(dissenting):
I must dissent from the majority opinion filed herein as to the procedure required to be followed by the Federal Power Commission. It does not appear that the issue has been settled by the Permian Basin Area Rate Case, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312, as the opinion states. Also the specific method here sought to be used by the FPC as evidenced by its rulings and orders in this record has not been considered in reference to the doctrine of confiscation which provides the constitutional base for court review of proceedings of this nature. The specifics of rate-making include the resolution of disputed facts and a consideration of the constitutional problems attendant to the fixing of just and reasonable rates.
The issue is the method of setting rates for the gas producers, and although the Supreme Court has indicated that some substantial departures from traditional methods are permitted, the complete conversion to rulemaking under the orders here concerned does not ap*853pear warranted under existing decisions. I am not prepared to anticipate a further departure in view of the constitutional limitations.
Some further examination of the decisions appears to be necessary before considering some practical problems of the record, the required review by the courts, and some specific matters relative to the method here sought to be used by the FPC.
In F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, the Court considered the ratemaking function of the FPC under section 5 of the Natural Gas Act. The Commission then was proceeding under the typical return on “investment” ratemaking doctrines. However, the Court described at some length the function of the courts and the nature of judicial review under the Natural Gas Act, and stated: “Once a fair hearing has been given, proper findings made and other statutory requirements satisfied, the courts cannot intervene in the absence of a clear showing that the limits of due process have been overstepped.” It is this determination by the courts that is frustrated by the procedure here adopted by the FPC.
The Supreme Court, prior to F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, had decided Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (see also 304 U.S. 1, 58 S.Ct. 999, 82 L.Ed. 1129). One of the principal issues there raised and considered by the Court was the nature of the hearing required to be held under the Packers and Stockyards Act [7 U.S.C. §§ 181-229], The Court there held it was quasi-judicial and that a “full hearing” was required and said: “Nothing can be treated as evidence which is not introduced as such. Facts and circumstances must not be considered which should not legally influence the conclusion. Findings based on the evidence must embrace the basic facts which are needed to sustain the order.” This is a clear and direct reference to the procedure and to nothing else.
There have been several decisions by the United States Courts of Appeals which directly concerned summary proceedings under the Natural Gas Act. Some of these are based on the Act and some on due process. One of the earlier of these cases is Mississippi River Fuel Corp. v. F. P. C., 202 F.2d 899 (3d Cir.), where the court did not permit a summary refusal by the FPC to receive a rate schedule tendered under section 4. Later in Shell Oil Co. v. F. P. C., 334 F.2d 1002 (3d Cir.), the same court held that those objecting to filings under section 4 should have an opportunity to be heard and there be a “full hearing.” See also Hill v. F. P. C., 335 F.2d 355 (5th Cir.). In Murphy Oil Corp. v. F. P. C., 431 F.2d 805 (8th Cir.), the court considered FPC action on a rate application without a hearing. The Commission had sought to handle the issue under section j.6 of the Natural Gas Act, but the court held that a “hearing” was required, which was understood to mean a formal hearing. The court in American Louisiana Pipe Line Co. v. F. P. C., 120 U.S.App.D.C. 140, 344 F.2d 525, held an evidentiary record was required with a decision based upon the facts so developed and not upon the regulatory experience of the agency.
F. P. C. v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037, must be regarded as a significant case as to the issues before us. It is apparent that the nature of the proof required and the method of the Commission is now much different in the area rate cases such as the Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312, but this should not bring about a different result as to the fundamental nature of the hearings. The practices of the Commission have changed during the many years it has been in existence, but a present feeling' of urgency, as indicated in the Commission’s brief, should not overcome the statutory or constitutional requirements for a full hearing.
*854The FPC here relies on Hunt Oil Co. v. F. P. C., 424 F.2d 982 (5th Cir.), which is important, but is cited principally for the statement in it that area rate proceedings are quasi-legislative and thus not quasi-judicial. This is useful as a generality, but it does not assist us much in our problem.
The relation of the Administrative Procedure Act to the Natural Gas Act provisions has been elsewhere considered in detail and need not be repeated here other than to state the conclusion that even if the Natural Gas Act does not expressly require a full evidentiary hearing, it does require a “hearing on the record,” and thus if the Administrative Procedure Act is operative, a hearing to meet its requirements set out in 5 U.S.C. §§ 556 and 557 is necessary.
On the requirements of the Administrative Procedure Act as to rulemaking by the ICC, the Supreme Court has recently decided United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453. This treats the application of 5 U.S.C. §§ 556 and 557 (the APA) when rules are required to be “on the record.” The Court there said:
“Because the proceedings under review were an exercise of legislative rulemaking power rather than adjudicatory hearings as in Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950), and Ohio Bell Telephone Co. v. Public Utilities Comm’n, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093 (1937); and because 49 U.S.C. § 1(14) (a) does not require a determination ‘on the record’ the provisions of 5 U.S.C. §§ 556, 557, were inapplicable.”
The above decision is significant here, but as the quotation indicates the Esch Act gives specifically to the ICC the authority to make “rules, regulations, and practices with respect to car service.” With this specific authority for rules for the limited subject before it in an Act which applies only to the ICC and its powers, it is not difficult to see how authority was found for the rulemaking type of hearing under the APA without use of sections 556 and 557.
The Supreme Court then in United States v. Florida East Coast Ry., 410 U.S. 224, 93 S.Ct. 810, 35 L.Ed.2d 223, considered essentially the same issue as in United States v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453. Again it is a matter arising under the Esch Act with its limited scope of car service rules and with specific authority for rules relating to the subject. The Court there holds that evidentiary hearings are not required under the Esch Act with reference to the imposition of charges on carriers using cars of others. It also holds that the term, “hearing,” in section 1(14) (a) of the Interstate Commerce Act is not the equivalent to “on the record after opportunity for an agency hearing,” as used in section 553(e) of the Administrative Procedure Act. The Court also notes however that sections 556 and 557 of the APA could be “triggered” by other language. The opinion in Florida East Coast is in the narrow statutory area of “car rules,” but makes a general distinction between “rulemaking type proceedings” and “a proceeding devoted to the adjudication of particular disputed facts.” The Court distinguishes the Morgan case on the basis of notice to the parties. Attention is also directed in Florida East Coast to the distinction in Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372, between disputed facts and general rules.
It would appear also that the hearing provisions in the Federal Power Act plus the contemplated review should “trigger” the provisions of sections 556 and 557 of the Administrative Procedure Act, and the exceptions in section 553 apply because this is certainly not a matter of general policy rules. We have before us an example of the need to resolve disputed facts under the distinction made in Florida East Coast in a traditional ratemaking situation. The Commission has expressly here stated in *855its Order of December 16, 1971, that would decide these disputed facts “in the light of the record before it and based on its own experience.” The decision is thus to be made on these two factors even without the benefit of an evidentiary hearing. Although Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288, may be weakened by the way in which it was distinguished in Florida East Coast, it still must stand for the proposition in the following quotation from the opinion relative to the reasons for an evidentiary hearing: it
“. . . The ‘hearing’ is designed to afford the safeguard that the one who decides shall be bound in good conscience to consider the evidence, to be guided by that alone, and to reach his conclusion uninfluenced by extraneous considerations which in other fields might have play in determining purely executive action. The ‘hearing’ is the hearing of evidence and argument. If the one who determines the facts which underlie the order has not considered evidence or argument, it is manifest that the hearing has not been given.”
See also I. C. C. v. Louisville & Nashville R. R., 227 U.S. 88, 33 S.Ct. 185, 57 L.Ed. 431.
By order of the FPC which instituted the rulemaking procedure, certain producers were named therein and made parties whether they wanted to be or not. Furthermore, they were “ordered and directed” to complete, “verify,” and file certain cost data within a specified time. The proceedings were directed to them specifically. Statements and “submittals” were required to be under oath. This procedure has to be unusual in a rulemaking proceeding where generally those interested may submit information if they wish. However, as to those named they are “hereby made respondents to this rulemaking proceeding,” and then ordered to respond. Thus it commences with all the compulsion used at any ratemaking hearing, but then provides for “submittals” and “responses” and “statements” which the staff “shall composite and reconcile.” After this, the Commission will “consider” the material and reach a decision, but from the record and brief references it also expects to rely on its “expertise” and the files which have been accumulated from the nationwide “hearings” previously conducted and from other sources. As indicated the FPC in its Order Denying. Motion for Cross-Examination in Docket R-425, issued December 16, 1971, said:
“In a rulemaking proceeding, such as the instant one, our primary objective is the acquisition of information which will enable us, inter alia, to determine just and reasonable producer rates for jurisdictional sales in the Rocky Mountain area for contracts dated prior to October 1, 1968. The purpose is not to allow interested parties to define the issues or narrow the scope of the proceedings. On the contrary, in soliciting comments from interested parties, and in relying upon the experience gained through previous area rate proceedings, we are building a record from which we can make a determination of said producer rates. We need not, as Amerada would require us to do, lose ourselves in an excursion into detail which would obscure, rather than clarify, the issues before us.”
The above quotation in the first sentence states that only one of the purposes of the hearing is to determine just and reasonable rates. If this is only one of the purposes and since “comments” are also “solicited” from other interested parties, and experience from other hearings is used, it is difficult to determine what “the record” of the “hearing” will be. It is also apparent that those ordered to be made parties will have no part in the making of the record of the proceedings, that is, through the introduction of exhibits or testimony with the right to object to or test the validity of the material. There is thus assembled material which cannot be considered a “public record,” and which is not really identifiable as having been assembled during the course of public proceedings.
*856In a matter related to the record, the petitioners raise the issue as to how there can be judicial review of the determination to be made by the FPC in this rulemaking proceeding. The statute expressly provides for review and the preparation of a record. Review is also required on constitutional grounds under the confiscation doctrine. The hearings must thus be held in contemplation of this review, and the record so developed must be suitable for the purpose. Also for a meaningful review the courts must know the basis for the decision by the administrative body. Thus the requirement for findings, and of equal importance the decision must be based on “the record.” It must be not only based on “the record” but the agency must consider only the record as the basis for its decision. See Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372, and the quotation from Morgan above. A decision cannot be properly reviewed if it is based on matters outside the record. These requirements all relate to the constitutional confiscation doctrine prevailing in all ratefixing proceedings.
In the proceedings here contemplated only the staff members or the Commission know what material has been submitted. The parties have no knowledge as to what will be considered as part of the record and have no part in the development of the record as such during the course of the proceedings. This applies both to the record for decisional purposes and for review.
Further, with reference to the record for decision, the Commission has not stated that its determination will be based on the record alone, but has stated that it will “consider” the material submitted by the parties. It has also said it will use its experience to resolve disputed facts. Thus the problem relates to the decisional process, the matter of review, and the preparation of a “public” record. The general method of submitting all material in writing and having the Commission staff “composite and reconcile” such data leads to a question as to whether or not the procedure is really a “hearing.” Under the Act, the Commission must determine whether rates are just and reasonable and the Act provides that if the rates are not “reasonable,” they are “unlawful.” It is apparent from the orders entered by the Commission and from the Commission’s brief that it intends to rely on much more than the submittals and responses filed by the parties in its proceedings. In the Commission’s order of December 16, 1971, denying the motion for cross-examination, the Commission stated that it was “soliciting comments” and “in relying upon the experience gained through previous area rate proceedings, we will build a record upon which we can make a determination of said producers’ rates.” The Commission further states that the rulemaking method was chosen because of “the advantages of determining rates in a more expeditious manner, based on the informed judgment and expertise of the Commission through ten years of producer regulation,” etc.
The matter of cross-examination was also raised by the petitioners and expressly ruled upon by the Commission. It stated that there was no such procedure contemplated in rulemaking proceedings, and if there was it was “permissive” and could be denied entirely (as distinct from being limited).
Cross-examination in the situation here considered has several well recognized purposes, all of which relate to the matter of a fair hearing and the traditional “hearing” in judicial and administrative proceedings. The first purpose of cross-examination usually considered is to test the accuracy of the matters or facts presented by a party. This purpose needs no further description.
Another purpose of significance here is to test the knowledge of the witness as to the matters whereof he speaks; thus to show whether or not he is qualified or has the knowledge to so speak and thus to permit an evaluation of his testimony. The order of the Commission which sets out the procedure re*857quired the “submittals” to be under oath acknowledged in a certain way. This acknowledgment required the person to swear that “. . . he has examined the statements contained in the submittal or response, and that all such statements are true and correct to the best of his knowledge, information, and belief.” It is apparent that there is no way of telling, the extent of such person’s knowledge or information from his signature or title. There is no requirement as to the qualifications of the persons signing the submittals. Thus there is no way of testing whether the person knows whereof he speaks. The Commission does not know and the parties do not know.
Another purpose served by cross-examination is to develop the rest of a story partly told. The things which are omitted upon the direct examination are usually the most interesting and most revealing. Again with ex parte “submittals” the omitted details, when no further examination is expected, can be significant. Who better knows these things than the parties in the same or a related business?
As to bare conflicts in the facts which may result from the “submittals,” the Commission says in its Order Denying Cross-Examination of December 16, 1971, that: “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.” Ratemaking after all deals with specifics, not generalities, as it can be the confiscation of the property of the regulated parties, and at the least constitutes a statutory imposition of restrictions on their earnings not so imposed on businesses in other fields.
In my opinion the proceeding here concerned is well within ratemaking. It is to resolve disputed facts, to determine rates retroactively to some extent, and to decide whether within the constitutional justification for court review the rates are just and reasonable or whether they are “unlawful.” This cannot properly be done by resorting to rulemaking powers, and deciding the facts on the basis of “submittals” by anyone and which cannot be tested for accuracy or completeness, and which in turn the Commission staff will “composite and reconcile,” whatever that may be. The Commission will then “consider” the submittals and whatever else is in their files and in their “experience.” This may then be reviewed by the court.
This method does not appear to be within the proper construction of the Federal Power Act nor the Administrative Procedure Act, much less in accord with the established standards for a constitutional test on the confiscation issue. We must consider what the Commission has said it is going to do in its orders, what it is going to consider and how. This is the specific procedure before us, and the issues must be so evaluated.
The Commission has argued that there is a matter of urgency in view of an impending shortage of natural gas and abbreviated hearings are necessary. Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035, was decided in 1954 and the Act itself was passed in 1938. The area rate method was announced by the FPC in 1960. Congress has set up the regulatory machinery, and decided on the fact of regulation. We should act within this framework, and requests for substantial variations should be directed to Congress.
The orders relative to the nature of the hearing should be set aside and the matter remanded to the Commission.