocky Mountain area, seek review of an order of the Federal Power Commission promulgating a rulemaking procedure for the fixing of rates of natural gas sales in interstate commerce pursuant to the Natural Gas Act, 15 U.S.C. § 717 and, particularly, §§ 4 and 5 of the Act, 15 U.S.C. §§ 717c and 717d, which grants the Commission the authority to establish “just and reasonable rates.”

The peculiar aspect of this case is that the Commission has drastically changed the procedure from the traditional method involving trial-type adjudicatory proceedings to this rulemaking method. This is an informal hearing which is not conducted on the record and which does not afford an opportunity for cross-examination. It is used so as to enable the Commission to establish area rates without having an individual hearing on each producer. It calls for composition and reconciliation of written submissions of the various producers. The validity of this procedure is the issue which is presented to us.

I.

HISTORY OF THE CONTROVERSY

The Commission’s authority to regulate interstate sales of natural gas derives from the Natural Gas Act of 1938 which declares that “the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest.” 15 U.S. C. § 717(a). The Commission is empowered to set aside and modify any rate or contract which it determines after hearing to be “unjust, unreasonable, unduly discriminatory or preferential.”

A brief history of some of the antecedent events is necessary. In 1954 the Supreme Court decided in Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954), that independent producers of natural gas are natural gas companies within the meaning of § 2(6) of the Act. From this time forward, the Commission has “labored with obvious difficulty to regulate a diverse and growing industry under the terms of an ill-suited statute.” In re Permian Basin Area Rate Cases, 390 U.S. 747, 756, 88 S.Ct. 1344, 1354, 20 L.Ed.2d 312 (1968).

Following the Phillips decision, the Commission undertook the regulation of rates of approximately 2,500 producers selling gas in interstate commerce and did so on a company-by-company basis. The result of all this was somewhat ineffectual. See Permian Basin, supra, at 757 n. 13, 88 S.Ct. 1344. Thus in 1960 the Commission undertook to regulate producers on an area basis, whereby a uniform ceiling price applicable to all producers would be established based upon producers’ actual costs, area data for the flowing gas costs and national data for new gas-well costs. See Phillips Petroleum Co., 24 FPC 537, 540 (1960), aff’d sub nom. Wisconsin v. FPC, 112 U.S.App.D.C. 369, 303 F.2d 380 (1961), aff’d, 373 U.S. 294, 83 S.Ct. 1266, 10 L.Ed.2d 357 (1963). The Commission spent five years with its first area rate case which involved the establishing of rates for the Permian Basin. *845See Permian Basin Area Rate Proceeding, 34 FPC 159 (1965). This case was reviewed by the Supreme Court and the area rate procedure was affirmed. In re Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968).

As a result of the approval given in the Permian Basin case, the Commission instituted a number of other similar proceedings.1 These proceedings were lengthy and cumbersome, and as a result of this experience the Commission undoubtedly considered some of the admonitions given in the Permian Basin opinion which included: the Commission should “continue to examine both the premises of its regulatory methods and the consequences for the industry’s future of its rate-making orders2 Permian is “the first of many steps toward a more expeditious and effective system of regulation.”3 Based on these statements and the ruling in the Permian case, the Commission issued a notice of proposed rulemaking which called for the issuance of rules fixing just and reasonable rates for independent producers in the Appalachian and Illinois Basin Area.4 In less than a year after its notice rates were prescribed for these areas.5

The next step was for the Commission to embark on a nationwide rulemaking proceeding, whereby it sought information on independent producers’ costs of exploring and developing natural gas, gas supply, rate of return and general revenue requirements and prices for new gas sales. 35 Fed.Reg. 11638 (1970). Public hearings of record were held and arguments were heard concerning the Commission’s attempt to promulgate rates through a rulemaking procedure. See 36 Fed.Reg. 13585 (1971). See also Order No. 435 which established some rates under § 7 of the Gas Act. This case is currently on appeal, American Public Gas Ass’n v. FPC, D.C.Cir., No. 71-1812.

This led to the issuing of notice of proposed rulemaking and order procedures for the Rocky Mountain area. 36 Fed.Reg. 13621 (1971). This notice provided that just and reasonable rates would be issued for gas contracts dated before October 1, 1968. It provided also for determination as to whether the rates under Order 435 were to apply to contracts dated between October 1, 1968 *846and June 17, 1970. Except for these specifics contained in the notice, the rulemaking proceedings in Docket No. R-389A continued in effect. It was thus clear that informal rulemaking was being employed since the order outlined the manner in which data was to be submitted and provided that the Commission’s staff would composite and reconcile such data. It named the petitioners herein together with the purchasing pipelines. It allowed other persons to become parties by filing a notice of intention to respond by August 2, 1971.

The petitioners challenged the new rulemaking procedures. These challenges were, however, unsuccessful before the Commission. Motions for rehearing and for reconsideration were made in which the present contentions as to the necessity for evidentiary hearings were made. The Commission rejected the contention that an adjudicatory hearing was required, stating that both the Natural Gas Act and the Administrative Procedure Act recognized the use of rulemaking procedures by notice to interested parties and the opportunity to submit written material.6

The Phillips Petroleum Company then filed its petition seeking review in this court. Amerada Hess Corporation on behalf of itself and others filed a petition for review in the Court of Appeals for the District of Columbia. This petition was transferred and consolidated with the Phillips case for the purposes of this review.

The matter submitted for review herein is “Notice Instituting Proposed Rule-making and Order Prescribing Procedure”, which document was, as previously noted, issued by the Commision on July 15, 1971 in Docket No. R-425. This was called by the Commission a rule-making procedure having the purpose of more quickly effectuating the Commission’s task of fixing just and reasonable rates. The Commission ordered:

(1) completion by petitioners and pipelines producing natural gas of questionnaires covering “flowing gas costs and operational data on an individual company 1969 test year basis.”
(2) composition of such data by the Commission’s staff before October 22, 1971, the results being available to any party on request.
(3) verified written responses to the proposed rulemaking before November 12, 1971.
(4) a conference on August 3, 1971, for “developing the issues and procedures to be followed” in the proceeding, as such “appears to be warranted in the public interest.”

No specific rates were set forth in the notice or release.

It is noteworthy that the Commission has initiated the procedure for setting area rates and by doing so it was engaging in a rulemaking proceeding. However, its notice or release also formulated a procedure to be used in the area rate proceeding. This is also a rulemaking proceeding. Thus the question on the merits which we are called on to review is the validity of the proposed procedure of the Commission which in effect abolishes the traditional trial-type hearing and substitutes for it the informal evaluation of written submissions.

*847II.

JURISDICTION TO REVIEW

Petitioners assert that there is jurisdiction pursuant to § 19(b) of the Natural Gas Act, 15 U.S.C. § 717r(b). The Commission does not deny this, for they are equally desirous of having a determination of the validity of the proposed procedure. Hence, the Commission takes the position that the orders entered are final and that the attempted review is not a premature effort. This court is obligated, however, to view the condition and determine for itself that there is jurisdiction to determine the case. See Sunray DX Oil Co. v. FPC, 351 F.2d 395, 397 (10th Cir. 1965).

In the proposed rulemaking procedure, specific rates, terms or conditions are not set forth. It is a rule which prescribes standards for the setting of area rates in the Rocky Mountain region and to that end it orders submission of certain data. Thus it is clear that the Commission is presently engaged in an exercise of its rulemaking power, even though it is merely formulating the procedure to be used.

The matter before us is a question of law and not of fact. However, it is procedural in its nature, even though it may have profound substantive effects, and we are mindful that mere procedural orders have been held to be not within the scope of the circuit courts of appeal. See FPC v. Metropolitan Edison Co., 304 U.S. 375, 385, 58 S.Ct. 963, 82 L.Ed. 1408 (1938). But this line of cases goes to the proposition that courts will not interfere with the administrative process and will limit themselves to review of an actual order following a hearing. See FPC v. Metropolitan Edison Co., supra; Amerada Petroleum Corp. v. FPC, 285 F.2d 737 (10th Cir. 1960); United Gas Pipe Line Co. v. FPC, 206 F.2d 842 (3d Cir. 1953); Eastern Utilities Associates v. SEC, 162 F.2d 385 (1st Cir. 1947). If the order is as bad as the petitioners claim, it would require a holding that there exists a denial of rights guaranteed by the due process clause of the Fifth Amendment and a holding also that the Commission is acting beyond the law and outside the Administrative Procedure Act as well. Violations of this magnitude would render the entire proceeding invalid, and it could be raised following the setting of rates, but there would be much wasted motion in proceeding in this manner.

The statute in question, § 19(b), provides for judicial review of final agency orders and under such a statute challenges to newly promulgated agency regulations prior to their application against particular individuals have often been entertained. See FCC v. ABC, 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954); Columbia Broadcasting System v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 86 L.Ed. 1563 (1942); Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 87 S.Ct. 1526, 18 L.Ed.2d 704 (1967); Toilet Goods Ass’n v. Gardner, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967); Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). In the latter three cases Mr. Justice Harlan, writing for the Court, mentioned two applicable criteria: first, whether the issues tendered are appropriate for judicial resolution, that is to say e. g., whether specific facts were needed in order to decide the case and, secondly, whether the impact on the parties is substantial. In one of the food, drug and cosmetic act cases, Toilet Goods Ass’n v. Gardner, supra, it was determined that a question existed as to whether the threatened inspection would ever materialize. In the other two cases, Abbott Laboratories v. Gardner, supra, and Gardner v. Toilet Goods Ass’n, supra, it was held that a pre-enforcement judicial review was justified because the questions were straightforward legal ones not depending on specific facts and, secondly, that the regulations had an immediate substantial impact on the manufacturers involving large expenditures and the risk of serious penalties.

*848In our case the petitioners present a clear-cut legal issue, alleged deprivation of procedural due process, and it could not be made any clearer by factual background. Furthermore, the impact is immediate and the cost of its application, if it proves to be invalid, is substantial. The delay which would result from remanding this case for full-scale procedure would be great and unquestionably injury would result to the petitioners and would be felt by the public at large. The words of Chief Justice Stone in Columbia Broadcasting System v. United States, 316 U.S. 407, 425, 62 S.Ct. 1194, 1204, 86 L.Ed. 1563 (1942), come to mind:

The ultimate test of reviewability is not to be found in an overrefined technique, but in the need of the review to protect from the irreparable injury threatened in the exceptional case by administrative rulings which attach legal consequences to action taken in advance of other hearings and adjudications that may follow, the results of which the regulations purport to control.

Accordingly, we view the present order as one which is appropriate for judicial review and resolution since it tenders a pure question of law and, secondly, the hardship to the petitioners which would result from refusal to review the question would be of great magnitude, and we conclude that the case is a proper one for the exercise of this court’s jurisdiction.

III.

VALIDITY OF THE PROPOSED REGULATION BY RULEMAKING UNDER THE NATURAL GAS ACT

The Act does not expressly authorize the procedure which the Commission has adopted; by the same token, the Act does not prohibit it. Section 5 of the Act gives the Commission the power to fix just and reasonable rates. It does require that a hearing shall be held, and the rules of procedure regarding hearings are found in § 15 of the Act, 15 U. S.C. § 717n. Part (b) of this particular section provides that

[a] 11 hearings, investigations, and proceedings . . . shall be governed by rules of practice and procedure to be adopted by the Commission, and in the conduct thereof the technical rules of evidence need not be applied. No informality in any hearing, investigation, or proceeding or in the manner of taking testimony shall invalidate any order, decision, rule, or regulation issued under the authority of this chapter. (Emphasis added.)

The Commission, acting pursuant to § 16 of the Act, 15 U.S.C. § 717o, issued a rule which provides, as we have seen, for an informal hearing. This would appear to be in conformity with the plain terms of § 15 quoted above.

Section 16 is entirely consistent with the particular order adopted. It provides the Commission with the “power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate. This provision goes on to say, referring to the Commission, that it “may prescribe the form or forms of all statements, declarations, applications, and reports to be filed.” This section thus provides the Commission with a broad authority in prescribing procedures for obtaining information upon which it is to act. As was said by the Court of Appeals for the District of Columbia, a primary objective is the obtaining of information to enable the Commission to carry out effectively the provisions of the Natural Gas Act. The court went on to say that the Commission has the ability to choose with relative freedom the procedure that it will use to acquire relevant information. The Commission has the power to tailor its proceedings so as to fit the issues before it together with the information that it needs to illuminate those issues and the manner of presentation which will bring before it the *849information in the most efficient manner. See City of Chicago v. F.P.C., 147 U.S.App.D.C. 312, 458 F.2d 731, 743-744 (1971).

After reading §§ 15 and 16, one is constrained to conclude that the Commission has a very broad discretion indeed in determining the form of its proceedings. The petitioners, on the other hand, maintain that § 5 of the Act in providing for a hearing, necessarily means a formal or adjudicative type of hearing with full right of cross-examination and participation in the preparation of a public record, a record which must be the product of the ratemaking procedure. This, so it is argued, is the method which has' been followed throughout the years and the present attempts at innovations are not authorized by the statute.

It is true that the Commission has traditionally conducted individual company-by-company hearings. See, e. g., FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037 (1942), which upheld the procedures under the Natural Gas Act and endorsed the adjudicative formal-type hearing. However, the Court in that instance did not consider the nature of the proceedings required under the law. It merely stated that a prerequisite to a rate order is a hearing and findings. In that ease the companies had full opportunity to cross-examine witnesses and although the Supreme Court approved the proceeding as a fair hearing, it did not establish that a formal hearing is necessary in order to comply with the Gas Act or the Constitution.

The petitioners also rely on other regulatory statutes and seek to argue that in order to have a fair hearing it must be a formal proceeding.7 However, we cannot justifiably apply standards which have been laid down in quasi-judicial proceedings.

Decisions of the Supreme Court since the rulings in the Phillips cases have pointed the way to adoption of a more flexible and less formal method for fixing the rates of gas producers. Its first effort was area rate setting, itself a departure from the adjudication process. The Supreme Court approved this early effort in FPC v. Texaco, Inc., 377 U.S. 33, 84 S.Ct. 1105, 12 L.Ed. 112 (1964), a pre-Permian Basin case. The Court, though dealing with § 7 of the Gas Act, held that

the statutory requirement for a hearing under § 7 does not preclude the Commission from particularizing statutory standards through the rulemaking process and barring at the threshold those who neither measure up to them nor show reasons why in the public interest the rule should be waived. ... To require the Commission to proceed only on a ease-by-ease basis would require it, so long as its policy outlawed indefinite price-changing provisions, to repeat in hearing after hearing its conclusions that condemn • all of them. *850We see no reason why under this statutory scheme the processes of regulation need be so prolonged and so crippled.8

The decision of the Supreme Court which we regard as dispositive of the issues raised here is In re Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). In that area rate decision Mr. Justice Harlan, writing for the Court, described in detail the difficulties experienced by the Commission in seeking to regulate the producers’ sales. It was described as the “outstanding éxample in the federal government of the breakdown of the administrative process,” citing Landis, Report on Regulatory Agencies to the President-Elect.

In the Permian Basin case the Supreme Court, utilizing the price regulation analogy, stated that the Constitution does not prohibit the determination of rates through group or class proceedings and that it does not require that the separate financial position of each member of the class be evaluated. Indeed, the only limitation noted was that the prices fixed must be calculated in conformity with the constitutional limitations; that such prices must not be arbitrary, discriminatory or irrelevant to the policy which the legislature had agreed to adopt.

As we view it, the present effort is, to a large degree, the result of the encouragement which the Supreme Court gave to the FPC to innováte. Thus in the Permian case the Court stated that “the breadth and complexity of the Commission’s responsibilities demand that it be given every reasonable opportunity to formulate methods of regulation appropriate for the solution of its intensely practical difficulties.”9 This message was many times repeated: “the width of administrative authority must be measured in part by the purpose for which it was conferred”;10 “the ultimate achievement of the Commission’s regulatory purposes may easily depend upon the contrivance of more expeditious administrative methods”;11 “administrative authorities must be permitted, consistently with the obligations of due process, to adapt their rules and policies to the demands of changing circumstances”;12 “ [p] rovided only that they do not together produce arbitrary or unreasonable consequences, the Commission may employ any ‘formula or combination of formulas’ it wishes, and is free ‘to make the pragmatic adjustments which may be called for by particular circumstances.’ ”13

The final contention of the petitioners is that there can be a valid judicial review only if there is a record. However, we do not agree that this requires that there be a record resulting from a formal evidentiary hearing. The important point is that there shall be a record which will allow an orderly review of the Commission’s findings and conclusions. Under the rule the record will consist of the written comments submitted by the respondents to the Commission together with questionnaire data filed by producer and pipeline companies and composited by the Commission staff. The submissions of the petitioners would be placed in public files and made available for public inspection. Thus the petitioners are aware of the material which will be considered together with the application of Commission expertise to the information submitted.

Finally, the reviewing court is at liberty to remand the cause to the agency for further delineation, information or expression of views.

In the light of the provisions of the Act, together with the Supreme *851Court’s comments concerning the need for streamlined procedures, we are of the opinion that the proposed rulemaking is consistent with the Natural Gas Act and is valid.

IV.

THE CONTENTION THAT THE ADMINISTRATIVE PROCEDURE ACT REQUIRES FORMAL PROCEEDINGS

Petitioners read the Administrative Procedure Act (APA) as requiring a formal hearing whenever a hearing is called for in a particular type of proceeding. The Commission, on the other hand, contends that the key to the requirement of a formal hearing is the term “hearing on the record.” 14

The APA expressly provides for two categories of administrative hearing and decision: rulemaking and adjudication. The term “rule” in § 2, 5 U.S.C. § 551(4), includes the approval or prescription of future rates. Unquestionably, therefore, the hearing required by the Gas Act fixing rates is a rulemaking procedure rather than adjudication.

Two types of rulemaking are recognized under § 4. Informal is that generally used, and § 4 prescribes the procedure in connection with informal rule-making such as proper notice so that interested persons are given an opportunity to participate “through submission of written data, views, or arguments with or without oral presentation”; the rules adopted must incorporate a statement as to their basis and purpose. Formal rulemaking is the exception which is set forth in § 4(b) which provides:

When rules are required by statute to be made on the record after opportunity for an agency hearing, sections 556 and 557 of this title apply instead of this subsection.

The § 4(b) exception calls for the procedural formalities that are found in adjudication including the right to submit oral evidence and to cross-examine, This approach is a hybrid one which is in part rulemaking and in part adjudieation.

The fact, as previously noted, that the Gas Act does not contain the words “on the record” furnishes a strong argument in support of the Commission’s contention that informal rule-making satisfies the requirements of the APA. If the words “on the record” were contained in the Gas Act, it would furnish a basis for the petitioner’s position. See 2 Davis, Administrative Law Treatise § 13.08, at 225 (1958). Professor Davis states that the large number of administrative statutes do not contain the words “hearing on the record.” However, there are indications that the presence or absence of these words is not conclusive. See H.R.Rep.No. 1980, 79th Cong., 2d Sess. 51, n. 9 (1946); Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950). A more reliable test is the congressional intent as contained in the specific statute. See United States v. Allegheny-Ludlum Steel Co., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972).

The scope and depth of the § 4(b) exception are not apparent from a reading of the Committee reports and the debates. Moreover, a study of the research materials such as the Final Report of the Attorney General’s Committee, the Committee Monograph on the FPC and the Attorney General’s Manual on the Administrative Procedure Act do not, with the exception of the Attorney General’s Manual, contain any significant evidence which would indicate a congressional intent to require formal rulemaking procedures.

Comments in the Attorney General’s Manual at page 33 take for granted that rate setting hearings under the Gas Act will be on the record and thus will be *852formal and adjudicative. These comments are, however, not to be regarded as evidencing congressional intent because the Manual is not addressed to Congress but rather to various administrative agencies after the passage of the Administrative Procedure Act, and so this is at best very weak support for the petitioners’ contentions.15

Accordingly, from the legislative history of the Administrative. Procedure Act, it must be concluded that Congress intended to allow administrative agencies a broad latitude in adopting rulemaking procedures. Throughout this period the FPC had been conducting experiments with various procedures, especially in the area of proof and evidence, and the Attorney General’s Committee recommended further experimenting. Congress sanctioned such procedural experimentation in the APA.

As we have seen the present proposed rulemaking stems from the suggestions of the Supreme Court in the Permian Basin case. There is no assurance, however, that this will be successful and the procedures may have to be modified or discontinued. But such flexibility was within the contemplation of the Congress when it enacted the APA, especially, where as here, formal rulemaking procedures are not required.

Finally, as we have noted earlier, the hearings here involve quasi-legislative rather than quasi-judicial activities. Where this is the situation, informal proceedings are generally held to be sufficient. See Norwegian Nitrogen Prod. Co. v. United States, 288 U.S. 294, 53 S.Ct. 350, 77 L.Ed. 796 (1933); I. C. C. v. Louisville & Nashville R. R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1913) (dictum).

In summary, we are of the opinion that the proposed rulemaking is in harmony with the comments of the Supreme Court contained in Permian Basin and in harmony also with the Natural Gas Act and the APA. The gas producers’ contrary argument is largely based on the FPC’s history of conducting adjudicatory hearings. Based on this history, the gas producers would seek to have the court impose a requirement that its hearings be conducted in this manner. We are convinced that such action would be unwarranted.

The petition for review should be and the same is hereby denied.

. E. g., Southern Louisiana Area Rate Proceeding, 40 RPC 530 (1968), aff’d, 428 F.2d 407 (5th Cir.), cert. denied sub nom. Municipal Distributors Group v. FPC, 400 U.S. 950, 91 S.Ct. 241, 27 L.Ed.2d 257 (1970); Hugoton-Anadarko Area Rate Proceeding, 44 FPC 761 (1970), affirmed, 466 F.2d 974 (9th Cir. 1972); Texas Gulf Coast Area Rate Proceeding, 45 FPC - (May 6, 1971), appeal pending, D.C.Cir., No. 71-1828; Other Southwest Area Rate Proceeding, 46 FPC - (October 29, 1971), appeal pending, 5th Cir., No. 72-1114.

. Permian Basin Area Rate Cases, supra, at 816 n. 99, 88 S.Ct. at 1385.

. Id. at 772 n. 37, 88 S.Ct. at 1362.

. 34 Fed.Reg. 17341 (1969).

. 44 FPC 1112 (1970). Although several parties challenged the Commission’s use of its rulemaking authority to establish rates, the Commission cited American Airlines, Inc. v. CAB, 123 U.S.App.D.C. 310, 359 F.2d 624, cert. denied, 385 U.S. 843, 87 S.Ct. 73, 17 L.Ed.2d 75 (1969), and stated that no party demonstrated a need for a formal, evidentiary hearing. 44 RPC at 1119. No party appealed the Commission’s order. The Commission had further noted that

our action here is not one based on a nugatory record. We fully considered the staff report, and accepted it as evidence. We received lengthy and well-considered comments from many parties, and answers to said comments made by other parties. And, we considered the staff’s minutes of the conference of June 2, 1970, and the comments of such minutes filed by Cities Service on July 24, 1970. Added to our consideration of all of this rather extensive record, we have applied the expertise gained by us in determining previous area rate proceedings, and our long experience gained from dealing with the problems of these areas.

44 FPC at 1119.

. The Commission stated that there was nothing in the Natural Gas Act that required a “hearing on the record” or an adjudicatory hearing. As to the Administrative Procedure Act, the Commission said that even if § 7, 5 U.S.C. § 556, were applicable,

we cannot determine how Amerada has been, or will be, prejudiced by the adoption of the procedures in Docket No. R — 425. Amerada has not pointed to specifics on which it needs to cross-examine or present live rebuttal testimony. Instead, Amerada refers to general subjects to which it, and other interested parties have filed written submissions, and states as reasons for its requests, “apparent disputes.” . The existence of disagreements among the several submissions does not preclude the Commission from making a reasonable determination in light of the record before it and based on its own experience.

. Petitioners place reliance on Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936) and its successor, Morgan v. United States, 304 U.S. 1, 58 S.Ct. 999, 82 L.Ed. 1129 (1938). There the Supreme Court reversed a decision establishing rates under section 310 of the Packers & Stockyards Act of 1921, 7 U.S.C. § 211, because the administrative official making the decision did not hear the evidence, 298 U.S. at 478-479, 481 — 482, 56 S.Ct. 906, a situation not occurring in the case at bar. Moreover, the Morgan proceeding was characterized as quasi-judicial, 304 U.S. at 14, 58 S.Ct. 999, whereas area rate proceedings are quasi-legislative. Finally, it was stated that “full hearing” embraced the right to present evidence and the opportunity to know the claims of opposing parties. Id. at 18-21, 58 S.Ct. 999. Petitioners had this right and opportunity.

Petitioners also misplace reliance on I.C.C. v. Louisville & Nashville R.R. Co., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431 (1913). Not only does that case deal with the Interstate Commerce Act, but it is also a pre-Administrative Procedure Act case which is fully out of harmony with that statute.

. FPC v. Texaco, Inc., supra, 377 U.S. at 39, 44, 84 S.Ct. at 1109, 1112. See Davis, Administrative Law Treatise § 7.01, at 153-54.

. 390 U.S. at 790, 88 S.Ct. at 1372.

. Id. at 776, 88 S.Ct. at 1364.

. Id. at 777, 88 S.Ct. at 1365.

. Id. at 784, 88 S.Ct. at 1369.

. Id. at 800, 88 S.Ct. at 1377.

. They cite in support of their argument the following cases: United States v. Alleglieny-Ludlum Steel Co., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972); Siegel v. AEC, 130 U.S.App.D.C. 307, 400 F.2d 778, 785 (1968); Pacific Coast European Conference v. United States, 350 F.2d 197, 205 (9th Cir. 1965).

. The interpretation of § 4(b) contained in the Manual conflicts to some degree with the position taken by the Attorney General’s office prior to passage of the APA. The Attorney General’s Committee specifically found in its Monograph on the Federal Power Commission that formal rulemaking had proved unsatisfactory for rate setting and was not likely to be used in the future. Sen.Doc.No.10, 77th Cong., 1st Sess. pt. 12, at 40 (1941). The Final Report of the Attorney General’s Committee also suggests that rate setting will not be restricted to formal, adjudicatory proceedings. Sen.Doc.No.8, 77th Cong., 1st Sess. 106-11 (1941).