Me. Justice Douglas

delivered the opinion of the Court.

The primary issue in these cases concerns the validity under the Natural Gas Act of 1938 (52 Stat. 821,15 U. S. C. § 717) of a rate order issued by the Federal Power Commission reducing the rates chargeable by Hope Natural Gas Co., 44 P. U. R. (N. S.) 1. On a petition for review of the order made pursuant to § 19 (b) of the Act, the *594Circuit Court of Appeals set it aside, one judge dissenting. 134 F. 2d 287. The cases are here on petitions for writs of certiorari which we granted because of the public importance of the questions presented.

Hope is a West Virginia corporation organized in 1898. It is a wholly owned subsidiary of Standard Oil Co. (N. J.). Since the date of its organization, it has been in the business of producing, purchasing and marketing natural gas in that state.1 It sells some of that gas to local consumers in West Virginia. But the great bulk of it goes to five customer companies which receive it at the West Virginia line and distribute it in Ohio and in Pennsylvania.2 In July 1938 the cities of Cleveland and Akron filed complaints with the Commission charging that the rates collected by Hope from East Ohio Gas Co. (an affiliate of Hope which distributes gas in Ohio) were excessive and unreasonable. Later in 1938 the Commission on its own motion instituted an investigation to determine the reasonableness of all of Hope's interstate rates. In March *5951939 the Public Utility Commission of Pennsylvania filed a complaint with the Commission charging that the rates collected by Hope from Peoples Natural Gas. Co. (an affiliate of Hope distributing gas in Pennsylvania) and two non-affiliated companies were unreasonable. The City of Cleveland asked that the challenged rates be declared unlawful and that just and reasonable rates be determined from June 30,1939 to the date of the Commission’s order. The latter finding was requested in aid of state regulation and to afford the Public Utilities Commission of Ohio a proper basis for disposition of a fund collected by East Ohio under bond from Ohio consumers since June 30, 1939. The cases were consolidated and hearings were held.

On May 28,1942, the Commission entered its order and made its findings. Its order required Hope to decrease its future interstate rates so as to reflect a reduction, on an annual basis, of not less than $3,609,857 in operating revenues. And it established “just and reasonable” average rates per m. c. f. for each of the five customer companies.3 In response to the prayer of the City of Cleveland the Commission also made findings as to the lawfulness of past rates, although concededly it had no authority under the Act to fix past rates or to award reparations. 44 P. U. R. (N. S.) p. 34. It found that the rates collected by Hope from East Ohio were unjust, unreasonable, excessive and therefore unlawful, by $830,892 during 1939, $3,219,-551 during 1940, and $2,815,789 on an annual basis since 1940. It further found that just, reasonable, and lawful rates for gas sold by Plope to East Ohio for resale for ultimate public consumption were those required *596to produce $11,528,608 for 1939, $11,507,185 for 1940 and $11,910,947 annually since 1940.

The Commission established an interstate rate base of $33,712,526 which, it found, represented the “actual legitimate cost” of the company’s interstate property less depletion and depreciation and plus unoperated acreage, working capital and future net capital additions. The Commission, beginning with book cost, made certain adjustments not necessary to relate here and found the “actual legitimate cost” of the plant in interstate service to be $51,957,416, as of December 31, 1940. It deducted accrued depletion and depreciation, which it found to be $22,328,016 on an “economic-service-life” basis. And it added $1,392,021 for future net capital additions, $566,105 for useful unoperated acreage, and $2,125,000 for working capital. It used 1940 as a test year to estimate future revenues and expenses. It allowed over $16,000,000 as annual operating expenses — about $1,300,000 for taxes, $1,460,000 for depletion and depreciation, $600,000 for exploration and development costs, $8,500,000 for gas purchased. The Commission allowed a net increase of $421,-160 over 1940 operating expenses, which amount was to take care of future increase in wages, in West Virginia property taxes, and in exploration and development costs. The total amount of deductions allowed from interstate revenues was $13,495,584.

Hope introduced evidence from which it estimated reproduction cost of the property at $97,000,000. It also presented a so-called trended “original cost” estimate which exceeded $105,000,000. The latter was designed “to indicate what the original cost of the property would have been if 1938 material and labor prices had prevailed throughout the whole period of the piecemeal construction of the company’s property since 1898.” 44 P. IT. R. (N. S.), pp. 8-9. Hope estimated by the “per cent condition” method accrued depreciation at about 35% of *597reproduction cost new. On that basis Hope contended for a rate base of $66,000,000. The Commission refused to place any reliance on reproduction cost new, saying that it was “not predicated upon facts” and was “too conjectural and illusory to be given any weight in these proceedings.” Id., p. 8. It likewise refused to give any “probative value” to trended “original cost” since it was “not founded in fact” but was “basically erroneous” and produced “irrational results.” Id., p. 9. In determining the amount of accrued depletion and depreciation the Commission, following Lindheimer v. Illinois Bell Tel. Co., 292 U. S. 151, 167-169; Federal Power Commission v. Natural Gas Pipeline Co., 315 U. S. 575, 592-593, based its computation on “actual legitimate cost.” It found that Hope during the years when its business was not under regulation did not observe “sound depreciation and depletion practices” but “actually accumulated an excessive reserve”4 of about $46,000,000. Id., p. 18. One member of the Commission thought that the entire amount of the reserve should be deducted from “actual legitimate cost” in determining the rate base.5 The majority of the *598Commission concluded, however, that where, as here, a business is brought under regulation for the first time and where incorrect depreciation and depletion practices have prevailed, the deduction of the reserve requirement (actual existing depreciation and depletion) rather than the excessive reserve should be made so as to lay “a sound basis for future regulation and control of rates.” Id., p. 18. As we have pointed out, it determined accrued depletion and depreciation to be $22,328,016; and it allowed approximately $1,460,000 as the annual operating expense for depletion and depreciation.6

Hope’s estimate of original cost was about $69,735,-000 — approximately $17,000,000 more than the amount found by the Commission. The item of $17,000,000 was made up largely of expenditures which prior to December 31, 1938, were charged to operating expenses. Chief among those expenditures was some $12,800,000 expended *599in well-drilling prior to 1923. Most of that sum was expended by Hope for labor, use of drilling-rigs, hauling, and similar costs of well-drilling. Prior to 1923 Hope followed the general practice of the natural gas industry and charged the cost of drilling wells to operating expenses. Hope continued that practice until the Public Service Commission of West Virginia in 1923 required it to capitalize such expenditures, as does the Commission under its present Uniform System of Accounts.7 The Commission refused to add such items to the rate base stating that “No greater injustice to consumers could be done than to allow items as operating expenses and at a later date include them in the rate base, thereby placing multiple charges upon the consumers.” Id., p. 12. For the same reason the Commission excluded from the rate base about $1,600,000 of expenditures on properties which Hope acquired from other utilities, the latter having charged those payments to operating expenses. The Commission disallowed certain other overhead items amounting to over $3,000,000 which also had been previously charged to operating expenses. And it refused to add some $632,000 as interest during construction since no interest was in fact paid.

Hope contended that it should be allowed a return of not less than 8%. The Commission found that an 8% return would be unreasonable but that 6%% was a fair rate of return. That rate of return, applied to the rate base of $33,712,526, would produce $2,191,314 annually, as compared with the present income of not less than $5,801,171.

The Circuit Court of Appeals set aside the order of the Commission for the following reasons. (1) It held that the rate base should reflect the “present fair value” of the *600property, that the Commission in determining the “value” should have considered reproduction cost and trended original cost, and that “actual legitimate cost” (prudent investment) was not the proper measure of “fair value” where price levels had changed since the investment. (2) It concluded that the well-drilling costs and overhead items in the amount of some $17,000,000 should have been included in the rate base. (3) It held that accrued depletion and depreciation and the annual allowance for that expense should be computed on the basis of “present fair value” of the property, not on the basis of “actual legitimate cost.”

The Circuit Court of Appeals also held that the Commission had no power to make findings as to past rates in aid of state regulation. But it concluded that those findings were proper as a step in the process of fixing future rates. Viewed in that light, however, the findings were deemed to be invalidated by the same errors which vitiated the findings on which the rate order was based.

Order Reducing Rates. Congress has provided in § 4 (a) of the Natural Gas Act that all natural gas rates subject to the jurisdiction of the Commission “shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.” Sec. 5 (a) gives the Commission the power, after hearing, to determine the “just and reasonable rate” to be thereafter observed and to fix the rate by order. Sec. 5 (a) also empowers the Commission to order a “decrease where existing rates are unjust, . . . unlawful, or are not the lowest reasonable rates.” And Congress has provided in § 19 (b) that on review of these rate orders the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” Congress, however, has provided no formula by which the “just and reasonable” rate is to be determined. It has not filled in the *601details of the general prescription8 of § 4 (a) and § 6 (a). It has not expressed in a specific rule the fixed principle of “just and reasonable.”

When we sustained the constitutionality of the Natural Gas Act in the Natural Gas Pipeline Go. case, we stated that the “authority of Congress to regulate the prices of commodities in interstate commerce is at least as great under the Fifth Amendment as is that of the States under the Fourteenth to regulate the prices of commodities in intrastate commerce.” 315 U. S. p. 582. Rate-making is indeed but one species of price-fixing. Munn v. Illinois, 94 U. S. 113, 134. The fixing of prices, like other applications of the police power, may reduce the value of the property which is being regulated. But the fact that the value is reduced does not mean that the regulation is invalid. Block v. Hirsh, 256 U. S. 135, 155-157; Nebbia v. New York, 291 U. S. 502, 523-539 and cases cited. It does, however, indicate that “fair value” is the end product of the process of rate-making not the starting point as the Circuit Court of Appeals held. The heart of the matter is that rates cannot be made to depend upon “fair value” when the value of the going enterprise depends on earnings under whatever rates may be anticipated.9

*602We held in Federal Power Commission v. Natural Gas Pipeline Co., supra, that the Commission was not bound to the use of any single formula or combination of for-mulae in determining rates. Its rate-making function, moreover, involves the making of “pragmatic adjustments.” Id., p. 586. And when the Commission’s order is challenged in the courts, the question is whether that order “viewed in its entirety” meets the requirements of the Act. Id., p. 686. Under the statutory standard of “just and reasonable” it is the result reached not the method employed which is controlling. Cf. Los Angeles Gas & Electric Corp. v. Railroad Commission, 289 U. S. 287, 304-305, 314; West Ohio Gas Co. v. Public Utilities Commission (No. 1), 294 U. S. 63, 70; West v. Chesapeake & Potomac Tel. Co., 295 U. S. 662, 692-693 (dissenting opinion). It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable., judicial inquiry under the Act is at an end. The fact that the method employed to reach that result may contain infirmities is not then important. Moreover, the Commission’s order does not become suspect by reason of the fact that it is challenged. It is the product of expert judgment which carries a presumption of validity. And he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences. Cf. Railroad Commission v. Cumberland Tel. & T. Co., 212 U. S. 414; Lindheimer v. Illinois Bell Tel. Co., supra, pp. 164, 169; Railroad Commission v. Pacific Gas & Electric Co., 302 U. S. 388, 401.

*603The rate-making process under the Act, i. e., the fixing of “just and reasonable” rates, involves a balancing of the investor and the consumer interests. Thus we stated in the Natural Gas Pipeline Co. case that “regulation does not insure that the business shall produce net revenues.” 315 U. S. p. 590. But such considerations aside, the investor interest has a legitimate concern with the financial integrity of the company whose rates are being regulated. From the investor or company point of view it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock. Cf. Chicago & Grand Trunk Ry. Co. v. Wellman, 143 U. S. 339, 345-346. By that standard the return to the equity owner should be commensurate with returns on investments in other enterprises having corresponding risks. That return, moreover, should be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital. See Missouri ex rel. Southwestern Bell Tel. Co. v. Public Service Commission, 262 U. S. 276, 291 (Mr. Justice Brandeis concurring) . The conditions under which more or less might be allowed are not important here. Nor is it important to this case to determine the various permissible ways in which any rate base on which the return is computed might be arrived at. For we are of the view that the end result in this case cannot be condemned under the Act as unjust and unreasonable from the investor or company viewpoint.

We have already noted that Hope is a wholly owned subsidiary of the Standard Oil Co. (N. J.). It has no securities outstanding except stock. All of that stock has been owned by Standard since 1908. The par amount presently outstanding is approximately $28,000,000 as compared with the rate base of $33,712,526 established by *604the Commission. Of the total outstanding stock $11,000,-000 was issued in stock dividends. The balance, or about $17,000,000, was issued for cash or other assets. During the four decades of its operations Hope has paid over $97,000,000 in cash dividends. It had, moreover, accumulated by 1940 an earned surplus of about $8,000,000. It had thus earned the total investment in the company nearly seven times. Down to 1940 it earned over 20% per year on the average annual amount of its capital stock issued for cash or other assets. On an average invested capital of some $23,000,000 Hope’s average earnings have been about 12 % a year. And during this period it had accumulated in addition reserves for depletion and depreciation of about $46,000,000. Furthermore, during 1939,1940 and 1941, Hope paid dividends of 10% on its stock. And in the year 1942, during about half of which the lower rates were in effect, it paid dividends of 7%%. From 1939-1942 its earned surplus increased from $5,260,000 to about $13,700,000, i. e., to almost half the par value of its outstanding stock.

As we have noted, the Commission fixed a rate of return which permits Hope to earn $2,191,314 annually. In determining that amount it stressed the importance of maintaining the financial integrity of the company. It considered the financial history of Hope and a vast array of data bearing on the natural gas industry, related businesses, and general economic conditions. It noted that the yields on better issues of bonds of natural gas companies sold in the last few years were “close to 3 per cent,” 44 P. U. R. (N. S.), p. 33. It stated that the company was a “seasoned enterprise whose risks have been minimized” by adequate provisions for depletion and depreciation (past and present) with “concurrent high profits,” by “protected established markets, through affiliated distribution companies, in populous and industrialized areas,” and by a supply of gas locally to meet all require*605ments, “except on certain peak days in the winter, which it is feasible to supplement in the future with gas from other sources.” Id., p. 33. The Commission concluded, “The company’s efficient management, established markets, financial record, affiliations, and its prospective business place it in a strong position to attract capital upon favorable terms when it is required.” Id., p. 33.

In view of these various considerations we cannot say that an annual return of $2,191,314 is not “just and reasonable” within the meaning of the Act, Rates which enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed certainly cannot be condemned as invalid, even though they might produce only a meager return on the so-called “fair value” rate base. In that connection it will be recalled that Hope contended for a rate base of $66,000,000 computed on reproduction cost new. The Commission points out that if that rate base were accepted, Hope’s average rate of return for the four-year period from 1937-1940 would amount to 3.27%. During that period Hope earned an annual average return of about 9%. on the average investment. It asked for no rate increases. Its properties were well maintained and operated. As the Commission says, such a modest rate of 3.27% suggests an “inflation of the base on which the rate has been computed.” Dayton Power & Light Co. v. Public Utilities Commission, 292 U. S. 290, 312. Cf. Lindheimer v. Illinois Bell Tel. Co., supra, p. 164. The incongruity between the actual operations and the return computed on the basis of reproduction cost suggests that the Commission was wholly justified in rejecting the latter as the measure of the rate base.

In view of this disposition of the controversy we need not stop to inquire whether the failure of the Commission to add the $17,000,000 of well-drilling and other costs to *606the rate base was consistent with the prudent investment theory as developed and applied in particular cases.

Only a word need be added respecting depletion and depreciation. We held in the Natural Gas Pipeline Co. case that there was no constitutional requirement “that the owner who embarks in a wasting-asset business of limited life shall receive at the end more than he has put into it.” 315 U. S. p. 593. The Circuit Court of Appeals did not think that that rule was applicable here because Hope was a utility required to continue its service to the public and not scheduled to end its business on a day certain as was stipulated to be true of the Natural Gas Pipeline Co. But that distinction is quite immaterial. The ultimate exhaustion of the supply is inevitable in the case of all natural gas companies. Moreover, this Court recognized in Lindheimer v. Illinois Bell Tel. Co., supra, the propriety of basing annual depreciation on cost.10 By such a procedure the utility is made whole and the integrity of its investment maintained.11 No more is required.12 We cannot approve the contrary holding *607of United Railways Co. v. West, 280 U. S. 234, 253-254. Since there are no constitutional requirements more exacting than the standards of the Act, a rate order which conforms to the latter does not run afoul of the former.

The Position of West Virginia. The State of West Virginia, as well as its Public Service Commission, intervened in the proceedings before the Commission and participated in the hearings before it. They have also filed a brief amicus curiae here and have participated in the argument at the bar. Their contention is that the result achieved by the rate order “brings consequences which are unjust to West Virginia and its citizens” and which “unfairly depress the value of gas, gas lands and gas leaseholds, unduly restrict development of their natural resources, and arbitrarily transfer their properties to the residents of other states without just compensation therefor.”

West Virginia points out that the Hope Natural Gas Co. holds a large number of leases on both producing and un-operated properties. The owner or grantor receives from the operator or grantee delay rentals as compensation for postponed drilling. When a producing well is successfully brought in, the gas lease customarily continues indefinitely for the life of the field. In that case the operator pays a stipulated gas-well rental or in some cases a gas royalty equivalent to one-eighth of the gas marketed.13 Both the owner and operator have valuable property interests in thé gas which are separately taxable under West Virginia law. The contention is that the reversionary interests in the leaseholds should be represented in the rate proceedings since it is their gas which is being sold in interstate *608commerce. It is argued, moreover, that the owners of the reversionary interests should have the benefit of the “discovery value” of the gas leaseholds, not the interstate consumers. Furthermore, West Virginia contends that the Commission in fixing a rate for natural gas produced in that State should consider the effect of the rate order on the economy of West Virginia. It is pointed out that gas is a wasting asset with a rapidly diminishing supply. As a result West Virginia’s gas deposits are becoming increasingly valuable. Nevertheless the rate fixed by the Commission reduces that value. And that reduction, it is said, has severe repercussions on the economy of the State. It is argued in the first place that as a result of this rate reduction Hope’s West Virginia property taxes may be decreased in view of the relevance which earnings have under West Virginia law in the assessment of property for tax purposes.14 Secondly, it is pointed out that West Virginia has a production tax15 on the “value” of the gas exported from the State. And we are told that for purposes of that tax “value” becomes under West Virginia law “practically the substantial equivalent of market value.” Thus West Virginia argues that undervaluation of Hope’s gas leaseholds will cost the State many thousands of dollars in taxes. The effect, it is urged, is to impair West Virginia’s tax structure for the benefit of Ohio and Pennsylvania consumers. West Virginia emphasizes, moreover, its deep interest in the conservation of its natural resources including its natural gas. It says that a reduction of the value of these leasehold values will jeopardize these conservation policies in three respects: (1) exploratory development of new fields will be discouraged; (2) abandonment of low-yield high-cost marginal wells will be hastened; and (3) secondary recovery of oil will be hampered. *609Furthermore, West Virginia contends that the reduced valuation will harm one of the great industries of the State and that harm to that industry must inevitably affect the welfare of the citizens of the State. It is also pointed out that West Virginia has a large interest in coal and oil as well as in gas and that these forms of fuel are competitive. When the price of gas is materially cheapened, consumers turn to that fuel in preference to the others. As a result this lowering of the price of natural gas will have the effect of depreciating the price of West Virginia coal and oil.

West Virginia insists that in neglecting this aspect of the problem the Commission failed to perform the function which Congress entrusted to it and that the case should be remanded to the Commission for a modification of its order.16

We have considered these contentions at length in view of the earnestness with which they have been urged upon us. We have searched the legislative history of the Natural Gas Act for any indication that Congress entrusted to the Commission the various considerations which West Virginia has advanced here. And our conclusion is that Congress did not.

We pointed out in Illinois Natural Gas Co. v. Public Service Co., 314 U. S. 498, 506, that the purpose of the Natural Gas Act was to provide, “through the exercise of the national power over interstate commerce, an agency for regulating the wholesale distribution to public service companies of natural gas moving interstate, which this Court had declared to be interstate commerce not subject to certain types of state regulation.” As stated in the House Report the “basic purpose” of this legislation was “to occupy” the field in which such cases as Missouri v. *610 Kansas Gas Co., 265 U. S. 298, and Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U. S. 83, had held the States might not act. H. Rep. No. 709, 75th Cong., 1st Sess., p. 2. In accomplishing that purpose the bill was designed to take “no authority from State commissions ” and was “so drawn as to complement and in no manner usurp State regulatory authority.” Id., p. 2. And the Federal Power Commission was given no authority over the “production or gathering of natural gas.” § 1 (b).

The primary aim of this legislation was to protect consumers against exploitation at the hands of natural gas companies. Due to the hiatus in regulation which resulted from the Kansas Gas Co. case and related decisions state commissions found it difficult or impossible to discover what it cost interstate pipe-line companies to deliver gas within the consuming states; and thus they were thwarted in local regulation. H. Rep. No. 709, supra, p. 3. Moreover, the investigations of the Federal Trade Commission had disclosed that the majority of the pipeline mileage in the country used to transport natural gas, together with an increasing percentage of the natural gas supply for pipe-line transportation, had been acquired by a handful of holding companies.17 State commissions, independent producers, and communities having or seeking the service were growing quite helpless against these combinations.18 These were the types of problems with which those participating in the hearings were preoccupied.19 Congress addressed itself to those specific evils.

*611The Federal Power Commission was given broad powers of regulation. The fixing of “just and reasonable” rates (§4) with the powers attendant thereto20 was the heart of the new regulatory system. Moreover, the Commission was given certain authority by § 7 (a), on a finding that the action was necessary or desirable “in the public interest,” to require natural gas companies to extend or improve their transportation facilities and to sell gas to any authorized local distributor. By § 7 (b) it was given control over the abandonment of facilities or of service. And by § 7 (c), as originally enacted, no natural gas company could undertake the construction or extension of any facilities for the transportation of natural gas to a market in which natural gas was already being served by another company, or sell any natural gas in such a market, without obtaining a certificate of public convenience and necessity from the Commission. In passing on such applications for certificates of convenience and necessity the Commission was told by § 7 (c), as originally enacted, that it was “the intention of Congress that natural gas shall be sold in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use at the lowest possible reasonable rate consistent with the maintenance of adequate service in the public interest.” The latter provision was deleted from § 7 (c) when that subsection was amended by the Act of February 7, 1942, 56 Stat. 83. By that amendment limited grandfather rights were granted companies desiring to extend their facilities and services over the routes or within the area which they were already serving. Moreover, § 7 (c) was broadened so as to require certifi*612cates of public convenience and necessity not only where the- extensions were being made to markets in which natural gas was already being sold by another company but in other situations as well.

These provisions were plainly designed to protect the consumer interests against exploitation at the hands of private natural gas companies. When it comes to cases of abandonment or of extensions of facilities or service, we may assume that, apart from the express exemptions21 contained in § 7, considerations of conservation are material to the issuance of certificates of public convenience and necessity. But the Commission was not asked here for a certificate of public convenience and necessity under § 7 for any proposed construction or extension. It was faced with a determination of the amount which a private operator should be allowed to earn from the sale of natural gas across state lines through an established distribution system. Secs. 4 and 6, not § 7, provide the standards for that determination. We cannot find in the words of the Act or in its history the slightest intimation or suggestion that the exploitation of consumers by private operators through the maintenance of high rates should be allowed to continue provided the producing states obtain indirect benefits from it. That apparently was the Commission’s view of the matter, for the same arguments advanced here were presented to the Commission and not adopted by it.

We do not mean to suggest that Congress was unmindful of the interests of the producing states in their natural gas supplies when it drafted the Natural Gas Act. As we have said, the Act does not intrude on the domain traditionally reserved for control by state commissions; and the Federal Power Commission was given no authority over *613“the production or gathering of natural gas.” § 1 (b). In addition, Congress recognized the legitimate interests of the States in the conservation of natural gas. By § 11 Congress instructed the Commission to make reports on compacts between two or more States dealing with the conservation, production and transportation of natural gas.22 The Commission was also directed to recommend further legislation appropriate or necessary to carry out any proposed compact and “to aid in the conservation of natural-gas resources within the United States and in the orderly, equitable, and economic production, transportation, and distribution of natural gas.” § 11 (a). Thus Congress was quite aware of the interests of the producing states in their natural gas supplies.23 But it left the protection of *614those interests to measures other than the maintenance of high rates to private companies. If the Commission is to be compelled to let the stockholders of natural gas companies have a feast so that the producing states may receive crumbs from that table, the present Act must be redesigned. Such a project raises questions of policy which go beyond our province.

It is hardly necessary to add that a limitation on the net earnings of a natural gas company from its interstate business is not a limitation on the power of the producing state either to safeguard its tax revenues from that industry 24 or to protect the interests of those who sell their gas to the interstate operator.25 The return which the Com*615mission allowed was the net return after all such charges.

It is suggested that the Commission has failed to perform its duty under the Act in that it has not allowed a return for gas production that will be enough to induce private enterprise to perform completely and efficiently its functions for the public. The Commission, however, was not oblivious of those matters. It considered them. It allowed, for example, delay rentals and exploration and development costs in operating expenses.26 No serious attempt has been made here to show that they are inadequate. We certainly cannot say that they are, unless we are to substitute our opinions for the expert judgment of the administrators to whom Congress entrusted the decision. Moreover, if in light of experience they turn out to be inadequate for development of new sources of supply, the doors of the Commission are open for increased allowances. This is not an order for all time. The Act contains machinery for obtaining rate adjustments. § 4.

But it is said that the Commission placed too low a rate on gas for industrial purposes as compared with gas for domestic purposes and that industrial uses should be discouraged. It should be noted in the first place that the rates which the Commission has fixed are Hope’s interstate wholesale rates to distributors, not interstate rates to industrial users27 and domestic consumers. We hardly *616can assume, in view of the history of the Act and its provisions, that the resales intrastate by the customer companies which distribute the gas to ultimate consumers in Ohio and Pennsylvania are subject to the rate-making powers of the Commission.28 But in any event those rates are not in issue here. Moreover, we fail to find in the power to fix “just and reasonable” rates the power to fix rates which will disallow or discourage resales for industrial use. The Committee Report stated that the Act provided “for regulation along recognized and more or less standardized lines” and that there was “nothing novel in its provisions.” H. Rep. No. 709, supra, p. 3. Yet if we are now to tell the Commission to fix the rates so as to discourage particular uses, we would indeed be injecting into a rate case a “novel” doctrine which has no express statutory sanction. The same would be true if we were to hold that the wasting-asset nature of the industry required the maintenance of the level of rates so that natural gas companies could make a greater profit on each unit of gas sold. Such theories of rate-making for this industry may or may not be desirable. The difficulty is that § 4 (a) and § 5 (a) contain only the conventional standards of rate-making for natural gas companies.29 The *617Act of February 7,1942, by broadening § 7 gave the Commission some additional authority to deal with the conservation aspects of the problem.30 But § 4 (a) and § 5 (a) were hot changed. If the standard of “just and reasonable” is to sanction the maintenance of high rates by a natural gas company because they restrict the use of natural gas for certain purposes, the Act must be further amended.

It is finally suggested that the rates charged by Hope are discriminatory as against domestic users and in favor of industrial users. That charge is apparently based on § 4 (b) of the Act which forbids natural gas companies from maintaining “any unreasonable difference in rates, charges, service, facilities, or in any other respect, either as between localities or as between classes of service.” The power of the Commission to eliminate any such unreasonable differences or discriminations is plain. § 5 (a). The Commission, however, made no findings under § 4 (b). Its failure in that regard was not challenged in the petition to review. And it has not been raised or argued here by any party. Hence the problem of discrimination has no proper place in the present decision. It will be time enough to pass on that issue when it is presented to us. Congress has entrusted the administration of the Act to the Commission, not to the courts. Apart from the requirements of judicial review it is not *618for us to advise the Commission how to discharge its functions.

' Findings as to the Lawfulness of Past Rates. As we have noted, the Commission made certain findings as to the lawfulness of past rates which Hope had charged its interstate customers. Those findings were made on the complaint of the City of Cleveland and in aid of state regulation. It is conceded that under the Act the Commission has no power to make reparation orders. And its power to fix rates admittedly is limited to those “to be thereafter observed and in force.” § 5 (a). But the Commission maintains that it has the power to make findings as to the lawfulness of past rates even though it has no power to fix those rates.31 However that may be, we do not think that these findings were reviewable under § 19 (b) of the Act. That section gives any. party “aggrieved by an order” of the Commission a review “of such order” in the circuit court of appeals for the circuit where the natural gas company is located or has its principal place of business or in the United States Court of Appeals for the District of Columbia. We do not think that the findings in question fall within that category.

The Court recently summarized the various types of administrative action or determination reviewable as orders under the Urgent Deficiencies Act of October 22, *6191913, 28 U. S. C. §§ 45, 47a, and kindred statutory provisions. Rochester Telephone Corp. v. United States, 307 U. S. 125. It was there pointed out that where “the order sought to be reviewed does not of itself adversely affect complainant-hut’ only affects his rights adversely on the contingency of future administrative action,” it is not reviewable. Id., p. 130. The Court said, “In view of traditional conceptions of federal judicial power, resort to the courts in these situations is either premature or wholly beyond their province.” Id., p. 130. And see United States v. Los Angeles & Salt Lake R. Co., 273 U. S. 299, 309, 310; Shannahan v. United States, 303 U. S. 596. These considerations are apposite here. The Commission has no authority to enforce these findings. They are “the exercise solely of the function of investigation.” United States v. Los Angeles & Salt Lake R. Co., supra, p. 310. They are only a preliminary, interim step towards possible future action — action not by the Commission but by wholly independent agencies. The outcome of those proceedings may turn on factors other than these findings. These findings may never result in the respondent feeling the pinch of administrative action.

Reversed.

Mr. Justice Roberts took no part in the consideration or decision of this case.

Opinion of

Mr. Justice Black and Mr. Justice Murphy:

We agree with the Court’s opinion and would add nothing to what has been said but for what is patently a wholly gratuitous assertion as to Constitutional law in the dissent of Mr. Justice Frankfurter. We refer to the statement that “Congressional acquiescence to date in the doctrine of Chicago, M. & St. P. Ry. Co. v. Minnesota, supra, may fairly be claimed.” That was the case in which a majority of this Court was finally induced to expand the meaning *620of “due process” so as to give courts power to block efforts of the state and national governments to regulate economic affairs. The present case does not afford a proper occasion to discuss the soundness of that doctrine because, as stated in Mr. Justice Frankfurter’s dissent, “that issue is not here in controversy.” The salutary practice whereby courts do not discuss issues in the abstract applies with peculiar force to Constitutional questions. Since, however, the dissent adverts to a highly controversial due process doctrine and implies its acceptance by Congress, we feel compelled to say that we do not understand that Congress voluntarily has acquiesced in a Constitutional principle of government that courts, rather than legislative bodies, possess final authority over regulation of economic affairs. Even this Court has not always fully embraced that principle, and we wish to repeat that we have never acquiesced in it, and do not now. See Federal Power Commission v. Natural Gas Pipeline Co., 315 U. S. 575, 599-601.

Mr. Justice Reed,

dissenting:

This case involves the problem of rate making under the Natural Gas Act. Added importance arises from the obvious fact that the principles stated are generally applicable to all federal agencies which are entrusted with the determination of rates for utilities. Because my views differ somewhat from those of my brethren, it may be of some value to set them out in a summary form.

The Congress may fix utility rates in situations subject to federal control without regard to any standard except the constitutional standards of due process and for taking private property for public use without just compensation. Wilson v. New, 243 U. S. 332, 350. A Commission, however, does not have this freedom of action. Its powers are limited not only by the constitutional standards but also by the standards of the delegation. Here the standard added by the Natural Gas Act is that the rate be “just *621and reasonable."1 Section 62 throws additional light on the meaning of these words.

When the phrase was used by Congress to describe allowable rates, it had relation to something ascertainable. The rates were not left to the whim of the Commission. The rates fixed would produce an annual return and that annual return was to be compared with a theoretical just and reasonable return, all risks considered, on the fair value of the property used and useful in the public service at the time of the determination.

Such an abstract test is not precise. The agency charged with its determination has a wide range before it could properly be said by a court that the agency had disregarded statutory standards or had confiscated the property of the utility for public use. Cf. Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, 461-66, dissent. This is as Congress intends. Rates are left to an experienced agency particularly competent by training to appraise the amount required.

The decision as to a reasonable return had not been a source of great difficulty, for borrowers and lenders reached such agreements daily in a multitude of situations; and although the determination of fair value had been troublesome, its essentials had been worked out in fairness to investor and consumer by the time of the en*622actment of this Act. Cf. Los Angeles Gas & Electric Corp. v. Railroad Commission, 289 U. S. 287, 304 et seq. The results were well known to Congress and had that body desired to depart from the traditional concepts of fair value and earnings, it would have stated its intention plainly. Helvering v. Griffiths, 318 U. S. 371.

It was already clear that when rates are in dispute, "earnings produced by rates do not afford a standard for decision.” 289 U. S. at 305. Historical cost, prudent investment and reproduction cost3 were all relevant factors in determining fair value. Indeed, disregarding the pioneer investor’s risk, if prudent investment and reproduction cost were not distorted by changes in price levels or technology, each of them would produce the same result. The realization from the risk of an investment in a speculative field, such as natural gas utilities, should be reflected in the present fair value.4 The amount of evidence to be admitted on any point was of course in the agency’s reasonable discretion, and it was free to give its own weight to these or other factors and to determine from all the evidence its own judgment as to the necessary rates.

*623I agree with the Court in not imposing a rule of prudent investment alone in determining the rate base. This leaves the Commission free, as I understand it, to use any available evidence for its finding of fair value, including both prudent investment and the cost of installing at the present time an efficient system for furnishing the needed utility service.

My disagreement with the Court arises primarily from its view that it makes no difference how the Commission reached the rate fixed so long as the result is fair and reasonable. For me the statutory command to the Commission is more explicit. Entirely aside from the constitutional problem of whether the Congress could validly delegate its rate-making power to the Commission, in toto and without standards, it did legislate in the light of the relation of fair and reasonable to fair value and reasonable return. The Commission must therefore make its findings in observance of that relationship.

The Federal Power Commission did not, as I construe their action, disregard its statutory duty. They heard the evidence relating to historical and reproduction cost and to the reasonable rate of return, and they appraised its weight. The evidence of reproduction cost was rejected as unpersuasive, but from the other evidence they found a rate base, which is to me a determination of fair value. On that base the earnings allowed seem fair and reasonable. So far as the Commission went in appraising the property employed in the service, I find nothing in the result which indicates confiscation, unfairness or unreasonableness. Good administration of rate-making agencies under this method would avoid undue delay and render revaluations unnecessary except after violent fluctuations of price levels. Rate making under this method has been subjected to criticism. But until Congress changes the standards for the agencies, these rate-making bodies should continue the conventional theory of rate *624making. It will probably be simpler to improve present methods than to devise new ones.

But a major error, I think, was committed in the disregard by the Commission of the investment in exploratory operations and other recognized capital costs. These were not considered by the Commission because they were charged to operating expenses by the company at a time when it was .unregulated. Congress did not direct the Commission in rate making to deduct from the rate base capital investment which had been recovered during the unregulated period through excess earnings. In my view this part of the investment should no more have been disregarded in the rate base than any other capital investment which previously had been recovered and paid out in dividends or placed to surplus. Even if prudent investment throughout the life of the property is accepted as the formula for figuring the rate base, it seems to me illogical to throw out the admittedly prudent cost of part of the property because the earnings in the unregulated period had been sufficient to return the prudent cost to the investors over and above a reasonable return. What would the answer be under the theory of the Commission and the Court, if the only prudent investment in this utility had been the seventeen million capital charges which are now disallowed?

For the reasons heretofore stated, I should affirm the action of the Circuit Court of Appeals in returning the proceeding to the Commission for further consideration and should direct the Commission to accept the disallowed capital investment in determining the fair value for rate-making purposes.

Me. Justice Frankfurter,

dissenting:

My brother Jackson has analyzed with particularity the economic and social aspects of natural gas as well as *625the difficulties which led to the enactment of the Natural Gas Act, especially those arising out of the abortive attempts of States to regulate natural gas utilities. The Natural Gas Act of 1938 should receive application in the light of this analysis, and Mr. Justice Jackson has, I believe, drawn relevant inferences regarding the duty of the Federal Power Commission in fixing natural gas rates. His exposition seems to me unanswered, and I shall say only a few words to emphasize my basic agreement with him.

For our society the needs that are met by public utilities are as truly public services as the traditional governmental functions of police and justice. They are not less so when these services are rendered by private enterprise under governmental regulation. Who ultimately determines the ways of regulation, is the decisive aspect in the public supervision of privately-owned utilities. Foreshadowed nearly sixty years ago, Railroad Commission Cases, 116 U. S. 307,331, it was decided more than fifty years ago that the final say under the Constitution lies with the judiciary and not the legislature. Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418.

While legal issues touching the proper distribution of governmental powers under the Constitution may always be raised, Congressional acquiescence to date in the doctrine of Chicago, M. & St. P. Ry. Co. v. Minnesota, supra, may fairly be claimed. But in any event that issue is not here in controversy. As pointed out in the opinions of my brethren, Congress has given only limited authority to the Federal Power Commission and made the exercise of that authority subject to judicial review. The Commission is authorized to fix rates chargeable for natural gas. But the rates that it can fix must be “just and reasonable.” § 5 of the Natural Gas Act, 15 U. S. C. § 717 (d). Instead of making the Commission’s rate determinations final, Con*626gress specifically provided for court review of such orders. To be sure, “the finding of the Commission as to the facts, if supported by substantial evidence” was made “conclusive,” § 19 of the Act, 15 U. S. C. § 717r. But obedience of the requirement of Congress that rates be “just and reasonable” is not an issue of fact of which the Commission’s own determination is conclusive. Otherwise, there would be nothing for a court to review except questions of compliance with the procedural provisions of the Natural Gas Act. Congress might have seen fit so to cast its legislation. But it has not done so. It has committed to the administration of the Federal Power Commission the duty of applying standards of fair dealing and of reasonableness relevant to the purposes expressed by the Natural Gas Act. The requirement that rates must be “just and reasonable” means just and reasonable in relation to appropriate standards. Otherwise Congress would have directed the Commission to fix such rates as in the judgment of the Commission are just and reasonable; it would not have also provided that such determinations by the Commission are subject to court review.

To what sources then are the Commission and the courts to go for ascertaining the standards relevant to the regulation of natural gas rates? It is at this point that Me. Justice Jackson’s analysis seems to me pertinent. There appear to be two alternatives. Either the fixing of natural gas rates must be left to the unguided discretion of the Commission so long as the rates it fixes do not reveal a glaringly bad prophecy of the ability of a regulated utility to continue its service in the future. Or the Commission’s rate orders must be founded on due consideration of all the elements of the public interest which the production and distribution of natural gas involve just because it is natural gas. These elements are reflected in the Natural Gas Act, if that Act be applied as an entirety. See, for *627instance, §§ 4 (a) (b) (c) (d), 6, and 11, 15 TJ. S. C., §§ 717c (a) (b) (c) (d), 717c, and 717j. Of course the statute is not concerned with abstract theories of rate-making. But its very foundation is the “public interest,” and the public interest is a texture of multiple strands. It includes more than contemporary investors and contemporary consumers. The needs to be served are not restricted to immediacy, and social as well as economic costs must be counted.

It will not do to say that it must all be left to the skill of experts. Expertise is a rational process and a rational process implies expressed reasons for judgment. It will little advance the public interest to substitute for the hodge-podge of the rule in Smyth v. Ames, 169 U. S. 466, an encouragement of conscious obscurity or confusion in reaching a result, on -the -assumption that so long as the result appears harmless its basis is irrelevant. That may be an appropriate attitude when state action is challenged as unconstitutional. Cf. Driscoll v. Edison Co., 307 U. S. 104. But it is not to be assumed that it was the design of Congress to make the accommodation of the conflicting interests exposed in Me. Justice Jackson’s opinion the occasion for a blind clash of forces or a partial assessment of relevant factors, either before the Commission or here.

The objection to the Commission’s action is not that the rates it granted were too low but that the range of its vision was too narrow. And since the issues before the Commission involved no less than the total public interest, the proceedings before it should not be judged by narrow conceptions of common law pleading. And so I conclude that the case should be returned to the Commission. In order to enable this Court to discharge its duty of reviewing the Commission’s order, the Commission should set forth with explicitness the criteria by which it is guided *628ip determining that rates are “just and reasonable,” and it should determine the public interest that is in its keeping in the perspective of the considerations set forth by Me. Justice Jackson.

By Me. Justice Jackson :

Certainly the theory of the court below that ties rate-making to the fair-value-reproduction-cost formula should be overruled as in conflict with Federal Power Commission v. Natural Gas Pipeline Co. 1 But the case should, I think, be the occasion for reconsideration of our rate-making doctrine as applied to natural gas and should be returned to the Commission, for further consideration in the light thereof. •>

The Commission appears to have understood the effect of the two opinions in the Pipeline case to be at least authority and perhaps direction to fix natural gas rates by exclusive application of the “prudent investment” rate base theory. This has no warrant in the opinion of the Chief Justice for the Court, however, which released the Commission from subservience to “any single formula or combination of formulas” provided its order, “viewed in its entirety, produces no arbitrary result.” 315 U. S. at 586. The minority opinion I understood to advocate the “prudent investment” theory as a sufficient guide in a natural gas case. The view was expressed in the court below that since this opinion was not expressly controverted it must have been approved.2 I disclaim this im*629puted approval with some particularity, because I attach importance at the very beginning of federal regulation ■ of the natural gas industry to approaching it as the performance of economic functions, not as the performance of legalistic rituals.

I.

Solutions of these cases must consider eccentricities of the industry which gives rise to them and also to the Act of Congress by which they are governed.

The heart of this problem is the elusive, exhaustible, and irreplaceable nature of natural gas itself. Given sufficient money, we can produce any desired amount of railroad, bus, or steamship transportation, or communications facilities, or capacity for generation of electric energy, or for the manufacture of gas of a kind. In the service of such utilities one customer has little concern with the amount taken by another, one’s waste will not deprive another, a volume of service can be created equal to demand, and today’s demands will not exhaust or lessen capacity to serve tomorrow. But the wealth of Midas and the wit of man cannot produce or reproduce a natural gas field. We cannot even reproduce the gas, for our manufactured product has only about half the heating value per unit of nature’s own.3

Natural gas in some quantity is produced in twenty-four states. It is consumed in only thirty-five states, and is *630available only to about 7,600,000 consumers.4 Its availability has been more localized than that of any other utility service because it has depended more on the caprice of nature.

The supply of the Hope Company is drawn from that old and rich and vanishing field that flanks the Appalachian mountains. Its center of production is Pennsylvania and West Virginia, with a fringe of lesser production in New York, Ohio, Kentucky, Tennessee, and the north end of Alabama. Oil was discovered in commercial quantities at a depth of only 69% feet near Titusville, Pennsylvania, in 1859. Its value then was about $16 per barrel.5 The oil branch of the petroleum industry went forward at once, and with unprecedented speed. The area productive of oil and gas was roughed out by the drilling of over 19,000 “wildcat” wells, estimated to have cost over $222,000,000. Of these, over 18,000, or 94.9 per cent, were “dry holes.” About five per cent, or 990 wells, made discoveries of commercial importance, 767 of them resulting chiefly in oil and 223 in gas only.6 Prospecting for many years was a search for oil, and to strike gas was a misfortune. Waste during this period and even later is appalling. Gas was regarded as having no commercial value until about 1882, in which year the total yield was valued only at about $75,000.7 Since then, contrary to oil, which has become cheaper, gas in this field has pretty steadily advanced in price.

While for many years natural gas had been distributed on a small scale for lighting,8 its acceptance was slow, *631facilities for its utilization were primitive, and not until 1885 did it take on the appearance of a substantial industry.9 Soon monopoly of production or markets developed.10 To get gas from the mountain country, where it was largely found, to centers of population, where it was in demand, required very large investment. By ownership of such facilities a few corporate systems, each including several companies, controlled access to markets. Their purchases became the dominating factor in giving a market value to gas produced by many small operators. Hope is the market for over 300 such operators. By 1928 natural gas in the Appalachian field commanded an average price of 21.1 cents per m. c. f. at points of production and was bringing 45.7 cents at points of consumption.11 The companies which controlled markets, however, did not rely on gas purchases alone. They acquired and held in fee or leasehold great acreage in territory proved by “wildcat” drilling. These large marketing system companies as well as many small independent owners and operators have carried on the commercial development of proved territory. The development risks appear from the estimate that up to 1928, 312,318 proved area wells had been sunk in the Appalachian field of which 48,962, or 15.7 per cent, failed to produce oil or gas in commercial quantity.12

*632With the source of supply thus tapped to serve centers of large demand, like Pittsburgh, Buffalo, Cleveland, Youngstown, Akron, and other industrial communities, the distribution of natural gas fast became big business. Its advantages as a fuel and its price commended it, and the business yielded a handsome return. All was merry and the goose hung high for consumers and gas companies alike until about the time of the first World War. Almost unnoticed by the consuming public, the whole Appalachian field passed its peak of production and started to decline. Pennsylvania, which to 1928 had given off about 38 per cent of the natural gas from this field, had its peak in 1905; Ohio, which had produced 14 per cent, had its peak in 1915; and West Virginia, greatest producer of all, with 45 per cent to its credit, reached its peak in 1917.13

Western New York and Eastern Ohio, on the fringe of the field, had some production but relied heavily on imports from Pennsylvania and West Virginia. Pennsylvania, a producing and exporting state, was a heavy consumer and supplemented her production with imports from West Virginia. West Virginia was a consuming state, but the lion’s share of her production was exported. Thus the interest of the states in the North Appalachian supply was in conflict.

Competition among localities to share in the failing supply and the helplessness of state and local authorities in the presence of state lines and corporate complexities is a part of the background of federal intervention in the industry.14 West Virginia took the boldest measure. It legislated a priority in its entire production in favor of its own inhabitants. That was frustrated by an injunc*633tion from this Court.15 Throughout the region clashes in the courts and conflicting decisions evidenced public anxiety and confusion. It was held that the New York Public Service Commission did not have power to classify consumers and restrict their use of gas.16 That Commission held that a company could not abandon a part of its territory and still serve the rest.17 Some courts admonished the companies to take action to protect consumers.18 Several courts held that companies, regardless of failing supply, must continue to take on customers, but such compulsory additions were finally held to be within the Public Service Commission’s discretion.19 There were attempts to throw up franchises and quit the service, and municipalities resorted to the courts with conflicting results.20 Public service commissions of consuming states were handicapped, for they had no control of the supply.21

*634Shortages during World War I occasioned the first intervention in the natural gas industry by the Federal Government. Under Proclamation of President Wilson the United States Fuel Administrator took control, stopped extensions, classified consumers and established a priority for domestic over industrial use.22 After the war federal control was abandoned. Some cities once served with natural gas became dependent upon a mixed gas of reduced heating value and relatively higher price.23

Utilization of natural gas of highest social as well as economic return is domestic use for cooking and water *635heating, followed closely by use for space heating in homes. This is the true public utility aspect of the enterprise, and its preservation should be the first concern of regulation. Gas does the family cooking cheaper than any other fuel.24 But its advantages do not end with dollars and cents cost. It is delivered without interruption at the meter as needed and is paid for after it is used. No money is tied up in a supply, and no space is used for storage. It requires no handling, creates no dust, and leaves no ash. It responds to thermostatic control. It ignites easily and immediately develops 'its maximum heating capacity. These incidental advantages make domestic life more liveable.

Industrial use is induced less by these qualities than by low cost in competition with other fuels. Of the gas exported from West Virginia by the Hope Company a very substantial part is used by industries. This wholesale use speeds exhaustion of supply and displaces other fuels. Coal miners and the coal industry, a large part of whose costs are wages, have complained of unfair competition from low-priced industrial gas produced with relatively little labor cost.25

Gas rate structures generally have favored industrial users. In 1932, in Ohio, the average yield on gas for domestic consumption was 62.1 cents per m. c. f. and on in*636dustrial, 38.7. In Pennsylvania, the figures were '62.9 against 31.7. West Virginia showed the least spread, domestic consumers paying 36.6 cents; and industrial, 27.7.26 Although this spread is less than in other parts of the United States,27 it can hardly be said to be self-justifying. It certainly is a very great factor in hastening decline of the natural gas supply.

About the time of World War I there were occasional and short-lived efforts by some hard-pressed companies to reverse this discrimination and adopt graduated rates, giving a low rate to quantities adequate for domestic use and graduating it upward to discourage industrial use.28 *637These rates met opposition from industrial sources, of course, and since diminished revenues from industrial sources tended to increase the domestic price, they met little popular or commission favor. The fact is that neither the gas companies nor the consumers nor local regulatory bodies can be depended upon to conserve gas. Unless federal regulation will take account of conservation, its efforts seem, as in this case, actually to constitute a new threat to the life of the Appalachian supply.

II.

Congress in 1938 decided upon federal regulation of the industry. It did so after an exhaustive investigation of all aspects including failing supply and competition for the use of natural gas intensified by growing scarcity.29 Pipelines from the Appalachian area to markets were in the control of a handful of holding company systems.30 This created a highly concentrated control of the producers’ market and of the consumers’ supplies. While holding companies dominated both production and distribution they segregated those activities in separate *638subsidiaries,'31 the effect of which, if not the purpose, was to isolate some end of the business from the reach of any one state commission. The cost of natural gas to consumers moved steadily upwards over the years, out of proportion to prices of oil, which, except for the element of competition, is produced under somewhat comparable conditions. The public came to feel that the companies were exploiting the growing scarcity of local gas. The problems of this region had much to do with creating the demand for federal regulation.

The Natural Gas Act declared the natural gas business to be “affected with a public interest,” and its regulation “necessary in the public interest.” 32 Originally, and at the time this proceeding was commenced and tried, it also declared “the intention of Congress that natural gas shall be sold in interstate commerce for resale for ultimate public consumption for domestic, commercial, industrial, or any other use at the lowest possible reasonable rate consistent with the maintenance of adequate service in the public interest.”33 While this was later dropped, there is nothing to indicate that it was not and is not still an accurate statement of purpose of the Act. Extension or improvement of facilities may be ordered when “necessary or desirable in the public interest,” abandonment of facilities may be ordered when the supply is “depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience or necessity *639permit” abandonment and certain extensions can only be made on finding of “the present or future convenience and necessity.”34 The Commission is required to take account of the ultimate use of the gas. Thus it is given power to suspend new schedules as to rates, charges, and classification of services except where the schedules are for the sale of gas “for resale for industrial use only,” 35 which gives the companies greater freedom to increase rates on industrial gas than on domestic gas. More particularly, the Act expressly forbids any undue preference or advantage to any person or “any unreasonable difference in rates . . . either as between localities or as between classes of service.” 36 And the power of the Commission expressly includes that to determine the “just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force.” 37

In view of the Court’s opinion that the Commission in administering the Act may ignore discrimination, it is interesting that in reporting this Bill both the Senate and the House Committees on Interstate Commerce pointed out that in 1934, on a nation-wide average the price of natural gas per m. c. f. was 74.6 cents for domestic use, 49.6 cents for commercial use, and 16.9 for industrial use.38 I am not ready to think that supporters of a bill called attention to the striking fact that householders were being charged five times as much for their gas as industrial users only as a situation which the Bill would do nothing to remedy. On the other hand the Act gave to the Commission what the Court aptly describes as “broad powers of regulation.”

*640III.

This proceeding was initiated by the Cities of Cleveland and Akron. They alleged that the price charged by Hope for natural gas “for resale to domestic, commercial and small industrial consumers in Cleveland and elsewhere is excessive, unjust, unreasonable, greatly in excess of the price charged by Hope to nonaffiliated companies at wholesale for resale to domestic, commercial, and small industrial consumers, and greatly in excess of the price charged by Hope to East Ohio for resale to certain favored industrial consumers in Ohio, and therefore is further unduly discriminatory between customers and between classes of service” (italics supplied). The company answered admitting differences in prices to affiliated and nonaffiliated companies and justifying them by differences in conditions of delivery. As to the allegation that the contract price is “greatly in excess of the price charged by Hope to East Ohio for resale to certain favored industrial consumers in Ohio,” Hope did not deny a price differential, but alleged that industrial gas was not sold to “favored consumers” but was sold under contracts and schedules filed with and approved by the Public Utilities Commission of Ohio, and that certain conditions of delivery made it not “unduly discriminatory.”

The record shows that in 1940 Hope delivered for industrial consumption 36,523,792 m. c. f. and for domestic and commercial consumption, 50,343,652 m. c. f. I find no separate figure for domestic consumption. It served 43,767 domestic consumers directly, 511,521 through the East Ohio Gas Company, and 154,043 through the Peoples Natural Gas Company, both affiliates owned by the same parent. Its special contracts for industrial consumption, so far as appear, are confined to about a dozen big industries.

*641Hope is responsible for such discrimination as exists in favor of these few industrial consumers. It controls both the resale price and use of industrial gas by virtue of the very interstate sales contracts over which the Commission is exercising its jurisdiction.

Hope’s contract with East Ohio Company is an example. Hope agrees to deliver, and the Ohio Company to take, “(a) all natural gas requisite for the supply of the domestic consumers of the Ohio Company; (b) such amounts of natural gas as may be requisite to fulfill contracts made with the consent and approval of the Hope Company by the Ohio Company, or companies which it supplies with natural gas, for the sale of gas upon special terms and conditions for manufacturing purposes.” The Ohio Company is required to read domestic customers’ meters once a month and meters of industrial customers daily and to furnish all meter readings to Hope. The Hope Company is to have access to meters of all consumers and to all of the Ohio Company’s accounts. The domestic consumers of the Ohio Company are to be fully supplied in preference to consumers purchasing for manufacturing purposes and “Hope Company can be required to supply gas to be used for manufacturing purposes only where the same is sold under special contracts which have first been submitted to and approved in writing by the Hope Company and which expressly provide that natural gas will be supplied thereunder only in so far as the same is not necessary to meet the requirements of domestic consumers supplied through pipe lines of the Ohio Company.” This basic contract was supplemented from time to time, chiefly as to price. The last amendment was in a letter from Hope to East Ohio in 1937. It contained a special discount on industrial gas and a schedule of special industrial contracts, Hope reserving the right to make eliminations therefrom and agreeing that others might be added from time to *642time with its approval in writing. It said, “It is believed that the price concessions contained in this letter, while not based on our costs, are, under certain conditions, to our mutual advantage in maintaining and building up the volumes of gas sold by us [italics supplied].” 39

The Commission took no note of the charges of discrimination and made no disposition of the issue tendered on this point. It ordered a flat reduction in the price per m. c. f. of all gas delivered by Hope in interstate commerce. It made no limitation, condition, or provision as to what classes of consumers should get the benefit of the reduction. While the cities have accepted and are defending the reduction, it is my view that the discrimination of which they have complained is perpetuated and increased by the order of the Commission and that it violates the Act in so doing.

The Commission’s opinion aptly characterizes its entire objective by saying that “bona fide investment figures now become all-important in the regulation of rates.” It should be noted that the all-importance of this theory is not the result of any instruction from Congress. When the Bill to regulate gas was first before Congress it con*643tained the following: “In determining just and reasonable rates the Commission shall fix such rate as will allow a fair return upon the actual legitimate prudent cost of the property used and useful for the service in question.” H. R. 5423, 74th Cong., 1st Sess., Title III, § 312 (c). Congress rejected this language. See H. R. 5423, § 213 (211 (c)), and H. R. Rep. No. 1318, 74th Cong., 1st Sess., 30.

The Commission contends nevertheless that the “all important” formula for finding a rate base is that of prudent investment. But it excluded from the investment base an amount actually and admittedly invested of some $17,000,000. It did so because it says that the Company recouped these expenditures from customers before the days of regulation from earnings above a fair return. But it would not apply all of such “excess earnings” to reduce the rate base as one of the Commissioners suggested. The reason for applying excess earnings to reduce the investment base roughly from $69,000,000 to $52,000,000 but refusing to apply them to reduce it from that to some $18,-000,000 is not found in a difference in the character of the earnings or in their reinvestment. The reason assigned is a difference in bookkeeping treatment many years before the Company was subject to regulation. The $17,000,000, reinvested chiefly in well drilling, was treated on the books as expense. (The Commission now requires that drilling costs be carried to capital account.) The allowed rate base thus actually was determined by the Company’s bookkeeping, not its investment. This attributes a significance to formal classification in account keeping that seems inconsistent with rational rate regulation.40 Of *644course, the Commission would not and should not allow a rate base to be inflated by bookkeeping which had improperly capitalized expenses. I have doubts about resting public regulation upon any rule that is to be used or not depending on which side it favors.

*645The Company on the other hand, has not put its gas fields into its calculations on the present-value basis, although that, it contends, is the only lawful rule for finding a rate base. To do so would result in a rate higher than it has charged or proposes as a matter of good business to charge.

The case before us demonstrates the lack of rational relationship between conventional rate-base formulas and natural gas production and the extremities to which regulating bodies are brought by the effort to rationalize them. The Commission and the Company each stands on a different theory, and neither ventures to carry its theory to logical conclusion as applied to gas fields.

IV.

This order is under judicial review not because we interpose constitutional theories between a State and the business it seeks to regulate, but because Congress put upon the federal courts a duty toward administration of a new federal regulatory Act. If we are to hold that a given rate is reasonable just because the Commission has said it was reasonable, review becomes a costly, time-consuming pageant of no practical value to anyone. If on the other hand we are to bring judgment of our own to the task, we should for the guidance of the regulators and the regulated reveal something of the philosophy, be it legal or economic or social, which guides us. We need not be slaves to a formula but unless we can point out a rational way of reaching our conclusions they can only be accepted as resting on intuition or predilection. I must admit that I possess no instinct by which to know the “reasonable” from the “unreasonable” in prices and must seek some conscious design for decision.

The Court sustains this order as reasonable, but what makes it so or what could possibly make it otherwise, *646I cannot learn. It holds that: “it is the result reached not the method employed which is controlling”; “the fact that the method employed to reach that result may contain infirmities is not then important” and it is not “important to this case to determine the various permissible ways in which any rate base on which the return is computed might be arrived at.” The Court does lean somewhat on considerations of capitalization and dividend history and requirements for dividends on outstanding stock. But I can give no real weight to that for it is generally and I think deservedly in discredit as any guide in rate cases.41

Our books already contain so much talk of methods of rationalizing rates that we must appear ambiguous if we announce results without our working methods. We are confronted with regulation of a unique type of enterprise which I think requires considered rejection of much conventional utility doctrine and adoption of concepts of “just and reasonable” rates and practices and of the “public interest” that will take account of the peculiarities of the business.

The Court rejects the suggestions of this opinion. It says that the Committees in reporting the bill which became the Act said it provided “for regulation along recognized and more or less standardized lines” and that there was “nothing novel in its provisions.” So saying it sustains a rate calculated on a novel variation of a rate base theory which itself had at the time of enactment of the legislation been recognized only in dissenting opinions. Our difference seems to be between unconscious innovation,42 and the purposeful and deliberate innovation I *647would make to meet the necessities of regulating the industry before us.

Hope’s business has two components of quite divergent character. One, while not a conventional common-carrier undertaking, is essentially a transportation enterprise consisting of conveying gas from where it is produced to point of delivery to the buyer. This is a relatively routine operation not differing substantially from many other utility operations. The service is produced by an investment in compression and transmission facilities. Its risks are those of investing in a tested means of conveying a discovered supply of gas to a known market. A rate base calculated on the prudent investment formula would seem a reasonably satisfactory measure for fixing a return from that branch of the business whose service is roughly proportionate to the capital invested. But it has other consequences which must not be overlooked. It gives marketability and hence “value” to gas owned by the company and gives the pipeline company a large power over the marketability and hence “value” of the production of others.

The other part of the business — to reduce to possession an adequate supply of natural gas — is of opposite character, being more erratic and irregular and unpredictable in relation to investment than any phase of any other utility business. A thousand feet of gas captured and severed from real estate for delivery to consumers is recognized under our law as property of much the same nature as a ton of coal, a barrel of oil, or a yard of sand. The value to be allowed for it is the real battleground between the investor and consumer. It is from this part of the business that the chief difference between the parties as to a proper rate base arises.

Is it necessary to a “reasonable” price for gas that it be anchored to a rate base of any kind? Why did courts in the first place begin valuing “rate bases” in order to “value” something else? The method came into vogue *648infixing rates for transportation service which the public obtained from common carriers. The public received none of the'carriers’ physical property but did make some use -of it. The carriage was often a monopoly so there were no open market criteria as to reasonableness. The “value” or “cost” of what was put to use in the service by the carrier was not a remote or irrelevant consideration in making such rates. Moreover the difficulty of appraising an intangible service was thought to be simplified if it could be related to physical property which was visible and measurable and the items of which might have market value. The court hoped to reason from the known to the unknown. But gas fields turn this method topsy turvy. Gas itself is tangible, possessible, and does have a market and a price in the field. The value of the rate base is more elusive than that of gas. It consists of intangibles — leaseholds and freeholds — operated and unop-erated — of little use in themselves except as rights to reach and capture gas. Their value lies almost wholly in predictions of discovery, and of price of gas when captured, and bears little relation to cost of tools and supplies and labor to develop it. Gas is what Hope sells and it can be directly priced more reasonably and easily and accurately than the components of a rate base can be valued. Hence the reason for resort to a roundabout way of rate base price fixing does not exist in the case of gas in the field.

But if found, and by whatever method found, a rate base is little help in determining reasonableness of the price of gas. Appraisal of present value of these intangible rights to pursue fugitive gas depends on the value assigned to the gas when captured. The “present fair value” rate base, generally in ill repute,43 is not even urged by the gas company for valuing its fields.

*649The prudent investment theory has relative merits in fixing rates for a utility which creates its service merely by its investment. The amount and quality of service rendered by the usual utility will, at least roughly, be measured by the amount of capital it puts into the enterprise. But it has no rational application where there is no such relationship between investment and capacity to serve. There is no such relationship between investment and amount of gas produced. Let us assume that Doe and Roe each produces in West Virginia for delivery to Cleveland the same quantity of natural gas per day. Doe, however, through luck or foresight or whatever it takes, gets his gas from investing $50,000 in leases and drilling. Roe drilled poorer territory, got smaller wells,- and has invested $250,000. Does anybody imagine that Roe can get or ought to get for his gas five times as much as Doe because he has spent five times as much? The service one renders to society in the gas business is measured by what he gets out of the ground, not by what he puts into it, and there is little more relation between the investment and the results than in a game of poker.

Two-thirds of the gas Hope handles it buys from about 340 independent producers. It is obvious that the principle of rate-making applied to Hope’s own gas cannot be applied, and has not been applied, to the bulk of the gas Hope delivers. It is not probable that the investment of any two of these producers will bear the same ratio to their investments. The gas, however, all goes to the same use, has the same utilization value and the same ultimate price.

To regulate such an enterprise by undiscriminatingly transplanting any body of rate doctrine conceived and *650adapted to the ordinary utility business can serve the “public interest” as the Natural Gas Act requires, if at all, only by accident. Mr. Justice Brandéis, the pioneer juristic advocate of the prudent investment theory for man-made utilities, never, so far as I am able to discover, proposed its application to a natural gas case. On the other hand, dissenting in Pennsylvania v. West Virginia, he reviewed the problems of gas supply and said, “In no other field of public service regulation is the controlling body confronted with factors so baffling as in the natural gas industry; and in none is continuous supervision and control required in so high a degree.” 262 U. S. 553, 621. If natural gas rates are intelligently to be regulated we must fit our legal principles to the economy of the industry and not try to fit the industry to our books.

As our decisions stand the Commission was justified in believing that it was required to proceed by the rate base method even as to gas in the field. For this reason the Court may not merely wash its hands of the method and rationale of rate making. The fact is that this Court, with no discussion of its fitness, simply transferred the rate base method to the natural gas industry. It happened in Newark Natural Gas & Fuel Co. v. City of Newark, Ohio, 242 U. S. 405 (1917), in which the company wanted 25 cents per m. c. f., and under the Fourteenth Amendment challenged the reduction to 18 cents by ordinance. This Court sustained the reduction because the court below “gave careful consideration to the questions of the value of the property at the time of the inquiry,” and whether the rate “would be sufficient to provide a fair return on the value of the property.” The Court said this method was “based upon principles thoroughly established by repeated decisions of this court,” citing many cases, not one of which involved natural gas or a comparable wasting natural resource. Then came issues as to state power to *651regulate as affected by'the commerce clause. Public Utilities Commission v. Landon, 249 U. S. 236 (1919); Pennsylvania Gas Co. v. Public Service Commission, 252 U. S. 23 (1920). These questions settled, the Court again was called upon in natural gas cases to consider state rate-making claimed to be invalid under the Fourteenth Amendment. United Fuel Gas Co. v. Railroad Commission of Kentucky, 278 U. S. 300 (1929); United Fuel Gas Co. v. Public Service Commission of West Virginia, 278 U. S. 322 (1929). Then, as now, the differences were “due chiefly to the difference in value ascribed by each to the gas rights and leaseholds.” 278 U. S. 300, 311. No one seems to have questioned that the rate base method must be pursued and the controversy was as to what rate base must be used. Later the “value” of gas in the field was questioned in determining the amount a regulated company should be allowed to pay an affiliate therefor — a state determination also reviewed under the Fourteenth Amendment. Dayton Power & Light Co. v. Public Utilities Commission of Ohio, 292 U. S. 290 (1934); Columbus Gas & Fuel Co. v. Public Utilities Commission of Ohio, 292 U. S. 398 (1934). In both cases, one of which sustained and one of which struck down a fixed rate, the Court assumed the rate base method as the legal way of testing reasonableness of natural gas prices fixed by public authority, without examining its real relevancy to the inquiry.

Under the weight of such precedents we cannot expect the Commission to initiate economically intelligent methods of fixing gas prices. But the Court now faces a new plan of federal regulation based on the power to fix the price at which gas shall be allowed to move in interstate commerce. I should now consider whether these rules devised under the Fourteenth Amendment are the exclusive tests of a just and reasonable rate under the federal statute, inviting reargument directed to that point *652if necessary. As I see it now I would be prepared to hold that these rules do not apply to a natural gas case arising under the Natural Gas Act.

Such a holding would leave the Commission to fix the price of gas in the field as one would fix maximum prices •of oil or milk or coal, or any other commodity. Such a price is not calculated to produce a fair return on the synthetic value of a rate base of any individual producer, and would not undertake to assure a fair return to any producer. The emphasis would shift from the producer to the product, which would be regulated with an eye to average or typical producing conditions in the field.

Such a price fixing process on economic lines would offer little temptation to the judiciary to become back seat drivers of the price fixing machine. The unfortunate effect of judicial intervention in this field is to divert the attention of those engaged in the process from what is economically wise to what is legally permissible. It is ■probable that price reductions would reach economically unwise and self-defeating limits before they would reach constitutional ones. Any constitutional problems growing out of price fixing are quite different than those that have heretofore been considered to inhere in rate making. A producer would have difficulty showing the invalidity of such a fixed price so long as he voluntarily continued to sell his product in interstate commerce. Should he withdraw and other authority be invoked to compel him to part with his property, a different problem would be presented.

Allowance in a rate to compensate for gas removed from gas lands, whether fixed as of point of production or as of point of delivery, probably best can be measured by a functional test applied to the whole industry. For good or ill we depend upon private enterprise to exploit these natural resources for public consumption. The function which an allowance for gas in the field should perform *653for society in such circumstances is to be enough and no more than enough to induce private enterprise completely and efficiently to utilize gas resources, to acquire for public service any available gas or gas rights and to deliver gas at a rate and for uses which will be in the future as well as in the present public interest.

The Court fears that “if we are now to tell the Commission to fix the rates so as to discourage particular uses, we would indeed be injecting into a rate case a ‘novel’ doctrine . . .” With due deference I suggest that there is nothing novel in the idea that any change in price of a service or commodity reacts to encourage or discourage its use. The question is not whether such consequences will or will not follow; the question is whether effects must be suffered blindly or may be intelligently selected, whether price control shall have targets at which it deliberately aims or shall be handled like a gun in the hands of one who does not know it is loaded.

We should recognize “price” for what it is — a tool, a means, an expedient. In public hands it has much the same economic effects as in private hands. Hope knew that a concession in industrial price would tend to build up its volume of sales. It used price as an expedient to that end. The Commission makes another cut in that same price but the Court thinks we should ignore the effect that it will have on exhaustion of supply. The fact is that in natural gas regulation price must be used to reconcile the private property right society has permitted to vest in an important natural resource with the claims of society upon it — price must draw a balance between wealth and welfare.

To carry this into techniques of inquiry is the task of the Commissioner rather than of the judge, and it certainly is no task to be solved by mere bookkeeping but requires the best economic talent available. There would doubtless be inquiry into the price gas is bringing in the *654field, how far that price is established by arm’s length bargaining and how far it may be influenced by agreements in restraint of trade or monopolistic influences. What must Hope really pay to get and to replace gas it delivers under this order? If it should get more or less than that for its own, how much and why? How far are such prices influenced by pipe line access to markets and if the consumers pay returns on the pipe lines how far should the increment they cause go to gas producers? East Ohio is itself a producer in Ohio.44 What do Ohio authorities require Ohio consumers to pay for gas in the field? Perhaps these are reasons why the Federal Government should put West Virginia gas at lower or at higher rates. If so what are they? Should East Ohio be required to exploit its half million acres of unoperated reserve in Ohio before West Virginia resources shall be supplied on a devalued basis of which that State complains and for which she threatens measures of self keep? What is gas worth in terms of other fuels it displaces?

A price cannot be fixed without considering its effect on the production of gas. Is it an incentive to continue to exploit vast unoperated reserves? Is it conducive to deep drilling tests the result of which we may know only after trial? Will it induce bringing gas from afar to supplement or even to substitute for Appalachian gas?45 Can it be had from distant fields as cheap or cheaper? If so, that competitive potentiality is certainly a relevant consideration. Wise regulation must also consider, as a private buyer would, what alternatives the producer has *655if the price is not acceptable. Hope has intrastate business and domestic and industrial customers. What can it do by way of diverting its supply to intrastate sales? What can it do by way of disposing of its operated or reserve acreage to industrial concerns or other buyers? What can West Virginia do by way of conservation laws, severance or other taxation, if the regulated rate offends? It must be borne in mind that while West Virginia was prohibited from giving her own inhabitants a priority that discriminated against interstate commerce, we have never yet held that a good faith conservation act, applicable to her own, as well as to others, is not valid. In considering alternatives, it must be noted that federal regulation is very incomplete, expressly excluding regulation of “production or gathering of natural gas,” and that the only present way to get the gas seems to be to call it forth by price inducements. It is plain that there is a downward economic limit on a safe and wise price.

But there is nothing in the law which compels a commission to fix a price at that “value” which a company might give to its product by taking advantage of scarcity, or monopoly of supply. The very purpose of fixing maximum prices is to take away from the seller his opportunity to get all that otherwise the market would award him for his goods. This is a constitutional use of the power to fix maximum prices, Block v. Hirsh, 256 U. S. 135; Marcus Brown Holding Co. v. Feldman, 256 U. S. 170; International Harvester Co. v. Kentucky, 234 U. S. 216; Highland v. Russell Car & Snow Plow Co., 279 U. S. 253, just as the fixing of minimum prices of goods in interstate commerce is constitutional although it takes away from the buyer the advantage in bargaining which market conditions would give him. United States v. Darby, 312 U. S. 100; Mulford v. Smith, 307 U. S. 38; United States v. Rock Royal Cooperative, 307 U. S. 533; Sunshine Anthracite Coal Co. v. Adkins, 310 U. S. 381. The Commission has power to fix *656a price that will be both maximum and minimum and it has the incidental right, and I think the duty, to choose the economic consequences it will promote or retard in production and also more importantly in consumption, to which I now turn.

If we assume that the reduction in company revenues is warranted we then come to the question of translating the allowed return into rates for consumers or classes of consumers. Here the Commission fixed a single rate for all gas delivered irrespective of its use despite the fact that Hope has established what amounts to two rates — a high one for domestic use and a lower one for industrial contracts.46 The Commission can fix two prices for interstate gas as readily as one — a price for resale to domestic users and another for resale to industrial users. This is the pattern Hope itself has established in the very contracts over which the Commission is expressly given jurisdiction. Certainly the Act is broad enough to permit two prices to be fixed instead of one, if the concept of the “public interest” is not unduly narrowed.

The Commission’s concept of the public interest in natural gas cases which is carried today into the Court’s opinion was first announced in the opinion of the minority in the Pipeline case. It enumerated only two “phases of the public interest: (1) the investor interest; (2) the consumer interest,” which it emphasized to the exclusion of all others. 315 U. S. 575, 606. This will do well enough in dealing with railroads or utilities supplying manufactured gas, electric power, a communications service or transportation, where utilization of facilities does not impair their future usefulness. Limitation of supply, however, brings into a natural gas case another phase of the public interest that to my mind overrides both the owner *657and the consumer of that interest. Both producers and industrial consumers have served their immediate private interests at the expense of the long-range public interest. The public interest, of course, requires stopping unjust enrichment of the owner. But it also requires stopping unjust impoverishment of future generations. The public interest in the use by Hope’s half million domestic consumers is quite a different one from the public interest in use by a baker’s dozen of industries.

Prudent price fixing it seems to me must at the very threshold determine whether any part of an allowed return shall be permitted to be realized from sales of gas for resale for industrial use. Such use does tend to level out daily and seasonal peaks of domestic demand and to some extent permits a lower charge for domestic service. But is that a wise way of making gas cheaper when, in comparison with any substitute, gas is already a cheap fuel? The interstate sales contracts provide that at times when demand is so great that there is not enough gas to go around domestic users shall first be served. Should the operation of this preference await the day of actual shortage? Since the propriety of a preference seems conceded, should it not operate to prevent the coming of a shortage as well as to mitigate its effects? Should industrial use jeopardize tomorrow’s service to householders any more than today’s? If, however, it is decided to cheapen domestic use by resort to industrial sales, should they be limited to the few uses for which gas has special values or extend also to those who use it only because it is cheaper than competitive fuels?47 And how much cheaper should indus*658trial gas sell than domestic gas, and how, much advantage should it have over competitive fuels? If industrial gas is to contribute at all to lowering domestic rates, should it not be made to contribute the very maximum of which it is capable, that is, should not its price be the highest at which the desired volume of sales can be realized?

If I were to answer I should say that the household rate should be the lowest that can be fixed under commercial conditions that will conserve the supply for that use. The lowest probable rate for that purpose is not likely to speed exhaustion much, for it still will be high enough to induce economy, and use for that purpose has more nearly reached the saturation point. On the other hand the demand for industrial gas at present rates already appears to be increasing. To lower further the industrial rate is merely further to subsidize industrial consumption and speed depletion. The impact of the flat reduction *659of rates ordered here admittedly will be to increase the industrial advantages of gas over competing fuels and to increase its use. I think this is not, and there is no finding by the Commission that it is, in the public interest.

There is no justification in this record for the present discrimination against domestic users of gas in favor of industrial users. It is one of the evils against which the Natural Gas Act was aimed by Congress and one of the evils complained of here by Cleveland and Akron. If Hope’s revenues should be cut by some $3,600,000 the whole reduction is owing to domestic users. If it be considered wise to raise part of Hope’s revenues by industrial purpose sales, the utmost possible revenue should be raised from the least consumption of gas. If competitive relationships to other fuels will permit, the industrial price should be substantially advanced, not for the benefit of the Company, but the increased revenues from the advance should be applied to reduce domestic rates. For in my opinion the “public interest” requires that the great volume of gas now being put to uneconomic industrial use should either be saved for its more important future domestic use or the present domestic user should have the full benefit of its exchange value in reducing his present rates.

Of course the Commission’s power directly to regulate does not extend to the fixing of rates at which the local company shall sell to consumers. Nor is such power required to accomplish the purpose. As already pointed out, the very contract the Commission is altering classifies the gas according to the purposes for which it is to be resold and provides differentials between the two classifications. It would only be necessary for the Commission to order that all gas supplied under paragraph (a) of Hope’s contract with the East Ohio Company shall be *660at a stated price fixed to give to domestic service the entire reduction herein and any further reductions that may prove possible by increasing industrial rates. It might further provide that gas delivered under paragraph (b) of the contract for industrial purposes to those industrial customers Hope has approved in writing shall be at such other figure as might be found consistent with the public interest as herein defined. It is too late in the day to contend that the authority of a regulatory commission does not extend to a consideration of public interests which it may not directly regulate and a conditioning of its orders for their protection. Interstate Commerce Commission v. Railway Labor Executives Assn., 315 U. S. 373; United States v. Lowden, 308 U. S. 225.

Whether the Commission will assert its apparently broad statutory authorization over prices and discrimina-tions is, of course, its own affair, not ours. It is entitled to its own notion of the “public interest” and its judgment of policy must prevail. However, where there is ground for thinking that views of this Court may have constrained the Commission to accept the rate-base method of decision and a particular single formula as “all important” for a rate base, it is appropriate to make clear the reasons why I, at least, would not be so understood. The Commission is free to face up realistically to the nature and peculiarity of the resources in its control, to foster their duration in fixing price, and to consider future interests in addition to those of investors and present consumers. If we return this case it may accept or decline the proffered freedom. This problem presents the Commission an unprecedented opportunity if it will boldly make sound economic considerations, instead of legal and accounting theories, the foundation of federal policy. I would return the case to the Commission and thereby be.clearly quit of what now may appear to be some responsibility for perpetrating a short-sighted pattern of natural gas regulation.

Mr. Chief Justice Vinson

delivered the opinion of the Court.

This case originated in proceedings before the Federal Power Commission initiated pursuant to § 5 (a) of the *684Natural Gas Act of 1938.1 After overruling objections to its jurisdiction, the Commission entered an order requiring the petitioner to effect substantial rate reductions in certain of its sales of natural gas and to file new schedules of rates and charges.2 Petitioner, in seeking review of the order in the Circuit Court of Appeals, denied the jurisdiction of the Commission to set rates for the sales in issue in this case and asserted that the rates so established were confiscatory. That Court, one judge dissenting, denied the petition for review.3 We granted certiorari limited to the question of the Commission’s jurisdiction.

Petitioner owns and operates 110 natural gas wells and owns or controls over 56,000 acres in the Monroe field of northern Louisiana. Petitioner’s main pipe line transports gas southward from the Monroe field through a part of Mississippi and back into Louisiana, where at Baton Rouge sales are made to various distributing companies and industrial consumers. Petitioner concedes that with respect to these operations it is a natural gas company within the meaning of § 2 (6) 4 of the Act and that the Commission has jurisdiction to regulate the rates of sales connected therewith.

The issue of this case involves the jurisdiction of the Federal Power Commission to regulate sales made in the field by petitioner to three pipe-line companies, each of which transports the gas so purchased to markets in States other than Louisiana.5 Gas produced from petitioner’s *685wells flows into petitioner’s system of field pipe lines, moving first into branch lines, then into trunk lines, and finally into the main trunk lines from which delivery is made to the three purchasing companies. During the course of this movement petitioner purchases gas from other producers in the field which gas is introduced into petitioner’s system at designated points and is there commingled with the gas moving from petitioner’s own wells. By far the larger part of the gas so purchased by petitioner has been gathered from various wells of the selling companies before delivery to petitioner is made.6 The gas moves through petitioner’s system at well pressure. Shortly after the sales in question are completed, the gas is directed through the compressor stations of the purchasing companies and is there subjected to increased pressure in order that it may be moved to markets as far distant as Illinois. The entire movement of the gas from the wells to the purchasing companies through the compressor pumps and across the state lines is a continuous process without interruption for storage, processing or for any other purpose.7 All the gas sold in these transactions is destined for ultimate public consumption in States other than Louisiana.

It appears that petitioner supplies only a part of the gas purchased by the three pipe-line companies in the Monroe *686field.8 Counsel for petitioner conceded before the Commission that the prices charged the three pipe-line companies were, by agreement, identical with those being charged by other producers in the field. The Commission found that petitioner was an affiliate of one of the three purchasing companies. It was the conclusion of the Commission that the rates charged by petitioner in these sales were “unjust, unreasonable and unlawful” and ordered rate reductions amounting to $596,320 per year as applied to the volume of gas sold in the test year of 1941.

Petitioner has at no time contended that regulation of its sales to the three purchasing companies is beyond the constitutional powers of Congress. Petitioner has vigorously asserted, however, that Congress did not exercise its full powers in the Natural Gas Act and that in § 1 (b) of the Act the jurisdiction of the Federal Power Commission is so limited as to preclude valid regulation of the sales by that agency. Section 1 (b) provides:

“The provisions of this Act 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, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.”

It is not denied that the transactions in question were sales of natural gas for resale for ultimate public consumption.

*687Petitioner has raised two issues: First, it is contended, the sales are not “in interstate commerce.” Second, the sales are a part of “production or gathering” and hence not within the Commission’s power of regulation.

We have no doubt that the sales are in interstate commerce. Indeed, petitioner did not contest that position before the Commission, but, so far as the record reveals, raised the issue for the first time in its petition for rehearing in the Circuit Court of Appeals.9 The Federal Power Commission found that the gas sold to the three pipe-line companies moves “. . . in a constant flow from the mouths of the wells from which it is produced through pipe lines belonging to Interstate to the compressor station of the respective purchaser, and thence through said compressor stations into the pipe line of said respective purchaser and thus into and through states other than Louisiana . . . , all without interruption, and said gas is so destined from the moment of its production.” The Commission further found that “The gas transported and sold by Interstate to these three pipe line companies continues its flow in interstate commerce and, as an established course of business well known to Interstate, is destined for resale for ultimate public consumption in . . . markets outside Louisiana.”

Under the circumstances described by the Commission, it is clear that the sales in question were quite as much in interstate commerce as they would have been had the *688pipes of the petitioner crossed the state line before reaching the points of sale.10 Thus in Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U. S. 83 (1927), a sale of electrical energy at the state line was held to be in interstate commerce. Commenting on that case, this Court in Jersey Central Power & Light Co. v. Federal Power Commission, 319 U. S. 61, 69 (1943) stated: “We see no distinction between a sale at or before reaching the state line.” There is nothing in the terms of the Act or in its legislative history to indicate that Congress intended that a more restricted meaning be attributed to the phrase “in interstate commerce” than that which theretofore had been given to it in the opinions of this Court.11 Section 2 (7) of the Act defines “interstate commerce” as “. . . commerce between any point in a State and any point outside thereof, or between points within the same State but through any place outside thereof, . . . .” Clearly the sales in question were a part of commerce being carried on between points in Louisiana and points in other States. There is nothing in that language to suggest that Congress intended that sales consummated before the gas crosses a state line should not be regarded as being “in” such commerce.

*689Nor are we impressed with the suggestion that the interstate movement of the gas should be regarded as beginning when the gas, theretofore moving through petitioner’s pipe line system at well pressure, is subjected to increased pressure in the compressor stations of the purchasing companies in order that the gas may be moved to the distant markets. Long before the gas reaches the compressor pumps it has been committed to its interstate journey which follows without interruption or deviation. Under such circumstances, the increase of pressure in the compressor stations must be regarded as merely an incident in the interstate commerce rather than as its origin.12

The Company contends, however, that regardless of whether the sales in question are in interstate commerce, those transactions fall within the clause of § 1 (b) specifically excepting from the Commission’s jurisdiction regulation of “. . . the production or gathering of natural gas.” In evaluating that contention we should not lose sight of the objectives sought to be accomplished by Congress in passing the Natural Gas Act.

In a series of decisions announced prior to the passage of the Act, this Court had held that, although Congress had not acted, the regulation of wholesale rates of gas and electrical energy moving in interstate commerce is beyond the constitutional powers of the States.13 Petitioner, relying in part upon the principles established by those cases, has successfully avoided regulation by the Louisiana *690Public Service Commission.14 As was stated in the House Committee report, the “basic purpose” of Congress in passing the Natural Gas Act was “to occupy this field in which the Supreme Court has held that the States may not act.”15 In denying the Federal Power Commission jurisdiction to regulate the production or gathering of natural gas, it was not the purpose of Congress to free companies such as petitioner from effective public control. The purpose of that restriction was, rather, to preserve in the States powers of regulation in areas in which the States are constitutionally competent to act. Thus the House Committee Report states: “The bill takes no authority from State commissions, and is so drawn as to complement and in no manner usurp State regulatory authority . . . .”16 Clearly, among the powers thus reserved to the States is the power to regulate the physical production and gathering of natural gas in the interests of conservation or of any other consideration of legitimate local concern.17 It was the intention of Congress to give the States full freedom in these matters. Thus, where sales, though technically consummated in interstate commerce, are made during the course of production and gathering and are so closely connected with the local incidents of that process as to render rate regulation by the Federal Power Commission inconsistent or a substantial interference with the exercise by the State of its regulatory functions, the jurisdiction of the Federal Power' Commission does not attach.18 But such conflict must be clearly shown. Ex*691ceptions to the primary grant of jurisdiction in the section are to be strictly construed. It is not sufficient to defeat the Commission’s jurisdiction over sales for resale in interstate commerce to assert that in the exercise of the power of rate regulation in such cases, local interests may in some degree be affected.19

. There is nothing in the record to indicate that the regulation in question is in any way inconsistent with the exercise by Louisiana of the powers over production and gathering of natural gas reserved to it by Congress in § 1 (b) of the Act. The State in a series of enactments has made elaborate provision for the conservation of its natural gas resources and has established various rules and regulations relating to the production and gathering process.20 Most of those provisions, presumably, are applicable to petitioner’s field operations.21 The record is devoid of any suggestion that Louisiana has ever opposed the jurisdiction of the Federal Power Commission in this case or has ever urged that federal regulation of the sales in question would interfere with the exercise by the State of its regulatory functions.22 We do not suggest that the *692jurisdiction of the Commission in any case is to be determined by the resistance or lack of resistance on the part of the State to federal regulation. But in evaluating the Company’s contention that the State’s powers have been invaded, we regard it a matter of some significance that although the State has freely exercised its regulatory powers over the production and gathering of natural gas, there is no evidence of any conflict, present or threatened, in the performing of those functions by the State with the exercise of the jurisdiction of the Federal Power Commission in this case.

It is not contended that the Commission is precluded from regulating the sales in question by reason of the exception from the Commission’s jurisdiction relating to the production of natural gas. Petitioner asserts, however, that the sales to the three pipe-line companies are a part of the gathering process and consequently not within the Commission’s power of regulation. This basic contention' has given rise to a great many subsidiary questions such as whether the sales were made from petitioner’s “gathering” lines or from petitioner’s “transmission” lines and whether the gathering process continued to the points of sale or was, as the Commission found, completed at some point prior to surrender of custody and passage of title. We have found it unnecessary to resolve those issues. The gas moved by petitioner to the points of sale consisted of gas produced from petitioner’s wells commingled with that produced and gathered by other companies and introduced into petitioner’s pipe-line system during the course of the movement. By the time the sales are consummated, nothing further in the gathering process remains to be done. We have held that these sales are in interstate commerce. It cannot be doubted that their regulation is predominately a matter of national, as contrasted to local concern. All the gas sold in these transactions is destined *693for consumption in States other than Louisiana. Unreasonable charges exacted at this stage of the interstate movement become perpetuated in large part in fixed items of costs which must be covered by rates charged subsequent purchasers of the gas, including the ultimate consumer.23 It was to avoid such situations that the Natural Gas Act was passed.

For reasons stated above, we have concluded that the Federal Power Commission in this case has not exceeded the jurisdiction conferred upon it by Congress in § 1 (b) of the Natural Gas Act.

Affirmed.

Mr. Justice Minton

delivered the opinion of the Court.

These cases present a common question concerning the jurisdiction of the Federal Power Commission over the rates charged by a natural-gas producer and gatherer in the sale in interstate commerce of such gas for resale. All three cases are an outgrowth of the same proceeding before the Power Commission and involve the same facts and issues.

The Phillips Petroleum Company1 is a large integrated oil company which also engages in the production, gathering, processing, and sale of natural gas. We are here concerned only with the natural-gas operations. Phillips is *675known as an “independent” natural-gas producer in that it does not engage in the interstate transmission of gas from the producing fields to consumer markets and is not affiliated with any interstate natural-gas pipeline company. As revealed by the record before us, however, Phillips does sell natural gas to five interstate pipeline transmission companies which transport and resell the gas to consumers and local distributing companies in fourteen states.

Approximately 50% of this gas is produced by Phillips, and the remainder is purchased from other producers. A substantial part is casinghead gas — i. e., produced in connection with the production of oil. The gas flows from the producing wells, in most instances at well pressure, through a network of converging pipelines of progressively larger size to one of twelve processing plants, where extractable products and impurities are removed. Of the nine such networks of pipelines involved in these cases, five are located entirely in Texas, one in Oklahoma, one in New Mexico, and two extend into both Texas and Oklahoma. After processing is completed, the gas flows from the processing plant through an outlet pipe, of varying lengths up to a few hundred feet, to a delivery point where the gas is sold and delivered to an interstate pipeline company. The gas then continues its flow through the interstate pipeline system until delivered in other states.

The Federal Power Commission, on October 28, 1948, instituted an investigation to determine whether Phillips is a natural-gas company within the jurisdiction of the Commission, and, if so, whether its natural-gas rates are unjust or unreasonable. In extensive hearings before an examiner, the facts described above were developed, as well as much additional information. An intermediate decision having been dispensed with, the Commission *676issued an opinion and order in which it held that Phillips is not a "natural-gas company” within the meaning of that term as used in the Natural Gas Act,2 and therefore is not within the Commission’s jurisdiction over rates.3 Consequently, the Commission did not proceed to investigate the reasonableness of the rates charged by Phillips. On appeals, the decision of the Commission was reversed by the United States Court of Appeals for the District of Columbia Circuit, one judge dissenting. 92 U. S. App. D. C. 284, 205 F. 2d 706. We granted certiorari. 346 U. S. 934, 935.

The Power Commission is authorized by § 4 of the Natural Gas Act to regulate the “rates and charges made, demanded, or received by any natural-gas company for or in connection with the transportation or sale of natural gas subject to the jurisdiction of the Commission . . . .” “Natural-gas company” is defined by § 2 (6) of the Act to mean “a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale.” The jurisdiction of the Commission is set forth in § 1(b) as follows:

“The provisions of this Act 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, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.”

*677Petitioners admit that Phillips engages in "the sale in interstate commerce of natural gas for resale/’ as, of course, they must. Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682, 687-689; cf. Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157, 166-168. They contend, however, that the affirmative grant of jurisdiction over such sales in the first clause of § 1 (b) is limited by the negative second clause of the section. In particular, the contention is made that the sales by Phillips are a part of the “production or gathering of natural gas” to which the Commission’s jurisdiction expressly does not extend.

We do not agree. In our view, the statutory language, the pertinent legislative history, and the past decisions of this Court all support the conclusion of the Court of Appeals that Phillips is a “natural-gas company” within the meaning of that term as defined in the Natural Gas Act, and that its sales in interstate commerce of natural gas for resale are subject to the jurisdiction of and regulation by the Federal Power Commission.

The Commission found that Phillips’ sales are part of the production and gathering process, or are “at least an exempt incident thereof.”4 This determination appears to have been based primarily on the Commission’s reading of legislative history and its interpretation of certain decisions of this Court. Also, there is some testimony in the record to the effect that the meaning of “gathering” commonly accepted in the natural-gas industry comprehends the sales incident to the physical activity of collecting and processing the gas. Petitioners contend that the Commission’s finding has a reasonable basis in law and is supported by substantial evidence of record and therefore should be accepted by the courts, particularly since the Commission has “consistently” interpreted the Act *678as not conferring jurisdiction over companies such as Phillips.5 See Gray v. Powell, 314 U. S. 402; Labor Board v. Hearst Publications, Inc., 322 U. S. 111. We are of the opinion, however, that the finding is without adequate basis in law, and that production and gathering, in the sense that those terms are used in § 1 (b), end before the sales by Phillips occur.

In Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U. S. 498, 505, we observed that the “natural and clear meaning” of the phrase “production or gathering of natural gas” is that it encompasses “the producing properties and gathering facilities of a natural-gas company.” Similarly, in Colorado Interstate Gas Co. v. Federal Power Commission, 324 U. S. 581, 598, we stated that “[transportation and sale do not include production or gathering,” and indicated that the “production or gathering” exemption applies to the physical activities, facilities, and properties used in the production and gathering of natural gas. Id., at 602-603. See also Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591, 612-615; Peoples Natural Gas Co. v. Federal Power Commission, 75 U. S. App. D. C. 235, 127 F. 2d 153; cf. United States v. Public Utilities Commission, 345 U. S. 295, 307-311.6

*679Even more directly in point is our decision in Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682. The Interstate Company produced or purchased natural gas which it in turn sold and delivered to. three interstate pipeline companies, all the activities occurring within the same state. We noted that “[exceptions to the primary grant of jurisdiction in the section [1 (b)] are to be strictly construed,”7 id., at 690-691, and held that § 1 (b) conferred jurisdiction over such sales on the Federal Power Commission, stating:

“Petitioner asserts . . . that the sales to the three pipe-line companies are a part of the gathering process and consequently not within the Commission’s power of regulation. This basic contention has given rise to a great many subsidiary questions such as whether the sales were made from petitioner’s 'gathering’ lines or from petitioner’s 'transmission’ lines and whether the gathering process continued to the *680points of sale or was, as the Commission found, completed at some point prior to surrender of custody and passage of title. We have found it unnecessary to resolve those issues. The gas moved by petitioner to the points of sale consisted of gas produced from petitioner’s wells commingled with that produced and gathered by other companies and introduced into petitioner’s pipe-line system during the course of the movement. By the time the sales are consummated, nothing further in the gathering process remains to be done. We have held that these sales are in interstate commerce. It cannot be doubted that their regulation is predominantly a matter of national, as contrasted to local concern. All the gas sold in these transactions is destined for consumption in States other than Louisiana. Unreasonable charges exacted at this stage of the interstate movement become perpetuated in large part in fixed items of costs which must be covered by rates charged subsequent purchasers of the gas, including the ultimate consumer. It was to avoid such situations.that the Natural Gas Act was passed.” Id., at 692-693.

Petitioners attempt to distinguish the Interstate case on the grounds that the Interstate Company transported the gas in its pipelines after completion of gathering and before sale, and that the Interstate Company was affiliated with an interstate pipeline company and therefore subject to Commission jurisdiction in any event. This Court, however, refused to rely on such refinements8 and instead based its decision in Interstate on the broader ground that sales in interstate commerce for resale by *681producers to interstate pipeline companies do not come within the “production or gathering” exemption.

The Interstate case is also said to be distinguishable in that it did not involve an asserted conflict with state regulation, and federal control was not opposed by the state authorities, while in the instant cases there are said to be conflicting state regulations, and federal jurisdiction is vigorously opposed by the producing states. The short answer to this contention is that the jurisdiction of the Federal Power Commission was not intended to vary from state to state, depending upon the degree of state regulation and of state opposition to federal control. We expressly rejected any implication to the contrary, in the Interstate case. 331 U. S., at 691-692. See Federal Power Commission v. Hope Natural Gas Co., supra, at 607-615.

The cases discussed above supply a ready answer to the determination of the Commission and also to petitioners’ suggestion that “production or gathering” should be construed to mean the “business” of production and gathering, with the sale of the product considered as an integral part of such “business.” We see no reason to depart from our previous decisions, especially since they are consistent with the language and legislative history of the Natural Gas Act.

In general, petitioners contend that Congress intended to regulate only the interstate pipeline companies since certain alleged excesses of those companies were the evil which brought about the legislation. If such were the case, we have difficulty in perceiving why the Commission’s jurisdiction over the transportation or sale for resale in interstate commerce of natural gas is granted in the disjunctive. It would have sufficed to give the Commission jurisdiction over only those natural-gas companies that engage in “transportation” or “transportation and sale for resale” in interstate commerce, if only interstate *682pipeline companies were intended to be covered.9 See Federal Power Commission v. East Ohio Gas Co., 338 U. S. 464, 468.

Rather, we believe that the legislative history indicates a congressional intent to give the Commission jurisdiction over the rates of all wholesales of natural gas in interstate commerce, whether by a pipeline company or not and whether occurring before, during, or after transmission by an interstate pipeline company.10 There can be no dispute that the overriding congressional purpose was to plug the “gap” in regulation of natural-gas companies resulting from judicial decisions prohibiting, on *683federal constitutional grounds, state regulation of many of the interstate commerce aspects of the natural-gas business.11 A significant part of this gap was created by cases12 holding that “the regulation of wholesale rates of gas and electrical energy moving in interstate commerce is beyond the constitutional powers of the States.” Interstate Natural Gas Co. v. Federal Power Commission, supra, at 689. The committee reports on the bill that became the Natural Gas Act specifically referred to two of these cases and to the necessity of federal regulation to occupy the hiatus created by them.13 Thus, we are *684satisfied that Congress sought to regulate wholesales of natural gas occurring at both ends of the interstate transmission systems.

Petitioners cite our recent decisions in Cities Service Gas Co. v. Peerless Oil & Gas Co., 340 U. S. 179, and Phillips Petroleum Co. v. Oklahoma, 340 U. S. 190, as authority for the proposition that the states may regulate the sales in question here and, hence, that such sales are not within the gap which the Natural Gas Act was intended to fill. Those cases upheld as constitutional state minimum price orders, justified as conservation measures, applying to sales of natural gas in interstate commerce. But it is well settled that the gap referred to is that thought to exist at the time the Natural Gas Act was passed, and the jurisdiction of the Commission is not affected by subsequent decisions of this Court which have somewhat loosened the constitutional restrictions on state activities affecting interstate commerce, in the absence of conflicting federal regulation. Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U. S. 498, 508; Federal Power Commission v. East Ohio Gas Co., supra, at 472. The Federal Power Commission did not participate in the Cities Service and Phillips Petroleum cases, the appellants there did not assert a possible conflict with federal authority under the Natural Gas Act, and consequently we expressly refused to consider at that time “[w]hether the Gas Act authorizes *685the Power Commission to set field prices on sales by-independent producers, or leaves that function to the states . . . 340 U. S., at 188-189.

Regulation of the sales in interstate commerce for resale made by a so-called independent natural-gas producer is not essentially different from regulation of such sales when made by an affiliate of an interstate pipeline company. In both cases, the rates charged may have a direct and substantial effect on the price paid by the ultimate consumers. Protection of consumers against exploitation at the hands of natural-gas companies was the primary aim of the Natural Gas Act. Federal Power Commission v. Hope Natural Gas Co., supra, at 610. Attempts to weaken this protection by amendatory legislation exempting independent natural-gas producers from federal regulation have repeatedly failed,14 and we refuse to achieve the same result by a strained interpretation of the existing statutory language.

The judgment is

Affirmed.

Mr. Justice Jackson took no part in the consideration or decision of these cases.

Mr. Justice Frankfurter,

concurring.

While I join the opinion of the Court, one consideration leading to the Court’s conclusion is for me so decisive that I deem it appropriate to give it emphasis.

Section 1 (b) is not to be construed on its face. It comes to us with an authoritative gloss. We must construe it as though Congress had, in words, added to *686the present text of § 1 (b) some such language as the following:

“However, since sales for resale, or so-called 'wholesale sales/ in interstate commerce are not local in character and are constitutionally not subject to State regulation, see Missouri v. Kansas Gas Co., 265 U. S. 298, and Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U. S. 83, the basic purpose of the legislation is to occupy this field in which the States may not act.”

The section must be read with such an interpolation because the Committees of Congress which were responsible for the legislation said specifically that the Natural Gas Act was designed to cover the situations which the two cited cases held to be outside the competence of State regulation. H. R. Rep. No. 709, 75th Cong., 1st Sess. 1-2; S. Rep. No. 1162, 75th Cong., 1st Sess. 1-2.*

To be sure, the Kansas Gas case excluded the business of piping gas by a supply company in one State to dis*687tributing companies in another; and the Attleboro case involved the transmission of electric current by a producing company which took it from one State to the boundary of another State and there sold it to a distributing company for resale in the other State. In this case, the sale by Phillips was made in Texas to interstate pipeline transmission companies which transported, the gas for resale to distributing companies and consumers in other States. But this fact — that Phillips itself did not pipe the gas to the State boundary or directly into another State — does not in the slightest alter the constitutional applicability of the Attleboro doctrine to the situation before us. The fact that the continuous transmission is not by facilities of Phillips but by the facilities of Phillips connecting with pipelines transmitting gas into other States does not change the interstate character of the transaction. For that reason, the decision in Attleboro, 273 U. S., at 86, relying on Peoples Gas Co. v. Public Service Commission, 270 U. S. 550, barred State regulation.

It may well be that if the problem in the Attleboro case came before the Court today, the constitutional doctrine there laid down would not be found compelling. This is immaterial. Congress did not leave it to the determination of this Court whether an Attleboro situation is subject to State regulation. It wrote the doctrine of the Attleboro case into the Natural Gas Act and said in effect that an Attleboro situation was to be taken over by federal regulation and was not to be left to the fluctuation of adjudications under the Commerce Clause.

Mr. Justice Douglas,

dissenting.

The question is whether sales of natural gas by an independent producer at the mouth of an interstate pipeline are subject to regulation by the Federal Power Commission under the Natural Gas Act of 1938. This is *688a question the Court has never decided. It is indeed one on which we expressly reserved decision in Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682, 690, n. 18.

There is much to be said from the national point of view for regulating sales at both ends of these interstate pipelines. The power of Congress to do so is unquestioned. Whether it did so by the Natural Gas Act of 1938 is a political and legal controversy that has raged in the Commission and in the Congress for some years. The question is not free from doubts. For while § 1 (b) of the Act makes the regulatory provisions applicable “to the sale in interstate commerce of natural gas for resale for ultimate public consumption,” it also makes them inapplicable “to the production or gathering of natural gas.”

The sale by this independent producer is a “sale in interstate commerce . . . for resale.” It is also an integral part of “the production or gathering of natural gas,” as Mr. Justice Clark makes clear in his opinion, for it is the end phase of the producing and gathering process. So we must make a choice; and the choice is not an easy one.

The legislative history is not helpful. Congress was concerned with interstate pipelines, not with independent producers, as the thoughtful Comment in 59 Yale L. J. 1468 points out. If one can judge by the reports of the Federal Trade Commission that preceded the Act (S. Doc. No. 92, Pt. 84-A, 70th Cong., 1st Sess.), and the hearings and debates in Congress on the bills that evolved into the Act, little or no consideration was given to the need of regulating the sales by independent producers to the pipelines. The gap to be filled was that existing before the pipelines were brought under regulation — sales to distributors along the pipelines, as the opinion of Mr. Justice Clark demonstrates.

*689That was the view of the Commission in a decision that followed on the heels of the Act. Columbian Fuel Corp., 2 F. P. C. 200, 207. That decision exempted from regulation an independent producer to whom Phillips is in all material respects comparable. It was a decision made by men intimately familiar with the background and history of the Act — Leland Olds, Basil Manly, Claude L. Draper, and Clyde L. Seavey. One Commisr sioner, John W. Scott, dissented. That construction of the Act by the Commission has persisted from that time (see Billings Gas Co., 2 F. P. C. 288; The Fin-Ker Oil & Gas Production Co., 6 F. P. C. 92; Tennessee Gas & Transmission Co., 6 F. P. C. 98) down to its decision in the present case. 10 F. P. C. 246.

That construction by the Commission, especially since it was contemporaneous (United States v. American Trucking Assns., 310 U. S. 534, 539) and long continued (Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U. S. 498, 513), is entitled to great weight. Other obtuse questions no less legal in character than the terms “production or gathering” of gas have been entrusted to the administrative agency charged with the regulation. See Shields v. Utah Idaho Central R. Co., 305 U. S. 177; Sunshine Anthracite Coal Co. v. Adkins, 310 U. S. 381; Gray v. Powell, 314 U. S. 402.

There are practical considerations which buttress that position and lead me to conclude that we should not reverse the Commission in the present case. If Phillips’ sales can be regulated, then the Commission can set a rate base for Phillips. A rate base for Phillips must of necessity include all of Phillips’ producing and gathering properties; and supervision over its operating expenses necessarily includes supervision over its producing and gathering expenses. We held in Colorado Interstate Gas Co. v. Federal Power Commission, 324 U. S. 581, that the Commission’s control extended that far in the case of an *690interstate pipeline company which owned producing and gathering properties. And so it had to be, if regulation of the pipelines that owned their own gas supplies was to be effective. But an understanding of what regulation entails should lead to a different result in this case. The fastening of rate regulation on this independent producer brings “the production or gathering of natural gas” under effective federal control, in spite of the fact that Congress has made that phase of the natural gas business exempt from regulation. The effect is certain to be profound. The price at which the independent producer can sell his gas determines the price he is able or willing to pay for it (if he buys from other wells). The sales price determines his profits. And his profits and the profits of all the other gatherers, whose gas moves into the interstate pipelines, have profound effects on the rate of production, the methods of production, the old wells that are continued in production, the new ones explored, etc. Regulating the price at which the independent producer can sell his gas regulates his business in the most vital way any business can be regulated. That regulation largely nullifies the exemption granted by Congress.

There is much to be said in terms of policy for the position of Commissioner Scott, who dissented the first time the Commission ruled it had no jurisdiction over these sales. But the history and language of the Act are against it. If that ground is to be taken, the battle should be won in Congress, not here. Regulation of the business of producing and gathering natural gas involves considerations of which we know little and with which we are not competent to deal.

Mr. Justice Clark,

with whom Mr. Justice Burton concurs, dissenting.

Perhaps Congress should have included control over the production and gathering of natural gas among the powers *691it gave the Federal Power Commission in the Natural Gas Act, but this Congress did not do. On the contrary, Congress provided that the Act “shall not apply ... to the production or gathering of natural gas.” Language could not express a clearer command, but the majority renders this language almost entirely nugatory by holding that the rates charged by a wholly independent producer and gatherer may be regulated by the Federal Power Commission. Nor does the Court stop there, for in the sweep of the opinion “the rates of all wholesales of natural gas in interstate commerce, whether by a pipeline company or not and whether occuring before, during, or after transmission by an interstate pipeline company” are covered under the Act. Ante, p. 682. (Emphasis supplied.) On its face, this language brings every gas operator, from the smallest producer to the largest pipeline, under federal regulatory control. In so doing, the Court acts contrary to the intention of the Congress, the understanding of the states, and that of the Federal Power Commission itself. The Federal Power Commission is thereby thrust into the regulatory domain traditionally reserved to the states.

. The natural gas industry, like ancient Gaul, is divided into three parts. These parts are production and gathering, interstate transmission by pipeline, and distribution to consumers by local distribution companies. A business unit may perform more than one of these functions— typically, production and gathering in addition to interstate transmission. But Phillips’ natural gas operations are confined exclusively to the first part — production and gathering. It has no interstate transmission or high-pressure trunk lines and does not sell to distribution companies; and it does not, of course, distribute to the ultimate consumer. Its nine gathering systems merely bring the gas from its own and other producers’ wells to its central plants in the producing fields so it can be rendered usable as fuel. Since there are no facilities for storage, *692the amount of gas, other than casinghead,* produced and gathered each day depends on the day-to-day demands of the interstate pipelines, which in turn depend on weather and other conditions in consuming areas. Gas wells are cut on and off as the market demand for the gas requires. Gathering takes place by well pressure forcing the gas through numerous small pipes connecting each well with the central gathering plant or processing station. It is there that the gas first comes to a common “header” and is processed for use as fuel. The processing of the gas at this central gathering plant is necessary to remove hydrocarbons, hydrogen sulphide and other foreign elements, in order to permit its use as fuel. The plant operates only while the wells are producing. All of Phillips’ operations, including the acreage from which the wells produce the gas, the wells themselves, the lines that connect with each of them and run to the central plant, form a closely knit unit that is entirely local to the field involved. After processing, the gas is immediately delivered to the interstate pipelines under long-term sales contracts.

The Commission found that “[t] hough technically consummated in interstate commerce, these sales [by Phillips to the pipelines] are made 'during the course of production and gathering/ ” and that the sales “are so closely connected with the local incidents of [production and gathering] as to render rate regulation by this Commission inconsistent or a substantial interference with *693the exercise by the affected states of their regulatory functions.” 10 F. P. C., at 278. We believe that this finding is correct and that it should be approved by the Court.

If there be any doubt that Congress thought the “production and gathering” exemption saved Phillips’ sales from Federal Power Commission regulation, the Act’s legislative history removes it. The Solicitor of the Commission, Mr. Dozier DeVane, at hearings in connection with a predecessor of the bill that finally became the Natural Gas Act, testified that the Federal Power Commission would have no jurisdiction over the rates for natural gas “that are paid in the gathering field.” Hearings before Subcommittee of the House Committee on Interstate and Foreign Commerce on H. R. 11662, 74th Cong., 2d Sess., p. 28 (1936). The bill, he said, “does not attempt to regulate the gathering rates or the gathering business.” Id., 34. See also, id., 42-43. The bill about which Mr. DeVane testified has been described as “substantially similar to the Natural Gas Act,” and his views have been treated as authoritative by this Court. Federal Power Commission v. Panhandle Eastern Pipe Line Co., 337 U. S. 498, 505, n. 7 (1949). See also Federal Power Commission v. East Ohio Gas Co., 338 U. S. 464, 472, n. 12 (1950). In the face of this as well as the Federal Power Commission’s adherence to the DeVane views ever since its first cases on the subject, Columbian Fuel Corp., 2 F. P. C. 200 (1940), Billings Gas Co., 2 F. P. C. 288 (1940), and in the absence of any specific matter in the Act’s legislative history refuting the DeVane views, the Court today erroneously finds that DeVane’s “testimony has little relevance here.” Ante, p. 682, n. 9.

There is no dispute that Congress intended the Natural Gas Act to close the “gap” created by decisions of this Court barring state regulation of certain interstate gas sales. The legislative history of the Act refers to two *694decisions: Missouri v. Kansas Natural Gas Co., 265 U. S. 298 (1924); Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U. S. 83 (1927). See H. R. Rep. No. 709, 75th Cong., 1st Sess., pp. 1-2 (1937). But these cases had nothing to do with sales to interstate pipelines by wholly independent, unintegrated, and unaffiliated producers and gatherers, such as Phillips. Neither of the companies involved in those cases was engaged exclusively in production and gathering; both were producing and transportation companies, Kansas of natural gas, Attleboro of electricity; both Kansas and Attleboro sold to distributing companies in the course of interstate transmission. Thus, when the House Report, id., 1-2, expressed the Act’s aim to regulate wholesales such as “sales by producing companies to distributing companies,” and immediately thereafter cited the Kansas and Attleboro cases, the Report’s unmistakable reference was to sales by an integrated “producer-pipeline” to the local distributor. It could not refer to an independent producer and gatherer because, first, such an independent never sells to local distributors and, secondly, the two cited cases do not support a reference to such independents. That Congress aimed at abuses resulting in the “gap” at the end of the transmission process by integrated and uninte-grated pipelines and not at abuses prior to transmission is clear from the final report of the Federal Trade Commission to the Senate on malpractices in the natural gas industry. S. Doc. No. 92, 70th Cong., 1st Sess. (1935). This report was the stimulus for federal intervention in the industry. The Federal Trade Commission outlined the abuses in the industry which the “gap” made the states powerless to prevent; the abuses were by monopo-listically situated pipelines which gouged the consumer by charging local distribution companies unreasonable rates. The Federal Trade Commission did not find abusive pricing by independent producers and gatherers; *695if anything, the independents at the producing end of the pipelines were likewise the victims of monopolistic practices by the pipelines.

And our decisions have certainly indicated that the “gap” was at the distribution end of the transmission process. Thus, in Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591 (1944), the Court observed that “the Federal Power Commission was given no authority over 'the production or gathering of natural gas’ ” and that the producing states had the power “to protect the interests of those who sell their gas to the interstate operator.” Id., at 612-613, 614. (Emphasis supplied.) Five years later, in Federal Power Commission v. Panhandle Eastern Pipe Line Co., supra, the Court said its approval of the Commission’s inclusion of the cost of production and gathering facilities of an interstate pipeline in the latter’s rate base “is not a precedent for regulation of any part of production or marketing.” 337 U. S., at 506. (Emphasis supplied.)

By today’s decision, the Court restricts the phrase “production and gathering” to “the physical activities, facilities, and properties” used in production and gathering. Such a gloss strips the words of their substance. If the Congress so intended, then it left for state regulation only a mass of empty pipe, vacant processing plants and thousands of hollow wells with scarecrow derricks, monuments to this new extension of federal power. It was not so understood. The states have been for over 35 years and are now enforcing regulatory laws covering production and gathering, including pricing, proration of gas, ratable taking, unitization of fields, processing of casinghead gas including priority over other gases, well spacing, repressuring, abandonment of wells, marginal area development, and other devices. Everyone is fully aware of the direct relationship of price and conservation. Federal Power Commission v. Panhandle *696 Eastern Pipe Line Co., supra, at 507. And the power of the states to regulate the producers’ and gatherers’ prices has been upheld in this Court. Cities Service Gas Co. v. Peerless Oil & Gas Co., 340 U. S. 179 (1950); Phillips Petroleum Co. v. Oklahoma, 340 U. S. 190 (1950). There can be no doubt, as the Commission has found, that federal regulation of production and gathering will collide and substantially interfere with and hinder the enforcement of these state regulatory measures. We cannot square this result with the House Report on this Act which states that the subsequently enacted bill “is so drawn as to complement and in no manner usurp State regulatory authority.” H. R. Rep. No. 709, supra, at 2.

The majority rely heavily on Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682 (1947), to support their position. To be sure, there is language in that case which on its face seems to govern the present case. Id., at 692-693. But that case involved a materially different fact situation. The Interstate Gas Company was already subject to Federal Power Commission jurisdiction because of its interstate pipeline operations; and the company was affiliated with one of the pipelines to which it sold. In addition, the Court emphasized the fact that in Interstate no claim to state regulatory authority was made. Indeed, the Interstate Company had successfully resisted state attempts to regulate. Hence there was no possibility of conflict in that case; either the Federal Power Commission moved in or Interstate would have remained unregulated. But perhaps a more significant factual distinction in terms of the Court’s reasoning in that case rests in the fact that of the total volume of gas Interstate sold, roughly 42% had been purchased from others who had produced and gathered it. This 42% was almost enough to supply all the needs of the three interstate pipelines to which Interstate sold. And the 42%, *697already gathered and processed, moved into and through Interstate’s branch, trunk, and main trunk lines. In short, Interstate was the equivalent of a middleman between gatherers and the pipelines for almost all the gas it sold to the pipelines and performed the function of transporting the gas it purchased from other gatherers through its branch, trunk, and main trunk lines. Phillips performs no such middleman or transmission function. In addition, the late Chief Justice Vinson in that case specifically stated that: “We express no opinion as to the validity of the jurisdictional tests employed by the Commission in these cases [Columbian and Billings, supra].’’ 331 U. S., at 690-691, n. 18. Since it was in those cases that the Federal Power Commission established the policy of declining jurisdiction over the rates charged by wholly independent producers and gatherers, it is difficult to see how Interstate can control the present case.

If we look to Interstate for guidance, we would do better to focus on the following words of the late Chief Justice:

“Clearly, among the powers thus reserved to the States is the power to regulate the physical production and gathering of natural gas in the interests of conservation or of any other consideration of legitimate local concern. It was the intention of Congress to give the States full freedom in these matters. Thus, where sales, though technically consummated in interstate commerce, are made during the course of production and gathering and are so closely connected with the local incidents of that process as to render rate regulation by the Federal Power Commission inconsistent or a substantial interference with the exercise by the State of its regulatory functions, the jurisdiction of the Federal Power Commission does not attach.” 331 U. S., at 690.

*698Even a cursory examination of Phillips’ operations reveals how completely local they are and how incidental to them are its sales to the pipelines. Moreover, federal regulation of these sales means an inevitable clash with a complex of state regulatory action, including minimum pricing. These were matters found by the Federal Power Commission in language obviously patterned after the above quotation. The clear import of the cited words is that Federal Power Commission jurisdiction “does not attach” in such a situation.

In the words of Mr. Justice Jackson, we believe “that observance of good faith with the states requires that we interpret this Act as it was represented at the time they urged its enactment, as its terms read, and as we have, until today, declared it, viz., to supplement but not to supplant state regulation.” Federal Power Commission v. East Ohio Gas Co., supra, at 490.

Justice BREYERdelivered the opinion of the Court.

In this case, a group of manufacturers, hospitals, and other institutions that buy natural gas directly from interstate pipelines sued the pipelines, claiming that they engaged in behavior that violated state antitrust laws. The pipelines' behavior affected bothfederally regulated wholesale natural-gas prices andnonfederally regulated retailnatural-gas prices. The question is whether the federal Natural Gas Act pre-empts these lawsuits. We have said that, in passing the Act, "Congress occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce." Schneidewind v. ANR Pipeline Co.,485 U.S. 293, 305, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988). Nevertheless, for the reasons given below, we conclude that the Act does not pre-empt the state-law antitrust suits at issue here.

I

A

The Supremacy Clause provides that "the Laws of the United States" (as well as treaties and the Constitution itself) "shall be the supreme Law of the Land *1595... any Thing in the Constitution or Laws of any state to the Contrary notwithstanding." Art. VI, cl. 2. Congress may consequently pre-empt, i.e.,invalidate, a state law through federal legislation. It may do so through express language in a statute. But even where, as here, a statute does not refer expressly to pre-emption, Congress may implicitly pre-empt a state law, rule, or other state action. See Sprietsma v. Mercury Marine,537 U.S. 51, 64, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002).

It may do so either through "field" pre-emption or "conflict" pre-emption. As to the former, Congress may have intended "to foreclose any state regulation in the area," irrespective of whether state law is consistent or inconsistent with "federal standards." Arizona v. United States,567 U.S. ----, ----, 132 S.Ct. 2492, 2502, 183 L.Ed.2d 351 (2012)(emphasis added). In such situations, Congress has forbidden the State to take action in the fieldthat the federal statute pre-empts.

By contrast, conflict pre-emption exists where "compliance with both state and federal law is impossible," or where "the state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' " California v. ARC America Corp.,490 U.S. 93, 100, 101, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989). In either situation, federal law must prevail.

No one here claims that any relevant federal statute expressly pre-empts state antitrust lawsuits. Nor have the parties argued at any length that these state suits conflict with federal law. Rather, the interstate pipeline companies (petitioners here) argue that Congress implicitly " 'occupied the field of mattersrelating to wholesale sales and transportation of natural gas in interstate commerce.' " Brief for Petitioners 18 (quoting Schneidewind, supra,at 305, 108 S.Ct. 1145(emphasis added)). And they contend that the state antitrust claims advanced by their direct-sales customers (respondents here) fall within that field. The United States, supporting the pipelines, argues similarly. See Brief for United States as Amicus Curiae15. Since the parties have argued this case almost exclusively in terms of field pre-emption, we consider only the field pre-emption question.

B

1

Federal regulation of the natural-gas industry began at a time when the industry was divided into three segments. See 1 Regulation of the Natural Gas Industry § 1.01 (W. Mogel ed. 2008) (hereinafter Mogel); General Motors Corp. v. Tracy,519 U.S. 278, 283, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997). First, natural-gas producers sunk wells in large oil and gas fields (such as the Permian Basin in Texas and New Mexico). They gathered the gas, brought it to transportation points, and left it to interstate gas pipelines to transport the gas to distant markets. Second, interstate pipelines shipped the gas from the field to cities and towns across the Nation. Third, local gas distributors bought the gas from the interstate pipelines and resold it to business and residential customers within their localities.

Originally, the States regulated all three segments of the industry. See 1 Mogel § 1.03. But in the early 20th century, this Court held that the Commerce Clause forbids the States to regulate the second part of the business-i.e.,the interstate shipment and sale of gas to local distributors for resale. See, e.g.,Public Util. Comm'n of R.I. v. Attleboro Steam & Elec. Co.,273 U.S. 83, 89-90, 47 S.Ct. 294, 71 L.Ed. 549 (1927);

*1596Missouri ex rel. Barrett v. Kansas Natural Gas Co.,265 U.S. 298, 307-308, 44 S.Ct. 544, 68 L.Ed. 1027 (1924). These holdings left a regulatory gap. Congress enacted the Natural Gas Act, 52 Stat. 821, to fill it. See Phillips Petroleum Co. v. Wisconsin,347 U.S. 672, 682-684, n. 13, 74 S.Ct. 794, 98 L.Ed. 1035 (1954)(citing H.R.Rep. No. 709, 75th Cong., 1st Sess., 1-2 (1937); S.Rep. No. 1162, 75th Cong., 1st Sess., 1-2 (1937)).

The Act, in § 5(a), gives rate-setting authority to the Federal Energy Regulatory Commission (FERC, formerly the Federal Power Commission (FPC)). That authority allows FERC to determine whether "any rate, charge, or classification ... collected by any natural-gas company in connection with any transportation or sale of natural gas, subject to the jurisdiction of [FERC]," or "any rule, regulation, practice, or contract affecting suchrate, charge, or classification is unjust, unreasonable, unduly discriminatory, or preferential." 15 U.S.C. § 717d(a)(emphasis added). As the italicized words make clear, § 5(a) limits the scope of FERC's authority to activities "in connection with any transportation or sale of natural gas, subject to the jurisdiction of the Commission." Ibid. (emphasis added). And the Act, in § 1(b), limits FERC's "jurisdiction" to (1) "the transportation of natural gas in interstate commerce," (2) "the sale in interstate commerce of natural gas for resale," and (3) "natural-gas companies engaged in such transportation or sale." § 717(b). The Act leaves regulation of other portions of the industry-such as production, local distribution facilities, and direct sales-to the States. See Northwest Central Pipeline Corp. v. State Corporation Comm'n of Kan.,489 U.S. 493, 507, 109 S.Ct. 1262, 103 L.Ed.2d 509 (1989)(Section 1(b) of the Act "expressly" provides that "States retain jurisdiction over intrastatetransportation, local distribution, and distribution facilities, and over 'the production or gathering of natural gas' ").

To simplify our discussion, we shall describe the firms that engage in interstate transportation as "jurisdictional sellers" or "interstate pipelines" (though various brokers and others may also fall within the Act's jurisdictional scope). Similarly, we shall refer to the sales over which FERC has jurisdiction as "jurisdictional sales" or "wholesale sales."

2

Until the 1970's, natural-gas regulation roughly tracked the industry model we described above. Interstate pipelines would typically buy gas from field producers and resell it to local distribution companies for resale. See Tracy, supra,at 283, 117 S.Ct. 811. FERC (or FPC), acting under the authority of the Natural Gas Act, would set interstate pipeline wholesale rates using classical "cost-of-service" ratemaking methods. See Public Serv. Comm'n of N.Y. v. Mid-Louisiana Gas Co.,463 U.S. 319, 328, 103 S.Ct. 3024, 77 L.Ed.2d 668 (1983). That is, FERC would determine a pipeline's revenue requirement by calculating the costs of providing its services, including operating and maintenance expenses, depreciation expenses, taxes, and a reasonable profit. See FERC, Cost-of-Service Rates Manual 6 (June 1999). FERC would then set wholesale rates at a level designed to meet the pipeline's revenue requirement.

Deregulation of the natural-gas industry, however, brought about changes in FERC's approach. In the 1950's, this Court had held that the Natural Gas Act required regulation of prices at the interstate pipelines' buying end-i.e., the prices at which field producers sold natural gas to interstate pipelines. Phillips Petroleum Co., supra,at 682, 685, 74 S.Ct. 794. By the 1970's, many in Congress thought that such efforts to regulate field prices *1597had jeopardized natural-gas supplies in an industry already dependent "on the caprice of nature." FPC v. Hope Natural Gas Co.,320 U.S. 591, 630, 64 S.Ct. 281, 88 L.Ed. 333 (1944)(opinion of Jackson, J.); see id.,at 629, 64 S.Ct. 281(recognizing that "the wealth of Midas and the wit of man cannot produce ... a natural gas field"). Hoping to avoid future shortages, Congress enacted forms of field price deregulation designed to rely upon competition, rather than regulation, to keep field prices low. See, e.g.,Natural Gas Policy Act of 1978, 92 Stat. 3409, codified in part at 15 U.S.C. § 3301 et seq.(phasing out regulation of wellhead prices charged by producers of natural gas); Natural Gas Wellhead Decontrol Act of 1989, 103 Stat. 157 (removing price controls on wellhead sales as of January 1993).

FERC promulgated new regulations designed to further this process of deregulation. See, e.g., Regulation of Natural Gas Pipelines after Partial Wellhead Decontrol, 50 Fed.Reg. 42408 (1985)(allowing "open access" to pipelines so that consumers could pay to ship their own gas). Most important here, FERC adopted an approach that relied on the competitive marketplace, rather than classical regulatory rate-setting, as the main mechanism for keeping wholesalenatural-gas rates at a reasonable level. Order No. 636, issued in 1992, allowed FERC to issue blanket certificates that permitted jurisdictional sellers (typically interstate pipelines) to charge market-based rates for gas, provided that FERC had first determined that the sellers lacked market power. See 57 Fed.Reg. 57957-57958 (1992); id.,at 13270.

After the issuance of this order, FERC's oversight of the natural-gas market largely consisted of (1) ex ante examinations of jurisdictional sellers' market power, and (2) the availability of a complaint process under § 717d(a). See Brief for United States as Amicus Curiae4. The new system also led many large gas consumers-such as industrial and commercial users-to buy their own gas directly from gas producers, and to arrange (and often pay separately) for transportation from the field to the place of consumption. See Tracy,519 U.S., at 284, 117 S.Ct. 811. Insofar as interstate pipelines sold gas to such consumers, they sold it for direct consumption rather than resale.

3

The free-market system for setting interstate pipeline rates turned out to be less than perfect. Interstate pipelines, distributing companies, and many of the customers who bought directly from the pipelines found that they had to rely on privately published price indices to determine appropriate prices for their natural-gas contracts. These indices listed the prices at which natural gas was being sold in different (presumably competitive) markets across the country. The information on which these indices were based was voluntarily reported by natural-gas traders.

In 2003, FERC found that the indices were inaccurate, in part because much of the information that natural-gas traders reported had been false. See FERC, Final Report on Price Manipulation in Western Markets (Mar. 2003), App. 88-89. FERC found that false reporting had involved "inflating the volume of trades, omitting trades, and adjusting the price of trades." Id.,at 88. That is, sometimes those who reported information simply fabricated it. Other times, the information reported reflected "wash trades," i.e.,"prearranged pair[s] of trades of the same good between the same parties, involving no economic risk and no net change in beneficial ownership." Id.,at 215. FERC concluded that these "efforts to manipulate *1598price indices compiled by trade publications" had helped raise "to extraordinary levels" the prices of both jurisdictional sales (that is, interstate pipeline sales for resale) and nonjurisdictional direct sales to ultimate consumers. Id.,at 86, 85.

After issuing its final report on price manipulation in western markets, FERC issued a Code of Conduct. That code amended all blanket certificates to prohibit jurisdictional sellers "from engaging in actions without a legitimate business purpose that manipulate or attempt to manipulate market conditions, including wash trades and collusion." 68 Fed.Reg. 66324 (2003). The code also required jurisdictional companies, when they provided information to natural-gas index publishers, to "provide accurate and factual information, and not knowingly submit false or misleading information or omit material information to any such publisher."Id.,at 66337. At the same time, FERC issued a policy statement setting forth "minimum standards for creation and publication of any energy price index," and "for reporting transaction data to index developers." Price Discovery in Natural Gas and Elec. Markets,104 FERC ¶ 61,121, pp. 61,407, 61,408 (2003). Finally, FERC, after finding that certain jurisdictional sellers had "engaged in wash trading ... that resulted in the manipulation of [natural-gas] prices," terminated those sellers' blanket marketing certificates. Enron Power Marketing, Inc.,103 FERC ¶ 61,343, p. 62,303 (2003).

Congress also took steps to address these problems. In particular, it passed the Energy Policy Act of 2005, 119 Stat. 594, which gives FERC the authority to issue rules and regulations to prevent "any manipulative or deceptive device or contrivance" by "any entity ... in connection with the purchase or sale of natural gas or the purchase or sale of transportation services subject to the jurisdiction of" FERC, 15 U.S.C. § 717c-1.

C

We now turn to the cases before us. Respondents, as we have said, bought large quantities of natural gas directly from interstate pipelines for their own consumption. They believe that they overpaid in these transactions due to the interstate pipelines' manipulation of the natural-gas indices. Based on this belief, they filed state-law antitrust suits against petitioners in state and federal courts. See App. 244-246 (alleging violations of Wis. Stat. §§ 133.03, 133.14, 133.18); see also App. 430-433 (same); id.,at 519-521 (same); id.,at 362-364 (alleging violations of Kansas Restraint of Trade Act, Kan. Stat. Ann. § 50-101 et seq.); App. 417-419 (alleging violations of Missouri Antitrust Law, Mo.Rev.Stat. §§ 416.011-416.161). The pipelines removed all the state cases to federal court, where they were consolidated and sent for pretrial proceedings to the Federal District Court for the District of Nevada. See 28 U.S.C. § 1407.

The pipelines then moved for summary judgment on the ground that the Natural Gas Act pre-empted respondents' state-law antitrust claims. The District Court granted their motion. It concluded that the pipelines were "jurisdictional sellers," i.e.,"natural gas companies engaged in" the "transportation of natural gas in interstate commerce." Order in No. 03-cv-1431 (D Nev., July 18, 2011), pp. 4, 11. And it held that respondents' claims, which were "aimed at" these sellers' "alleged practices of false price reporting, wash trades, and anticompetitive collusive behavior" were pre-empted because "such practices," not only affected nonjurisdictional direct-sale prices but also "directly affect[ed]" jurisdictional (i.e.,wholesale) rates. Id.,at 36-37.

*1599The Ninth Circuit reversed. It emphasized that the price-manipulation of which respondents complained affected not only jurisdictional (i.e.,wholesale) sales, but also nonjurisdictional (i.e.,retail) sales. The court construed the Natural Gas Act's pre-emptive scope narrowly in light of Congress' intent-manifested in § 1(b) of the Act-to preserve for the States the authority to regulate nonjurisdictional sales.And it held that the Act did not pre-empt state-law claims aimed at obtaining damages for excessively high retail natural-gas prices stemming from interstate pipelines' price manipulation, even if the manipulation raised wholesalerates as well. See In re Western States Wholesale Natural Gas Antitrust Litigation,715 F.3d 716, 729-736 (2013).

The pipelines sought certiorari. They asked us to resolve confusion in the lower courts as to whether the Natural Gas Act pre-empts retail customers' state antitrust law challenges to practices that also affect wholesale rates. Compare id.,at 729-736, with Leggett v. Duke Energy Corp.,308 S.W.3d 843 (Tenn.2010). We granted the petition.

II

Petitioners, supported by the United States, argue that their customers' state antitrust lawsuits are within the field that the Natural Gas Act pre-empts. See Brief for Petitioners 18 (citing Schneidewind,485 U.S., at 305, 108 S.Ct. 1145); Brief for United States as Amicus Curiae13 (same). They point out that respondents' antitrust claims target anticompetitive activities that affected wholesale (as well as retail) rates. See Brief for Petitioners 2. They add that the Natural Gas Act expressly grants FERC authority to keep wholesale rates at reasonable levels. See ibid. (citing 15 U.S.C. §§ 717(b), 717d(a)). In exercising this authority, FERC has prohibited the very kind of anticompetitive conduct that the state actions attack. See Part I-B-3, supra.And, petitioners contend, letting these actions proceed will permit state antitrust courts to reach conclusions about that conduct that differ from those that FERC might reach or has already reached. Accordingly, petitioners argue, respondents' state-law antitrust suits fall within the pre-empted field.

A

Petitioners' arguments are forceful, but we cannot accept their conclusion. As we have repeatedly stressed, the Natural Gas Act "was drawn with meticulous regard for the continued exercise of state power, not to handicap or dilute it in any way." Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n of Ind.,332 U.S. 507, 517-518, 68 S.Ct. 190, 92 L.Ed. 128 (1947); see also Northwest Central,489 U.S., at 511, 109 S.Ct. 1262(the "legislative history of the [Act] is replete with assurances that the Act 'takes nothing from the State [regulatory] commissions' " (quoting 81 Cong. Rec. 6721 (1937))). Accordingly, where (as here) a state law can be applied to nonjurisdictional as well as jurisdictional sales, we must proceed cautiously, finding pre-emption only where detailed examination convinces us that a matter falls within the pre-empted field as defined by our precedents. See Panhandle Eastern, supra,at 516-518, 68 S.Ct. 190; Interstate Natural Gas Co. v. FPC,331 U.S. 682, 689-693, 67 S.Ct. 1482, 91 L.Ed. 1742 (1947).

Those precedents emphasize the importance of considering the targetat which the state law aimsin determining whether that law is pre-empted. For example, in Northern Natural Gas Co. v. State Corporation Comm'n of Kan.,372 U.S. 84, 83 S.Ct. 646, 9 L.Ed.2d 601 (1963), the Court said that it had "consistently recognized"

*1600that the "significant distinction" for purposes of pre-emption in the natural-gas context is the distinction between "measures aimed directly atinterstate purchasers and wholesales for resale, and those aimed at" subjects left to the States to regulate. Id.,at 94, 83 S.Ct. 646(emphasis added). And, in Northwest Central,the Court found that the Natural Gas Act did not pre-empt a state regulation concerning the timing of gas production from a gas field within the State, even though the regulation might have affected the costs of and the prices of interstate wholesale sales, i.e.,jurisdictional sales. 489 U.S., at 514, 109 S.Ct. 1262. In reaching this conclusion, the Court explained that the state regulation aimed primarily at "protect[ing] producers' ... rights-a matter firmly on the States' side of that dividing line." Ibid.The Court contrasted this state regulation with the state orders at issue in Northern Natural,which " 'invalidly invade[d] the federal agency's exclusive domain' precisely because" they were " 'unmistakably and unambiguously directed at purchasers.' " Id.,at 513, 109 S.Ct. 1262(quoting Northern Natural, supra,at 92, 83 S.Ct. 646; emphasis added). Here, too, the lawsuits are directed at practices affecting retailrates-which are "firmly on the States' side of that dividing line."

Petitioners argue that Schneidewindconstitutes contrary authority. In that case, the Court found pre-empted a state law that required public utilities, such as interstate pipelines crossing the State, to obtain state approval before issuing long-term securities. 485 U.S., at 306-309, 108 S.Ct. 1145. But the Court there thought that the State's securities regulation was aimed directly at interstate pipelines. It wrote that the state law was designed to keep "a natural gas company from raising its equity levels above a certain point" in order to keep the company's revenue requirement low, thereby ensuring lower wholesale rates. Id.,at 307-308, 108 S.Ct. 1145. Indeed, the Court expressly said that the state law was pre-empted because it was "directed at ... the control of rates and facilities of natural gas companies," "precisely the things over which FERC has comprehensive authority." Id.,at 308, 108 S.Ct. 1145(emphasis added).

The dissent rejects the notion that the proper test for purposes of pre-emption in the natural gas context is whether the challenged measures are "aimed directly at interstate purchasers and wholesales for resale" or not. Northern Natural, supra,at 94, 83 S.Ct. 646. It argues that this approach is "unprecedented," and that the Court's focus should be on "whatthe State seeks to regulate ..., not whythe State seeks to regulate it." Post, at 1606 (opinion of SCALIA, J.). But the "target" to which our cases refer must mean more than just the physical activity that a State regulates. After all, a single physical action, such as reporting a price to a specialized journal, could be the subject of many different laws-including tax laws, disclosure laws, and others. To repeat the point we made above, no one could claim that FERC's regulation of this physical activity for purposes of wholesale rates forecloses every other form of state regulation that affects those rates.

Indeed, although the dissent argues that Schneidewindcreated a definitive test for pre-emption in the natural gas context that turns on whether "the matter on which the State asserts the right to act is in any way regulated by the Federal Act," post, at 1604 (quoting 485 U.S., at 310, n. 13, 108 S.Ct. 1145), Schneidewindcould not mean this statement as an absolute test. It goes on to explain that the Natural Gas Act does not pre-empt "traditional" state regulation, such as state blue sky laws (which, of course, raise wholesale-as well as retail *1601-investment costs). Id.,at 308, n. 11, 108 S.Ct. 1145.

Antitrust laws, like blue sky laws, are not aimed at natural-gas companies in particular, but rather all businesses in the marketplace. See ibid.They are far broader in their application than, for example, the regulations at issue in Northern Natural,which applied only to entities buying gas from fields within the State. See 372 U.S., at 85-86, n. 1, 83 S.Ct. 646; contra, post, at 1605 - 1606 (stating that Northern Naturalconcerned "background market conditions"). This broad applicability of state antitrust law supports a finding of no pre-emption here.

Petitioners and the dissent argue that there is, or should be, a clear division between areas of state and federal authority in natural-gas regulation. See Brief for Petitioners 18; post,at 1606. But that Platonic ideal does not describe the natural gas regulatory world. Suppose FERC, when setting wholesale rates in the former cost-of-service rate-making days, had denied cost recovery for pipelines' failure to recycle. Would that fact deny States the power to enact and apply recycling laws? These state laws might well raise pipelines' operating costs, and thus the costs of wholesale natural gas transportation. But in Northwest Centralwe said that "[t]o find field pre-emption of [state] regulation merely because purchasers' costs and hence rates might be affected would be largely to ify ... § 1(b)." 489 U.S., at 514, 109 S.Ct. 1262.

The dissent barely mentions the limitations on FERC's powers in § 1(b), but the enumeration of FERC's powers in § 5(a) is circumscribed by a reference back to the limitations in § 1(b). See post, at 1603 - 1605. As we explained above, see Part I-B-1, supra,those limits are key to understanding the careful balance between federal and state regulation that Congress struck when it passed the Natural Gas Act. That Act "was drawn with meticulous regard for the continued exercise of state power, not to handicap or dilute it in any way." Panhandle Eastern,332 U.S., at 517-518, 68 S.Ct. 190. Contra, post,at 1607. States have a "long history of" providing "common-law and statutory remedies against monopolies and unfair business practices." ARC America,490 U.S., at 101, 109 S.Ct. 1661; see also Watson v. Buck,313 U.S. 387, 404, 61 S.Ct. 962, 85 L.Ed. 1416 (1941)(noting the States' "long-recognized power to regulate combinations in restraint of trade"). Respondents' state-law antitrust suits relied on this well established state power.

B

Petitioners point to two other cases that they believe support their position. The first is Mississippi Power & Light Co. v. Mississippi ex rel. Moore,487 U.S. 354, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988). There, the Court held that the Federal Power Act-which gives FERC the authority to determine whether rates charged by public utilities in electric energy sales are "just and reasonable," 16 U.S.C. § 824d(a)-pre-empted a state inquiry into the reasonableness of FERC-approved prices for the sale of nuclear power to wholesalers of electricity (which led to higher retail electricity rates). 487 U.S., at 373-377, 108 S.Ct. 2428. Petitioners argue that this case shows that state regulation of similar sales here-i.e.,by a pipeline to a direct consumer-must also be pre-empted. See Reply Brief 11-12. Mississippi Power,however, is best read as a conflict pre-emption case, not a field pre-emption case. See 487 U.S., at 377, 108 S.Ct. 2428("[A] state agency's 'efforts to regulate commerce must fall when they conflict with or interfere with federal authority over the same activity' " (quoting *1602Chicago & North Western Transp. Co. v. Kalo Brick & Tile Co.,450 U.S. 311, 318-319, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981))).

Regardless, the state inquiry in Mississippi Powerwas pre-empted because it was directed at jurisdictional sales in a way that respondents' state antitrust lawsuits are not. Mississippi's inquiry into the reasonableness of FERC-approved purchases was effectively an attempt to "regulate in areas where FERC has properly exercised its jurisdiction to determine just and reasonable wholesale rates." 487 U.S., at 374, 108 S.Ct. 2428. By contrast, respondents' state antitrust lawsuits do not seek to challenge the reasonableness of any rates expressly approved by FERC. Rather, they seek to challenge the background marketplace conditions that affected both jurisdictional and nonjurisdictional rates.

Petitioners additionally point to FPC v. Louisiana Power & Light Co.,406 U.S. 621, 92 S.Ct. 1827, 32 L.Ed.2d 369 (1972). In that case, the Court held that federal law gave FPC the authority to allocate natural gas during shortages by ordering interstate pipelines to curtail gas deliveries to all customers, including retail customers.This latter fact, the pipelines argue, shows that FERC has authority to regulate index manipulation insofar as that manipulation affects retail (as well as wholesale) sales. Brief for Petitioners 26. Accordingly, they contend that state laws that aim at this same subject are pre-empted.

This argument, however, makes too much of too little. The Court's finding of pre-emption in Louisiana Powerrested on its belief that the state laws in question conflicted with federal law. The Court concluded that "FPC has authority to effect orderly curtailment plans involving both direct sales and sales for resale," 406 U.S., at 631, 92 S.Ct. 1827because otherwise there would be "unavoidable conflict between" state regulation of direct sales and the "uniform federal regulation" that the Natural Gas Act foresees, id.,at 633-635, 92 S.Ct. 1827. Conflict pre-emption may, of course, invalidate a state law even though field pre-emption does not. Because petitioners have not argued this case as a conflict pre-emption case, Louisiana Powerdoes not offer them significant help.

C

To the extent any conflicts arise between state antitrust law proceedings and the federal rate-setting process, the doctrine of conflict pre-emption should prove sufficient to address them. But as we have noted, see Part I-A, supra,the parties have not argued conflict pre-emption. See also, e.g., Tr. of Oral Arg. 24 (Solicitor General agrees that he has not "analyzed this [case] under a conflict preemption regime"). We consequently leave conflict pre-emption questions for the lower courts to resolve in the first instance.

D

We note that petitioners and the Solicitor General have argued that we should defer to FERC's determination that field pre-emption bars the respondents' claims. See Brief for Petitioners 22 (citing Arlington v. FCC,569 U.S. ----, ---- - ----, 133 S.Ct. 1863, 1871-1873, --- L.Ed.2d ---- (2013)); Brief for United States as Amicus Curiae32 (same). But they have not pointed to a specific FERC determination that state antitrust claims fall within the field pre-empted by the Natural Gas Act. Rather, they point only to the fact that FERC has promulgated detailed rules governing manipulation of price indices. Because there is no determination by FERC that its regulation pre-empts the field into which respondents' state-law antitrust *1603suits fall, we need not consider what legal effect such a determination might have. And we conclude that the detailed federal regulations here do not offset the other considerations that weigh against a finding of pre-emption in this context.

* * *

For these reasons, the judgment of the Court of Appeals for the Ninth Circuit is affirmed.

It is so ordered.

Justice THOMAS, concurring in part and concurring in the judgment.

I agree with much of the majority's application of our precedents governing pre-emption under the Natural Gas Act. I write separately to reiterate my view that "implied pre-emption doctrines that wander far from the statutory text are inconsistent with the Constitution." Wyeth v. Levine,555 U.S. 555, 583, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009)(THOMAS, J., concurring in judgment). The Supremacy Clause of our Constitution "gives 'supreme' status only to those [federal laws] that are 'made in Pursuance' " of it. Id.,at 585, 129 S.Ct. 1187 (quoting Art. VI, cl. 2). And to be "made in Pursuance" of the Constitution, a law must fall within one of Congress' enumerated powers and be promulgated in accordance with the lawmaking procedures set forth in that document. Id.,at 585-586, 129 S.Ct. 1187. "The Supremacy Clause thus requires that pre-emptive effect be given only to those federal standards and policies that are set forth in, or necessarily follow from, the statutory text that was produced through the constitutionally required bicameral and presentment procedures." Id.,at 586, 129 S.Ct. 1187.

In light of this constitutional requirement, I have doubts about the legitimacy of this Court's precedents concerning the pre-emptive scope of the Natural Gas Act, see, e.g.,Northern Natural Gas Co. v. State Corporation Comm'n of Kan.,372 U.S. 84, 91-92, 83 S.Ct. 646, 9 L.Ed.2d 601 (1963)(defining the pre-empted field in light of the "objective[s]" of the Act). Neither party, however, has asked us to overrule these longstanding precedents or "to overcome the presumption of stare decisisthat attaches to" them. Kurns v. Railroad Friction Products Corp.,565 U.S. ----, ----, 132 S.Ct. 1261, 1267, --- L.Ed.2d ---- (2012). And even under these precedents, the challenged state antitrust laws fall outside the pre-empted field. Because the Court today avoids extending its earlier questionable precedents, I concur in its judgment and join all but Part I-A of its opinion.

Justice SCALIA, with whom THE CHIEF JUSTICE joins, dissenting.

The Natural Gas Act divides responsibility over trade in natural gas between federal and state regulators. The Act and our cases interpreting it draw a firm line between national and local authority over this trade: If the Federal Government may regulate a subject, the States may not. Today the Court smudges this line. It holds that States may use their antitrust laws to regulate practices already regulated by the Federal Energy Regulatory Commission whenever "other considerations ... weigh against a finding of pre-emption." Ante,at 1603. The Court's make-it-up-as-you-go-along approach to preemption has no basis in the Act, contradicts our cases, and will prove unworkable in practice.

I

Trade in natural gas consists of three parts. A drilling company collects gas from the earth; a pipeline company then carries the gas to its destination and sells *1604it at wholesale to a local distributor; and the local distributor sells the gas at retail to industries and households. See ante,at 1595. The Natural Gas Act empowers the Commission to regulate the middle of this three-leg journey-interstate transportation and wholesale sales. 15 U.S.C. § 717 et seq.But it does not empower the Commission to regulate the opening and closing phases-production at one end, retail sales at the other-thus leaving those matters to the States. § 717(b). (Like the Court, I will for simplicity's sake call the sales controlled by the Commission wholesale sales, and the companies controlled by the Commission pipelines. See ante,at 1596.)

Over 70 years ago, the Court concluded that the Act confers "exclusive jurisdiction upon the federal regulatory agency." Public Util. Comm'n of Ohio v. United Fuel Gas Co.,317 U.S. 456, 469, 63 S.Ct. 369, 87 L.Ed. 396 (1943). The Court thought it "clear" that the Act contemplates "a harmonious, dual system of regulation of the natural gas industry-federal and state regulatory bodies operating side by side, each active in its own sphere," "without any confusion of functions." Id.,at 467, 63 S.Ct. 369. The Court drew this inference from the law's purpose and legislative history, though it could just as easily have relied on the law's terms and structure. The Act grants the Commission a wide range of powers over wholesale sales and transportation, but qualifies only some of these powers with reservations of state authority over the same subject. See § 717g(a) (concurrent authority over recordkeeping); § 717h(a) (concurrent authority over depreciation and amortization rates). Congress's decision to include express reservations of state power alongside these grants of authority, but to omit them alongside other grants of authority, suggests that the other grants are exclusive. Right or wrong, in any event, our inference of exclusivity is now settled beyond debate.

United Fuelrejected a State's regulation of wholesale rates. Id.,at 468, 63 S.Ct. 369. But our later holdings establish that the Act makes exclusive the Commission's powers in general, not just its rate-setting power in particular. We have again and again set aside state laws-even those that do not purport to fix wholesale rates-for regulating a matter already subject to regulation by the Commission. See, e.g.,Northern Natural Gas Co. v. State Corporation Comm'n of Kan.,372 U.S. 84, 89, 83 S.Ct. 646, 9 L.Ed.2d 601 (1963)(state regulation of pipelines' gas purchases preempted because it "invade[s] the exclusive jurisdiction which the Natural Gas Act has conferred upon the [Commission]"); Exxon Corp. v. Eagerton,462 U.S. 176, 185, 103 S.Ct. 2296, 76 L.Ed.2d 497 (1983)(state law prohibiting producers from passing on production taxes preempted because it "trespasse[s] upon FERC's authority"); Schneidewind v. ANR Pipeline Co.,485 U.S. 293, 309, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988)(state securities regulation directly affecting wholesale rates and gas transportation facilities preempted because it regulates "matters that Congress intended FERC to regulate"). The test for preemption in this setting, the Court has confirmed, " 'is whether the matter on which the State asserts the right to act is in any way regulated by the Federal Act.' " Id.,at 310, n. 13, 108 S.Ct. 1145.

Straightforward application of these precedents would make short work of the case at hand. The Natural Gas Act empowers the Commission to regulate "practice[s] ... affecting [wholesale] rate[s]." § 717d. Nothing in the Act suggests that the States share power to regulate these practices. The Commission has reasonably determined that this power allows it *1605to regulate the behavior involved in this case, pipelines' use of sham trades and false reports to manipulate gas price indices. Because the Commission's exclusive authority extends to the conduct challenged here, state antitrust regulation of that conduct is preempted.

II

The Court agrees that the Commission may regulate index manipulation, but upholds state antitrust regulation of this practice anyway on account of "other considerations that weigh against a finding of pre-emption in this context."Ante,at 1603. That is an unprecedented decision. The Court does not identify a single case-not one-in which we have sustained state regulation of behavior already regulated by the Commission. The Court's justifications for its novel approach do not persuade.

A

The Court begins by considering "the targetat which the state law aims." Ante,at 1599. It reasons that because this case involves a practice that affects both wholesale and retail rates, the Act tolerates state regulation that takes aim at the practice's retail-stage effects. Ibid.

This analysis misunderstands how the Natural Gas Act divides responsibilities between national and local regulators. The Act does not give the Commission the power to aim at particular effects; it gives it the power to regulate particular activities. When the Commission regulates those activities, it may consider their effects on allparts of the gas trade, not just on wholesale sales. It may, for example, set wholesale rates with the aim of encouraging producers to conserve gas supplies-even though production is a state-regulated activity. See Colorado Interstate Gas Co. v. FPC,324 U.S. 581, 602-603, 65 S.Ct. 829, 89 L.Ed. 1206 (1945); id.,at 609-610, 65 S.Ct. 829(Jackson, J., concurring). Or it may regulate wholesale sales with an eye toward blunting the sales' anticompetitive effects in the retail market-even though retail prices are controlled by the States. See FPC v. Conway Corp.,426 U.S. 271, 276-280, 96 S.Ct. 1999, 48 L.Ed.2d 626 (1976). The Court's ad hoc partition of authority over index manipulation-leaving it to the Commission to control the practice's consequences for wholesale sales, but allowing the States to target its consequences for retail sales-thus clashes with the design of the Act.

To justify its fixation on aims, the Court stresses that this case involves regulation of "background marketplace conditions" rather than regulation of wholesale rates or sales themselves. Ante,at 1602. But the Natural Gas Act empowers the Commission to regulate wholesale rates and"background" practices affecting such rates. It grants both powers in the same clause: "Whenever the Commission ... find[s] that a [wholesale] rate, charge, or classification ... [or] any rule, regulation, practice,or contract affecting such rate, charge, or classification is unjust [or] unreasonable, ... the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice,or contract to be thereafter observed." § 717d(a)(emphasis added). Nothing in this provision, and for that matter nothing in the Act, suggests that federal authority over practices is a second-class power, somehow less exclusive than the authority over rates.

The Court persists that the background conditions in this case affect bothwholesale and retail sales. Ante,at 1599. This observation adds atmosphere, but nothing more. The Court concedes that index manipulation's dual effect does not weaken the Commission's power to regulate it.

*1606Ante,at 1599. So too should the Court have seen that this simultaneous effect does not strengthen the claims of the States. It is not at all unusual for an activity controlled by the Commission to have effects in the States' field; production, wholesale, and retail are after all interdependent stages of a single trade. We have never suggested that the rules of field preemption change in such situations. For example, producers' ability to pass production taxes on to pipelines no doubt affects both producers and pipelines. Yet we had no trouble concluding that a state law restricting producers' ability to pass these taxes impermissibly attempted to manage "a matter within the sphere of FERC's regulatory authority." Exxon, supra,at 185-186, 103 S.Ct. 2296.

The Court's approach makes a snarl of our precedents. In Northern Natural,the Court held that the Act preempts state regulations requiring pipelines to buy gas ratably from gas wells. 372 U.S., at 90, 83 S.Ct. 646. The regulations in that case shared each of the principal features emphasized by the Court today. They governed background market conditions, not wholesale prices. Id.,at 90-91, 83 S.Ct. 646. The background conditions in question, pipelines' purchases from gas wells, affected both the federal field of wholesale sales and the state field of gas production. Id.,at 92-93, 83 S.Ct. 646. And the regulations took aim at the purchases' effects on production; they sought to promote conservation of natural resources by limiting how much gas pipelines could take from each well. Id.,at 93, 83 S.Ct. 646. No matter; the Court still concluded that the regulations "invade [d] the federal agency's exclusive domain." Id.,at 92, 83 S.Ct. 646. The factors that made no difference in Northern Naturalshould make no difference today.

Contrast Northern Naturalwith Northwest Central Pipeline Corp. v. State Corporation Comm'n of Kan.,489 U.S. 493, 109 S.Ct. 1262, 103 L.Ed.2d 509 (1989), which involved state regulations that restricted the times when producers could take gas from wells. On this occasion the Court upheld the regulations-not because the law aimed at the objective of gas conservation, but because the State pursued this end by regulating " 'the physical ac[t] of drawing gas from the earth.' " Id.,at 510, 109 S.Ct. 1262. Our precedents demand, in other words, that the Court focus in the present case upon whatthe State seeks to regulate (a pipeline practice that is subject to regulation by the Commission), not whythe State seeks to regulate it (to curb the practice's effects on retail rates).

Trying to turn liabilities into assets, the Court brandishes statements from Northern Naturaland Northwest Centralthat (in its view) discuss where state law was "aimed" or "directed." Ante,at 1600. But read in context, these statements refer to the entity or activity that the state law regulates, not to which of the activity's effects the law seeks to control by regulating it. See, e.g., Northern Natural, supra,at 94, 83 S.Ct. 646("[O]ur cases have consistently recognized a significant distinction ... between conservation measures aimed directly at interstate purchasers and wholesales ..., and those aimed at producers and production"); Northwest Central, supra,at 512, 109 S.Ct. 1262("[This regulation] is directed to the behavior of gas producers"). The lawsuits at hand target pipelines (entities regulated by the Commission) for their manipulation of indices (behavior regulated by the Commission). That should have sufficed to establish preemption.

B

The Court also tallies several features of state antitrust law that, it believes, weigh *1607against preemption. Ante,at 1601. Once again the Court seems to have forgotten its precedents. We have said before that " 'Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction' " over the gas trade. Nantahala Power & Light Co. v. Thornburg,476 U.S. 953, 966, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986)(quoting FPC v. Southern Cal. Edison Co.,376 U.S. 205, 215-216, 84 S.Ct. 644, 11 L.Ed.2d 638 (1964)). Our decisions have therefore " 'squarely rejected' " the theory, endorsed by the Court today, that the boundary between national and local authority turns on " 'a case-by-case analysis of the impact of state regulation upon the national interest.' " Ibid.

State antitrust law, the Court begins, applies to "all businesses in the marketplace" rather than just "natural-gas companies in particular." Ante,at 1601. So what? No principle of our natural-gas preemption jurisprudence distinguishes particularized state laws from state laws of general applicability. We have never suggested, for example, that a State may use general price-gouging laws to fix wholesale rates, or general laws about unfair trade practices to control wholesale contracts, or general common-carrier laws to administer interstate pipelines. The Court in any event could not have chosen a worse setting in which to attempt a distinction between general and particular laws. Like their federal counterpart, state antitrust laws tend to use the rule of reason to judge the lawfulness of challenged practices. Legal Aspects of Buying and Selling § 10:12 (P. Zeidman ed. 2014-2015). This amorphous standard requires the reviewing court to consider "a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect." State Oil Co. v. Khan,522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997). Far from authorizing across-the-board application of a uniform requirement, therefore, the Court's decision will invite state antitrust courts to engage in targeted regulation of the natural-gas industry.

The Court also stresses the " 'long history' " of state antitrust regulation. Ante,at 1601.Again, quite beside the point. States have long regulated public utilities, yet the Natural Gas Act precludes them from using that established power to fix gas wholesale prices. United Fuel,317 U.S., at 468, 63 S.Ct. 369. States also have long enacted laws to conserve natural resources, yet the Act precludes them from deploying that power to control purchases made by gas pipelines. Northern Natural,372 U.S., at 93-94, 83 S.Ct. 646. The Court's invocation of the pedigree of state antitrust law rests on air.

One need not launch this unbounded inquiry into the features of state law in order to preserve the States' authority to apply "tax laws," "disclosure laws," and "blue sky laws" to natural-gas companies, ante,at 1600. One need only stand by the principle that if the Commission has authority over a subject, the States lack authority over that subject. The Commission's authority to regulate gas pipelines "in the public interest," § 717a, is a power to address matters that are traditionally the concern of utility regulators, not "a broad license to promote the general public welfare," NAACP v. FPC,425 U.S. 662, 669, 96 S.Ct. 1806, 48 L.Ed.2d 284 (1976). We have explained that the Commission does not, for example, have power to superintend "employment discrimination" or "unfair labor practices." Id.,at 670-671, 96 S.Ct. 1806. So the Act does not preempt state employment discrimination or labor laws. But the Commission does have power to consider, say, "conservation, *1608environmental, and antitrustquestions." Id.,at 670, n. 6, 96 S.Ct. 1806(emphasis added). So the Act does preempt state antitrust laws.

C

At bottom, the Court's decision turns on its perception that the Natural Gas Act " 'was drawn with meticulous regard for the continued exercise of state power.' " Ante,at 1599. No doubt the Act protects state authority in a variety of ways. It gives the Commission authority over only some parts of the gas trade. § 717(b). It establishes procedures under which the Commission may consult, collaborate, or share information with States. § 717p. It even provides that the Commission may regulate practices affecting wholesale rates "upon its own motion or upon complaint of any State." § 717d(a)(emphasis added). It should have gone without saying, however, that no law pursues its purposes at all costs. Nothing in the Act and nothing in our cases suggests that Congress protected state power in the way imagined by today's decision: by licensing state sorties into the Commission's domain whenever judges conclude that an incursion would not be too disruptive.

The Court's preoccupation with the purpose of preserving state authority is all the more inexpiable because that is not the Act's only purpose. The Act also has competing purposes, the most important of which is promoting "uniformity of regulation." Northern Natural, supra,at 91, 83 S.Ct. 646. The Court's decision impairs thatobjective. Before today, interstate pipelines knew that their practices relating to price indices had to comply with one set of regulations promulgated by the Commission. From now on, however, pipelines will have to ensure that their behavior conforms to the discordant regulations of 50 States-or more accurately, to the discordant verdicts of untold state antitrust juries. The Court's reassurance that pipelines may still invoke conflict preemption, see ante,at 1602, provides little comfort on this front. Conflict preemption will resolve only discrepancies between state and federal regulations, not the discrepancies among differing state regulations to which today's opinion subjects the industry.

* * *

"The Natural Gas Act was designed ... to produce a harmonious and comprehensive regulation of the industry. Neither state nor federal regulatory body was to encroach upon the jurisdiction of the other." FPC v. Panhandle Eastern Pipe Line Co.,337 U.S. 498, 513, 69 S.Ct. 1251, 93 L.Ed. 1499 (1949)(footnote omitted). Today, however, the Court allows the States to encroach. Worse still, it leaves pipelines guessing about when States will be allowed to encroach again. May States aim at retail rates under laws that share none of the features of antitrust law advertised today? Under laws that share only some of those features? May States apply their antitrust laws to pipelines withoutaiming at retail rates? But that is just the start. Who knows what other "considerations that weigh against a finding of preemption" remain to be unearthed in future cases? The Court's all-things-considered test does not make for a stable background against which to carry on the natural gas trade.

I would stand by the more principled and more workable line traced by our precedents. The Commission may regulate the practices alleged in this case; the States therefore may not. I respectfully dissent.

Justice KAGAN delivered the opinion of the Court.

The Federal Power Act (FPA or Act), 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq., authorizes the Federal Energy Regulatory Commission (FERC or Commission) to regulate "the sale of electric energy at wholesale in interstate commerce," including both wholesale electricity rates and any rule or practice "affecting" such rates. §§ 824(b), 824e(a). But the law places beyond FERC's power, and leaves to the States alone, the regulation of "any other sale"-most notably, any retail sale-of electricity. § 824(b). That statutory division generates a steady flow of jurisdictional disputes because-in point of fact if not of law-the wholesale and retail markets in electricity are inextricably linked.

*767These cases concern a practice called "demand response," in which operators of wholesale markets pay electricity consumers for commitments not to use power at certain times. That practice arose because wholesale market operators can sometimes-say, on a muggy August day-offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production. In the regulation challenged here, FERC required those market operators, in specified circumstances, to compensate the two services equivalently-that is, to pay the same price to demand response providers for conserving energy as to generators for making more of it.

Two issues are presented here. First, and fundamentally, does the FPA permit FERC to regulate these demand response transactions at all, or does any such rule impinge on the States' authority? Second, even if FERC has the requisite statutory power, did the Commission fail to justify adequately why demand response providers and electricity producers should receive the same compensation? The court below ruled against FERC on both scores. We disagree.

I

A

Federal regulation of electricity owes its beginnings to one of this Court's decisions. In the early 20th century, state and local agencies oversaw nearly all generation, transmission, and distribution of electricity. But this Court held in Public Util. Comm'n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83, 89-90, 47 S.Ct. 294, 71 L.Ed. 549 (1927), that the Commerce Clause bars the States from regulating certain interstate electricity transactions, including wholesale sales (i.e., sales for resale) across state lines. That ruling created what became known as the "Attleboro gap"-a regulatory void which, the Court pointedly noted, only Congress could fill. See id., at 90, 47 S.Ct. 294.

Congress responded to that invitation by passing the FPA in 1935. The Act charged FERC's predecessor agency with undertaking "effective federal regulation of the expanding business of transmitting and selling electric power in interstate commerce." New York v. FERC, 535 U.S. 1, 6, 122 S.Ct. 1012, 152 L.Ed.2d 47 (2002) (quoting Gulf States Util. Co. v. FPC, 411 U.S. 747, 758, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973) ). Under the statute, the Commission has authority to regulate "the transmission of electric energy in interstate commerce" and "the sale of electric energy at wholesale in interstate commerce." 16 U.S.C. § 824(b)(1).

In particular, the FPA obligates FERC to oversee all prices for those interstate transactions and all rules and practices affecting such prices. The statute provides that "[a]ll rates and charges made, demanded, or received by any public utility for or in connection with" interstate transmissions or wholesale sales-as well as "all rules and regulations affecting or pertaining to such rates or charges"-must be "just and reasonable." § 824d(a). And if "any rate [or] charge," or "any rule, regulation, practice, or contract affecting such rate [or] charge[,]" falls short of that standard, the Commission must rectify the problem: It then shall determine what is "just and reasonable" and impose "the same by order." § 824e(a).

Alongside those grants of power, however, the Act also limits FERC's regulatory reach, and thereby maintains a zone of exclusive state jurisdiction. As pertinent here, § 824(b)(1) -the same provision that gives FERC authority over wholesale sales-states that "this subchapter," including *768its delegation to FERC, "shall not apply to any other sale of electric energy." Accordingly, the Commission may not regulate either within-state wholesale sales or, more pertinent here, retail sales of electricity (i.e., sales directly to users). See New York, 535 U.S., at 17, 23, 122 S.Ct. 1012. State utility commissions continue to oversee those transactions.

Since the FPA's passage, electricity has increasingly become a competitive interstate business, and FERC's role has evolved accordingly. Decades ago, state or local utilities controlled their own power plants, transmission lines, and delivery systems, operating as vertically integrated monopolies in confined geographic areas. That is no longer so. Independent power plants now abound, and almost all electricity flows not through "the local power networks of the past," but instead through an interconnected "grid" of near-nationwide scope. See id ., at 7, 122 S.Ct. 1012 ("electricity that enters the grid immediately becomes a part of a vast pool of energy that is constantly moving in interstate commerce," linking producers and users across the country). In this new world, FERC often forgoes the cost-based rate-setting traditionally used to prevent monopolistic pricing. The Commission instead undertakes to ensure "just and reasonable" wholesale rates by enhancing competition-attempting, as we recently explained, "to break down regulatory and economic barriers that hinder a free market in wholesale electricity." Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish Cty., 554 U.S. 527, 536, 128 S.Ct. 2733, 171 L.Ed.2d 607 (2008).

As part of that effort, FERC encouraged the creation of nonprofit entities to manage wholesale markets on a regional basis. Seven such wholesale market operators now serve areas with roughly two-thirds of the country's electricity "load" (an industry term for the amount of electricity used). See FERC, Energy Primer: A Handbook of Energy Market Basics 58-59 (Nov. 2015) (Energy Primer). Each administers a portion of the grid, providing generators with access to transmission lines and ensuring that the network conducts electricity reliably. See ibid. And still more important for present purposes, each operator conducts a competitive auction to set wholesale prices for electricity.

These wholesale auctions serve to balance supply and demand on a continuous basis, producing prices for electricity that reflect its value at given locations and times throughout each day. Such a real-time mechanism is needed because, unlike most products, electricity cannot be stored effectively. Suppliers must generate-every day, hour, and minute-the exact amount of power necessary to meet demand from the utilities and other "load-serving entities" (LSEs) that buy power at wholesale for resale to users. To ensure that happens, wholesale market operators obtain (1) orders from LSEs indicating how much electricity they need at various times and (2) bids from generators specifying how much electricity they can produce at those times and how much they will charge for it. Operators accept the generators' bids in order of cost (least expensive first) until they satisfy the LSEs' total demand. The price of the last unit of electricity purchased is then paid to every supplier whose bid was accepted, regardless of its actual offer; and the total cost is split among the LSEs in proportion to how much energy they have ordered. So, for example, suppose that at 9 a.m. on August 15 four plants serving Washington, D.C. can each produce some amount of electricity for, respectively, $10/unit, $20/unit, $30/unit, and $40/unit. And suppose that LSEs' demand at that time and place is met after the operator accepts the three *769cheapest bids. The first three generators would then all receive $30/unit. That amount is (think back to Econ 101) the marginal cost-i.e., the added cost of meeting another unit of demand-which is the price an efficient market would produce. See 1 A. Kahn, The Economics of Regulation: Principles and Institutions 65-67 (1988). FERC calls that cost (in jargon that will soon become oddly familiar) the locational marginal price, or LMP.1

As in any market, when wholesale buyers' demand for electricity increases, the price they must pay rises correspondingly; and in those times of peak load, the grid's reliability may also falter. Suppose that by 2 p.m. on August 15, it is 98 degrees in D.C. In every home, store, or office, people are turning the air conditioning up. To keep providing power to their customers, utilities and other LSEs must ask their market operator for more electricity. To meet that spike in demand, the operator will have to accept more expensive bids from suppliers. The operator, that is, will have to agree to the $40 bid that it spurned before-and maybe, beyond that, to bids of $50 or $60 or $70. In such periods, operators often must call on extremely inefficient generators whose high costs of production cause them to sit idle most of the time. See Energy Primer 41-42. As that happens, LMP-the price paid by all LSEs to all suppliers-climbs ever higher. And meanwhile, the increased flow of electricity through the grid threatens to overload transmission lines. See id., at 44. As every consumer knows, it is just when the weather is hottest and the need for air conditioning most acute that blackouts, brownouts, and other service problems tend to occur.

Making matters worse, the wholesale electricity market lacks the self-correcting mechanism of other markets. Usually, when the price of a product rises, buyers naturally adjust by reducing how much they purchase. But consumers of electricity-and therefore the utilities and other LSEs buying power for them at wholesale-do not respond to price signals in that way. To use the economic term, demand for electricity is inelastic. That is in part because electricity is a necessity with few ready substitutes: When the temperature reaches 98 degrees, many people see no option but to switch on the AC. And still more: Many State regulators insulate consumers from short-term fluctuations in wholesale prices by insisting that LSEs set stable retail rates. See id., at 41, 43-44. That, one might say, short-circuits the normal rules of economic behavior. Even in peak periods, as costs surge in the wholesale market, consumers feel no pinch, and so keep running the AC as before. That means, in turn, that LSEs must keep buying power to send to those users-no matter that wholesale prices spiral out of control and increased usage risks overtaxing the grid.

But what if there were an alternative to that scenario? Consider what would happen if wholesale market operators could induce consumers to refrain from using (and so LSEs from buying) electricity during peak periods. Whenever doing that costs less than adding more power, an operator could bring electricity supply and demand into balance at a lower price. And simultaneously, the operator could ease pressure on the grid, thus protecting against system failures. That is the idea behind the practice at issue here: Wholesale demand response, as it is called, pays *770consumers for commitments to curtail their use of power, so as to curb wholesale rates and prevent grid breakdowns. See id., at 44-46.2

These demand response programs work through the operators' regular auctions. Aggregators of multiple users of electricity, as well as large-scale individual users like factories or big-box stores, submit bids to decrease electricity consumption by a set amount at a set time for a set price. The wholesale market operators treat those offers just like bids from generators to increase supply. The operators, that is, rank order all the bids-both to produce and to refrain from consuming electricity-from least to most expensive, and then accept the lowest bids until supply and demand come into equipoise. And, once again, the LSEs pick up the cost of all those payments. So, to return to our prior example, if a store submitted an offer not to use a unit of electricity at 2 p.m. on August 15 for $35, the operator would accept that bid before calling on the generator that offered to produce a unit of power for $40. That would result in a lower LMP-again, wholesale market price-than if the market operator could not avail itself of demand response pledges. See ISO/RTO Council, Harnessing the Power of Demand: How ISOs and RTOs Are Integrating Demand Response Into Wholesale Electricity Markets 40-43 (2007) (estimating that, in one market, a demand response program reducing electricity usage by 3% in peak hours would lead to price declines of 6% to 12%). And it would decrease the risk of blackouts and other service problems.

Wholesale market operators began using demand response some 15 years ago, soon after they assumed the role of overseeing wholesale electricity sales. Recognizing the value of demand response for both system reliability and efficient pricing, they urged FERC to allow them to implement such programs. See, e.g., PJM Interconnection, L.L.C., Order Accepting Tariff Sheets as Modified, 95 FERC ¶ 61,306 (2001) ; California Independent System Operator Corp., Order Conditionally Accepting for Filing Tariff Revisions, 91 FERC ¶ 61,256 (2000). And as demand response went into effect, market participants of many kinds came to view it-in the words of respondent Electric Power Supply Association (EPSA)-as an "important element[ ] of robust, competitive wholesale electricity markets." App. 94, EPSA, Comments on Proposed Rule on Demand Response Compensation in Organized Wholesale Energy Markets (May 12, 2010).

Congress added to the chorus of voices praising wholesale demand response. In the Energy Policy Act of 2005, 119 Stat. 594 (EPAct), it declared as "the policy of the United States" that such demand response "shall be encouraged." § 1252(f), 119 Stat. 966, 16 U.S.C. § 2642 note. In particular, Congress directed, the deployment of "technology and devices that enable electricity customers to participate in ... demand response systems shall be facilitated, and unnecessary barriers to demand response participation in energy ... markets shall be eliminated." Ibid .3

*771B

Spurred on by Congress, the Commission determined to take a more active role in promoting wholesale demand response programs. In 2008, FERC issued Order No. 719, which (among other things) requires wholesale market operators to receive demand response bids from aggregators of electricity consumers, except when the state regulatory authority overseeing those users' retail purchases bars such demand response participation. See 73 Fed. Reg. 64119, ¶ 154 (codified 18 CFR § 35.28(g)(1) (2015) ). That original order allowed operators to compensate demand response providers differently from generators if they so chose. No party sought judicial review.

Concerned that Order No. 719 had not gone far enough, FERC issued the rule under review here in 2011, with one commissioner dissenting. See Demand Response Competition in Organized Wholesale Energy Markets, Order No. 745, 76 Fed. Reg. 16658 (Rule) (codified 18 CFR § 35.28(g)(1)(v) ). The Rule attempts to ensure "just and reasonable" wholesale rates by requiring market operators to appropriately compensate demand response providers and thus bring about "meaningful demand-side participation" in the wholesale markets. 76 Fed. Reg. 16658, ¶ 1, 16660, ¶ 10 ; 16 U.S.C. § 824d(a). The Rule's most significant provision directs operators, under two specified conditions, to pay LMP for any accepted demand response bid, just as they do for successful supply bids. See 76 Fed. Reg. 16666-16669, ¶¶ 45-67. In other words, the Rule requires that demand response providers in those circumstances receive as much for conserving electricity as generators do for producing it.

The two specified conditions ensure that a bid to use less electricity provides the same value to the wholesale market as a bid to make more. First, a demand response bidder must have "the capability to provide the service" offered; it must, that is, actually be able to reduce electricity use and thereby obviate the operator's need to secure additional power. Id., at 16666, ¶¶ 48-49. Second, paying LMP for a demand response bid "must be cost-effective," as measured by a standard called "the net benefits test." Ibid., ¶ 48. That test makes certain that accepting a lower-priced demand response bid over a higher-priced supply bid will actually save LSEs (i.e ., wholesale purchasers) money. In some situations it will not, even though accepting a lower-priced bid (by definition) reduces LMP. That is because (to oversimplify a bit) LSEs share the cost of paying successful bidders, and reduced electricity use makes some LSEs drop out of the market, placing a proportionally greater burden on those that are left. Each remaining LSE may thus wind up paying more even though the total bill is lower; or said otherwise, the costs associated with an LSE's increased share of compensating bids may exceed the savings that the LSE obtains from a lower wholesale price.4

*772The net benefits test screens out such counterproductive demand response bids, exempting them from the Rule's compensation requirement. See id., at 16659, 16666-16667, ¶¶ 3, 50-53. What remains are only those offers whose acceptance will result in actual savings to wholesale purchasers (along with more reliable service to end users). See id., at 16671, ¶¶ 78-80.

The Rule rejected an alternative scheme for compensating demand response bids. Several commenters had urged that, in paying a demand response provider, an operator should subtract from the ordinary wholesale price the savings that the provider nets by not buying electricity on the retail market. Otherwise, the commenters claimed, demand response providers would receive a kind of "double-payment" relative to generators. See id., at 16663, ¶ 24. That proposal, which the dissenting commissioner largely accepted, became known as LMP minus G, or more simply LMP-G, where "G" stands for the retail price of electricity. See id., at 16668, ¶ 60, 16680 (Moeller, dissenting). But FERC explained that, under the conditions it had specified, the value of an accepted demand response bid to the wholesale market is identical to that of an accepted supply bid because each succeeds in cost-effectively "balanc[ing] supply and demand." Id., at 16667, ¶ 55. And, the Commission reasoned, that comparable value is what ought to matter given FERC's goal of strengthening competition in the wholesale market: Rates should reflect not the costs that each market participant incurs, but instead the services it provides. See id., at 16668, ¶ 62. Moreover, the Rule stated, compensating demand response bids at their actual value-i.e., LMP-will help overcome various technological barriers, including a lack of needed infrastructure, that impede aggregators and large-scale users of electricity from fully participating in demand response programs. See id., at 16667-16668, ¶¶ 57-58.

The Rule also responded to comments challenging FERC's statutory authority to regulate the compensation operators pay for demand response bids. Pointing to the Commission's analysis in Order No. 719, the Rule explained that the FPA gives FERC jurisdiction over such bids because they "directly affect [ ] wholesale rates." Id., at 16676, ¶ 112 (citing 74 id., at 37783, ¶ 47, and 16 U.S.C. § 824d ). Nonetheless, the Rule noted, FERC would continue Order No. 719's policy of allowing any state regulatory body to prohibit consumers in its retail market from taking part in wholesale demand response programs. See 76 Fed. Reg. 16676, ¶ 114 ; 73 id., at 64119, ¶ 154. Accordingly, the Rule does not require any "action[ ] that would violate State laws or regulations." 76 id., at 16676, ¶ 114.

C

A divided panel of the Court of Appeals for the District of Columbia Circuit vacated the Rule as "ultra vires agency action." 753 F.3d 216, 225 (2014). The court held that FERC lacked authority to issue the Rule even though "demand response compensation affects the wholesale market." Id., at 221. The Commission's "jurisdiction to regulate practices 'affecting' rates," the court stated, "does not erase the specific limit[ ]" that the FPA imposes on FERC's regulation of retail sales. Id., at 222. And the Rule, the court concluded, exceeds that limit: In "luring ... retail customers" into the wholesale market, and causing them to decrease "levels of retail electricity consumption," the Rule engages in "direct regulation of the retail market." Id., at 223-224.

The Court of Appeals held, alternatively, that the Rule is arbitrary and capricious under the Administrative Procedure Act, *7735 U.S.C. § 706(2)(A), because FERC failed to "adequately explain[ ]" why paying LMP to demand response providers "results in just compensation." 753 F.3d, at 225. According to the court, FERC did not "properly consider" the view that such a payment would give those providers a windfall by leaving them with "the full LMP plus ... the savings associated with" reduced consumption. Ibid. (quoting Demand Response Competition in Organized Wholesale Energy Markets: Order on Rehearing and Clarification, Order No. 745-A (Rehearing Order), 137 FERC ¶ 61,215, p. 62,316 (2011) (Moeller, dissenting)). The court dismissed out of hand the idea that "comparable contributions [could] be the reason for equal compensation." 753 F.3d, at 225.

Judge Edwards dissented. He explained that the rules governing wholesale demand response have a "direct effect ... on wholesale electricity rates squarely within FERC's jurisdiction." Id., at 227. And in setting those rules, he argued, FERC did not engage in "direct regulation of the retail market"; rather, "[a]uthority over retail rates ... remains vested solely in the States." Id., at 234 (internal quotation marks omitted). Finally, Judge Edwards rejected the majority's view that the Rule is arbitrary and capricious. He noted the substantial deference due to the Commission in cases involving ratemaking, and concluded that FERC provided a "thorough" and "reasonable" explanation for choosing LMP as the appropriate compensation formula. Id., at 236-238.

We granted certiorari, 575 U.S. ----, 135 S.Ct. 2049, 191 L.Ed.2d 954 (2015), to decide whether the Commission has statutory authority to regulate wholesale market operators' compensation of demand response bids and, if so, whether the Rule challenged here is arbitrary and capricious. We now hold that the Commission has such power and that the Rule is adequately reasoned. We accordingly reverse.

II

Our analysis of FERC's regulatory authority proceeds in three parts. First, the practices at issue in the Rule-market operators' payments for demand response commitments-directly affect wholesale rates. Second, in addressing those practices, the Commission has not regulated retail sales. Taken together, those conclusions establish that the Rule complies with the FPA's plain terms. And third, the contrary view would conflict with the Act's core purposes by preventing all use of a tool that no one (not even EPSA) disputes will curb prices and enhance reliability in the wholesale electricity market.5

A

The FPA delegates responsibility to FERC to regulate the interstate wholesale market for electricity-both wholesale rates and the panoply of rules and practices affecting them. As noted earlier, the Act establishes a scheme for federal regulation of "the sale of electric energy at wholesale in interstate commerce." 16 U.S.C. § 824(b)(1) ; see supra, at 767. Under the statute, "[a]ll rates and charges made, demanded, or received by any public utility for or in connection with" interstate wholesale sales "shall be just and reasonable"; so too shall "all rules and regulations affecting or pertaining to such rates or charges." § 824d(a). And if FERC sees *774a violation of that standard, it must take remedial action. More specifically, whenever the Commission "shall find that any rate [or] charge"-or "any rule, regulation, practice, or contract affecting such rate [or] charge"-is "unjust [or] unreasonable," then the Commission "shall determine the just and reasonable rate, charge[,] rule, regulation, practice or contract" and impose "the same by order." § 824e(a). That means FERC has the authority-and, indeed, the duty-to ensure that rules or practices "affecting" wholesale rates are just and reasonable.

Taken for all it is worth, that statutory grant could extend FERC's power to some surprising places. As the court below noted, markets in all electricity's inputs-steel, fuel, and labor most prominent among them-might affect generators' supply of power. See 753 F.3d, at 221 ; id., at 235 (Edwards, J., dissenting). And for that matter, markets in just about everything-the whole economy, as it were-might influence LSEs' demand. So if indirect or tangential impacts on wholesale electricity rates sufficed, FERC could regulate now in one industry, now in another, changing a vast array of rules and practices to implement its vision of reasonableness and justice. We cannot imagine that was what Congress had in mind.

For that reason, an earlier D.C. Circuit decision adopted, and we now approve, a common-sense construction of the FPA's language, limiting FERC's "affecting" jurisdiction to rules or practices that "directly affect the [wholesale] rate." California Independent System Operator Corp. v. FERC, 372 F.3d 395, 403 (2004) (emphasis added); see 753 F.3d, at 235 (Edwards, J., dissenting). As we have explained in addressing similar terms like "relating to" or "in connection with," a non-hyperliteral reading is needed to prevent the statute from assuming near-infinite breadth. See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) ("If 'relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes [the statute] would never run its course"); Maracich v. Spears, 570 U.S. ----, ----, 133 S.Ct. 2191, 2200, 186 L.Ed.2d 275 (2013) ("The phrase 'in connection with' is essentially indeterminat[e] because connections, like relations, stop nowhere" (internal quotation marks omitted)). The Commission itself incorporated the D.C. Circuit's standard in addressing its authority to issue the Rule. See 76 Fed. Reg. 16676, ¶ 112 (stating that FERC has jurisdiction because wholesale demand response "directly affects wholesale rates"). We think it right to do the same.

Still, the rules governing wholesale demand response programs meet that standard with room to spare. In general (and as earlier described), wholesale market operators employ demand response bids in competitive auctions that balance wholesale supply and demand and thereby set wholesale prices. See supra, at 769 - 770. The operators accept such bids if and only if they bring down the wholesale rate by displacing higher-priced generation. And when that occurs (most often in peak periods), the easing of pressure on the grid, and the avoidance of service problems, further contributes to lower charges. See Brief for Grid Engineers et al. as Amici Curiae 26-27. Wholesale demand response, in short, is all about reducing wholesale rates; so too, then, the rules and practices that determine how those programs operate.

And that is particularly true of the formula that operators use to compensate demand response providers. As in other areas of life, greater pay leads to greater *775participation. If rewarded at LMP, rather than at some lesser amount, more demand response providers will enter more bids capable of displacing generation, thus necessarily lowering wholesale electricity prices. Further, the Commission found, heightened demand response participation will put "downward pressure" on generators' own bids, encouraging power plants to offer their product at reduced prices lest they come away empty-handed from the bidding process. 76 Fed. Reg. 16660, ¶ 10. That, too, ratchets down the rates wholesale purchasers pay. Compensation for demand response thus directly affects wholesale prices. Indeed, it is hard to think of a practice that does so more.

B

The above conclusion does not end our inquiry into the Commission's statutory authority; to uphold the Rule, we also must determine that it does not regulate retail electricity sales. That is because, as earlier described, § 824(b)"limit[s] FERC's sale jurisdiction to that at wholesale," reserving regulatory authority over retail sales (as well as intrastate wholesale sales) to the States. New York, 535 U.S., at 17, 122 S.Ct. 1012 (emphasis deleted); see 16 U.S.C. § 824(b) ; supra, at 767 - 768.6 FERC cannot take an action transgressing that limit no matter how direct, or dramatic, its impact on wholesale rates. Suppose, to take a far-fetched example, that the Commission issued a regulation compelling every consumer to buy a certain amount of electricity on the retail market. Such a rule would necessarily determine the load purchased on the wholesale market too, and thus would alter wholesale prices. But even given that ineluctable consequence, the regulation would exceed FERC's authority, as defined in § 824(b), because it specifies terms of sale at retail-which is a job for the States alone.7

*776Yet a FERC regulation does not run afoul of § 824(b)'s proscription just because it affects-even substantially-the quantity or terms of retail sales. It is a fact of economic life that the wholesale and retail markets in electricity, as in every other known product, are not hermetically sealed from each other. To the contrary, transactions that occur on the wholesale market have natural consequences at the retail level. And so too, of necessity, will FERC's regulation of those wholesale matters. Cf. Oneok, Inc. v. Learjet, Inc., 575 U.S. ----, ----, 135 S.Ct. 1591, 1601, 191 L.Ed.2d 511 (2015) (noting that in the similarly structured world of natural gas regulation, a "Platonic ideal" of strict separation between federal and state realms cannot exist). When FERC sets a wholesale rate, when it changes wholesale market rules, when it allocates electricity as between wholesale purchasers-in short, when it takes virtually any action respecting wholesale transactions-it has some effect, in either the short or the long term, on retail rates. That is of no legal consequence. See, e.g., Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 365, 370-373, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988) (holding that an order regulating wholesale purchases fell within FERC's jurisdiction, and preempted contrary state action, even though it clearly affected retail prices); Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 959-961, 970, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986) (same); FPC v. Louisiana Power & Light Co., 406 U.S. 621, 636-641, 92 S.Ct. 1827, 32 L.Ed.2d 369 (1972) (holding similarly in the natural gas context). When FERC regulates what takes place on the wholesale market, as part of carrying out its charge to improve how that market runs, then no matter the effect on retail rates, § 824(b) imposes no bar.

And in setting rules for demand response, that is all FERC has done. The Commission's Rule addresses-and addresses only-transactions occurring on the wholesale market. Recall once again how demand response works-and forgive the coming italics. See supra, at 769 - 770. Wholesale market operators administer the entire program, receiving every demand response bid made. Those operators accept such a bid at the mandated price when (and only when) the bid provides value to the wholesale market by balancing supply and demand more "cost-effective[ly]"-i.e., at a lower cost to wholesale purchasers-than a bid to generate power. 76 Fed. Reg. 16659, 16666, ¶ 2, 48. The compensation paid for a successful bid (LMP) is whatever the operator's auction has determined is the marginal price of wholesale electricity at a particular location and time. See id., at 16659, ¶ 2. And those footing the bill are the same wholesale purchasers that have benefited from the lower wholesale price demand response participation has produced. See id., at 16674, ¶¶ 99-100. In sum, whatever the effects at the retail level, every aspect of the regulatory plan happens exclusively on the wholesale market and governs exclusively that market's rules.

What is more, the Commission's justifications for regulating demand response are all about, and only about, improving the wholesale market. Cf. Oneok, 575 U.S., at ----, 135 S.Ct., at 1599 (considering "the target at which [a] law aims " in determining whether a State is properly regulating retail or, instead, improperly *777regulating wholesale sales). In Order No. 719, FERC explained that demand response participation could help create a "well-functioning competitive wholesale electric energy market" with "reduce[d] wholesale power prices" and "enhance[d] reliability." 73 Fed. Reg. 64103, ¶ 16. And in the Rule under review, FERC expanded on that theme. It listed the several ways in which "demand response in organized wholesale energy markets can help improve the functioning and competitiveness of those markets": by replacing high-priced, inefficient generation; exerting "downward pressure" on "generator bidding strategies"; and "support[ing] system reliability." 76 id., at 16660, ¶ 10 ; see Notice of Proposed Rulemaking for Order No. 745, 75 id., at 15363-15364, ¶ 4 (2010) (noting similar aims); supra, at 769 - 770. FERC, that is, focused wholly on the benefits that demand response participation (in the wholesale market) could bring to the wholesale market. The retail market figures no more in the Rule's goals than in the mechanism through which the Rule operates.

EPSA's primary argument that FERC has usurped state power (echoed in the dissent) maintains that the Rule "effectively," even though not "nominal[ly]," regulates retail prices. See, e.g., Brief for Respondents 1, 10, 23-27, 35-39; Tr. of Oral Arg. 26, 30; post, at 786 - 787. The argument begins on universally accepted ground: Under § 824(b), only the States, not FERC, can set retail rates. See, e.g., FPC v. Conway Corp., 426 U.S. 271, 276, 96 S.Ct. 1999, 48 L.Ed.2d 626 (1976). But as EPSA concedes, that tenet alone cannot make its case, because FERC's Rule does not set actual rates: States continue to make or approve all retail rates, and in doing so may insulate them from price fluctuations in the wholesale market. See Brief for Respondents 39. Still, EPSA contends, rudimentary economic analysis shows that the Rule does the "functional equivalen[t]" of setting-more particularly, of raising-retail rates. Id., at 36. That is because the opportunity to make demand response bids in the wholesale market changes consumers' calculations. In deciding whether to buy electricity at retail, economically-minded consumers now consider both the cost of making such a purchase and the cost of forgoing a possible demand response payment. So, EPSA explains, if a factory can buy electricity for $10/unit, but can earn $5/unit for not buying power at peak times, then the effective retail rate at those times is $15/unit: the $10 the factory paid at retail plus the $5 it passed up. See id., at 10. And by thus increasing effective retail rates, EPSA concludes, FERC trespasses on the States' ground.

The modifier "effective" is doing quite a lot of work in that argument-more work than any conventional understanding of rate-setting allows. The standard dictionary definition of the term "rate" (as used with reference to prices) is "[a]n amount paid or charged for a good or service." Black's Law Dictionary 1452 (10th ed. 2014); see, e.g., 13 Oxford English Dictionary 208-209 (2d ed. 1989) ("rate" means "price," "cost," or "sum paid or asked for a ... thing"). To set a retail electricity rate is thus to establish the amount of money a consumer will hand over in exchange for power. Nothing in § 824(b) or any other part of the FPA suggests a more expansive notion, in which FERC sets a rate for electricity merely by altering consumers' incentives to purchase that product.8 And *778neither does anything in this Court's caselaw. Our decisions uniformly speak about rates, for electricity and all else, in only their most prosaic, garden-variety sense. As the Solicitor General summarized that view, "the rate is what it is." Tr. of Oral Arg. 7. It is the price paid, not the price paid plus the cost of a forgone economic opportunity.

Consider a familiar scenario to see what is odd about EPSA's theory. Imagine that a flight is overbooked. The airline offers passengers $300 to move to a later plane that has extra seats. On EPSA's view, that offer adds $300-the cost of not accepting the airline's proffered payment-to the price of every continuing passenger's ticket. So a person who originally spent $400 for his ticket, and decides to reject the airline's proposal, paid an "effective" price of $700. But would any passenger getting off the plane say he had paid $700 to fly? That is highly unlikely. And airline lawyers and regulators (including many, we are sure, with economics Ph.D.'s) appear to share that common-sensical view. It is in fact illegal to "increase the price" of "air transportation ... after [such] air transportation has been purchased by the consumer." 14 CFR § 399.88(a) (2015). But it is a safe bet that no airline has ever gotten into trouble by offering a payment not to fly.9

And EPSA's "effective price increase" claim fares even worse when it comes to payments not to use electricity. In EPSA's universe, a wholesale demand response program raises retail rates by compelling consumers to "pay" the price of forgoing demand response compensation. But such a consumer would be even more surprised than our air traveler to learn of that price hike, because the natural consequence of wholesale demand response programs is to bring down retail rates. Once again, wholesale market operators accept demand response bids only if those offers lower the wholesale price. See supra, at 769 - 770. And when wholesale prices go down, retail prices tend to follow, because state regulators can, and mostly do, insist that wholesale buyers eventually pass on their savings to consumers. EPSA's theoretical construct thus runs headlong into the real world of electricity sales-where the Rule does anything but increase retail prices.

EPSA's second argument that FERC intruded into the States' sphere is more historical and purposive in nature. According to EPSA, FERC deliberately "lured [retail customers] into the[ ] wholesale markets"-and, more, FERC did so "only because [it was] dissatisfied with the *779States' exercise of their undoubted authority" under § 824(b) to regulate retail sales. Brief for Respondents 23; see id., at 2-3, 31, 34. In particular, EPSA asserts, FERC disapproved of "many States' continued preference" for stable pricing-that is, for insulating retail rates from short-term fluctuations in wholesale costs. Id., at 28. In promoting demand response programs-or, in EPSA's somewhat less neutral language, in "forc[ing] retail customers to respond to wholesale price signals"-FERC acted "for the express purpose of overriding" that state policy. Id., at 29, 49.

That claim initially founders on the true facts of how wholesale demand response came about. Contra EPSA, the Commission did not invent the practice. Rather, and as described earlier, the impetus came from wholesale market operators. See supra, at 770. In designing their newly organized markets, those operators recognized almost at once that demand response would lower wholesale electricity prices and improve the grid's reliability. So they quickly sought, and obtained, FERC's approval to institute such programs. Demand response, then, emerged not as a Commission power grab, but instead as a market-generated innovation for more optimally balancing wholesale electricity supply and demand.

And when, years later (after Congress, too, endorsed the practice), FERC began to play a more proactive role, it did so for the identical reason: to enhance the wholesale, not retail, electricity market. Like the market operators, FERC saw that sky-high demand in peak periods threatened network breakdowns, compelled purchases from inefficient generators, and consequently drove up wholesale prices. See, e.g., 73 Fed. Reg. 64103, ¶ 16 ; 76 id., at 16660, ¶ 10 ; see supra, at 769 - 770. Addressing those problems-which demand response does-falls within the sweet spot of FERC's statutory charge. So FERC took action promoting the practice. No doubt FERC recognized connections, running in both directions, between the States' policies and its own. The Commission understood that by insulating consumers from price fluctuations, States contributed to the wholesale market's difficulties in optimally balancing supply and demand. See 76 Fed. Reg. 16667-16668, ¶¶ 57, 59 ; supra, at 769 - 770. And FERC realized that increased use of demand response in that market would (by definition) inhibit retail sales otherwise subject to State control. See 73 Fed. Reg. 64167. But nothing supports EPSA's more feverish idea that the Commission's interest in wholesale demand response emerged from a yen to usurp State authority over, or impose its own regulatory agenda on, retail sales. In promoting demand response, FERC did no more than follow the dictates of its regulatory mission to improve the competitiveness, efficiency, and reliability of the wholesale market.

Indeed, the finishing blow to both of EPSA's arguments comes from FERC's notable solicitude toward the States. As explained earlier, the Rule allows any State regulator to prohibit its consumers from making demand response bids in the wholesale market. See 76 id., at 16676, ¶ 114 ; 73 id., at 64119, ¶ 154 ; supra, at 772. Although claiming the ability to negate such state decisions, the Commission chose not to do so in recognition of the linkage between wholesale and retail markets and the States' role in overseeing retail sales. See 76 Fed. Reg. 16676, ¶¶ 112-114. The veto power thus granted to the States belies EPSA's view that FERC aimed to "obliterate[ ]" their regulatory authority or "override" their pricing policies. Brief for Respondents 29, 33. And that veto gives States the means to *780block whatever "effective" increases in retail rates demand response programs might be thought to produce. Wholesale demand response as implemented in the Rule is a program of cooperative federalism, in which the States retain the last word. That feature of the Rule removes any conceivable doubt as to its compliance with § 824(b)'s allocation of federal and state authority.

C

One last point, about how EPSA's position would subvert the FPA.

EPSA's jurisdictional claim, as may be clear by now, stretches very far. Its point is not that this single Rule, relating to compensation levels, exceeds FERC's power. Instead, EPSA's arguments-that rewarding energy conservation raises effective retail rates and that "luring" consumers onto wholesale markets aims to disrupt state policies-suggest that the entire practice of wholesale demand response falls outside what FERC can regulate. EPSA proudly embraces that point: FERC, it declares, "has no business regulating 'demand response' at all." Id., at 24. Under EPSA's theory, FERC's earlier Order No. 719, although never challenged, would also be ultra vires because it requires operators to open their markets to demand response bids. And more: FERC could not even approve an operator's voluntary plan to administer a demand response program. See Tr. of Oral Arg. 44. That too would improperly allow a retail customer to participate in a wholesale market.

Yet state commissions could not regulate demand response bids either. EPSA essentially concedes this point. See Brief for Respondents 46 ("That may well be true"). And so it must. The FPA "leaves no room either for direct state regulation of the prices of interstate wholesales" or for regulation that "would indirectly achieve the same result." Northern Natural Gas Co. v. State Corporation Comm'n of Kan., 372 U.S. 84, 91, 83 S.Ct. 646, 9 L.Ed.2d 601 (1963). A State could not oversee offers, made in a wholesale market operator's auction, that help to set wholesale prices. Any effort of that kind would be preempted.

And all of that creates a problem. If neither FERC nor the States can regulate wholesale demand response, then by definition no one can. But under the Act, no electricity transaction can proceed unless it is regulable by someone. As earlier described, Congress passed the FPA precisely to eliminate vacuums of authority over the electricity markets. See supra, at 767 - 768. The Act makes federal and state powers "complementary" and "comprehensive," so that "there [will] be no 'gaps' for private interests to subvert the public welfare." Louisiana Power & Light Co., 406 U.S., at 631, 92 S.Ct. 1827. Or said otherwise, the statute prevents the creation of any regulatory "no man's land." FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 19, 81 S.Ct. 435, 5 L.Ed.2d 377 (1961) ; see id., at 28, 81 S.Ct. 435. Some entity must have jurisdiction to regulate each and every practice that takes place in the electricity markets, demand response no less than any other.10

*781For that reason, the upshot of EPSA's view would be to extinguish the wholesale demand response program in its entirety. Under the FPA, each market operator must submit to FERC all its proposed rules and procedures. See 16 U.S.C. §§ 824d(c) -(d) ; 18 CFR §§ 35.28(c)(4), 35.3(a)(1). Assume that, as EPSA argues, FERC could not authorize any demand response program as part of that package. Nor could FERC simply allow such plans to go into effect without its consideration and approval. There are no "off the books" programs in the wholesale electricity markets-because, once again, there is no regulatory "no man's land." Transcontinental, 365 U.S., at 19, 81 S.Ct. 435. The FPA mandates that FERC review, and ensure the reasonableness of, every wholesale rule and practice. See 16 U.S.C. §§ 824d(a), 824e(a) ; supra, at 767 - 768, 773 - 774. If FERC could not carry out that duty for demand response, then those programs could not go forward.

And that outcome would flout the FPA's core objects. The statute aims to protect "against excessive prices" and ensure effective transmission of electric power. Pennsylvania Water & Power Co. v. FPC, 343 U.S. 414, 418, 72 S.Ct. 843, 96 L.Ed. 1042 (1952) ; see Gulf States Util. Co. v. FPC, 411 U.S. 747, 758, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973). As shown above, FERC has amply explained how wholesale demand response helps to achieve those ends, by bringing down costs and preventing service interruptions in peak periods. See supra, at 776 - 777. No one taking part in the rulemaking process-not even EPSA-seriously challenged that account. Even as he objected to FERC's compensation formula, Commissioner Moeller noted the unanimity of opinion as to demand response's value: "[N]owhere did I review any comment or hear any testimony that questioned the benefit of having demand response resources participate in the organized wholesale energy markets. On this point, there is no debate." 76 Fed. Reg. 16679 ; see also App. 82, EPSA, Comments on Proposed Rule (avowing "full[ ] support" for demand response participation in wholesale markets because of its "economic and operational" benefits).11 Congress itself agreed, "encourag[ing]" greater use of demand response participation at the wholesale level. EPAct § 1252(f), 119 Stat. 966. That undisputed judgment extinguishes *782any last flicker of life in EPSA's argument. We will not read the FPA, against its clear terms, to halt a practice that so evidently enables the Commission to fulfill its statutory duties of holding down prices and enhancing reliability in the wholesale energy market.

III

These cases present a second, narrower question: Is FERC's decision to compensate demand response providers at LMP-the same price paid to generators-arbitrary and capricious? Recall here the basic issue. See supra, at 770 - 772. Wholesale market operators pay a single price-LMP-for all successful bids to supply electricity at a given time and place. The Rule orders operators to pay the identical price for a successful bid to conserve electricity so long as that bid can satisfy a "net benefits test"-meaning that it is sure to bring down costs for wholesale purchasers. In mandating that payment, FERC rejected an alternative proposal under which demand response providers would receive LMP minus G (LMP-G), where G is the retail rate for electricity. According to EPSA and others favoring that approach, demand response providers get a windfall-a kind of "double-payment"-unless market operators subtract the savings associated with conserving electricity from the ordinary compensation level. 76 Fed. Reg. 16663, ¶ 24. EPSA now claims that FERC failed to adequately justify its choice of LMP rather than LMP-G.

In reviewing that decision, we may not substitute our own judgment for that of the Commission. The "scope of review under the 'arbitrary and capricious' standard is narrow." Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). A court is not to ask whether a regulatory decision is the best one possible or even whether it is better than the alternatives. Rather, the court must uphold a rule if the agency has "examine [d] the relevant [considerations] and articulate[d] a satisfactory explanation for its action[,] including a rational connection between the facts found and the choice made." Ibid. (internal quotation marks omitted). And nowhere is that more true than in a technical area like electricity rate design: "[W]e afford great deference to the Commission in its rate decisions." Morgan Stanley, 554 U.S., at 532, 128 S.Ct. 2733.

Here, the Commission gave a detailed explanation of its choice of LMP. See 76 Fed. Reg. 16661-16669, ¶¶ 18-67. Relying on an eminent regulatory economist's views, FERC chiefly reasoned that demand response bids should get the same compensation as generators' bids because both provide the same value to a wholesale market. See id., at 16662-16664, 16667-16668, ¶¶ 20, 31, 57, 61 ; see also App. 829-851, Reply Affidavit of Dr. Alfred E. Kahn (Aug. 30, 2010) (Kahn Affidavit). FERC noted that a market operator needs to constantly balance supply and demand, and that either kind of bid can perform that service cost-effectively-i.e., in a way that lowers costs for wholesale purchasers. See 76 Fed. Reg. 16667-16668, ¶¶ 56, 61. A compensation system, FERC concluded, therefore should place the two kinds of bids "on a competitive par." Id., at 16668, ¶ 61 (quoting Kahn Affidavit); see also App. 830, Kahn Affidavit (stating that "economic efficiency requires" compensating the two equally given their equivalent function in a "competitive power market [ ]"). With both supply and demand response available on equal terms, the operator will select whichever bids, of whichever kind, provide the needed electricity at the lowest possible cost. See Rehearing *783Order, 137 FERC, at 62,301-62,302, ¶ 68 ("By ensuring that both ... receive the same compensation for the same service, we expect the Final Rule to enhance the competitiveness" of wholesale markets and "result in just and reasonable rates").

That rationale received added support from FERC's adoption of the net benefits test. The Commission realized during its rulemaking that in some circumstances a demand response bid-despite reducing the wholesale rate-does not provide the same value as generation. See 76 Fed. Reg. 16664-16665, ¶ 38. As described earlier, that happens when the distinctive costs associated with compensating a demand response bid exceed the savings from a lower wholesale rate: The purchaser then winds up paying more than if the operator had accepted the best (even though higher priced) supply bid available. See supra, at 771 - 772. And so FERC developed the net benefits test to filter out such cases. See 76 Fed. Reg. 16666-16667, ¶¶ 50-53. With that standard in place, LMP is paid only to demand response bids that benefit wholesale purchasers-in other words, to those that function as "cost-effective alternative[s] to the next highest-bid generation." Id., at 16667, ¶ 54. Thus, under the Commission's approach, a demand response provider will receive the same compensation as a generator only when it is in fact providing the same service to the wholesale market. See ibid., ¶ 53.

The Commission responded at length to EPSA's contrary view that paying LMP, even in that situation, will overcompensate demand response providers because they are also "effectively receiv[ing] 'G,' the retail rate that they do not need to pay." Id., at 16668, ¶ 60. FERC explained that compensation ordinarily reflects only the value of the service an entity provides-not the costs it incurs, or benefits it obtains, in the process. So when a generator presents a bid, "the Commission does not inquire into the costs or benefits of production." Ibid., ¶ 62. Different power plants have different cost structures. And, indeed, some plants receive tax credits and similar incentive payments for their activities, while others do not. See Rehearing Order, 137 FERC, at 62,301, ¶ 65, and n. 122. But the Commission had long since decided that such matters are irrelevant: Paying LMP to all generators-although some then walk away with more profit and some with less-"encourages more efficient supply and demand decisions." 76 Fed. Reg. 16668, ¶ 62 (internal quotation marks omitted). And the Commission could see no economic reason to treat demand response providers any differently. Like generators, they too experience a range of benefits and costs-both the benefits of not paying for electricity and the costs of not using it at a certain time. But, FERC again concluded, that is immaterial: To increase competition and optimally balance supply and demand, market operators should compensate demand response providers, like generators, based on their contribution to the wholesale system. See ibid. ; 137 FERC, at 62,300, ¶ 60.

Moreover, FERC found, paying LMP will help demand response providers overcome certain barriers to participation in the wholesale market. See 76 Fed. Reg. 16667-16668, ¶¶ 57-59. Commenters had detailed significant start-up expenses associated with demand response, including the cost of installing necessary metering technology and energy management systems. See id., at 16661, ¶ 18, 16667-16668, ¶ 57 ; see also, e.g., App. 356, Viridity Energy, Inc., Comments on Proposed Rule on Demand Response Compensation in Organized Wholesale Energy Markets (May 13, 2010) (noting the "capital investments and operational changes needed" for demand *784response participation). The Commission agreed that such factors inhibit potential demand responders from competing with generators in the wholesale markets. See 76 Fed. Reg. 16668, ¶ 59. It concluded that rewarding demand response at LMP (which is, in any event, the price reflecting its value to the market) will encourage that competition and, in turn, bring down wholesale prices. See ibid.

Finally, the Commission noted that determining the "G" in the formula LMP-G is easier proposed than accomplished. See ibid., ¶ 63. Retail rates vary across and even within States, and change over time as well. Accordingly, FERC concluded, requiring market operators to incorporate G into their prices, "even though perhaps feasible," would "create practical difficulties." Ibid. Better, then, not to impose that administrative burden.

All of that together is enough. The Commission, not this or any other court, regulates electricity rates. The disputed question here involves both technical understanding and policy judgment. The Commission addressed that issue seriously and carefully, providing reasons in support of its position and responding to the principal alternative advanced. In upholding that action, we do not discount the cogency of EPSA's arguments in favor of LMP-G. Nor do we say that in opting for LMP instead, FERC made the better call. It is not our job to render that judgment, on which reasonable minds can differ. Our important but limited role is to ensure that the Commission engaged in reasoned decisionmaking-that it weighed competing views, selected a compensation formula with adequate support in the record, and intelligibly explained the reasons for making that choice. FERC satisfied that standard.

IV

FERC's statutory authority extends to the Rule at issue here addressing wholesale demand response. The Rule governs a practice directly affecting wholesale electricity rates. And although (inevitably) influencing the retail market too, the Rule does not intrude on the States' power to regulate retail sales. FERC set the terms of transactions occurring in the organized wholesale markets, so as to ensure the reasonableness of wholesale prices and the reliability of the interstate grid-just as the FPA contemplates. And in choosing a compensation formula, the Commission met its duty of reasoned judgment. FERC took full account of the alternative policies proposed, and adequately supported and explained its decision. Accordingly, we reverse the judgment of the Court of Appeals for the District of Columbia Circuit and remand the cases for further proceedings consistent with this opinion.

It is so ordered.

Justice ALITO took no part in the consideration or decision of these cases.

Justice SCALIA, with whom Justice THOMAS joins, dissenting.

I believe the Federal Power Act (FPA or Act), 16 U.S.C. § 791a et seq., prohibits the Federal Energy Regulatory Commission (FERC) from regulating the demand response of retail purchasers of power. I respectfully dissent from the Court's holding to the contrary.

I

A

I agree with the majority that FERC has the authority to regulate practices "affecting" wholesale rates. §§ 824d(a), 824e(a) ;

*785Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 371, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988). I also agree that this so-called "affecting" jurisdiction cannot be limitless. And I suppose I could even live with the Court's "direct effect" test as a reasonable limit. Ante, at 773. But as the majority recognizes, ante, at 775, that extratextual limit on the "affecting" jurisdiction merely supplements, not supplants, limits that are already contained in the statutory text and structure. I believe the Court misconstrues the primary statutory limit. (Like the majority, I think that deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), is unwarranted because the statute is clear.)

The Act grants FERC authority to regulate the "generation ... [and] transmission of electric energy in interstate commerce and the sale of such energy at wholesale." § 824(a). Yet the majority frames the issue thusly: "[T]o uphold the [r]ule, we also must determine that it does not regulate retail electricity sales." Ante, at 775. That formulation inverts the proper inquiry. The pertinent question under the Act is whether the rule regulates sales "at wholesale ." If so, it falls within FERC's regulatory authority. If not, the rule is unauthorized whether or not it happens to regulate "retail electricity sales"; for, with exceptions not material here, the FPA prohibits FERC from regulating "any other sale of electric energy" that is not at wholesale. § 824(b)(1) (emphasis added). (The majority wisely ignores FERC's specious argument that the demand-response rule does not regulate any sale, wholesale or retail. See Brief for Petitioner in No. 14-840, p. 39. Paying someone not to conclude a transaction that otherwise would without a doubt have been concluded is most assuredly a regulation of that transaction. Cf. Gonzales v. Raich, 545 U.S. 1, 39-40, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005) (SCALIA, J., concurring in judgment).)

Properly framing the inquiry matters not because I think there exists "some undefined category of ... electricity sales" that is "non-retail [and] non-wholesale," ante, at 775, n. 7,1 but because a proper framing of the inquiry is important to establish the default presumption regarding the scope of FERC's authority. While the majority would find every sale of electric energy to be within FERC's authority to regulate unless the transaction is demonstrably a retail sale, the statute actually excludes from FERC's jurisdiction all sales of electric energy except those that are demonstrably sales at wholesale.

So what, exactly, is a "sale of electric energy at wholesale"? We need not guess, for the Act provides a definition: "a sale of electric energy to any person for resale ." § 824(d) (emphasis added). No matter how many times the majority incants and italicizes the word "wholesale," ante, at 776 - 777, nothing can change the fact that the vast majority of (and likely all) demand-response participants-"[a]ggregators of multiple users of electricity, as well as large-scale individual users like factories or big-box stores," ante, at 770-do not resell electric energy ; they consume it themselves. FERC's own definition of demand response is aimed at energy consumers, not resellers. 18 CFR § 35.28(b)(4) (2015).

*786It is therefore quite beside the point that the challenged "[r]ule addresses-and addresses only-transactions occurring on the wholesale market," ante, at 776. For FERC's regulatory authority over electric-energy sales depends not on which "market" the "transactions occu[r] on" (whatever that means), but rather on the identity of the putative purchaser . If the purchaser is one who resells electric energy to other customers, the transaction is one "at wholesale" and thus within FERC's authority. If not, then not. Or so, at least, says the statute. As we long ago said of the parallel provision in the Natural Gas Act, 15 U.S.C. § 717, "[t]he line of the statute [i]s thus clear and complete. It cut[s] sharply and cleanly between sales for resale and direct sales for consumptive uses. No exceptions [a]re made in either category for particular uses, quantities, or otherwise." Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n of Ind., 332 U.S. 507, 517, 68 S.Ct. 190, 92 L.Ed. 128 (1947). The majority makes no textual response to this plain reading of the statute.

The demand-response bidders here indisputably do not resell energy to other customers. It follows that the rule does not regulate electric-energy sales "at wholesale," and 16 U.S.C. § 824(b)(1) therefore forbids FERC to regulate these demand-response transactions. See New York v. FERC, 535 U.S. 1, 17, 122 S.Ct. 1012, 152 L.Ed.2d 47 (2002). That is so whether or not those transactions "directly affect" wholesale rates; as we recently said in another context, we will not adopt a construction that "needlessly produces a contradiction in the statutory text." Shapiro v. McManus, 577 U.S. ----, ----, 136 S.Ct. 450, 454, 193 L.Ed.2d 279 (2015). A faithful application of that principle would compel the conclusion that FERC may not "do under [§§ 824d(a) and 824e(a) ] what [it] is forbidden to do under [§ 824(b)(1) ]." Id., at ----, 136 S.Ct., at 455.

B

The analysis could stop there. But the majority is wrong even on its own terms, for the rule at issue here does in fact regulate "retail electricity sales," which are indisputably "matters ... subject to regulation by the States" and therefore off-limits to FERC. § 824(a) ; see FPC v. Conway Corp., 426 U.S. 271, 276, 96 S.Ct. 1999, 48 L.Ed.2d 626 (1976) ; Panhandle Eastern Pipe Line Co., supra, at 517-518, 68 S.Ct. 190. The demand-response participants are retail customers-they purchase electric energy solely for their own consumption. And FERC's demand-response scheme is intentionally "designed to induce lower consumption of electric energy"-in other words, to induce a reduction in "retail electricity sales"-by offering "incentive payments" to those customers. 18 CFR § 35.28(b)(4). The incentive payments effectively increase the retail price of electric energy for participating customers because they must now account for the opportunity cost of using, as opposed to abstaining from using, more energy. In other words, it literally costs them more to buy energy on the retail market. In the court below, FERC conceded that offering credits to retail customers to reduce their electricity consumption "would be an impermissible intrusion into the retail market" because it would in effect regulate retail rates. 753 F.3d 216, 223 (C.A.D.C.2014). Demand-response incentive payments are identical in substance.

The majority resists this elementary economic conclusion (notwithstanding its own exhortation to "think back to Econ 101," ante, at 769). Why? Because its self-proclaimed "common-sensical" view dictates otherwise. Ante, at 778. Maybe the *787easiest way to see the majority's error is to take its own example: an airline passenger who rejects a $300 voucher for taking a later flight. Consider the following formulation of that example, indistinguishable in substance from the majority's formulation. (Indistinguishable because the hypothetical passenger has exactly the same options and outcomes available to him.) Suppose the airline said to the passenger: "We have proactively canceled your ticket and refunded $400 to your account; and because we have inconvenienced you, we have also deposited an extra $300. The money is yours to use as you like. But if you insist on repurchasing a ticket on the same flight, you must not only pay us $400, but return the $300 too." Now what is the effective price of the ticket? Sometimes an allegedly commonsensical intuition is just that-an intuition, often mistaken.

Moving closer to home, recall that demand-response participants must choose either to purchase a unit of energy at the prevailing retail price (say $10) or to withhold from purchasing that unit and receive instead an incentive payment (of say $5). The two options thus present a choice between having a unit of energy, on the one hand, and having $15 more in the bank, on the other. To repeat: take the energy, be $15 poorer; forgo the energy, be $15 richer. Is that not the very definition of price? See Black's Law Dictionary 1380 (10th ed. 2014) ("[t]he amount of money or other consideration asked for or given in exchange for something else"). In fact, is that not the majority 's definition of price? Ante, at 777 ("the amount of money a consumer will hand over in exchange for power").

In any event, the majority appears to recognize that the effective price is indeed $15-just as the effective price of the airline ticket in the hypothetical is $700. Ante, at 778, n. 9. That recognition gives away the game. For FERC is prohibited not just from directly setting or modifying retail prices ; it is prohibited from regulating retail sales, no matter the means. Panhandle Eastern Pipe Line Co., supra, at 517, 68 S.Ct. 190. Whether FERC sets the "real" retail price (to use the majority's idiosyncratic terminology, ante, at 778, n. 9) or the "effective" retail price is immaterial; either way, the rule-by design -induces demand-response participants to forgo retail electric-energy purchases they otherwise would have made. As noted, even FERC conceded that offering credits to retail customers would impermissibly regulate retail sales. The majority blithely overlooks this concession in favor of its own myopic view of retail pricing-all the while evading the inconvenient fact that fiddling with the effective retail price of electric energy, be it through incentive payments or hypothetical credits, regulates retail sales of electric energy no less than does direct ratesetting.

C

The majority cites dicta in several of our opinions expressing the assumption that state jurisdiction and federal jurisdiction under FERC cover the field, so that there is no regulatory "gap"; one entity or the other "must have jurisdiction to regulate each and every practice that takes place in the electricity markets." Ante, at 780. The cases that express such a principle, with respect to the Federal Power Act and its companion the Natural Gas Act, base it (no surprise) on legislative history. See, e.g., FPC v. Louisiana Power & Light Co., 406 U.S. 621, 631, 92 S.Ct. 1827, 32 L.Ed.2d 369 (1972) ; FPC v. Transcontinental Gas Pipe Line Corp., 365 U.S. 1, 19, 81 S.Ct. 435, 5 L.Ed.2d 377 (1961) ; Panhandle Eastern Pipe Line Co., 332 U.S., at 517-518, and n. 13, 68 S.Ct. 190.

*788One would expect the congressional proponents of legislation to assert that it is "comprehensive" and leaves no stone unturned. But even if one is a fan of legislative history, surely one cannot rely upon such generalities in determining what a statute actually does. Whether it is "comprehensive" and leaves not even the most minor regulatory "gap" surely depends on what it says and not on what its proponents hoped to achieve. I cannot imagine a more irrational interpretive principle than the following, upon which the majority evidently relies:

"[W]hen a dispute arises over whether a given transaction is within the scope of federal or state regulatory authority, we are not inclined to approach the problem negatively, thus raising the possibility that a 'no man's land' will be created. That is to say, in a borderline case where congressional authority is not explicit we must ask whether state authority can practicably regulate a given area and, if we find that it cannot, then we are impelled to decide that federal authority governs." Transcontinental Gas Pipe Line Corp., supra, at 19-20, 81 S.Ct. 435 (citation omitted).

That extravagant and otherwise-unheard-of method of establishing regulatory jurisdiction was not necessary to the judgments that invoked it, and should disappear in the Court's memory hole.

Suppose FERC decides that eliminating the middleman would benefit the public, and therefore promulgates a rule allowing electric-energy generators to sell directly to retail consumers across state lines and fixing generation, transmission, and retail rates for such sales. I think it obvious this hypothetical scheme would be forbidden to FERC. Yet just as surely the States could not enact it either, for only FERC has authority to regulate "the transmission of electric energy in interstate commerce." 16 U.S.C. § 824(b)(1) ; see also New York, 535 U.S., at 19-20, 122 S.Ct. 1012. Is this a regulatory "gap"? Has the generator-to-consumer sales scheme fallen into a regulatory "no man's land"? Must FERC therefore be allowed to implement this scheme on its own? Applying the majority's logic would yield nothing but "yesses." Yet the majority acknowledges that neither FERC nor the States have regulatory jurisdiction over this scheme. Ante, at 780, n. 10. Such sales transactions, involving a mix of retail and wholesale players-as the demand-response scheme does -can be regulated (if at all) only by joint action. I would not call that a "problem," ante, at 780; I would call it an inevitable consequence of the federal-state division created by the FPA.

The majority is evidently distraught that affirming the decision below "would ... extinguish the wholesale demand response program in its entirety." Ante, at 781. Alarmist hyperbole. Excluding FERC jurisdiction would at most eliminate this particular flavor of FERC-regulated demand response. Nothing prevents FERC from tweaking its demand-response scheme by requiring incentive payments to be offered to wholesale customers, rather than retail ones. Brief for Respondent Electric Power Supply Assn. (EPSA) et al. 47-48; Brief for Respondents Midwest Load-Serving Entities 10-11. And retail-level demand-response programs, run by the States, do and would continue to exist. See Brief for Respondent EPSA et al. 46-47; Brief for Respondents Midwest Load-Serving Entities 6-11. In fact Congress seemed to presuppose that States, not FERC, would run such programs: The relevant provisions of the Energy Policy Act of 2005, 119 Stat. 594 et seq., are intended "to encourage States to coordinate, on a regional basis, State energy policies to provide reliable and affordable demand response services." § 1252(e)(1), id., at 965, codified at *78916 U.S.C. § 2642 note (emphasis added). That statute also imposes several duties on the Secretary of Energy to assist States in implementing demand-response programs. §§ 1252(e)(2), (e)(3), 119 Stat. 965-966. In context, § 1252(f) of the 2005 Act is therefore best read as directing the Secretary to eliminate "unnecessary barriers" to States ' adopting and implementing demand-response systems-and not, as the majority contends, as "praising wholesale demand response" systems to be deployed and regulated by FERC, ante, at 770 (emphasis added).

Moreover, the rule itself allows States to forbid their retail customers to participate in the existing demand-response scheme. 18 CFR § 35.28(g)(1)(i)(A) ; see Brief for Petitioner in No. 14-840, at 43. The majority accepts FERC's argument that this is merely a matter of grace, and claims that it puts the "finishing blow" to respondents' argument that 16 U.S.C. § 824(b)(1) prohibits the scheme. Ante, at 779. Quite the contrary. Remember that the majority believes FERC's authority derives from 16 U.S.C. §§ 824d(a) and 824e(a), the grants of "affecting" jurisdiction. Yet those provisions impose a duty on FERC to ensure that "all rules and regulations affecting or pertaining to [wholesale] rates or charges shall be just and reasonable ." § 824d(a) (emphasis added); see § 824e(a) (similar); Conway Corp., 426 U.S., at 277-279, 96 S.Ct. 1999. If inducing retail customers to participate in wholesale demand-response transactions is necessary to render wholesale rates "just and reasonable," how can FERC, consistent with its statutory mandate, permit States to thwart such participation? See Brief for United States as Amicus Curiae 20-21, in Hughes v. Talen Energy Marketing, LLC, No. 14-614 etc., now pending before the Court (making an argument similar to ours); cf. New England Power Co. v. New Hampshire, 455 U.S. 331, 339-341, 102 S.Ct. 1096, 71 L.Ed.2d 188 (1982). Although not legally relevant, the fact that FERC-ordinarily so jealous of its regulatory authority, see Brief for United States as Amicus Curiae in No. 14-614 etc.-is willing to let States opt out of its demand-response scheme serves to highlight just how far the rule intrudes into the retail electricity market.

II

Having found the rule to be within FERC's authority, the Court goes on to hold that FERC's choice of compensating demand-response bidders with the "locational marginal price" is not arbitrary and capricious. There are strong arguments that it is. Brief for Robert L. Borlick et al. as Amici Curiae 5-34. Since, however, I believe FERC's rule is ultra vires I have neither need nor desire to analyze whether, if it were not ultra vires, it would be reasonable.

* * *

For the foregoing reasons, I respectfully dissent.

Justice GINSBURG delivered the opinion of the Court.

The Federal Power Act (FPA), 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq., vests in the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction over wholesale sales of electricity in the interstate market. FERC's regulatory scheme includes an auction-based market *1292mechanism to ensure wholesale rates that are just and reasonable. FERC's scheme, in Maryland's view, provided insufficient incentive for new electricity generation in the State. Maryland therefore enacted its own regulatory program. Maryland's program provides subsidies, through state-mandated contracts, to a new generator, but conditions receipt of those subsidies on the new generator selling capacity into a FERC-regulated wholesale auction. In a suit initiated by competitors of Maryland's new electricity generator, the Court of Appeals for the Fourth Circuit held that Maryland's scheme impermissibly intrudes upon the wholesale electricity market, a domain Congress reserved to FERC alone. We affirm the Fourth Circuit's judgment.

I

A

Under the FPA, FERC has exclusive authority to regulate "the sale of electric energy at wholesale in interstate commerce." § 824(b)(1). A wholesale sale is defined as a "sale of electric energy to any person for resale." § 824(d). The FPA assigns to FERC responsibility for ensuring that "[a]ll rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of the Commission ... shall be just and reasonable." § 824d(a). See also § 824e(a) (if a rate or charge is found to be unjust or unreasonable, "the Commission shall determine the just and reasonable rate"). "But the law places beyond FERC's power, and leaves to the States alone, the regulation of 'any other sale'-most notably, any retail sale-of electricity." FERC v. Electric Power Supply Assn., 577 U.S. ----, ----, 136 S.Ct. 760, 766, 193 L.Ed.2d 661 (2016) (EPSA ) (quoting § 824(b) ). The States' reserved authority includes control over in-state "facilities used for the generation of electric energy." § 824(b)(1) ; see Pacific Gas & Elec. Co. v. State Energy Resources Conservation and Development Comm'n, 461 U.S. 190, 205, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983) ("Need for new power facilities, their economic feasibility, and rates and services, are areas that have been characteristically governed by the States.").

"Since the FPA's passage, electricity has increasingly become a competitive interstate business, and FERC's role has evolved accordingly." EPSA, 577 U.S., at ----, 136 S.Ct., at 768. Until relatively recently, most state energy markets were vertically integrated monopolies-i.e., one entity, often a state utility, controlled electricity generation, transmission, and sale to retail consumers. Over the past few decades, many States, including Maryland, have deregulated their energy markets. In deregulated markets, the organizations that deliver electricity to retail consumers-often called "load serving entities" (LSEs)-purchase that electricity at wholesale from independent power generators. To ensure reliable transmission of electricity from independent generators to LSEs, FERC has charged nonprofit entities, called Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs), with managing certain segments of the electricity grid.

Interstate wholesale transactions in deregulated markets typically occur through two mechanisms. The first is bilateral contracting: LSEs sign agreements with generators to purchase a certain amount of electricity at a certain rate over a certain period of time. After the parties have agreed to contract terms, FERC may review the rate for reasonableness. See Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish Cty., 554 U.S. 527, 546-548, 128 S.Ct. 2733, 171 L.Ed.2d 607 (2008) (Because rates set *1293through good-faith arm's-length negotiation are presumed reasonable, "FERC may abrogate a valid contract only if it harms the public interest."). Second, RTOs and ISOs administer a number of competitive wholesale auctions: for example, a "same-day auction" for immediate delivery of electricity to LSEs facing a sudden spike in demand; a "next-day auction" to satisfy LSEs' anticipated near-term demand; and a "capacity auction" to ensure the availability of an adequate supply of power at some point far in the future.

These cases involve the capacity auction administered by PJM Interconnection (PJM), an RTO that oversees the electricity grid in all or parts of 13 mid-Atlantic and Midwestern States and the District of Columbia. The PJM capacity auction functions as follows. PJM predicts electricity demand three years ahead of time, and assigns a share of that demand to each participating LSE. Owners of capacity to produce electricity in three years' time bid to sell that capacity to PJM at proposed rates. PJM accepts bids, beginning with the lowest proposed rate, until it has purchased enough capacity to satisfy projected demand. No matter what rate they listed in their original bids, all accepted capacity sellers receive the highest accepted rate, which is called the "clearing price."1 LSEs then must purchase from PJM, at the clearing price, enough electricity to satisfy their PJM-assigned share of overall projected demand. The capacity auction serves to identify need for new generation: A high clearing price in the capacity auction encourages new generators to enter the market, increasing supply and thereby lowering the clearing price in same-day and next-day auctions three years' hence; a low clearing price discourages new entry and encourages retirement of existing high-cost generators.2

The auction is designed to accommodate long-term bilateral contracts for capacity. If an LSE has acquired a certain amount of capacity through a long-term bilateral contract with a generator, the LSE-not the generator-is considered the owner of that capacity for purposes of the auction. The LSE sells that capacity into the auction, where it counts toward the LSE's assigned share of PJM-projected demand, thereby reducing the net costs of the LSE's required capacity purchases from PJM.3 LSEs generally bid their capacity *1294into the auction at a price of $0, thus guaranteeing that the capacity will clear at any price. Such bidders are called "price takers." Because the fixed costs of building generating facilities often vastly exceed the variable costs of producing electricity, many generators also function as price takers.

FERC extensively regulates the structure of the PJM capacity auction to ensure that it efficiently balances supply and demand, producing a just and reasonable clearing price. See EPSA, 577 U.S., at ----, 136 S.Ct., at 769 (the clearing price is "the price an efficient market would produce"). Two FERC rules are particularly relevant to these cases. First, the Minimum Offer Price Rule (MOPR) requires new generators to bid capacity into the auction at or above a price specified by PJM, unless those generators can prove that their actual costs fall below the MOPR price. Once a new generator clears the auction at the MOPR price, PJM deems that generator an efficient entrant and exempts it from the MOPR going forward, allowing it to bid its capacity into the auction at any price it elects, including $0. Second, the New Entry Price Adjustment (NEPA) guarantees new generators, under certain circumstances, a stable capacity price for their first three years in the market. The NEPA's guarantee eliminates, for three years, the risk that the new generator's entry into the auction might so decrease the clearing price as to prevent that generator from recovering its costs.

B

Around 2009, Maryland electricity regulators became concerned that the PJM capacity auction was failing to encourage development of sufficient new in-state generation. Because Maryland sits in a particularly congested part of the PJM grid, importing electricity from other parts of the grid into the State is often difficult. To address this perceived supply shortfall, Maryland regulators proposed that FERC extend the duration of the NEPA from three years to ten. FERC rejected the proposal. PJM, 126 FERC ¶ 61,275 (2009). "[G]iving new suppliers longer payments and assurances unavailable to existing suppliers," FERC reasoned, would improperly favor new generation over existing generation, throwing the auction's market-based price-setting mechanism out of balance. Ibid. See also PJM, 128 FERC ¶ 61,157 (2009) (order on petition for rehearing) ("Both new entry and retention of existing efficient capacity are necessary to ensure reliability and both should receive the same price so that the price signals are not skewed in favor of new entry.").

Shortly after FERC rejected Maryland's NEPA proposal, the Maryland Public Service Commission promulgated the Generation Order at issue here. Under the order, Maryland solicited proposals from various companies for construction of a new gas-fired power plant at a particular location, and accepted the proposal of petitioner CPV Maryland, LLC (CPV). Maryland then required LSEs to enter into a 20-year pricing contract (the parties refer to this contract as a "contract for differences") with CPV at a rate CPV specified *1295in its accepted proposal.4 Unlike a traditional bilateral contract for capacity, the contract for differences does not transfer ownership of capacity from CPV to the LSEs. Instead, CPV sells its capacity on the PJM market, but Maryland's program guarantees CPV the contract price rather than the auction clearing price.

If CPV's capacity clears the PJM capacity auction and the clearing price falls below the price guaranteed in the contract for differences, Maryland LSEs pay CPV the difference between the contract price and the clearing price. The LSEs then pass the costs of these required payments along to Maryland consumers in the form of higher retail prices. If CPV's capacity clears the auction and the clearing price exceeds the price guaranteed in the contract for differences, CPV pays the LSEs the difference between the contract price and the clearing price, and the LSEs then pass the savings along to consumers in the form of lower retail prices. Because CPV sells its capacity exclusively in the PJM auction market, CPV receives no payment from Maryland LSEs or PJM if its capacity fails to clear the auction. But CPV is guaranteed a certain rate if its capacity does clear, so the contract's terms encourage CPV to bid its capacity into the auction at the lowest possible price.5

Prior to enactment of the Maryland program, PJM had exempted new state-supported generation from the MOPR, allowing such generation to bid capacity into the auction at $0 without first clearing at the MOPR price. Responding to a complaint filed by incumbent generators in the Maryland region who objected to Maryland's program (and the similar New Jersey program), *1296FERC eliminated this exemption. PJM, 135 FERC ¶ 61,022 (2011). See also 137 FERC ¶ 61,145 (2011) (order on petition for rehearing) ("Our intent is not to pass judgment on state and local policies and objectives with regard to the development of new capacity resources, or unreasonably interfere with those objectives. We are forced to act, however, when subsidized entry supported by one state's or locality's policies has the effect of disrupting the competitive price signals that PJM's [capacity auction] is designed to produce, and that PJM as a whole, including other states, rely on to attract sufficient capacity."); New Jersey Bd. of Pub. Util. v. FERC, 744 F.3d 74, 79-80 (C.A.3 2014) (upholding FERC's elimination of the state-supported generation exemption). In the first year CPV bid capacity from its new plant into the PJM capacity auction, that capacity cleared the auction at the MOPR rate, so CPV was thereafter eligible to function as a price taker.

In addition to seeking the elimination of the state-supported generation exemption, incumbent generators-respondents here-brought suit in the District of Maryland against members of the Maryland Public Service Commission in their official capacities. The incumbent generators sought a declaratory judgment that Maryland's program violates the Supremacy Clause by setting a wholesale rate for electricity and by interfering with FERC's capacity-auction policies.6 CPV intervened as a defendant. After a six-day bench trial, the District Court issued a declaratory judgment holding that Maryland's program improperly sets the rate CPV receives for interstate wholesale capacity sales to PJM. PPL Energyplus, LLC v. Nazarian, 974 F.Supp.2d 790, 840 (Md.2013). "While Maryland may retain traditional state authority to regulate the development, location, and type of power plants within its borders," the District Court explained, "the scope of Maryland's power is necessarily limited by FERC's exclusive authority to set wholesale energy and capacity prices." Id., at 829.7

The Fourth Circuit affirmed. Relying on this Court's decision in Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 370, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988), the Fourth Circuit observed that state laws are preempted when they "den[y] full effect to the rates set by FERC, even though [they do] not seek to tamper with the actual terms of an interstate transaction." PPL EnergyPlus, LLC v. Nazarian, 753 F.3d 467, 476 (2014). Maryland's program, the Fourth Circuit reasoned, "functionally sets the rate that CPV receives for its sales in the PJM auction," "a FERC-approved market mechanism." Id., at 476-477. "[B]y adopting terms and prices set by Maryland, not those sanctioned by FERC," the Fourth Circuit concluded, Maryland's program "strikes at the heart of the agency's statutory power." Id., at 478.8 The *1297Fourth Circuit cautioned that it "need not express an opinion on other state efforts to encourage new generation, such as direct subsidies or tax rebates, that may or may not differ in important ways from the Maryland initiative." Ibid .

The Fourth Circuit then held that Maryland's program impermissibly conflicts with FERC policies. Maryland's program, the Fourth Circuit determined, "has the potential to seriously distort the PJM auction's price signals," undermining the incentive structure FERC has approved for construction of new generation. Ibid. Moreover, the Fourth Circuit explained, Maryland's program "conflicts with NEPA" by providing a 20-year price guarantee to a new entrant-even though FERC refused Maryland's request to extend the duration of the NEPA past three years. Id., at 479.

We granted certiorari, 577 U.S. ----, 136 S.Ct. 356, 193 L.Ed.2d 288 (2015), and now affirm.

II

The Supremacy Clause makes the laws of the United States "the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const., Art. VI, cl. 2. Put simply, federal law preempts contrary state law. "Our inquiry into the scope of a [federal] statute's pre-emptive effect is guided by the rule that the purpose of Congress is the ultimate touchstone in every pre-emption case." Altria Group, Inc. v. Good, 555 U.S. 70, 76, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008) (internal quotation marks omitted). A state law is preempted where "Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the States to supplement federal law," Northwest Central Pipeline Corp. v. State Corporation Comm'n of Kan., 489 U.S. 493, 509, 109 S.Ct. 1262, 103 L.Ed.2d 509 (1989), as well as "where, under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," Crosby v. National Foreign Trade Council, 530 U.S. 363, 373, 120 S.Ct. 2288, 147 L.Ed.2d 352 (2000) (brackets and internal quotation marks omitted).

We agree with the Fourth Circuit's judgment that Maryland's program sets an interstate wholesale rate, contravening the FPA's division of authority between state and federal regulators. As earlier recounted, see supra, at 1292, the FPA allocates to FERC exclusive jurisdiction over "rates and charges ... received ... for or in connection with" interstate wholesale sales. § 824d(a). Exercising this authority, FERC has approved the PJM capacity auction as the sole ratesetting mechanism for sales of capacity to PJM, and has deemed the clearing price per se just and reasonable. Doubting FERC's judgment, Maryland-through the contract for differences-requires CPV to participate in the PJM capacity auction, but guarantees CPV a rate distinct from the clearing price for its interstate sales of capacity to PJM. By adjusting an interstate wholesale rate, Maryland's program invades FERC's regulatory turf. See EPSA, 577 U.S., at ----, 136 S.Ct., at 780 ("The FPA leaves no room either for direct state regulation of the prices of interstate wholesales or for regulation that would indirectly achieve the same result." (internal quotation marks omitted)).9

*1298That Maryland was attempting to encourage construction of new in-state generation does not save its program. States, of course, may regulate within the domain Congress assigned to them even when their laws incidentally affect areas within FERC's domain. See Oneok, Inc. v. Learjet, Inc., 575 U.S. ----, ----, 135 S.Ct. 1591, 1599, 191 L.Ed.2d 511 (2015) (whether the Natural Gas Act (NGA) preempts a particular state law turns on "the target at which the state law aims ").10 But States may not seek to achieve ends, however legitimate, through regulatory means that intrude on FERC's authority over interstate wholesale rates, as Maryland has done here. See ibid. (distinguishing between "measures aimed directly at interstate purchasers and wholesalers for resale, and those aimed at subjects left to the States to regulate" (internal quotation marks omitted)).11

The problem we have identified with Maryland's program mirrors the problems we identified in Mississippi Power & Light and Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986). In each of those cases, a State determined that FERC had failed to ensure the reasonableness of a wholesale rate, and the State therefore prevented a utility from recovering-through retail rates-the full cost of wholesale purchases. See Mississippi Power & Light, 487 U.S., at 360-364, 108 S.Ct. 2428 ; Nantahala, 476 U.S., at 956-962, 106 S.Ct. 2349. This Court invalidated the States' attempts to second-guess the reasonableness of interstate wholesale rates. " 'Once FERC sets such a rate,' " we observed in Mississippi Power & Light, " 'a State may not conclude in setting retail rates that the FERC-approved wholesale rates are unreasonable. A State must rather give effect to Congress' desire to give FERC plenary authority over interstate wholesale rates, and to ensure that the States do not interfere with this authority.' " 487 U.S., at 373, 108 S.Ct. 2428 (quoting Nantahala, 476 U.S., at 966, 106 S.Ct. 2349 ). True, Maryland's program does not prevent a utility from recovering through retail sales a cost FERC mandated it incur-Maryland instead guarantees CPV a certain rate for capacity sales to PJM regardless of the clearing *1299price. But Mississippi Power & Light and Nantahala make clear that States interfere with FERC's authority by disregarding interstate wholesale rates FERC has deemed just and reasonable, even when States exercise their traditional authority over retail rates or, as here, in-state generation.

The contract for differences, Maryland and CPV respond, is indistinguishable from traditional bilateral contracts for capacity, which FERC has long accommodated in the auction. See supra, at 1293 - 1294, and n. 3. But the contract at issue here differs from traditional bilateral contracts in this significant respect: The contract for differences does not transfer ownership of capacity from one party to another outside the auction. Instead, the contract for differences operates within the auction; it mandates that LSEs and CPV exchange money based on the cost of CPV's capacity sales to PJM. Notably, because the contract for differences does not contemplate the sale of capacity outside the auction, Maryland and CPV took the position, until the Fourth Circuit issued its decision, that the rate in the contract for differences is not subject to FERC's reasonableness review. See § 824(b)(1) (FERC has jurisdiction over contracts for "the sale of electric energy at wholesale in interstate commerce." (emphasis added)).12

Our holding is limited: We reject Maryland's program only because it disregards an interstate wholesale rate required by FERC. We therefore need not and do not address the permissibility of various other measures States might employ to encourage development of new or clean generation, including tax incentives, land grants, direct subsidies, construction of state-owned generation facilities, or re-regulation of the energy sector. Nothing in this opinion should be read to foreclose Maryland and other States from encouraging production of new or clean generation through measures "untethered to a generator's wholesale market participation." Brief for Respondents 40. So long as a State does not condition payment of funds on capacity clearing the auction, the State's program would not suffer from the fatal defect that renders Maryland's program unacceptable.13

For the reasons stated, the judgment of the Court of Appeals for the Fourth Circuit is

Affirmed.

Justice SOTOMAYOR, concurring.

I write separately to clarify my understanding of the pre-emption principles that should guide this Court's analysis of the Federal Power Act and that underpin its conclusion in these cases.

The process through which consumers obtain energy stretches across state and federal regulatory domains. The Federal Power Act authorizes the States to regulate *1300energy production. 16 U.S.C. § 824(b). It then instructs the Federal Government to step in and regulate wholesale purchases and energy transportation. § 824(a). Finally, it allows the States to assume control over the ultimate sale of energy to consumers. § 824(b). In short, the Federal Power Act, like all collaborative federalism statutes, envisions a federal-state relationship marked by interdependence.

Pre-emption inquiries related to such collaborative programs are particularly delicate. This Court has said that where "coordinate state and federal efforts exist within a complementary administrative framework, and in the pursuit of common purposes, the case for federal pre-emption becomes a less persuasive one." New York State Dept. of Social Servs. v. Dublino, 413 U.S. 405, 421, 93 S.Ct. 2507, 37 L.Ed.2d 688 (1973). That is not to say that pre-emption has no role in such programs, but courts must be careful not to confuse the "congressionally designed interplay between state and federal regulation," Northwest Central Pipeline Corp. v. State Corporation, Comm'n of Kan., 489 U.S. 493, 518, 109 S.Ct. 1262, 103 L.Ed.2d 509 (1989), for impermissible tension that requires pre-emption under the Supremacy Clause.

In this context, therefore, our general exhortation not to rely on a talismanic pre-emption vocabulary applies with special force. See Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941) ("This Court ... has made use of the following expressions: conflicting; contrary to; occupying the field; repugnance; difference; irreconcilability; inconsistency; violation; curtailment; and interference. But none of these expressions provides an infallible constitutional test or an exclusive constitutional yardstick" (footnote omitted)).

I understand today's opinion to reflect these principles. Using the purpose of the Federal Power Act as the "ultimate touchstone" of its pre-emption inquiry, Altria Group, Inc. v. Good, 555 U.S. 70, 76, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008), rather than resting on generic pre-emption frameworks unrelated to the Federal Power Act, the Court holds that Maryland has impermissibly impeded the performance of one of FERC's core regulatory duties. Ensuring "just and reasonable" wholesale rates is a central purpose of the Act. See 16 § 824d(a). Pursuant to its mandate to set such rates, FERC has approved the PJM Interconnection capacity auction as the proper mechanism to determine the "just and reasonable" rate for the sale of petitioner CPV Maryland, LLC's energy at wholesale. Ante, at 1297. Maryland, however, has acted to guarantee CPV a rate different from FERC's "just and reasonable" rate and has thus contravened the goals of the Federal Power Act. Ibid. Such actions must be preempted. Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 374, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988) ("States may not regulate in areas where FERC has properly exercised its jurisdiction to determine just and reasonable wholesale rates"). The Court, however, also rightly recognizes the importance of protecting the States' ability to contribute, within their regulatory domain, to the Federal Power Act's goal of ensuring a sustainable supply of efficient and price-effective energy. Ante, at 1299.

Endorsing those conclusions, I join the Court's opinion in full.

Justice THOMAS, concurring in part and concurring in the judgment.

The Court concludes that Maryland's regulatory program invades the Federal Energy Regulatory Commission's (FERC)

*1301exclusive jurisdiction over interstate wholesale sales of electric energy. Ante, at 1297 - 1298. I agree that the statutory text and framework compel that conclusion, and that Maryland's program therefore cannot stand. Because the statute provides a sufficient basis for resolving these cases, I would not also rest today's holding on principles of implied pre-emption. See, e.g., ante, at 1297 - 1298. For that reason, I join the Court's opinion only to the extent that it rests on the text and structure of the Federal Power Act (FPA), 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq.

The FPA divides federal and state jurisdiction over the regulation of electricity sales. As relevant here, the FPA grants FERC the authority to regulate "the sale of electric energy at wholesale in interstate commerce." § 824(b)(1). That federal authority over interstate wholesale sales is exclusive. See, e.g., Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 966, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986) (recognizing that Congress "vested" in FERC "exclusive jurisdiction" and "plenary authority over interstate wholesale rates"); Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 377, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988) (Scalia, J., concurring in judgment) ("It is common ground that if FERC has jurisdiction over a subject, the States cannot have jurisdiction over the same subject").

To resolve these cases, it is enough to conclude that Maryland's program invades FERC's exclusive jurisdiction. Maryland has partially displaced the FERC-endorsed market mechanism for determining wholesale capacity rates. Under Maryland's program, CPV Maryland, LLC, is entitled to receive, for its wholesale sales into the capacity auction, something other than what FERC has decided that generators should receive. That is a regulation of wholesale sales: By "fiddling with the effective ... price" that CPV receives for its wholesale sales, Maryland has "regulate[d]" wholesale sales "no less than does direct ratesetting." FERC v. Electric Power Supply Assn., 577 U.S. ----, ----, 136 S.Ct. 760, 787, 193 L.Ed.2d 661 (2016) (Scalia, J., dissenting) (emphasis deleted) (addressing analogous situation involving retail sales). Maryland's program therefore intrudes on the exclusive federal jurisdiction over wholesale electricity rates.

Although the Court applies the FPA's framework in reaching that conclusion, see ante, at 1297 - 1298, it also relies on principles of implied pre-emption, see, e.g., ante, at 1297 - 1298. Because we can resolve these cases based on the statute alone, I would affirm based solely on the FPA. Accordingly, I concur in the judgment and I join the Court's opinion to the extent that it holds that Maryland's program invades FERC's exclusive jurisdiction.

Mr. Chief Justice White

delivered the opinion of the court.

The Standard Oil Company of New Jersey and 33 other corporations, John D. Rockefeller, William Rockefeller and five other individual defendants prosecute this appeal to reverse a decree of the court below. Such decree was entered upon a bill filed by the United States under authority of § 4, of the act of July 2,1890, c. 647, p. 209, known as the Anti-trust Act, and had for its object the enforcement of the provisions of that act. The record is inordinately voluminous, consisting of twenty-three volumes of printed matter, aggregating about twelve thousand- pages, containing a vast amount of confusing and conflicting testi*31mony relating to innumerable,' complex and varied business transactions, extending over a period of nearly forty years. In an effort to pave the way to reach the subjects which we are called upon to consider, we propose at the outset, following the order of the bill, to give the merest possible outline of its contents, to summarize the answer, to indicate the course of the trial, and point out briefly the decision below rendered.

The bill and. exhibits, covering one hundred and seventy pages of the printed record, was filed on November 15, 1906. Corporations known as Standard Oil Company of New Jersey, Standard Oil Company of California, Standard Oil Company of Indiana, Standard Oil Company of Iowa, Standard Oil Company of Kansas, Standard Oil Company of Kentucky, Standard Oil Company of Nebraska, Standard Oil Company of New York, Standard Oil Company of Ohio and sixty-two other corporations and partnerships, as also seven individuals were named as defendants. The bill was divided into thirty numbered sections, and sought relief upon the theory that the various defendants were engaged in conspiring “to restrain the trade and commerce in petroleum, commonly called ‘crude oil/ in refined oil, and in the other products of petroleum, among the several States and Territories of the United States and the District of Columbia and with foreign nations, and to monopolize the said commerce.” The conspiracy was alleged to have been formed in or about the year 1870 by three of the individual defendants, viz: John D. Rockefeller, William Rockefeller and Henry M. Flagler. The detailed averments concerning the alleged conspiracy were arranged with-reference to three periods, the first from 1870 to 1882, the second from 1882 to 1899, and the third from 1899 to the time of the filing of the bill.

The general charge concerning the period from 1870 to 1882 was as follows:

*32“That during said first period the said individual defendants, in connection with the Standard Oil Company of Ohio, purchased and obtained interests through stock ownership and otherwise in, and entered into agreements with, various' persons, firms, corporations, and limited partnerships engaged in purchasing, shipping, refining, and selling petroleum and its products among the various States for the purpose of fixing the price of crude and refined oil and the products- thereof, limiting the production thereof, and controlling the transportation therein, and thereby restraining trade and commerce among the several States, and monopolizing the said commerce.”

To establish this charge it was averred that John D. and William Rockefeller and several other named individuals, who, prior to 1870, composed three separate partnerships engaged in the business of refining crude oil and shipping its products in interstate commerce, organized in the year 1870, a corporation known as the Standard Oil Company of Ohio and transferred to that company the business of the said partnerships, the members thereof becoming, in proportion to their prior ownership, stockholders in the corporation. It was averred that the other individual defendants soon afterwards became participants in the illegal combination and either transferred property, to the corporation or to individuals to be held for the benefit of all parties in interest in proportion to their respective interests in the combination; that is, in proportion to their stock ownership in the Standard Oil Company of Ohio. By the means thus stated, it was charged that by the year 1872, the combination had acquired substantially all but •three or four of the thirty-five or forty oil refineries located in Cleveland, Ohio. By .reason of the power thus obtained and in further execution of the intent and purpose to restrain trade and to monopolize the commerce, interstate as well as intrastate, in petroleum and its products, the bill alleged that the combination and its mem*33bers obtained large preferential rates and rebates in many and devious ways over their competitors from various railroad companies, and that by means of the advantage thus obtained many, if not virtually all, competitors were forced either to become members of the combination or were driven out of business; and thus, it was alleged, during the period in question the following results were brought about: a. That the combination, in addition to the refineries in Cleveland which it had -acquired as previously stated, and which it had either dismantled to limit production or continued to operate, also from time to time acquired a large number of refineries of crude petroleum, situated in New York, Pennsylvania, Ohio and elsewhere. The properties thus acquired, like those previously obtained, although belonging to and being held for the benefit of the combination, were ostensibly divergently controlled, some of them being put in the name of the Standard Oil Company of Ohio, some in the name of corporations , or limited partnerships affiliated therewith, or some being left in the name of the original owners who had become stockholders in the Standard Oil Company of Ohio and thus members of the alleged illegal combination. 6. That the combination had obtained control of the pipe lines available for transporting oil from the oil fields to the refineries in Cleveland, Pittsburg, Titusville, Philadelphia, New York and New Jersey, c. That the combination during the period named had obtained a complete mastéry over the oil industry, controlling 90 per cent of the business of producing, shipping, refining and selling petroleum and its products, and thus was able to fix the price of crude and refined petroleum and to restrain and monopolize all interstate commerce in, those products.

The averments bearing upon the second period (1882 to 1899) had relation to the claim:

“ That during the said second period of conspiracy the defendants entered into a contract and trust agreement, *34by which various independent firms, corporations, limited partnerships and individuals engaged ip purchasing, transporting, refining, shipping, and selling oil and the products thereof among the various States turned over the management of their said business, corporations and limited partnerships to nine trustees, composed chiefly of certain individuals defendant herein, which said trust agreement was in restraint of trade and commerce and in violation of law, as hereinafter more partieulárly alleged:”

The trust agreement thus referred to was, set out in the bill. It was made in January, 1882. -By its terms the stock of forty corporations^ including the Standard Oil Company of Ohio, and a large quantity of'various properties which hád been previously acquired- by the alleged combination and which was held in diverse forms, as we have previously , indicated, for the benefit of the members of the combination, was vested in the trustees and their successors, “to be held for all parties" in interest jointly.” In the body of the trust agreement was contained a fist of the various individuals and corporations and limited partnerships whose stockholders and members, or a portion thereof, became parties to the agreement. This list is in the margin-.1

*35The agreement made provision for the method of controlling and managing the property by the trustees, for the formation of additional manufacturing, etc., corpora*36tions in various States, and the trust, unless terminated by a mode specified, was to continue “during the lives of the survivors and survivor of the trustees named in the agreement and for twenty-óne years thereafter.” The agreement provided for the issue of Standard Oil Trust certificates to represent the interest arising under the trust in the properties affected by the trust, which of course in view of the provisions of the agreement and the subject to which it related caused the interest in the certificates to be coincident with and the exact representative of the interest in the combination, that is, in the Standard Oil Company of Ohio. Soon afterwards it was alleged the trustees organized the Standard Oil Company of New Jersey and the Standard Oil Company of New York, the former having a capital stock of $3,000,000 and the latter a capital stock of $5,000,000, subsequently increased to $10,000,000 and $15,000,000 respectively. The bill alleged “that pursuant to said trust agreement the said trustees caused to be transferred to themselves the stocks of all corporations and limited partnerships named in said trust agreement, and caused various of the individuals and copartnerships, who owned apparently independent refineries and other properties employed in the business of refining and transporting and selling oil in and among said various States and Terri*37tories of the United States as aforesaid, to transfer .their property situated in said, several States to the respective Standard Oil Companies of said States of New York, New Jersey, Pennsylvania and Ohio, and other corporations organized or acquired by said trustees from time to time. . . .” For the stocks and property so acquired the trustees issued trust certificates. It was alleged that in 1888 the trustees “unlawfully controlled the-stock and ownership of various corporations and limited partnerships en-r gaged in such purchase and transportation, refining, selling, and shipping of oil,” as per a list which is excerpted in the ’margin.1 .

*38The bill charged that during the second period quo warranto proceedings were commenced against the Standard Oil Company of Ohio, which resulted in the entry by the Supreme Court of Ohio, on March 2, 1892, of a decree *39adjudging the trust ágreement to be void, not only because the Standard Oil Company of Ohio was a party to the same, but also because the agreement in and of itself *40was in restraint of trade and amounted to the creation of an unlawful monopoly. • It was alleged that shortly after this decision, seemingly for the purpose of complying therewith, voluntary proceedings were had apparently to dissolve the trust, but that these proceedings were a. subterfuge and a sham because they simply amounted, to a transfer of the stock held by the trust in 64 of the companies which it controlled to some of the remaining 20 companies, it having controlled before the decree 84 in all, thereby, while seemingly in part giving up it’s dominion, yet in reality preserving the same by means of . the control of the companies as to which it had retained complete authority. It was charged that:especially was this the case, as the stock in the companies selected for transfer was virtually owned by the nine trustees or the members of their immediate families or associates. The bill further alleged that in 1897 the Attorney-General of Ohio instituted contempt proceedings in the quo warranto case based upon the cláim that;-the trust had riot-been dissolved as required by the decree in that case. About the same time also proceedings in quo warranto were commenced to forfeit the charter of a pipe line known as the Buckeye Pipe Line Company, an *41Ohio corporation, whose stock, it was alleged, was owned by the members of the combination, on the ground of its connection with the trust which had been held to be. illegal.

The result of these proceedings, the bill charged, caused a resort to the alleged wrongful acts asserted to have been committed during the third period, as follows:

" That during the third period of said conspiracy and in pursuance thereof the said individual defendants operated through the Standard Oil Company of New Jersey, as a holding corporation, which corporation obtained and acquired the majority of the stocks of the various corporations engaged in purchasing, transporting, refining, shipping, and selling oil into and among the various States and Territories of the United States and the District of Columbia and with foreign nations, and thereby managed and controlled the same, in violation of the laws of the. United States, as hereinafter more particularly alleged.”

It was alleged that in or about the month of January, 1899, the individual defendants caused the charter of the Standard Oil Company of New Jersey to be amended; "so that the business and objects of said company were stated as follows, to wit: ‘To do all kinds of mining, manufacturing, and trading business; transporting goods and merchandise by land or water in any manner; to buy, sell, lease, and improve land; build houses, structures, vessels, cars, wharves, docks, and piers; to lay and operate pipe lines; to erect lines for conducting electricity; to enter into, and carry out contracts of every kind pertaining to its business; to acquire, use, sell, and grant licenses under patent rights; to purchase or otherwise acquire, hold, sell, assign, and transfer shares of capital stock and bonds or other evidences of indebtedness of corporations, and to exercise all the ‘privileges of ownership, including voting upon the stock so held; to carry on its business and have offices and agencies therefor in all parts of the world, and *42to hold, purchase, mortgage, and convey real estate and personal property oxitside the State of New Jersey.’ ”

The capital stock of the company — which since March 19, 1892, had been $10,000,000 — was increased to $110,000,000;' and the individual defendants, as theretofore, continued to be a majority of the board of directors.

Without going into detail it suffices to say that it was alleged in the bill that shortly after these proceedings the trust came to an end, the stock of the various corporations which had been' controlled by it being transferred by its holders to the- Standard Oil Company of New Jersey, which corporation issued therefor certificates of its common stock to the amount of $97,250,000. The bill contained allegations referring to the development of new oil fields, for example, in California, southeastern Kansas, northern Indian Territory, and northern Oklahoma, and made reference to the building or otherwise-acquiring by the combination of refineries and pipe lines in the new fields for the purpose of restraining and monopolizing the interstate trade in petroleum and its products.

Reiterating in substance the averments that both the Standard Gil Trust from 1882 to 1899 and the Standard Oil Company of New Jersey since 1899 had monopolized and restrained interstate commerce in petroleum and its products, the bill at great length additionally set forth various means by which during the second and third periods, in addition to the effect occasioned by the combination of alleged previously independent concerns, the monopoly and restraint complained of was continued.'' Without attempting to follow the elaborate averments on these subjects spread over fifty-seven pages of the printed record, it suffices to say that such averments may properly be groxxped under the following heads: Rebates, preferences and other discriminatory practises in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practises against com*43peting pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where íiecessary to suppress competition; espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent; the division of the United States into districts and the limiting of the operations of the various subsidiary corporations as to such disr tricts so that competition in the sale of petroleum products between such corporations had been entirely eliminated and destroyed; and finally reference was made to what was alleged to be the “enormous and unreasonable profits ” earned by the Standard Oil Trust and the Standard Oil Company as a result of the alleged monopoly; which presumably was averred as a means of réflexly inferring the scope and power acquired by the alleged combination.

Coming to the prayer of the bill, it suffices to say that in general terms the substantial relief asked was, first, that the combination in restraint of interstate'trade and commerce and which had monopolized the same, as alleged in the bill, be found to have existence and that the parties thereto be perpetually enjoined from doing any further act to give effect to it; second, that the transfer of the-stocks of the various corporations to the Standard Oil Company of New Jersey, as allegeddn the bill, be held to be in violation of the first and second sections of the Antitrust Act, and that the Standard Oil Company of New Jersey be enjoined and restrained from in any manner continuing to exert control over the subsidiary corporations by means of ownership of said stock or otherwise; third, that specific relief by injunction be awarded against further violation of the statute by any of the acts specifically complained of in the bill. There was also a prayer for general relief.

Of the. numerous defendants named in the bill, the Waters-Pierce Oil Company was the only resident of the *44district in which the suit was commenced and the only-defendant served with process therein. Contemporaneous with the filing of the bill the court made an order, under §' 5' of the Anti-trust Act, for the service of process upon all the other defendants, wherever they could be found. Thereafter the various defendants unsuccessfully moved to vacate the order for service on non-resident defendants or filed pleas to the jurisdiction. • Joint exceptions were likewise unsuccessfully filed, upon the ground of impertinence, to many of the averments of the bill of complaint, particularly those which related to acts alleged to have been done by the combination prior to the passage of the Anti-trust Act and prior to the year 1899.

Certain of the defendants filed separate answers, and a joint answer was filed on behalf of the Standard Oil Company of New Jersey and numerous of the other defendants. The spope of the answers will be adequately-indicated by' quoting a summary on the subject made in the brief for the appellants.

“It is sufficient to say that, whilst admitting many of the alleged acquisitions of property, the formation of the so-called trust .of 1882, its dissolution in 1892, and the acquisition by the Standard Oil Company of New Jersey of the stocks of the various corporations in 1899, they deny all the allegations respecting combinations or conspiracies to restrain or monopolize the oil trade; and particularly that the so-called trust of 1882, or the acquisition of the shares of the defendant companies by the Standard Oil Company of New Jersey in 1899, was a combination of independent or competing concerns or corporations. The averments of the petition respecting the means adopted to monopolize the oil trade are traversed either by a denial of the acts alleged or of their purpose, intent or effect.”

On June 24, .1907, the cause being at issue, a special examiner was appointed to take the evidence, and his report was filed March 22, 1909. It was heard on April 5 *45to 10,1909, under the expediting, act of February 11,1903, before a/Circuit Court consisting of four judges.

The court decided in favor of the United States. In the opinion delivered, all the multitude of acts of wrongdoing charged in'the bill were put aside, in so far as they were alleged to have been committed prior to the passage of the Anti-trust Act, “except as evidence of their (the defendants') purpose, of-their continuing conduct and of its effect.”. (173 Fed.'Rep. 177.)

By .the decree which was entered it was adjudged that the/C*ombining of the stocks of various companies in the hands of the. Standard Oil Company of New Jersey in 1899 constituted a combination, iff restraint; of trade and álso an attempt to monopolize and a monopolization under § 2 of the Anti-trust Act. The decree' was against seven individual defendants, the Standard Oil Company of New Jersey, thirty-six domestic companies and one foreign company which the Standard Oil Company of New Jersey controls by stock ownership; these 38 corporate .defendants being held to be parties to the combination found to exist.1

The bill was dismissed as to all other corporate defendants, 33 in number, it being adjudged by § 3 of the decree that they “have not been proved to be engaged in the operation-or carrying out of the combination.”2

*46The Standard Oil Company of New Jersey was enjoined from voting the stocksor exerting any control over the said 37 subsidiary companies, and the subsidiary companies were énjoined from paying any dividends as to the Standard Oil Company or permitting it to exercise any control over them'by virtue of the stock ownership or power acquired by means of the combination. The individuals and corporations were also enjoined from entering into or carrying into effect any like combination which would evade the decree. Further, the individual defendants, the Standard Oil Company, and the 37 subsidiary corporations were enjoined from engaging or continuing in interstate commerce in petroleum or its products during the continuance of the illegal combination.

At the outset a question of jurisdiction requires consideration, and we shall, also, as a preliminary, dispose of. another question, to the end that our attention may be completely concentrated upon the merits of the controversy when we come to consider them.

First. We are of opinion that in consequence of the presence within the district of the Waters-Pierce Oil Company, the court,' under the authority of § 5 of the Anti-trust Act, rightly took jurisdiction over the cause and properly ordered notice to be served upon the non-resident defendants.

Second. The overruling of the exceptions taken to so much of the bill as counted upon facts occurring prior to the passage of the Anti-trust Act, — whatever may be the. view as an original question of the duty to restrict the controversy to a much narrower area than that propounded by the bill, — we think by no possibility in the present stage of the case can the action of the court be treated as prejudicial error justifying reversal. We say this because the court, as we shall do, gave no weight to the testimony adduced under the averments complained of except in so far as it tended to throw light upon the jacts done after the *47passage of the Anti-trust Act and the results of which it was charged were.being participated in and enjoyed by the alleged combination at the time of the filing of the bill.

We are thus brought face to face with the merits of the controversy.

Both as to the law and as to the facts the opposing contentions pressed in the argument are numerous and in all their aspects are so irreconcilable that it is difficult to reduce them to some fundamental generalization, which by being disposed of would decide them all. For instance, as to the law. While both sides agree that the determination of the controversy rests upon the correct construction and application of the first and second sections of the Anti-trust Act, yet the views as to the meaning of the act are as wide apart as the poles, since there is no real point of agreement on any view of the act. And this also is the case as to the scope and effect of authorities relied upon, even although in some instances one and the same authority is asserted to be controlling.

So also is it as to the facts. Thus, on the one hand, with relentless pertinacity and minuteness of analysis, it is insisted that the facts establish that the assailed combination took its birth in a purpose to unlawfully acquire wealth by oppressing the public and destroying the just rights of others, and that its entire career exemplifies an inexorable carrying out of such wrongful intents, since, it is asserted, the pathway of the combination from the beginning to the time of the filing of the bill is marked with constant proofs of wrong inflicted upon the public and is strewn with the wrecks resulting from crushing out, without regard to law, the individual rights of others. Indeed, so conclusive, it is urged, is the proof on these subjects that it is asserted that the existence of the prin-' cipal corporate defendant — the Standard Oil Company of New Jersey — with the vast accumulation of property which it owns or controls, because of its infinite potency *48for harm and the dangerous example which its continued existence affords, is an open and enduring menace to all freedom of trade and is a byword and reproach to modern economic methods. On the other hand, in a powerful analysis of the facts, it is insisted that they demonstrate that the origin and development of. the vast business which the defendants control was but the result of lawful competitive methods, guided by economic genius of the highest order, sustained by courage, by a keen insight into, commercial situations, resulting in the acquisition of great wealth, but at the same time serving to stimulate and increase production, to widely extend the distribution of the products of petroleum at a cost largely below that which would have otherwise prevailed, thus proving to be. at one and the same time a benefaction to the general public as well as of enormous advantage to individuals. It is not denied that in the enormous volume of proof contained in the record in the period of almost a lifetime to which that proof is addressed, thére-may be found acts of wrongdoing, but the insistence is that they were rather-the exception than the rule, and in most cases were either the result of too great individual' zeal in the keen rivalries of business or of the methods and habits of dealing which, even if wrong, were commonly practised at. the time. And to discover and state the truth concerning these contentions both arguments call for the' analysis and weighing, as we have said at the outset, of. a jungle of. conflicting testimony covering a period of forty years, a duty difficult to rightly perform and, even-if.satisfactorily accomplished, almost impossible to state with any reasonable regard to brevity.

Duly appreciating the situation just stated, it is certain that only one point of concord between the parties is discernable, which is, that the controversy in-every aspect is controlled by a correct conception of the meaning of thé first and second sections of the Anti-trust. Act. We shall *49therefore — departing from what otherwise would be the natural'order of analysis — make this one point of har* mony the initial básis of our examination'of the contentions, relying upon the conception that, by doing so some harmonious resonance may result adequate to dominate and control 'the discord with which the case - abounds. That is to say, we shall first; come to consider'the meaning of the first and second sections of the' Anti-trust Act by the text, and after diseerning what by that proeess appears to be its true meaning wé shall proCeéd to consider the respective contentions of the parties concerning the act, the strength or weakness’df those contentions, as'well as the accuracy of the meaning of the act ás'dédüced fíbm the text in the light of the prior decisions of this Court com cerning it. When we have doné this-we-shall .then- approach the facts. Following this course we shall- make our investigation under four Separate héadings: First. The text of the first and second sections Of the act originally considered and its meaning in the'light of-the common law and .the law- of‘this country atthe time of its adoption. Second. The contentions of the parties concerning the act, and the scope and efféct of the decisions of this court upon which they rely.' Third. The application of the statute to facts, and, Fourth. The remedy, if any, to’ be afforded as the result Of such application.

First. The text of the act and its meaning.

We quote the text- Of the first and second sections of the act, as follows

“ Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint Of tráde or commerce, among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract; or engage in any such combination or conspiracy," shall be deemed guilty' of a misdemeanor, and, on conviction thereof,' shall be punished by fine not exceeding five thousand'dollars, or by *50imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.

“Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.” *

The debates show that doubt ás to whether there was a common law of the United States which governed the subject in the absence of legislation was among the influences leading to the passage of the act. They conclusively show, however, that the main cause which led to the legislation was the thought that it was required by the economic condition of the times, that is, the vast accumulation of wealth in the hands of corporations and individuals, the enormous development of corporate organization, the facility for combination which such organizations afforded, the fact that the facility was being used, and that combinations known as trusts were being multiplied, and the widespread impression that their power had been and would be exerted to oppress individuals and injure the public generally. Although debates may not be used as a means for interpreting a statute (United States v. Trans-Missouri Freight Association, 166 U. S. 318, and cases cited) that rule in the nature of things is not violated by resorting to. debates as a means of ascertaining the environment at the time of the enactment of a particular law, that is, the history of the period when it was adopted.

There can be no doubt that the sole subject with which the first section deals is restraint of trade as therein contemplated, aiSd "that the attempt to monopolize and monopolization is the subject with which the second sec*51tion is concerned. It is certain that those terms, at least in their. rudimentary meaning,'took their origin in the common law, and were also familiar iii the , law of this country prior to and at the-time of the adoption of the act in questipn. . .

We shall endeavor then; first to seek their meaning, not by indulging iii an elaborate and learned analysis of the' English law and of the law of this country, but by making a very brief reference to the elementary and indisputable conceptions of both the English and American law on the subject-prior to the passage of the Anti-trust Act.

a. It is certain .that át a very remote period the words “ contract M restraint of trade ” in England came to refer to some voluntary restraint put by contract by an individual on his right to'carry on his trade or calling. Originally' all such contracts were considered to be illegal, because it was deemed they were injurious to the public as well as to the individuals who. made them. In the interest of the freedom of individuals'to contract this doctrine was modi-, fied so that it was only* when a restraint by contract .was so general as to’ be coterminous with the kingdoih that it was treated as void. That is to say, if the restraint was partial in its operation and was ótherwise. reasonable the contract was held to be valid:

b. Monopolies were, defined by Lord Coke as follows:

“ ‘A monopoly is an institution, or allowance by the king by his grant, commission, or otherwise to any person or persons, bodies politic or corporate, of or for the sole. buying, selling) making, working, or using of anything, whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before, or hindered in their, lawful trade.' (3 Inst. 181, c. 85.)”

Hawkins thus defined them:

“ ‘A monopoly is an allowance by the king to a particular person or persons of the sole buying, selling, making, *52working, or using of anything whereby the subject in general is restrained from the freedom of manufacturing or trading which he had before.’ (Hawk. P. C. bk. 1, c. 29.) ”

The frequent granting of monopolies and the struggle which led to a denial of the power to create them, that is to say,, to the establishment that, they were incompatible with the English constitution is known to all and need not be reviewed. The evils which led to the public outcry against monopolies and to the final denial of the power to make them may be thus summarily stated: 1. The power which the monopoly gave to the one who enjoyed it to fix the price and thereby injure the public; 2. The power which it engendered of enabling a limitation on production; and, 3. The danger of deterioration in quality of the monopolized article which it was deemed was the inevitable resultant of the monopolistic control over its production and sale. As monopoly as thus conceived embraced only a consequence arising from an exertion of sovereign power, no express restrictions or prohibitions obtained against the creation by an individual of a monopoly as such. But as it was considered; at least so far as the necessaries of life were concerned, «that individuals by the abuse of their right to contract might be able to usurp the power arbitrarily to enhance prices, one of the wrongs arising from monopoly, it came to be that laws were passed relating to offenses such as forestalling, regrating and engrossing by which prohibitions were placed upon the power of individuals to deal under such circumstances and conditions as, according to the conception of the times, created a presumption that the dealings were not simply the honest exertion of one’s right to contract for his own benefit unaccompanied by <a wrongful motive to injure others, but were the consequence of a contract or course of dealing of such a character as to give rise,to .the presumption- of an intent to injure others through the means, for instance, of a monopolistic increase of prices. *53This is illustrated by the definition of engrossing found in the statute, 5 and 6 Edw. VI, ch. 14, as follows:

' "Whatsoever person or persons. . . . shall engross or get into his -or their hands by buying, contracting, ór promise-taking, other than by demise, grant, or lease of land, or tithe, any corn growing in the fields, or any other corn or grain, butter, cheese, fish, or other dead victual, whatsoever/ within the realm of England, to the intent to sell the-same again/, shall be'accepted, reputed, and taken art unlawful engrosser or engrossers.”

As by the Statutes providing- against engrossing the quantity.engrossed was^not required to be the whole or a" proximate part of the whole -of' an article, it is clear that there was a wide difference between monopoly and engrossing, etc. But as the principal wrong which it was deeméd* would result from monopoly, that is, an enhancement of the price, was the same wrong to which it was thought the prohibited engrossment would give rise, it came to pass that monopoly and engrossing wefe regarded as virtually one and the same thing. In 'other words, the prohibited act of engrossing because of its inevitable accomplishment of one of the evils .deemed to be engendered by monopoly, came to be referred to as being a monopoly or constituting an attempt to monopolize. . Thus Pollexfen, in his argument in East India Company v. Sandys, Skin. 165, 169, said:

"By common law, he said that/trade is free, and for that cited 3 Inst. 81; F. B. 65; 1 Roll. 4; that the common law is as much against ‘monopoly’ as ‘engrossing;’ and that they differ only, that a ‘monopoly’ is by patent from the king, the other is by the act of the subject between party and party; but that the mischiefs are the same from both, and there is the same law against both. Moore, 673; 11 Rep. 84. The sole trade of anything is ‘engrossing’ ex rei natura,. for whosoever hath the sole trade of buying and selling hath ‘engrossed’ that trade; and who*54soever hath the sole trade to any country, hath the sole trade of buying and selling the produce of that country, at his own price, which is an ‘engrossing.’ ”

And by operation of the mental process which led to considering as a monopoly acts which although they did not constitute a monopoly were thought to produce some of its baneful effects, so also because of the impediment or burden to the due course of trade which they produced, such acts came to be referred to as in restraint of trade. This is shown by my Lord Coke’s definition of monopoly as being “an'institution or allowance . . . whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before or hindered in their lawful trade.” It is illustrated also by the definition which Hawkins gives of monopoly wherein it is said that the effect of monopoly is to restrain the citizen “from the freedom of manufacturing or trading which he had before.” And see especially the opinion of Parker, C. J., in Mitchel v. Reynolds (1711), 1 P. Williams, 181, where á classification is made of monopoly which brings it generically within the description of restraint of trade.

Generalizing these considerations, the situation is this: 1. That by the common law monopolies were unlawful because of their restriction upon individual freedom of contract and their injury to the public. 2. That as to necessaries of life the freedom of the individual to deal was restricted where the nature and character of the dealing was such as to engender the presumption of intent to bring about at least one of the injuries which it was deemed would result from monopoly, that is an undue enhancement of price. 3. That to protect the freedom of contract of the individual not only in his own interest, but principally in the interest of the common weal, a contract of an individual by which he put an unreasonable restraint upon himself as to carrying on his trade or busi*55ness was void. And that at common law the evils consequent upon engrossing, etc., caused those things to be treated as coming within monopoly and sometimes to be called monopoly and the same considerations caused monopoly because of its operation and effect, to be brought within and spoken of generally as impeding the due course of or being in restraint of trade.

From the development of more accurate economic conceptions and the changes in conditions of society it came to be recognized that the acts prohibited by the engrossing, forestalling, etc., statutes did not have the harmful tendency which they were presumed to have when the legislation concerning them was enacted, and therefore did not justify the presumption which had previously been deduced from them, but, on the contrary, such acts tended to fructify and develop trade. See the statutes of 12th George III, ch. 71, enacted in 1772, and statute of 7 and 8 Victoria, ch. 24, enacted in 1844, repealing the prohibitions against engrossing, forestalling, etc., upon the express ground that the prohibited acts had come to be considered as favorable to the development of and not in. restraint of trade. It is remarkable (that nowhere at common law can there be found a prohibition against the creation of monopoly, by an individual. This would seem to manifest, either consciously or intuitively, a profound conception as to the inevitable operation of economic forces and the equipoise or balance in favor of the protection of the rights of individuals which resulted. That is. to say, as-it was deemed that monopoly in the concrete could only arise from an act of sovereign power, and, such sovereign power being restrained, prohibitions as to individuals were directed, not against the creation of monopoly, but were only applied to such acts in relation to particular subjects as to which it was deemed, if not restrained, some of the consequences of monopoly might result. After all, this was but an instinctive recognition *56of. the truisms that the course of trade could not be made free by obstructing it, and that axi individual’s right to trade could not be protected by destroying such right.

From the review just made it clearly results that outside • Of the restrictions resulting from the want of power in an •individual"to voluntarily and unreasonably restrain his right to carry on his trade or business and outside of the want'o'f right to restrain the free course of trade by contracts or acts which implied a wrongful purpose, freedom to contract and to abstain from contracting and to exercise every reasonable right incident thereto became the rule in the English law.. The scope and effect of this freedom to trade and contract is clearly shown by the decision in Mogul Steamship Co. v. McGregor (1892), A. C. 25. While it is true that the decision of the House of Lords in the case in question was announced shortly after the passage of the Anti-trust Act, it serves reflexly to show the exact • state "of the law in England at the time the Antitrust statute was enacted.

In this country also the acts from which it was deemed there resulted a part if not all of the injurious consequences ascribed to monopoly, came to be referred to as a monopoly itself. In other words, here as had been the case in England, practical common sense caused attention to be concentrated not upon the theoretically correct name to be given to the condition or acts which gave rise to a harmful result, but to the result itself and to the remedying of the evils which it produced. The statement just made is illustrated by an early statute of the Province of Massachusetts, that is, chap. 31 of the laws of 1778-1779, by which monopoly and forestalling were expressly treated as one and the same thing.

It is also true that while the principles concerning contracts in restraint of trade, that is, voluntary restraint put by a person on his right to pursue his calling, hence only operating subjectively, came generally to be recognized *57in accordance with the English rule, it came moreover to pass that contracts or acts which it was considered had a monopolistic tendency, especially those which were thought to unduly diminish competition and hence to enhance prices — in other words, to monopolize — came also in’a generic sense to be spoken of and treated as they had been in England, as restricting the due course of trade, and therefore as being in restraint of trade. The dread of monopoly as an emanation of governmental power, while it passed at an early date out of mind in this country, as a result of the structure of our Government, did not serve to assuage the fear as to the evil consequences which might arise from the acts of individuals producing or tending to produce the consequences of monopoly. It resulted that treating such acts as we have said as amounting to monopoly, sometimes constitutional restrictions, again legislative enactments or judicial decisions, served to enforce and illustrate the purpose to prevent the occurence of the evils recognized in the mother country as consequent upon monopoly, by providing against contracts or acts of individuals or combinations of individuals or, corporations deemed to be conducive to such results. To refer to .the constitutional or legislative provisions on the subject or many judicial decisions which illustrate it would unnecessarily prolong this opinion. We append in the margin a note to treatises, &c., wherein are contained references to constitutional and statutory provisions and to numerous decisions, etc., relating to the subject.1

It will be found that as modern conditions arose-the trend of legislation and judicial decision came more and more to adapt the recognized restrictions to new manifestations of conduct or of dealing which it was thought *58justified the inference of intent to do. the wrongs which it had been the purpose to prevent from the beginning. The evolution is clearly pointed out in National Cotton Oil Co. v. Texas, 197 U. S. 115, and Shawnee Compress Co. v. Anderson, 209 U. S. 423; and, indeed, will be found to be illustrated in various aspects by the decisions of this court which have been concerned with the enforcement of the act we are now considering. ■

Without going into detail and but very briefly surveying the whole field, it may be with accuracy said that the dread of enhancement of prices and of other wrongs which it was thought would flow from the undue limitation qn competitive conditions caused by contracts or other acts of individuals or corporations, led, as a matter of public policy, to the prohibition-or treating as illegal all contracts or acts which were unreasonably restrictive of competitive conditions, either from the nature or character of the contract or act or where the surrounding circumstances were such as to justify the conclusion that they had not been entered into or performed with the legitimate purpose of reasonably forwarding personal interest and developing trade, but on the contrary were of such a character as to give rise to the inference or presumption that they had been entered into or done with the intent to do wrong to the general public and to limit the right of individuals, thus restraining the free flow of commerce and tending to bring about the evils, such as enhancement of prices, which were considered to be against public policy. It is equally true to say that the survey of the legislation in this country on this subject from the beginning will show, depending as it did upon the economic conceptions which obtained at the time when the legislation was adopted or judicial decision was rendered, ‘that contracts or acts were at one time deemed to be of such a character as to justify the inference of wrongful intent which were at another period thought not to be *59of that character. But this again, as we have seen, simply-followed the line of development of the law of England.

Let us consider the language of the firsij and second sections, guided by the principle that where words are employed in a statute which had at the time a well-known meaning at common law or in the law of this country they are presumed to have been used in that sense unless the context compels to the contrary.1

As to the first section, the words to be interpreted aré: “Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce ... is hereby declared to be illegal.” As there, is no room for dispute that the statute was intended to formulate a rule for the regulation of interstate and foreign commerce, the question is what was the rule which it adopted?

In view of the common law and the law in this country as to restraint of trade, which we have feviewed, and the illuminating effect which that history must have under the rule to which we have referred, we think it results:

а. That the context manifests that the statute was. drawn in the light of the existing practical conception of the law of restraint -of trade, because it groups as within that class, not only contracts which were in restraint of trade in the subjective sense, but all contracts or ácts which theoretically wiere attempts to monopolize, yet which in practice had come to be considered as iii restraint of trade in a broad sense.

б. That in view of the many new forms of.contracts and combinations which were being evolved from existing economic conditions, it was deemed essential by an all-embracing enumeration to make sure that no form of contract or combination by which an undue restraint of *60interstate or foreign commerce was brought about could save such restraint from condemnation. The statute under this view evidenced the intent not to restrain the right to make and enforce contracts, whether resulting from combination or otherwise, which did not unduly restrain interstate or foreign commerce, but to protect that commerce from being Restrained by methods, whether old or new, which would constitute an interference that is an undue restraint.

c. And as. the contracts or acts embraced in the provision were not expressly defined, since the enumeration addressed itself simply to classes of acts, those classes being broad enough to embrace every conceivable contract or combination which could be made concerning trade or commerce or the subjects of such commerce, and thus caused any act., done by any of the enumerated methods anywhere in the whole field of human activity to be illegal if in restraint of trade, it inevitably follows that ■ the provision necessarily called for the exercise of judgment which required that some standard should be resorted to for the purpose of determining whether the prohibitions contained in the statute had or had not in any given case been violated. Thus not specifying but indubitably contemplating and requiring a standard, it follows that it was intended that the standard of reason which had' been applied at the commo^ law and in this country in dealing with subjects of the character embraced by the statute, was intended to be the measure used for the purpose of determining whether in a given case a particular act had or had not brought about the wrong against which the statute provided.

And a consideration of the text of the second section serves to establish that it was intended to supplement the first and to make sure that by no possible guise could the public policy embodied in the first section be frustrated or evaded. The prohibitions of the second embrace *61“Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons,, to monopolize any part of^the trade or commerce among the several states, or with ■ foreign nations, . •. .” By reference to the ternas of § 8 it ‘is certain that the word person'clearly implies a corporation, •as well as an individual.'.

The commerce .referred to by the words “any part” construed in the light of the manifest purpose of the statute has both a geographical, and a distributive significance, that is it includes any portion of theJJnited States and any One of the classes of things forming a part of interstate or foreign commerce.

Undoubtedly, the words “to monopolize” and.“monopolize” as used in the section reach every act bringing about the prohibited results. The ambiguity, if any, is involved in détermining'what is intended by monopolize. But.this ambiguity is readily dispelled in the light of the previous history of the law of restraint of trade to which we have referred and the indication which it .gives of the practical evolution by which monopoly and ..the acts which, produce the same result as monopoly,. that is, an undue restraint of the course of trade, all carné to be spoken of as, and to be indeed synonymous with, restraint .of trade. In other words, having by the first section forbidden all means of monopolizing trade, that is, unduly restraining it by means of every contract, combination, etc., the second section seeks, if possible, to make the prohibitions of the act all the more complete and perfect by embracing all attempts to reach the end prohibited by the first section, that is, restraints of trade, by any attempt to monopolize, or monopolization thereof, even although the acts by which such results are attempted to be brought about or are brought about be not embraced within the general-enumeration of the first section. And, of course, when the second section is thus harmonized with and made as it *62was intended to be the complement of the first, it becomes obvious that the criteria to be resorted to in any given case for the purpose of ascertaining whether violations of the section have been committed, is the rule of reason guided by the established law and by the plain duty to enforce the prohibitions of the act and thus the public policy which its restrictions were obviously enacted to subserve. And it is worthy of observation, as we have previously remarked concerning the common law, that although the statute by the comprehensiveness of the enumerations embodied in both the first and second sections makes it certain that its purpose was to prevent undue restraints of every kind or nature, nevertheless by the omission of any direct prohibition against monopoly in the concrete it indicates a consciousness that the freedom of the individual right to contract when not unduly or improperly exercised was the most efficient means for the prevention of monopoly, since the operation of the centrifugal and centripetal forces resulting from the right to freely contract was the means by which monopoly would be inevitably prevented if no extraneous or sovereign power imposed it and no right to make unlawful contracts having a monopolistic tendency were permitted. In other words that freedom to contract was the essence of freedom from undue restraint on the right to contract.

Clear as it seems to us is the meaning of the provisions of the statute in the light of the review which we have made, nevertheless before definitively applying that meaning it behooves us to consider the contentions urged on one side or the other concerning the meaning of the statute, which, if maintained, would give to it, in some aspects a much wider and in every view at least a somewhat different significance. And to do this brings us to the second question which, at the outset, we have stated it was our purpose to consider and dispose of.

*63 Second. The contentions of the parties as to the meaning of the statute and the decisions of this court relied upon concerning those contentions.

In substance, the propositions urged by the Government are reducible to this: That the language of the statute embraces every contract, combination, etc., in restraint of trade, and hence its text leaves no room for the exercise of judgment, but simply imposes the plain duty of applying its prohibitions to every case within its literal language. The error involved lies in assuming the matter to be decided. This is true because as the acts which may come under the classes stated in the first section and the restraint of trade to which thát section applies are not specifically enumerated or defined, it is obvious that judgment must in every case be called into play in order to determine whether a particular act is embraced within the statutory classes, and whether if the act is within such classes its nature or effect causes it to be a restraint of trade within the intendment of the act. To hold to the contrary would require the conclusion either that every contract, act or combination of any kind or nature, whether it operated a restraint on trade or not, was within the statute, and thus the statute would be destructive of all right to contract or agree or combine in any respect whatever, as to subjects embraced in interstate trade or commerce, or if this conclusion were not reached, then the contention would require it to be held that as the statute did not define the things to which it related and excluded resort to the only means by which the acts to which it relates could be ascertained — the light of reason — the enforcement of the statute was impossible because of its uncertainty. ■ The merely generic enumeration which the statute makes of the acts to which it refers and the absence of any definition of restraint of trade as used in the statute leaves room for but one conclusion, which is, that it was expressly designed not to unduly limit ¡the appli*64cation of the act by precise definition, but while clearly fixing a standard, that is, by defining the ulterior boundaries which could not be transgressed with impunity, to leave' it to be determined by the light of reason, guided by the principles of law and the duty to apply and enforce the public policy embodied in the statute, in every given ■case whether any particular act or contract was within the contemplation of the statute.

But, it is said, persuasive as these views may be, they may not be here applied, because the previous decisions of this court have given to the statute a meaning which expressly excludes the construction which must result from the reasoning státed. The cases are United States v. Freight Association, 166 U. S. 290, and United States v. Joint Traffic Association, 171 U. S. 505. Both the cases involved the legality of combinations or associations of railroads engaged in interstate commerce for the purpose of controlling the conduct of the parties to the association or combination iri many particulars. The association or combination was assailed in each case as being in violation of the statute. It was held that they were. It is undoubted that in the opinion in each case general language, was made use of, which, when separated from its context, would justify the conclusion that it was decided that reason could not be resorted to for the purpose of determining whether the acts complained of were within the statute. It is, however, also true that the nature and character of the contract or ágreement in each case was fully referred to and suggestipns as to their unreasonableness pointed out in order to indicate that they were within the prohibitions of the statute. As the cases cannot by any possible conception be treated as authoritative • without the certitude that reason was resorted to for the purpose of deciding them, it follows as a matter of course that it must have been held by the light of reason, since the conclusion could not have been otherwise reached, that the assailed *65contracts or agreements were within the general enumeration of the statute, and that their operation and effect brought about the restraint of trade which the statute prohibited. This being inevitable, the deduction can in reason only be this: That in the cases relied upon it having been found' that the acts complained of were within the statute and operated to produce the injuries which the statute forbade, that resort to reason was not permissible in order to allow that to be done which the statute prohibited. This being true, the rulings in the cases relied upon when rightly appreciated were therefore this and nothing more: That as considering the contracts or agreements, their necessary effect and the character of the parties by whom they were made, they were clearly restraints of trade within the purview of the statute, they could not be taken out of that category by indulging in general reasoning as to the expediency or non-expediency of having made the contracts or the wisdom or want of wisdom of the statute which prohibited their being made. That is to say, the cases but decided that the nature and character of the contracts, creating as they did a conclusive presumption which brought them within the statute, such result was not to be disregarded by the substitution of a judicial appreciation of what the law ought to be for the plain judicial duty of enforcing the law as it was made.

But aside from reasoning it is true to say that the cases relied upon do not when rightly construed sustain the doctrine contended for is established by all of the numerous decisions of this court which have applied and enforced the Anti-trust Act, since they all in the very nature of things rest upon the premise that reason was the guide by which the provisions of the act were in every case interpreted. Indeed intermediate the decision of the two cases, that is, after the decision in the Freight Association Case and before the decision in the Joint Traffic Case, the case of Hopkins v. United States, 171 U. S. 578, was de*66cided, the opinion being delivered by Mr. Justice Peck-ham, who wrote both the opinions in the Freight Association and the Joint Traffic cases. And, referring in the Hopkins Case to the broad claim made as to the rule of interpretation announced in the Freight Association Case, it was said (p.'592): “To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased would enlarge the application of the act far beyond the fair meaning of the language used. There must be some direct and immediate effect upon interstate commerce in order to come within the act.’’ And in the Joint Traffic. Case this statement was expressly reiterated and approved and illustrated by example; like limitation on the general language used in Freight Association and Joint Traffic Cases is also the clear result of Bement v. National Harrow Co., 186 U. S. 70, 92, and especially of Cincinnati Packet Co. v. Bay, 200 U. S. 179.

If the criterion by which it is to be determined in all cases whether every contract, combination, etc., is a restraint of trade within the .intendment of the law, is the direct or indirect effect of the acts involved, then of course the rule of reason becomes the guide, and the construction which we have given the statute, instead of being refuted by the cases relied upon, is by those cakes demonstrated to be correct. This is true, because as the construction which we have deduced from the., history of the act and the analysis of its text is simply that in every case where it is claimed that an act or acts are in violation of the statute the rule of reason, in the light of the principles of law and. the public policy which the act embodies, must be applied. From this it follows, since that rule and the result of the test as to direct or indirect, in their ultimate aspect, come to one and the same thing, that the difference between the two is therefore only that which obtains •between things which do not differ at all.

*67If it be true that there is this identity of result between the rule intended to be applied in the Freight Association Case, that is, the rule of direct and indirect, and the rule of reason which under the statute as we construe it should be here applied, it may be asked how was it that in the opinion in the Freight Association Case much consideration was given to the subject of whether the agreement or combination which was involved in that case could be taken out of the prohibitions of the statute upon the theory of its reasonableness. The question is pertinent and must be fully and frankly met, for if it be now de.emed that the Freight Association Case was mistakenly decided or too broadly stated, the doctrine which it announced should be either expressly overruled or limited.

Í The confusion which gives rise to the question results from failing to distinguish between the want of power to take a case which by its terms or the circumstances which surrounded it, considering among such circumstances the character of the parties, is plainly within .the statute, out of the operation of the statute by resort to reason in effect to establish, that the contract ought not to be treated as within the statute, and the duty in every case where it becomes necessary from the nature and character of the parties to decide whether it was within the statute to pass upon that question by the light of reason. This distinction, we think, serves to point out what in its ultimate conception was the thought underlying the reference to the-rule of reason made in the Freight Association Case, especially when such reference is interpreted by the context of the opinion and in the light of the subsequent .opinion in the Hopkins Case and in Cincinnati Packet Company v. Bay, 200 U. S. 179.

And in order not in the slightest degree, to be wanting in frankness, we say that in so far, however, as by separating the general language used in the opinions in the Freight Association and Joint Traffic cases from the con*68text and the subject and parties with which the cases were concerned, it may be conceived that the language referred to conflicts with the construction which we give the statute, they are necessarily now limited and qualified. -We see no possible escape from this conclusion if we are to adhere to the many cases decided in this court in which the Anti-trust Law has been applied and enforced and if the duty to apply and enforce that law in the future is to continue to exist. The first is true, because the construction which we now give the statute does not in the slightest degree conflict with a single previous case .decided concerning the Anti-trust Law aside from the contention as to the Freight Association and-Joint Traffic cases, and because every one of those casés applied the rule of .reason for the purpose of determining whether the subject before the court was within the statute. The second is also true, since, as we have already pointed out, unaided by the light of reason it is impossible to Understand how the statute.may in the future be enforced and the public policy which it establishes be made efficaciousj

So .far as the objections of the defendants are concerned they are all embraced under two headings:—

a. That the act, even if the averments of the bill be true, cannot be constitutionally applied, because to do so would extend the power of Congress to subjects dehors the reach of its authority to regulate, commerce, by enabling that body to deal with mere questions of production of commodities within the States. But all the structure upon which this argument proceeds is based upon the decision in United States v. E. C. Knight Co., 156 U. S. 1. The view, however, which the argument takes of that case and the arguments based upon that view have been so repeatedly pressed upon this court in connection with the interpretation and enforcement of the Anti-trust Act, and have been so necessarily and expressly decided to be unsound as to cause the contentions to be plainly foreclosed and to require no ex*69.press notice. United States v. Northern Securities Co., 193 U. S. 197, 334; Loewe v. Lawlor, 208 U. S. 274; Swift & Co. v. United States, 196 U. S. 375; Montague v. Lowry, 193 U. S. 38, Shawnee Compress Co. v. Anderson, 209 U. S. 423.

. 6. Many arguments are pressed in various forms of statement which in substance amount to contending that the statute cannot be applied.under the facts of this case without impairing rights of property and destroying the freedom of contract or trade, which is essentially necessary to the well-being of society .and which it is insisted is protected by the' constitutional guaranty of due process of law. But the ultimate foundation of aíl these arguments is the assumption that reason may not be resorted to in interpreting and applying th,e statute, and therefore that the statute unreasonably restricts the right to contract and unreasonably operates upon the right to acquire and hold property. As the premise, is demonstrated to be unsound by the construction we have given the statute, of course the propositions which rest upon that premise need not be further noticed. .

So far as the arguments proceed upon the conception that in view of the generality of the statute it is not susceptible of being enforced by the courts because it cannot be carried out without a judicial exertion of legislative power, they are clearly unsound. The statute certainly genericaily enumerates the character of acts which it prohibits and the wrong which it was intended to prevent. The propositions therefore but insist that, consistently with the fundamental principles of due process of law, it never can be left to the judiciary to decide whether in a given case particular acts come within a generic statutory provision. But to reduce' the propositions, however, to this their final meaning makes it clear that in substance they deny the existence of essential legislative authority and challenge the right of the judiciary to perform duties which that department of the government has exerted from *70the beginning. This is' so clear as to require no elaboration. Yet, let us demonstrate that which needs no demonstration, by a few obvious examples. Take for-instance the familiar cases where the judiciary is called upon to determine whether a particular act or acts ¿re within a given prohibition, depending upon wrongful intent. .Take.questions of fraud. Consider the power which must be exercised in every case where the courts are called upon to determine whether particular acts are invalid which are, abstractly speaking, in and of themselves valid, but which are asserted to be invalid because of their direct effect' upon interstate commerce.

We come then to the third proposition requiring consideration, viz

Third. The facts and the application of the statute to them,.

Beyond dispute the proofs establish substantially as alleged in the bill the following facts:

1. The creation of the Standard Oil Company of Ohio;

2. The organization of the Standard Oil Trust of 1882, and also a previous one of 1879, not referred to in the bill, and the proceedings in the Supreme Court-of Ohio, culminating in a decree based upon the finding that the company was unlawfully a party to that trust; the transfer by the trustees.of stocks in certain of the companies; the contempt proceedings; and, finally, the increase of the capital'of the Standard Oil Company of New Jersey and the acquisition by that company of the shares of the stock of the other corporations in exchange for its certificates.

The vast amount of property and the possibilities of far-reaching control which resulted from the facts last stated are shown by the' statement which we have previously annexed concerning the parties to the trust agreement of 1882, and the corporations whose stock was held by The trustees under the trust and which came therefore .to be held by the New Jersey corporation. But these statements do not with accuracy convey an appreciation of the *71situation as it existed at the time of the entry of the decree below, since during the more than ten years which elapsed between the acquiring by the New'Jersey corporation of the stock and other property which was formerly held by the trustees' under the trust agreement, the situation of course had somewhat changed, a- change which when analyzed in the light of the proof, we think, establishes that the result of enlarging the capital stock of the New Jersey company and giving it the vast power to which we have' referred’produced its normal consequence, that is, it gave to the corporation, despite enormous dividends and despite the dropping out of certain corporations enumerated in the decree of the court below, an enlarged arid more perfect sway and control over the trade and commerce in petroleum and its products. The ultimate situation referred to will be made manifest by an examination of §§ 2 and 4 of the decree below, which are excerpted in the margin.1 ____;___

*72Giving to the facts just stated, the weight which it was deemed they were entitled to, in the light afforded by the *73proof of other cognate facts and circumstances, the court below, held that the acts and dealings established by the *74proof operated to destroy the “potentiality of competition” which otherwise would have existed to such an extent as to cause the transfers of stock which were made to the New Jersey corporation and the control which resulted over the many and various subsidiary corporations to be a combination or conspiracy in restraint of trade in violation of the first section of the act, but also to be an attempt to monopolize and a monopolization , bringing about a perennial violation of the second section.

We see no cause to doubt the correctness of these conclusions, considering the subject from every aspect, that .is, both in view of the facts established by the record and the necessary operation and effect of the law as we have *75construed it upon the inferences deducible from the lacts, for the following reasons:

a. Because the unification of power and control over petroleum and its products which was the inevitable result of the combining in the New Jersey corporation byr the increase of its stock and the transfer to it of the stocks of so many other corporations, aggregating so vast a capital, gives rise, in and of itself, in the absence of countervailing circumstances, to say the least, to the prima facie presumption of intent and purpose to maintain the dominancy over the oil industry, not as a result of normal methods of industrial development, but by new means of combination which were resorted to in order that greater .power might be added than would otherwise have arisen had normal methods been followed, the whole with the purpose of excluding others from the trade and thus centralizing in the combination a perpetual control. of the movements of petroleum and its products in the channels of interstate commerce.

b. Because the prima facie presumption of intent to restrain trade, to monopolize and to bring about monopolization resulting from the act of expanding the stock of the New Jersey corporation and vesting it with such vast control of the oil industry, is made conclusive by considering, 1, the conduct of the persons or corporations who were mainly instrumental in bringing about the extension of power in the New Jersey corporation before the consummation of that result and prior to the formation of the trust agreements of 1879 and 1882: 2, by,considering the proof- as to what was done under those agreements and .the acts which immediately preceded the vesting of power .in the New Jersey corporation as well as by weighing the ' modes in which the power vested in that corporation has been exerted and the results which have arisen from it.

Recurring to the acts doné by the individuals or corporations who were mainly instrumental in bringing about the *76expansion of the New Jersey corporation during the period prior to the formation of the trust agreements of 1879 and 1882, including those agreements, not for the purpose of weighing the substantial merit of the numerous charges of wrongdoing made during such period, but solely as an aid for discovering intent and purpose, we think no disinterested mind can survey the period in question without being irresistibly driven to the conclusion that the very geriius for commercial development and organization which it would seem was manifested from the beginning soon begot an intent and purpose to exclude others which was frequently manifested by acts and dealings wholly inconsistent with the theory that they were made with the single conception of advancing the development of business power by usual methods, but which on the contrary necessarily involved the intent to drive others from the field and to exclude them from their right to trade and thus accomplish the mastery which was the end in view. And, considering the period from the date of the trust agreements of 1879 and 1882, up' to the time of the expansion of the New Jersey corporation, the gradual extension of the power over the commerce in oil . which ensued, the decision of the Supreme Court of, Ohio, the tardiness or reluctance in conforming to the commands of--that decision, the method first adopted and that which finally culminated in the plan of the New Jersey corporation, all additionally serve to make manifest the continued existence of the intent which we have previously indicated and which among other things impelled the expansion of the New Jersey corporation. The exercise of the power which resulted from that organization fortifies. the foregoing conclusions, since the development which came, the acquisition here and there which ensued of every efficient means by which competition could have been asserted, the slow but. resistless methods which followed by which, means-of transportation were absorbed and brought under control, *77the system of marketing which was adopted by which the country was divided into districts and the trade in each district in oil was turned over to a designated corporation within the combination and all others were excluded, all lead the mind up to a conviction of a purpose and intent which we think is so certain as practically to cause the subject, not to be within the domain of reasonable contention.

The inference that no attempt to monopolize could have been intended, and that no monopolization resulted from the acts complained of, since it is established that a very small percentage of the crude oil produced was controlled by the combination, is unwarranted. As substantial power . ovei; the crude product was the inevitable result of the absolute control which existed over the refined product, the monopolization of the one carried with it the power to control the other, and if the inferences which this situation suggests were developed, which we deem it unnecessary to do, they might well serve to add additional cogency to the presumption of intent to monopolize which we have found arises from the unquestioned proof on other subjects.

We are thus brought to the last subject which we are called upon to consider, viz:

Fourth. The remedy to he administered.

It may be conceded that ordinarily where it was found that acts had i been done in violation of the statute, adequate measure of relief would result from restraining the doing of such acts in the future. Swift v. United States, 196 U. S. 375. But in a case like this, where the condition which has been brought about in violation of the statute, in and of itself, is not only a continued ¿ttempt to monopolize, but also a monopolization, the duty to enforce the statute requires the application of broader and more controlling remedies. As penalties which áre not authorized by law may not be inflicted by judicial authority, it follows that to meet the situation with which we are confronted *78the application of remedies two-fold in character becomes essential: 1st, To forbid the doing in the future of ácts like those which we have found to have been done in the past which would be violative of the statute. 2d. The exertion of such measure of relief as will effectually dissolve the combination found to exist in violation of the. statute, and thus neutralize the extension and continually operating force which the possession of the power unlawfully obtained has brought and will continue to bring about.

In applying remedies for this purpose, however, the fact must not- be overlooked that- injúry to the public by the prevention of an undue restraint, on, or the monopolization of trade or commerce is.the foundation upon which the prohibitions of the statute rest, and moreover that one of the fundamental purposes of the statute is to protect, not to destroy, ^fights of property. ■

Let us then, as a means of accurately determining what relief we.are to- afford, first -come to consider what relief was afforded by the court below, in order to fix how far it is necessary to take from or add to that relief, to the end that the prohibitions-of the statute.jjiay have complete and operative force.

The court below by virtue of §§ 1, 2, and 4 of its decree, which we have in part previously excerpted in the margin, adjudged that the New Jersey corporation in so far as it held the stock of the various corporations, recited in §§ 2 and 4 of the decree, or-controlled the same was a combination in violation of the first section of the act,, and an attempt to monopolize or a monopolization contrary to the second section of the act. It commanded the dissolution of the combination, and therefore in' effect, directed the transfer by the New Jersey corporation back to the stockholders of the various subsidiary corporations entitled to the same of the stock which had been turned over to the New Jersey company in exchange for its stock. To *79make this command effective § 5 of the decree forbade the New Jersey corporation from in any form Or maimer exercising any ownership or exerting any power directly or indirectly- ip virtue of its apparent title to the stocks of the subsidiary corporations, and prohibited those subsidiary corporations from paying any dividends to the New Jersey-corporation or-doing any act which would recog-' nize further power in that company, except to the extent . that it was necessary to enable that company to transfer . the stock. So far as the owners of the stock of the subsidiary corporations, and the corporations themselves were concerned after the stock had been transferred, § 6 of the decree enjoined them from in any way conspiring or combining.to violate the. act or to monopolize or attempt to monopolize in virtue of their ownership of the stock .transferred to them, and prohibited all .agreements between the .subsidiary corporations or other stockholders in the future, • tending to produce or. bring about further violations of the act.

""By §7, pending.the accomplishment of the dissolution óf the combination by the transfer of stock, and until it was consummated, thg 'defendants.named in § 2, constituting all the corporations to which we have referred, were enjoined from engaging in or carrying on interstate commerce. And by § 9-,' among other things a delay of thirty days was granted for the carrying into effect of the directions of the decree.

. So far as the decree held that the ownership of the stock of the New Jersey corporation constituted' a-combination in violation of the first section and an attempt to create a monopoly or to monopolize under the second section and commanded the dissolution of the combination, the decree was clearly appropriate. And this also is true of § 5 of the decree which restrained both the New Jersey corporation and the subsidiary corporations from doing anything which would recognize dr give effect to further ownership *80in the New Jersey corporation of the stocks which were ordered to be retransferred.

But the contention is that, in so far as the relief by way of injunction which was awarded by § 6 against the stockholders of the subsidiary corporations or the subsidiary corporations themselves after the. transfer of stock by the New Jersey corporation was completed in conformity to the decree, the relief awarded was too broad; a. Because it was not sufficiently specific and tended to cause those who were within the embrace of the order to cease to be under the protection of the law of the land and required them to thereafter conduct their business under the jeopardy of punishments for contempt for violating a general injunction. New Haven R. R. v. Interstate Commerce Commission, 200 U. S. 404. Besides it is said that the restraint imposed by § 6 — even putting out of view the consideration just stated — was moreover calculated to do injury to the public and it may be in and of itself to produce the very restraint on the due course of trade which it was intended to prevent. We say this since it does not necessarily follow because an illegal restraint of trade or an attempt to monopolize or a monopolization resulted from the combination and the transfer of the stocks of. the subsidiary corporations to the New Jersey corporation that a like restraint or attempt to monopolize or monopolization would necessarily arise from agreements between one or more of the subsidiary corporations after the transfer of the stock by the New Jersey corporation. For illustration, take the pipe lines. By the effect of the transfer of the stock the pipe lines would come under the control of various corporations' instead of being subjected to a uniform control. If various corporations, owning the lines determined in the public interests u *ó. combine as to make a continuous line, such agreement or' Combination would, not be repugnant to the act, and yet it might be restrained by the decree. As another example, take the *81Union Tank Line Company, one of the subsidiary corporations, the owner practically of all the tank cars in use by the combination. If -no possibility existed of agreements for the distribution of these cars among the subsidiary corporations,. the most serious detriment to the public interest might'result. Conceding the merit, abstractly considered, of these contentions they are irrelevant. We so think, since we construe the sixth paragraph of the decree, not as depriving the stockholders or the corporations, after the dissolution of the combination, ■ of the power to make normal and lawful contracts or agreements, but as restraining them from, by any device whatever, recreating directly or indirectly the illegal combination which the decree, dissolved. In other words we construe the sixth paragraph of the decree, not as depriving the stockholders or corporations of the right to live under the law of the land, but as compelling obedience to that law. As therefore the sixth paragraph as thus construed is not amenable to the criticism directed against it and cannot produce the harmful results which the arguments suggest it whs obviously right. We think that in view of the magnitude of the interests involved and their complexity that the delay of thirty days allowed for executing the decree was too short and should be extended so as to embrace a period of at least six months. So also, in view of the possible serious injury to result to the public from an absolute cessation of interstate commerce in petroleum and its products by such vast agencies as are embraced in the combination, a result which might arise from that portion of the decree which enjoined carrying on of interstate commerce not only by the New Jersey corporation but by all the subsidiary companies until the dissolution of the combination by the transfer of the stocks in accordance with the decree, the injunction provided for in § 7- thereof should not have been- awarded.

Our conclusion is that the decree below was right and *82should be affirmed, except as to the minor matters concerning which we have indicated the decree should be modified. Our order will therefore be one of affirmance with directions, however, to modify the decree in accordance with this opinion. The court below to retain jurisdiction to the extent necessary to compel compliance in every respect with its decree.

And it is so ordered.

Mr. Justice Harlan

concurring in part, and dissenting in part. .

A sense of duty constrains me to express the objections which I have to certain declarations in the opinion just delivered on behalf of the court.

I concur in holding that the Standard Oil Company of New Jersey and its subsidiary companies constitute a combination in restraint of interstate commerce, and that they have attempted to monopolize and have monopolized parts of such commerce — all in violation of what is known as the Anti-trust Act of 1890. 26 Stat. 209, c. 647. The evidence in this case overwhelmingly sustained that view ■and led the Circuit Court, by its final decree, to order the dissolution of the New Jersey corporation and the discontinuance of the illegal combination between that corporation and its subsidiary companies.

.In my judgment, the decree below should have been affirmed without qualification. But the court, while affirming the decree, directs some modifications in respect of what it characterizes as “minor matters.” It is to be apprehended that those modifications may prove to be mischievous. In saying this, I have particularly in view . the statement in the opinion that “it does not necessarily follow that because an illegal restraint of trade or an attempt to monopolize or a monopolization resulted from the combination and the transfer of the stocks of the subsidiary corporations to the New Jersey corporation,.. *83that a like restraint of trade or attempt to monopolize or monopolization would necessarily arise from agreements between one or more of the subsidiary corporations after the transfer of the stock by the New Jersey corporation.” Taking this language, in connection with other parts of the opinion, the subsidiary companies are thus, in effect, informed — unwisely, I think — that although the New' Jersey corporation, being an illegal combination, must go out of existence, they may join in an agreement to restrain commerce among the States if such restraint be not “undue.”

In order that my objections to certain parts of the court’s opinion may distinctly appear, I must state the circumstances under which Congress passed the Antitrust Act, and trace the course of judicial decisions as to its meaning and scope. This is the more necessary because the court by its decision, when interpreted by the language of its opinion, has not only upset the long-settled interpretation of the act, ■ but has usurped the constitutional functions of the legislative branch of the. Government. With all due respect for the opinions of others, I feel bound to say that what the court has said may well cause some alarm for the integrity of our institutions. bet us see how the .matter stands.

All who recall the condition of the country in. 1890 will' remember that there was everywhere, among the people generally, a deep feeling of unrest. The Nation had been rid of human slavery — fortunately, as all now feel — but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people, namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit' and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life. Such a danger was thought to be then *84imminent, and all felt, that it must be .met firmly and by such statutory regulations, as would adequately protect the people against oppression and wrong. Congress therefore took up the matter and gave the whole subject the fullest consideration.. All agreed that the National Government could not, by legislation, regulate the domestic trade carried.On wholly within the several States; for, power to regulate such trade remained with, because never surrendered by, the States. But, under authority expressly granted to it by the Constitution, Congress could regulate commerce among the several States and with foreign states.. Its- authority to regulate such commerce was and is paramount, due force being given to other provisions of the fundamental law devised by the fathers for the safety of the Government and for the protection '"and security of the essential rights inhering in life, liberty and property.

. Guided by these considerations, and to the end that the people,, so far as interstate commerce was concerned, might not be dominated by vast combinations , and monopolies, having power to advance their own selfish ends, regardless of. the general interests and. welfare, Congress passed the. Anti-trust Act of 1890 in these words (the italics here and'elsewhere in this-opinion are mine): •

' “Sec. sl. Every contract, combination in the form of ' trust or, otherwise, or conspiracy, in restraint of trade or commerce among the. several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make hny such CQntract or engage in any such combination or. conspiracy,, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall- be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion, of. the court. . § 2. Every person who shall monopolize, or attempt to ^monopolize, or combine or conspire with any other person or persons, *85to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. § 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade- or commerce in any Territory of the United States or in the District of Columbia, or in restraint'of trade or commerce between any such-Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by' imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.” 26 Stat. 209, c. 647.

The important inquiry in the present case is as to the meaning and scope of that act in its application to interstate commerce.

In 1896 this court had occasion to determine the meaning and scope of the act in an important case known as the Trans-Missouri Freight Case. 166 U. S. 290. The question there was as to the validity under the Anti-trust Act of a certain agreement between numerous railroad companies, whereby they formed an association for the purpose of establishing and maintaining rates, rules and regulations in respect of freight traffic over specified routes. Two questions were involved: first, whether the act applied to railroad carriers; second, whether the agreement the annulment of which as illegal was the basis of the suit which the United States brought. The court *86.held that railroad carriers were embraced by the act. In determining that question, the court, among other things, said:

“ The language of the act includes every contract, combination in the form of trust or otherwise, or conspiracy, in restraint'of trade or commerce among the several State's or with foreign nations. So far as the very terms of the statute go, they apply to any contract of the nature described. A -contract therefore that is in restraint of trade or commerce is,. by the strict language of the' act prohibited, even though such contract is entered into between competing common carriers by railroad, and only for the purposes of thereby affecting traffic rates for .the transportation of persons and property. If such an agreement restrains trade or commerce, it is prohibited by the statute, unless it can be said that an agreement, no matter what its terms, relating only to transportation cannot restrain trade or commerce. We see no escape from the conclusion that if an agreement of such a nature does restrain it, the agreement is condemned by this act.. . . . Nor is it, for the substantial interests of the country that any one commodity should be within the sole'power and subject to the sole will of one powerful combination of capital. Congress has, so far as its jurisdiction extends, prohibited all contracts or combinations in the form of trusts entered into for the purpose of restraining trade and commerce. .• ... While the statute prohibits all combinations in the form of trusts or otherwise, the limitation is not confined to that form alone. All combinations which are in' restraint of trade or commerce are prohibited, whether in the form of trusts or in any other form whatever.” United States v. Freight Assn., 166 U. S. 290, 312, 324, 326.

The court then proceeded to consider the second of the above, questions, saying: "Thf liext question to be discussed is as to wliat is the true construction of the statute, *87assuming that it applies to common carriers by railroad. What is the meaning of the languagé as used in the stat.ute, that 'every contract,- combination injthe form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States or .with foreign nations, is hereby declared to be illegal? ’ Is it confined to a contract or combination which is only in unreasonable restraint of trade or commerce, or does it include what the language of the act plainly and in terms covers, all contracts of that nature? It is now with much amplification of argument urged that the statute, in declaring illegal every combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, does not mean what the language used therein plainly imports, but that it only means to declare illegal any such contract which is in unreasonable restraint of trade, while leaving all others unaffected by the provisions of the act; that the common law meaning.of the term 'contract.in restraint of trade’ includes only such contracts as are in unreasonable restraint of trade, and when that term is used in the Federal statute it .is not intended to include all contracts, in restraint of trade, but only those which are in unreasonable restraint thereof. ... . By the simple use of the term 'contract in restraint of trade,’ all contracts of that nature, whether valid or otherwise, would be included, and not alone that kind of contract which wasr invalid and unenforceable as being in unreasonable restraint of trade. When, therefore, thé body of an act pronounces •as illegal every contract or combination in restraint of trade or commerce among the several States, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which, is in unreasonable restraint of' trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has" been omitted by Congress. ... If only that kind of contract *88which is in unreasonable restraint of trade be within the. meaning of . the statute, and declared therein to be illegal, it is at once apparent that the subject of what is a reasonable rate is attended with great uncertainty. ■. . . To say, therefore,) that the act excludes-agreements which are not in unreasonable restraint of trade, and which tend simply to keep up reasonable rates , for transportation, is substantially to leave the question of unreasonableness to the companies themselves. . . . But assuming that agreements of this nature are not void at common law and that the various cases cited by the learned courts below show it, the answer to the statement of their validity now is to be found in the terms of the statute under consideration. . . . The arguments which have been addressed to us against the inclusion of all contracts in restraint of trade, as provided for by the language of the act, have been based upon the alleged presumption that Congress, notwithstanding the language of the act, could not have intended to embrace all contracts, but only such contracts as were in unreasonable restraint of trade. Under these circumstances we are, therefore, asked to ..hold that the act of Congress excepts contracts which áre not in unreasonable restraint of trade, and which" only keep rates up to a reasonable price, notwithstanding the language of the act makes no such exception. In other words, we are asked to read into the act by way of judicial legislation an exception that is not placed there by the lawmaking branch of the Government, and this is to be done upon the theory that the impolicy of such legislation is so clear that it cannot be supposed Congress intended the natural import of the language it used. This we cannot and ought not to do. . . .

“If the act ought to read, as contended for by defendants, Congress is the body to amend it and not this court, by a process of judicial legislation wholly unjustifiable. Large numbers do not agree that the view taken by defendants *89is sound or true in substance, and Congress may and very probably did share in that belief in passing the act. The public policy of the Government is to be found in its statutes, and when they have not directly spoken, then in the decisions of the courts and the constant practice of the government officials; but when the lawmaking power speaks upon a particular subject, over which it has constitutional power to legislate, public policy in such a case is what the statute enacts. If the law prohibit any contract or combination in restraint of trade or commerce, a contract or combination made in violation of such law is void, whatever may have been theretofore decided by the courts to have been the public policy of the country on that subject. The conclusion which we have drawn from the examination above made into the question before us is that the Anti-trust Act applies to railroads, and that it renders illegal all agreements which are in restraint of trade or commerce as we have above defined that expression, and the question then arises whether the agreement before us is of that nature.”

I have made these extended extracts from the opinion, of the court in the 'Txans-Missouri Freight Case in order to show beyond question, that the point was there urged by .counsel that'the Anti-trust Act condemned only contracts, combinations,'trusts and conspiracies that were in unreasonable restraint of interstate commerce, and that the .court in clear and decisive language met that point. It adjudged that Congress had in unequivocal words declared that “every contract, combination, in the form of trust or otherwise, or conspiracy, in restraint of commerce among the several States” shall be illegal, and that no distinction, so far as interstate commerce was concerned, was to be tolerated between restraints of such commerce as -were undue or unreasonable, and restraints that were due or reasonable. With, full knowledge of the then condition of the country and of its business, Congress- deter*90mined to meet, and did meet, the situation by an absolute, statutory prohibition of “every contract, combination in the form of trust or otherwise, in restraint of trade or commerce.” Still more; in response to the suggestion by able counse' that Congress intended only to strike down such contracts, combinations and monopolies as unreasonably restrained interstate commerce, this court, in words too clear to be misunderstood, said that to so hold was “to read into the act by way of judicial, legislation, an exception not placed there by the law-making branch of the Government.” “This,” the court said, as we have seen. “we cannot and ought not to do.”

It thus appears that fifteen years ago, when the purpose of Congress in passing the Anti-trust Act was fresh in the minds of courts, lawyers, statesmen and the general public, this court expressly declined to indulge in judicial legislation, by inserting in the act the word “unreasonable” or any other word of like import. It may be stated here that the country at large accepted this view of the act, and the Federal courts throughout the entire country enforced its provisions according to the interpretation given in the Freight Association Case. What, then, was to be done by those who questioned the soundness of the interpretation placed on the act by this court in that case? As the court had decided that to insert the word “unreasonable” in the act would be.t “judicial legislation” on its part, the only alternative left to those who opposed the decision in that case was to induce Congress to so amend the act as to recognize the right to restrain interstate commerce to a reasonable extent. The public press, magazines and law journals, the debates in Congress, speeches and addresses ..by public men and jurists, all contain abundant evidence of the general understanding that the meaning, extent and scope of the Anti-trust Act had been judicially determined by this court, and that the only question remaining open for discussion was the *91wisdom of the policy declared by the act — a matter that was exclusively within the cognizance of Congress. But at every session of Congress since the decision of 1896, the lawmaking branch of the Government, with full knowledge of that decision, has refused to change the policy it had declared or to so amend the act of 1890 as to except from its operation contracts, combinations and trusts that reasonably restrain interstate commerce..

But those who were in combinations that were illegal did not despair. They at once set up the baseless claim that the decision of 1896 disturbed the “business interests of the country,” and let it be known that they would never be content until the rule was established that would permit interstate commerce to be subjected to reasonable restraints. Finally, an opportunity came again to raise the same question which this court had, upon full consideration, determined in 1896. I now allude to the case of United States v. Joint Traffic Association, 171 U. S. 505, decided in 1898. What was that case?

It was a suit by the United States against more than thirty railroad companies to have the court declare illegal,, under the Anti-trust Act, a certain agreement between these companies. The relief asked was denied in the subordinate Federal courts and the Government brought the case here.

It is important to state the points urged in that case by the defendant companies charged with violating the Anti-trust Act, and to show that the court promptly met them. To that end Í make a copious extract from-the opinion in the Joint Traffic Case. Among other things, the court said: “Upon comparing that agreement [the one in the Joint Traffic Case, then under consideration, 171 U. S. 505] with the one set forth in the case of United States v. Trans-Missouri Freight Association, 166 U. S. 290, the great similarity between them suggests that a similar result should b.e reached in the two cases” (p. 5581. *92Learned counsel in the Joint Traffic Case urged a reconsideration of the question decided in the Trans-Missouri Case contending that “the decision in that case [the Trans-Missouri Freight Case] is quite plainly erroneous, and the consequences pf such error are far reaching and disastrous, and clearly at war with justice and sound policy, and the construction placed upon the Anti-trust statute has been received by the public with surprise and alarm.” They suggested , that the point made in the Joint Traffic Case as to the meaning and scope of the act might have been but was not made in the previous case. The court said (171 U. S. 559) that “the report of the Trans-Missouri Case clearly shows not only that the point now taken was there urged upon the attention of the court, but it was then intern-tionally and necessarily decided.”

The question whether the court should again consider the point decided in the Trans-Missouri Case, 171 U. S. 573, was disposed of in the most decisive language, as follows: “Finally, we are asked to reconsider the question decided in the Trans-Missouri Case, and to retrace the steps taken therein, because of the plain error contained in that decision and the widespread alarm with which it was received and the serious consequences which have resulted, or may soon result, from the law a»s interpreted in that case. It is proper to remark that an application for a reconsideration of a question but lately decided by this court is usually based upon a statement that some of the arguments employed on the original hearing of the question have been overlooked or misunderstood, or that some controlling authority has been either misapplied by the court or passed over without discussion or notice. While this is not strictly an application for a rehearing in the same case, yet in substance it is the same thing. The court is asked to reconsider a question but just decided after a careful investigation of the matter involved. There have heretofore been in effect two arguments of precisely the same *93questions now before the court, and the same arguments were addressed to us on both those occasions. The report of the Trans-Missouri Case shows a dissenting opinion delivered in that case, and that the opinion was concurred in by three other members of the court. That opinion, it will be seen, gives with great force and ability the arguments against the decision which was finally arrived at by the court. It was after a full discussion of the' questions involved and with the knowledge of the views entertained by the minority as expressed in the dissenting opinion, that the majority of the court came to the conclusion if did. Soon after the decision a petition for a rehearing of the case was made, supported by a printed argument in its favor, and pressed with an earnestness and vigor and at a length which were certainly commensurate with the importance of the case. This court, with care and deliberation and also with a full appreciation of their importance, again considered the questions involved in its former decision. A majority of the court once more arrived at the conclusion it had first announced, and accordingly it denied the application. ■ And now for the third time the saíne arguments are. employed^ and the court is again asked to recant its former opinion, and to 'ddcide the. same question in direct opposition. to the conclusion arrived at in the, Trans-Missouri Case. The learned counsel while making the application frankly confers that the argument in opposition to the decision in the case above named has. been so fully, so clearly and so forcibly -presented in the dissenting opinion of Mr. Justice White [in the Freight Case] that it is hardly possible to add to it, nor is it necessary to repeat it. The fact that there was so close a division of opinion in this court when the matter was first under advisement, together with the different views taken by some of the judges of the lower courts, led us to the most careful and scrutinizing examination of the arguments advanced by both sides, and it was after such an examination that the majority of *94the court came to the conclusion it did. - .It is-not now alleged that the court on the former occasion overlooked any argument for the respondents or misapplied any controlling authority. It is simply insisted that the court, notwithstanding the arguments for an opposite view, arrived at an erroneous result, which, for reasons already stated, ought to be reconsidered and reversed. As we have twice already deliberately and earnestly considered the same arguments which are now for a third time pressed upon our attention, it could hardly be expected that our opinion should now change from that already expressed.”

These utterances, taken in connection with what was previously said in the Trans-Missouri Freight Case,.show so clearly and affirmatively as to admit of no doubt that this court, many years ago, upon thg fullest consideration, interpreted the Anti-trust Act as prohibiting and making illegal not only every contract or combination, in whatever form, which was in restraint of interstate commerce, without regard to its reasonableness or unreasonableness, but all monopolies or attempts to monopolize “any part” of such trade or commerce. Let me refer to a few other cases in which the scope of the decision in the Freight Association Case was referred to: In Bement v. National Harrow Co., 186 U. S. 70, 92, the court said: “It is true that it has been held by this court that the act (Anti-trust Act) included any restraint of commerce, whether reasonable or unreasonable ” — citing United States v. Trans-Missouri Freight Asso., 166 U. S. 290; United States v. Joint Traffic Association, 171 U. S. 505; Addyston Pipe &c. Co. v. United States, 175 U. S. 211. In Montague v. Lowry, 193 U. S. 38, 46, which involved the validity, under the Anti-trust Act, of a certain association formed for the sale of tiles, mantels, and grates, the court referring to the contention that the sale of tiles in San Francisco was so small-“ as to be a negligible quantity,” held that, the association was nevertheless a combination in restraint of interstate trade or com*95merce in violation of the Anti-trust Act. In Loewe v. Lawlor, 208 U. S. 274, 297, all the members of this court concurred in saying that the Trans-Missouri, Joint Traffic arid Northern Securities cases “hold in effect that the Antitrust Law has a broad0r application than the prohibition of restraints of trade unlawful at common law.” In Shawnee Compress Co. v. Anderson (1907), 209 U. S. 423, 432, 434, all the members of the court again concurred in declaring that “it has been decided that, not only unreasonable but all direct restraints of trade are prohibited, the law being thereby distinguished from the common law.” In United States v. Addyston Pipe Company, 85 Fed. Rep. 271, 278, Judge Taft, speaking for the Circuit Court of Appeals for the Sixth Circuit, said that according to the decision of this court-iri the Freight Association Case, “contracts in restraint of interstate transportation were within the statute, whether the restraints could be regarded as reasonable at common law or not.” .In Chesapeake & Ohio Fuel Co. v. United States (1902), 115 Fed. Rep. 610, 619, the Circuit Court of Appeals for the Sixth Circuit, after referring to the right of Congress to regulate interstate commerce, thus interpreted the prior decisions of this court in the Trans-Missouri, the Joint Traffic and the Addyston Pipe and Steel Co. cases: “In the exercise of this right, Congress has seen fit to.prohibit all.contracts iri restraint of trade. It has not left to the courts the consideration of the question whether such restraint is reasonable or unreasonable, or whether the contract would have been illegal at the common law of not. The act leaves for consideration by judicial authority no question of this character, but all contracts and combinations are declared illegal if in restraint of trade or commerce among the States.” As far back as Robbins v. Shelby Taxing District, 120 U. S. 489, 497, it was held that certain local regulations, subjecting drummers engaged in both interstate and domestic trade, could not be sustained by reason of the fact that no discrimina*96tion was made among citizens of the different States. The court observed that this did not meet the difficulty, for the reason that “interstate commerce cannot be taxed at all.” Under this view Congress no doubt acted, when by the Antitrust Act it forbade any restraint whatever upon interstate commerce. It manifestly proceeded upon the theory that interstate commerce could not be restrained at all by combinations, trusts or monopolies, but must be allowed to flow in its accustomed channels, wholly unvexed and unobstructed by anything that would restrain its ordinary movement. See also Minnesota v. Barber, 136 U. S. 313, 326; Brimmer v. Rebman, 138 U. S. 78, 82, 83.

In the opinion delivered on behalf of the minority in the Northern Securities Case, 193 U. S. 197, our present Chief Justice referred to the contentions made by the defendants in the Freight Association Cade, one of which was that the agreement there involved did not unreasonably restrain interstate commerce, and said: “Both these contentions were decided against the association, the court holding that the Anti-trust Act did embrace interstate carriage by railroad corporations, and as that act prohibited any contract in restraint of interstate commerce, it hence embraced all contracts of that character, whether they were reasonable or unreasonable.” One of the Justices who dissented in the Northern Securities Case in'a separate opinion, concurred in by the minority, thus referred to the Freight and Joint Traffic cases: “For it cannot be too carefully remembered that that clause applies to ‘ every ’ contract of the forbidden kind — a consideration which was the turning point of the Trans-Missouri Freight Association case. . . . Size has nothing to do with the matter. A monopoly of ‘any part’ of commerce among the States is unlawful.”

In this connection it may be well to refer to the adverse report made in 1909, by Senator Nelson, on behalf of the Senate Judiciary Committee, in reference to á certain bill *97offered in the Senate and which proposed to amend the Anti-trust Act in various particulars. That report contains a full, careful and able-analysis of judicial decisions relating to combinations and monopolies in restraint of trade and commerce. Among other things said in it which bear on the questions involved in the present case are these: “The Anti-trust Act makes it a criminal offense, to violate the law, and provides a punishment both by fine and imprisonment. To inject into the act the question of whether an agreement or combination is reasonable or unreasonable would render the act as a criminal or penal statute indefinite and uncertain, and hence, to that extent, utterly nugatory and void, and would practically amount to a repeal of that part of the act. . . . And while the same technical objection does not apply to civil prosecutions, the injection of the rule of reasonableness or unreasonableness would lead to the greatest variableness and uncertainty in the enforcement of the law. The defense of reasonable restraint would be made in every case and there would be as many different rules of reasonableness as cases, courts and juries. What one court or jury might deem unreasonable another court or jury might deem reasonable. A court or jury in Ohio might find a given agreement or combination reasonable, while a court and jury in Wisconsin might find the same agreement and- combination unreasonable. In the case of People v. Sheldon, 139 N. Y. 264, Chief Justice Andrews remarks: ‘If agreements and combinations to prevent competition in prices are or may be hurtful to trade, the only sure remedy is to prohibit all agreements of that character. If the validity of such ah agreement was made to depend upon actual proof of public prejudice or injury, it would be very difficult in any case .to establish the invalidity, although the moral evidence might be very convincing.’ ... To amend the Anti-trust Act, as suggested by this bill, would be to entirely emasculate it,, and for all practical purposes render it nugatory as a reme*98dial statute. Criminal prosecutions would not lie and civil remedies would labor under the greatest doubt and uncertainty. The act as it exists is clear, comprehensive, certain and highly remedial. It practically covers the field of Federal jurisdiction, and is in every respect a model law. To destroy or undermine it at the present juncture, when combinations are on the increase, and appear to be as oblivious as ever of the rights of the public, would be a calamity.” The result was the indefinite postponement by the Senate of any further consideration of the proposed amendments of the Anti-trust Act.

. After what has been adjudged, upon full consideration, 'as to the meaning and scope of the Anti-trust Act, and in view of the usages of this court when attorneys for litigants have attempted to reopen questions that have been deliberately decided, I confess to no little surprise as to what has occurred in the present case. The court says that the previous cases, above cited, “cannot by any possible conception be treated as authoritative without the certitude that reason was resorted to for the purpose of deciding them.” And its opinion is full of intimations that this court proceeded in those cases, so far as the present question is concerned, without being guided by the “rule of reason,” or “the light of reason.” It is more than once intimated, if not suggested, that if the Anti-trust Act is to be construed as' prohibiting every contract or combination, of whatever nature, which is in fact in restraint of commerce, regardless of the reasonableness or unreasonableness of such restraint, that fact would show that the court had not proceeded, in its decision, according to “the light of reason,” but had disregarded the “rule of'reason.” If ■ the court, in those cases, was wrong in its construction qf the'act, it is certain that it fully apprehended the views advanced by learned counsel in previous cases and pronounced them to be untenable.. The published reports place this beyond all question. The opinion'of the court *99was delivered by a Justice of wide experience as a judicial officer, and the court had before it the Attorney General of the United States and lawyers who were recognized, on all sides, as great leaders in their profession. The same eminent jurist who delivered the opinion in the Trans-Missouri Case delivered the opinion in the Joint Traffic Association Case, and the Association in that case was represented by lawyers whose ability was universally recognized. Is it to be supposed that any point escaped notice in those cases when we think of the sagacity of the Justice who expressed the views of the court, or of the ability of the profound, astute lawyers, who sought such an interpretation of the act as would compel the court to insert words in the statute- which Congress had not put there, and the insertion of which words, would amount to “judicial legislation”? Now this court is asked to do that which it has distinctly declared it could not and would not do, and has now done what it then said it could not constitutionally do. It has, by mere interpretation, modified the act of Congress, and deprived it of practical value as a defensive measure against the evils to be remedied. On reading the opinion just delivered, the first inquiry will, be, that as the court is unanimous in holding that the particular things done by the Standard Oil Company and its subsidiary companies, in this case, were illegal under the Anti-trust Act, whether those things were in reasonable or unreasonable restraint of interstate commerce, why was it necessary to make an elaborate argument, as is done in the opinion, to show that according to the “rule of reason” the act as passed by Congress should be interpreted as if it contained the word “unreasonable” or the word “undue ” ? The only answer which, in frankness, can be given to this question is, that the court intends to decide that its deliberate judgment, fifteen years ago, to the effect .that the act permitted no restraint whatever of interstate commerce, whether reasonable or unreasonable, was not in accordance with *100the “rule of reason.”' In effect the court says, that it will now, for the first time, bring the discussion under the “light of reason” and apply the “rule of reason” .to the questions to be decided. I have the authority of this court for saying that such a course of proceeding on its part would be “judicial legislation.”

Still more, what is now done involves a serious departure from the settled usages of this court. Counsel have ■not ordinarily been allowed to discuss questions already settled by previous decisions. More than once at the present term, that rule has been applied. In St. Louis, I. M. & S. Ry. Co. v. Taylor, 210 U. S. 281, 295, the court had occasion to determine the meaning and scope of the original Safety Appliance Act of Congress passed for the protection of railroad employés and passengers on interstate trains. 27 Stat. 531, § 5, c. 196. A particular construction of that act was insisted upon by the interstate carrier which was sued under the Safety Appliance Act; and the contention was that a different construction, than the one insisted upon by the carrier, would be a harsh one. After quoting the words of the act, Mr. Justice Moody said for the court: “There is no escape from the meaning of these words. Explanation cannot clarify them, and ought not to be epiployed to confuse them or lessen their significance. The obvious purpose of the legislature was to supplant, the qualified duty of the common law with an absolute duty deemed by it more just. If the railroad does, in point of fact; use cars which do not comply with the standard, it violates the plain prohibitions of the law, and there arises from that violation the liability to make compensation to one who is injured by it. It is urged that this is a harsh construction. To this we reply that, if it be the true construction, its harshness is no concern of the courts. They have no responsibility for the justice or wisdom of legislation, and ho duty except to enforce the law as it is written, unless it is clearly beyond the constitutional power of the lawmaking *101body.....It is quite conceivable that Congress, contemplating the inevitable hardship of such injuries, and hoping to diminish the economic loss to the community resulting from them, should deem it wise to impose their burdens upon those who could measurably control their causes, instead of upon those who are in the main helpless in that regard. Such a policy would be intelligible, and, to say the least, not so unreasonable as to require us to doubt that it was intended, and to seek some unnatural interpretation of common words. We see no error in this part of the ease.” And at the present term of this court we were asked, in a case arising under the Safety Appliance Act, to reconsider.the question decided in the Taylor Case, • We declined to do so, saying in an opinion just now handed down: “In view of these facts, we are unwilling to regard the question as to the meaning and scope of the Safety Appliance Act, so far as it relates to automatic couplers on trains moving in interstate traffic, as open to further discussion here. If the court was wrong in the Taylor case the way is.open for such an amendment of the statute as Congress may, in its discretion, deem proper. - This court ought not now to disturb what has been so widely accepted and acted upon by the courts as having been decided in that case. A contrary course would cause infinite uncertainty, if not mischief, in the administration of the law in the Federal courts. To avoid misapprehension,, it is appropriate to say that we are not to be understood as questioning the soundness of the interpretation heretofore placed by this court upon the Safety Appliance Act. We only mean to say that until Congress, by an amendment of the statute, changes the rule announced in the Taylor Case, this court will adhere to and apply that rule.” C., B. & Q. Ry. Co. v. United States, 220 U. S. 559. When counsel in the present case insisted upon a reversal of the former rulings of this court, and asked such an interpretation of the Anti-trust Act as would allow reasonable restraints of interstate commerce, this *102court, in deference to established practice, should, I submit, have said to. them: “That question, according to our practice,-is not open for further discussion here. This court long ago deliberately held (1) that the act, interpreting its words in their ordinary acceptation, prohibits all restraints of interstate commerce by combinations in whatever form, and whether reasonable or unreasonable; (2) the question relates to matters of public policy in reference to commerce among the States and with foreign nations, and Congress alone can deal with the subject; (3) this--court would en.croach upon the authority of Congress if, under the guise of construction, it should assume to determine a matter of public policy; (4) the parties must go to Congress and obtain an amendment of the Anti-trust Act if they think this court was wrong in its former decisions'; and (5) this court cannot, and will not judicially legislate, since its function is to declare the law, while it belongs to the legislative department to make the law. Such á course, I am sure, would not have offended the “rule of reason.”

But my brethren, in their wisdom, have deemed it best to pursue a different course. They have now said to those who condemn our former decisions and who object to-all legislative prohibitions of contracts, combinations and trusts in restraint.of interstate commerce, “You may now'. restrain such commerce, provided yon are reasonable about it; only take care that the restraint in not undue.” The disposition of the case under consideration, according to' the views of the defendants, will, it- is claimed, quiet and give rest to “the business of the country.” On the contrary, I have a strong conviction that it will throw the business of the country into confusion and invite widely-extended and harassing- litigation; the injurious effects of which will be felt for many years to come. When Congress prohibited every contract, combination or monopoly, in restraint of commerce, it prescribed a simple, definite rule that all could understand, and which could be easily ap*103plied by everyone wishing to obey the law, and not to conduct their business in violation of law. But now, it is to be feared, we are to have, in cases without number, the constantly ..recurring inquiry — difficult to solve by proof — whether the particular contract, combination, or trust involved in each case is or is not an "unreasonable” or "undue” restraint of trade. Congress, in effect, said that there should be no restraint df trade, in any form, and this court solemnly adjudged many years ago that Congress meant" what it thus said in clear and explicit words, and that it could not add to the words of the act. But those who condemn the action of Congress are now, in effect, informed that the courts will allow such restraints . of interstate commerce as are shown not to be unreasonable or undue.

It remains for me to refer, more fully than I have heretofore done, to another, and, in my judgment — if we .look to the future — the most important aspect of this case. That aspect concerns the usurpation by the judicial branch of the Government of the functions of the legislative department. The illustrious men who laid the foundations of bur institutions, deemed no part of the National Constitution of more consequence or more essential to the per-, manancy of our form of government, than the provisions under which were distributed the powers of Government among three separate, equal and coordinate departments —legislative, executive, and judicial. This was at that, time a new feature of governmental regulation among the nations of the earth, and it is deemed by the people of every section of our own country as most vital in the workings of a representative republic whose Constitution was ordained and established in order to accomplish the objects stated in its Preamble by the means, but only by the means, provided either expressly or by necessary implication, by the instrument itself. No department of that government can constitutionally exercise the *104powers committed strictly to another and separate department. '

I said at the outset that the action of the court in this case might well alarm thoughtful men who revered Jhe Constitution. I meant by this that many things are intimated and said in the court’s opinion which will not be regarded otherwise than as sanctioning an invasion by the judiciary of the constitutional domain of Congress — an attempt by interpretation to soften or modify what some regard as a harsh public policy. This court, let me repeat, solemnly adjudged many years ago that it could not,.except by “judicial legislation,” read words into the Antitrust Act.not püt. there by Congress, and which, being inserted, give it a meaning which the words of the Act, as passed, if' properly interpreted, would not justify. The court has decided that it could not thus change a public policy formulated and declared by Congress; that Congress has paramount authority to regulate interstate commerce, and that it alone can change a policy once inaugurated by legislation. The courts have nothing to do with the wisdom or policy of an act of Congress. Their duty is to ascertain. the will of Congress, and if the statute embodying the expression of that will is constitutional, the courts must respect it. They have no function to declare a public policy, nor to amend legislative enactments. “What is termed the policy of the Government with reference to any particular legislation,” as this court has said, “ is generally a very uncertain thing, upon' which all sorts of opinions, each variant from the other, may be formed by different persons. It is a ground much too unstable upon which to rest the judgment of the court in the interpretation of statutes.” Hadden v. Collector, 5 Wall. 107. Nevertheless, if I do not misapprehend its opinion, the court has now read into the act of Congress words which are not to be found there, and has thereby done that which.it adjudged in 1896 and 1898 could not be done without violating *105the Constitution, namely, by interpretation of a statute, changed a public policy declared by the legislative department.

After many years of public service at the National Capital, and after a somewhat close observation of the conduct of public affairs, I am impelled to say that there is abroad, in our land, a most harmful tendency to bring about the amending of constitutions and legislative enactments by means alone of judicial construction. As a public policy has been declared by the legislative department in respect of interstate commerce, over which Congress has entire control, under the Constitution, all concerned must patiently submit to what has been lawfully done, until the People of the United States — the source-of all National power — shall, in their own time, upon reflection and through the legislative department of thé Government, require a change of that policy. There are some who say that it . is a part of one’s liberty to. conduct commerce among the States without being subject to governmental authority. But that would not be liberty, regulated by law, and liberty, which cannot be regulated by law, is not to be desired. The Supreme Law of the Land — which is binding alike upon all — upon Presidents, Congresses, the Courts'and the People — gives to Congress, and to Congress alone, authority to regulate interstate commerce, and when Congress forbids any restraint of such commerce, in any form, all must obey its mandate. To overreach the action nf Congress merely by judicial construction, that is, by indirection, is a blow: at the integrity of our governmental system, and in the end will prove most dangerous to all. Mr. Justice. Bradley wisely said, when on this Bench, that illegitimate and unconstitutional practices get their first footing by silent approaches and slight deviations from legal modes of legal procedure. Boyd v. United States, 116 U. S. 616, 635. We shall do well to heed the warnings of that great jurist.

*106I do not stop to discuss the merits of the policy embodied in the Anti-trust Act of 1890; for, as has been often adjudged, the courts, under our constitutional system, have no rightful concern with the wisdom or policy of legislation enacted by that branch of the Government which alone can make laws. •

For the reasons stated, .while concurring in the general affirmance of the decree of the Circuit Court, I dissent from that part of the judgment of this court which directs the modification of the decree of the Circuit Court, as well as from those parts of the opinion which, in effect, assert authority, in this court, to insert words in the Anti-trust Act which Congress did not . put there, and which, being inserted, Congress is made to declare, as part of the public policy of the country, what it has not chosen to declare.

ROBERTS, Circuit Judge.

This petition arises out of a proceeding before the Federal Energy Regulatory Commission to set rates for the transmission of electricity over lines operated by a regional transmission organization. Over *55a century ago, the first Justice Harlan noted that regulated rates must ensure just compensation, but confessed that “[h]ow such compensation may be ascertained, and what are the necessary elements in such an inquiry, will always be an embarrassing question.” Smyth v. Ames, 169 U.S. 466, 546, 18 S.Ct. 418, 42 L.Ed. 819 (1898) (quoted in Duquesne Light Co. v. Barasch, 488 U.S. 299, 308, 109 S.Ct. 609, 102 L.E.2d 646 (1989)). For our part, we have recognized that “agency ratemaking is far from an exact science,” Time Warner Entm’t Co. v. FCC, 56 F.3d 151, 163 (D.C.Cir.1996), and that it involves “complex industry analyses,” Ass’n of Oil Pipe Lines v. FERC, 83 F.3d 1424, 1431 (D.C.Cir.1996), and “[¡Issues of rate design [that] are fairly technical,” Town of Norwood v. FERC, 962 F.2d 20, 22 (D.C.Cir.1992). For these reasons, and because ratemaking “involves policy determinations in which the agency is acknowledged to have expertise, our review thereof is particularly deferential.” Time Warner, 56 F.3d at 163 (internal quotation marks omitted).

Given the deferential standard, we uphold FERC’s decisions to calculate the pertinent rate of return on equity in this case by reference to a particular “proxy group” of publicly-traded companies, and to base the rate of return on the midpoint, rather than the median or mean, of the rates in that group. But FERC is entitled to deference only if it plays fair, and we conclude that the Commission failed to give adequate notice that it would add 50 basis points to the rate of return generated by its calculations, to encourage participation in regional transmission organizations. We accordingly grant the petition in part.

I.

Midwest Independent Transmission System Operator, Inc. (MISO) is a regional transmission organization (RTO) — a company that combines multiple power grids into a single transmission system. In recent years, FERC has promoted the formation of RTOs as a means of increasing competition and driving down the price of electricity. According to the Commission, RTOs provide a large and stable transmission system that reduces regional pricing disparities and creates an efficient market for new power generators. See generally Regional Transmission Organizations, Order No.2000, 65 Fed.Reg. 809 (Dec. 20, 1999); Order No.2000-A, 65 Fed.Reg. 12,088 (Feb. 25, 2000). MISO, the first such organization in the nation, came into being when a series of midwestern utilities placed their grids under its centralized control. See Midwest ISO Transmission Owners, Inc. v. FERC, 373 F.3d 1361, 1365 (D.C.Cir.2004).

The rates charged by electric utilities such as MISO are regulated by FERC to ensure that they are just and reasonable, and not unduly discriminatory. See 16 U.S.C. §§ 824d, 824e. Utilities themselves initiate the ratemaking process by submitting proposals to the Commission, but FERC retains authority to modify such proposals to ensure compliance with the statutory standards. Id. §§ 824d(c)-(d), 824e(a).

A major component of the rates charged by MISO is the return on equity (ROE) paid to its member utilities. This rate compensates the utilities for the capital cost of the grids they placed under MISO’s control. FERC derives the rate by estimating the annual return an equity investor in the utility would expect on such capital, had the utility continued to operate the grid outside the RTO. See generally Canadian Ass’n of Petroleum Producers v. FERC, 254 F.3d 289, 293-94 (D.C.Cir.2001). Calculating this rate would be relatively easy if a utility’s interest in its grid — its business as a transmission owner *56(TO) — were publicly traded, but “there are no publicly traded independent pure electric transmission companies.” MISO Initial Decision, 99 FERC ¶ 63,011, 65,040, 2002 WL 32056864 (2002). The Commission must therefore resort to more roundabout estimations.

In December 2001, MISO and certain of its member TOs petitioned the Commission to increase the ROE component of MISO’s charges from a previously approved level of 10.5 percent to 13 percent. The Commission set the matter for hearing, at which all interested parties were allowed to present evidence. Among those availing themselves of this opportunity were the petitioners in this case — the Public Service Commission of the Commonwealth of Kentucky (PSCKY) and a group of private consumers and municipal entities (the Intervenor Group) — who appeared on behalf of ratepayers and argued against any rate increase or, in any event, for a more modest one.1 At the hearing, an administrative law judge selected a proxy group of public companies to use in estimating the appropriate return on equity for the MISO TOs. The judge chose a group consisting of the parent companies of certain MISO TOs themselves — which, unlike the transmission-owning subsidiaries, are publicly traded. The judge rejected several other proposals, including one submitted by the Intervenor Group. Id. at 65,038-42.

Once she had made her choice, the judge sought to extract a single ROE value, representative of the proxy group as a whole, to be applied to all the MISO TOs. She chose the midpoint of the range — the average of the highest and lowest data points— which yielded a return of 12.38 percent. She rejected the recommendation of FERC staff to use the mean — the average of all values in the proxy group (11.74 percent) — as well as the Intervenor Group’s proposal to use the median — the middle data point in the group (11.85 percent). Id. at 65,047-52. The judge also rejected competing pleas from MISO and the Intervenor Group to derive ROE using only part of the proxy range, such as the top or bottom half. Id.

FERC affirmed the ALJ’s choice of the proxy group and her use of the midpoint. Speaking to the latter, the Commission noted that its electrical industry precedents — unlike its oil and gas cases — had relied on the midpoint as a measure of central tendency. The Commission, however, also decided sua sponte to increase the final return by 50 basis points, to 12.88 percent, as an incentive for companies to join a regional transmission organization. MISO Order Affirming Initial Decision, 100 FERC ¶ 61,292, 62,313-15, 2002 WL 31986513 (2002). FERC explained that it “will be clarifying [this] incentive rate policy in the near future.” Id. at 62,315. Several months later, the Commission indeed issued a proposal to give “any entity that transfers operational control of transmission facilities to a Commission-approved RTO ... an incentive adder of 50 basis points on its ROE for all such facilities transferred.” Proposed Pricing Policy for Efficient Operation and Expansion of Transmission Grid, 102 FERC ¶ 61,032, 61,065, 2003 WL 245747 (2003).

In the meantime, petitioners sought rehearing of FERC’s order, which the Commission denied. Besides affirming its earlier findings, FERC rejected petitioners’ contention that they had not been given sufficient notice of the possibility of an *57incentive-based adder. FERC explained that petitioners should have been aware of the possibility of such an adder, given the Commission’s statutory power to amend proposals to ensure just and reasonable rates. FERC also noted that the final value of 12.88 percent was less than the 13 percent initially requested by MISO, and thus presumably within the range of petitioners’ expectations at the outset of the proceedings. See MISO Order Denying Rehearing, 102 FERC ¶ 61,143, 61,395, 2003 WL 257395 (2003).

Petitioners then sought review in this court, but the Commission moved for a voluntary remand to allow further consideration of the rate of return. On remand, the Commission maintained its position, but offered a different rationale for the use of the midpoint in this case. FERC explained that the question here “is not what constitutes the best overall method for determining ROE generically (i.e. the midpoint versus the median or mean).” MISO Order on Remand, 106 FERC ¶ 61,302, 62,192, 2004 WL 598168 (2004). Rather, the Commission observed that under the “unique ... circumstances” of this case, in which the chosen value will apply “to a diverse group of companies,” the midpoint provides the best measure because it emphasizes the endpoints of the proxy group range, ensuring that outlier as well as average TOs receive just and fair compensation. Id. at 62,192-93. The Commission also found that the proxy group was not too skewed to permit a midpoint analysis. Id. at 62,193.

PSCKY and the Intervenor Group now seek review of the FERC orders, challenging the selection of the proxy group, the use of the midpoint, and the incentive-based adder.

II.

The “arbitrary and capricious” standard of the Administrative Procedure Act governs our review. See 5 U.S.C. § 706(2)(A). Under this standard, FERC must consider relevant data and “articulate a rational connection between the facts found and the choices made.” Williston Basin Interstate Pipeline Co. v. FERC, 165 F.3d 54, 60 (D.C.Cir.1999) (citations omitted). The Commission must also respond meaningfully to the arguments raised before it. See Canadian Ass’n of Petroleum Producers, 254 F.3d at 299. The Commission’s factual findings are conclusive if supported by substantial evidence. See 16 U.S.C. § 8251 (b).

A. Petitioners first question the proxy group chosen to represent the MISO TOs’ expected return on equity. They assert that the ALJ improperly dismissed the Intervenor Group’s proposal, which would have considered (and heavily weighted) four generation-divested electric utilities in addition to the companies ultimately chosen. They also maintain that the Commission failed to engage their petition on this issue, and erroneously saddled them with the burden of proof in the group selection process. We find these arguments unavailing.

The judge chose a group submitted by MISO, consisting of the publicly-owned parent companies of the TOs themselves. She reasoned that “[t]his is the best proxy group since it involves companies that are currently in the MISO; the group includes comparable risk companies, similar in business profiles and size.” Initial Decision, 99 FERC at 65,041. She also relied on a prior FERC decision that approved a proxy group in part because that group contained parent companies of the utility whose rates were being set. Id. (citing Southern California Edison, 92 FERC ¶ 61,070, 2000 WL 1100260 (2000)). She dismissed the Intervenor Group’s proposal because “it consisted of distribution companies, not transmission companies.” Id. *58at 65,042. FERC summarily affirmed these findings. Order Affirming Initial Decision 100 FERC at 62,312.

Petitioners provide us with insufficient reason for overturning the selection of the proxy group. At the hearing before the ALJ, the Intervenor Group’s own expert conceded that MISO’s proposal was one of “the two most appropriate groups to use in establishing the range” and that “[t]he TOs or their parent companies have rates at issue in this proceeding and are therefore an appropriate group to use as a reasonable starting point.” Testimony of J. Bertram Solomon at 67. On appeal, petitioners note that the parents’ businesses extend well beyond transmission, and maintain that the judge underestimated the transmission component of the additional companies in their own proposal.

Given the deferential standard of review, this is just nibbling at the margins. The Supreme Court explained long ago that ratemaking is a pragmatic exercise, see FPC v. Hope Natural Gas Co., 320 U.S. 591, 602, 64 S.Ct. 281, 88 L.Ed. 333 (1944), and more than second-guessing close judgment calls is required to show that a rate order is arbitrary and capricious. Id. FERC chose reasonably from the options presented, based on the testimony offered and the Commission’s own precedent.

Petitioners’ remaining challenges to the proxy group also fall short of the mark. Their contention that FERC failed to engage their petition finds no support in our case law. While we have held that FERC may not ignore an argument presented to it, our cases addressed situations where neither the Commission nor an ALJ addressed the issue. See Canadian Ass’n of Petroleum Producers, 254 F.3d at 298-99; NorAm Gas Transmission Co. v. FERC, 148 F.3d 1158, 1165 (D.C.Cir.1998). Here, by contrast, FERC reviewed the ALJ’s extensive discussion of proxy groups and expressly adopted her rejection of petitioners’ proposal. See Order Affirming Initial Decision, 100 FERC at 62,312 (“For the reasons set forth in the Initial Decisions, we find that the Intervenor Group has failed to set forth convincing evidence [regarding its proposal].”).

As for the burden of proof, petitioners rely on a handful of isolated statements in the rulings under review. At one point in her decision, the judge noted that the Intervenor Group’s witness did not “prove[ ]” that the companies in its proposal had risks comparable to the TOs. Initial Decision, 99 FERC at 65,042. In affirming the ALJ, the Commission observed that, the Intervenor Group “has not demonstrated that the [chosen proxy] group is unrepresentative,” and “has failed to set, forth convincing evidence” of the superiority of their own proposal. Order Affirming Initial Decision, 100 FERC at 62,312. Based on these statements, petitioners argue that FERC improperly saddled them with the burden of proving the validity of the rate increase at issue — a burden statutorily assigned to the proponent of the increase, in this case MISO. See 16 U.S.C. 824d(e) (“the burden of proof to show that the increased rate or charge is just and reasonable shall be upon the public utility”).

In proceedings before the ALJ, however, MISO expressly assumed the burden of justifying the proposed rate increase. Prehearing Conference at 25 (“PRESIDING JUDGE: And you have the burden of proof, don’t you? MR. SMALL [counsel for MISO]: Yes, your Honor .... ”). In selecting MISO’s proposal, the judge explained that she found it “consistent with Commission precedent,” and described the Intervenor Group’s alternative as “more speculative and statistically less reliable.” Initial Decision, 99 FERC at 65,042. MISO acknowledged and carried its burden of proof before the ALJ. As for the *59statements in FERC’s order, these are best read as merely affirming the reasonableness of the judge’s decision. See Town of Norwood, 962 F.2d at 26 (interpreting similar phrasing as “a rather perfunctory restatement of the Commission’s finding ... and not an indication that the FERC improperly shifted the burden of proof to the petitioner”).

B. PSCKY and the Intervenor Group next challenge the Commission’s use of the midpoint. They question the cogency of FERC’s reasoning in general, and dispute its application on the facts of this case. They also point to language in FERC’s order on remand suggesting that the Commission chose the midpoint simply because it yielded the highest rate of return.

In the order on remand the Commission stepped back from its prior reliance on electrical industry precedents, and even acknowledged that the median, and not the midpoint, may be “the most refined measure of central tendency.” Order on Remand, 106 FERC at 62,192. The Commission rested its use of the midpoint on a wholly different ground: it distinguished between “cases in which a ROE is set for one gas pipeline or electric utility” and cases where “applicants proposed setting a single ROE for across-the-board application.” Id. In the latter situation, where “the ROE will apply to a diverse set of companies,” FERC reasoned that the range of results becomes as important as the central value. Id. The midpoint — unlike the other measures of central tendency — “fully considers that range,” because it is derived directly from the endpoints of the range. Id.

This justification provides a reasoned approach that lends itself to consistent application over a series of cases. While petitioners highlight the shortcomings of the Commission’s method, they fail to debunk its fundamental premises. For instance, petitioners are correct in noting that all measures of central tendency “consider” the entire proxy group range, in the sense that all are influenced — at least indirectly — by each data point in the range. Pet. Br. at 23. But only the midpoint emphasizes that range, as it is equally placed between the top and bottom values. Likewise, petitioners rightly suggest that using the midpoint undermines the statistical sampling of the proxy group process, id. at 28-30, as only the mean places equal weight on every point in a sample. But the Commission made clear that it was less interested in particular data points than in the full range covered by the group.

Petitioners’ more technical challenges fare no better. First, they contend that the Commission erred in calculating the midpoint of a range containing two values for each company — a high and a low estimate — because FERC meant to “fully consider” the range of companies in the proxy group, and high or low estimates by themselves do not reflect a company’s ROE without considering the corresponding low or high estimate. Pet. Br. at 26-27. The Commission’s use of a high estimate to mark the high end for its midpoint calculation was, however, balanced to some extent by its use of a low estimate to mark the low end. It is true that this balance is imperfect, particularly on this record, where the company whose high estimate marks the high end also had a low estimate among the lowest values in the range. But it is certainly consistent with FERC’s rationale to calculate the midpoint of the entire range, rather than — as petitioners now seem to suggest — averaging each company’s high and low estimates and then determining the midpoint of that narrower range. See Pet. Br. at 27. At any rate, no such alternative proposal was ever presented to the Commission. *60Second, petitioners maintain that the data in this case were too skewed for a midpoint analysis. Pet. Br. at 33-87. This too is a matter squarely within the Commission’s expertise. The proxy group clearly has some skew — otherwise all measures of central tendency would have produced the same result — but this is part of the reason FERC used the midpoint in the first place. FERC acknowledged that some distributions are too skewed for such an analysis, but the Commission evaluated the distortion here and found it not to be excessive. Order on Remand, 106 FERC at 62,193; compare Northwest Pipeline Corp., 99 FERC ¶ 61,305 (2002) (employing a similar method for evaluating skew). As the Commission explained, this is not a case where one end-point is considerably out of line with the rest of the range; ratemaking is not an “exact science,” Time Warner, 56 F.3d at 163, and FERC was not required to adopt petitioners’ mathematical model for determining when some skew becomes too much skew.

All this notwithstanding, the order on remand does contain language clouding the clarity of FERC’s midpoint rationale. In a footnote, the Commission observes that:

The results of our proxy group yielded a midpoint of 12.38, a median of 11.85, and a mean of 11.74. Relying on the median or mean in this case would result in an unreasonably low ROE in light of the high end values in the proxy group and could substantially under-compensate those utilities at the upper end of the range.

106 FERC at 62,192 n. 14. Elsewhere, FERC notes that “the midpoint does not have as deleterious an effect as the median on those [MISO] TOs whose returns are higher than what we allow for [MISO] TOs here,” and that this “offers additional incentive for such companies to join RTOs.” Id. at 62,193-94. According to petitioners, these passages indicate that FERC chose the midpoint simply because it yielded the highest result.

If FERC’s orders premised a policy of using the midpoint on an effort to obtain the highest rate of return, the orders could not withstand APA review. This is because there would be no logical connection between the rationale and the result: nothing about the midpoint ensures it will be higher than the median or the mean in any particular case. Of course, FERC could have explained that it would always choose the measure that yields the highest result, and tried to defend that rationale here. But the Commission cannot justify a commitment to the midpoint on the ground that it produced the highest return, because that is pure happenstance.

We think the most reasonable reading of FERC’s order on remand as a whole is that it selected the midpoint because the rate of return would apply to a diverse group of companies, and that the language petitioners point to simply reflects FERC’s view that the resulting rate gave it confidence that it was not undercompensating MISO TOs. The bulk of the order sets forth the “diverse companies” rationale. The contrary language appears in a footnote and a single paragraph near the end of the opinion. The Commission emphasized the rate’s across-the-board applicability to MISO TOs — rather than the greater value of the midpoint — in both its brief and at oral argument. In light of all this, we read the order as resting on its principal rationale. Should the Commission elect to abandon that rationale to rely on a higher median or mean in the next case involving applicability of the chosen rate to several companies, it will have to justify its departure from the precedent established by this case.

C. Finally, PSCKY and the Inter- ' venor Group argue that FERC arbitrarily adopted the 50-point premium, and that *61the Commission violated due process by announcing its decision sua sponte without prior notice to the parties. We focus on the latter claim.

The Due Process Clause and the APA require that an agency setting a matter for hearing provide parties “with adequate notice of the issues that would be considered, and ultimately resolved, at that hearing.” Williston, 165 F.3d at 63; see 5 U.S.C. § 554(b)(3). This requirement ensures the parties’ right to present rebuttal evidence on all matters decided at the hearing. See Bowman Tramp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 288 n. 4, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974); Hatch v. FERC, 654 F.2d 825, 835 (D.C.Cir.1981); Hill v. FPC, 335 F.2d 355, 363 (5th Cir.1964). In addition, the Federal Power Act authorizes FERC to approve rate increases only “after full hearings” — a requirement that itself “unquestionably imposes the duty to give adequate notice of the subject to which the orders pertain.” 16 U.S.C. § 824d(e); City of Winnfield v. FERC, 744 F.2d 871, 876 (D.C.Cir.1984).

Here, the Commission failed to place the parties on notice that its post-hearing order would contemplate an incentive-based premium for the MISO TOs. When MISO and its TOs first filed for the subject rate increase, they sought an incentive adder of 100 basis points, but FERC declined to consider such “innovative ratemaking proposals,” limiting the subject matter of the hearing to “ROE rates that essentially provide for appropriate cost-recovery.” Order Accepting in Part and Rejecting in Part Proposed Tariff Changes and Establishing Hearing Procedures, 98 FERC ¶ 61,064, 61,165, 2002 WL 123313 (2002). The ALJ refused to consider premium-related proposals, noting “that establishing an incentive based ROE seems to be outside the scope of this proceeding.” Initial Order, 99 FERC at 65,052. As a result, the record compiled at the hearing contained no evidence on the need for — or appropriate size of — such a premium.

On appeal, FERC maintains that it gave petitioners all the process they were due by considering their requests for rehearing, which contained extensive challenges to the premium. FERC Br. at 47; see PSCKY Req. for Reh’g at 9-14; Intervenor Group Req. for Reh’g at 41-49. Considering petitioners’ arguments, however, is not the same thing as allowing them to present evidence on the issue — as at least one of the petitioners pointed out to the Commission. See PSCKY Req. for Reh’g at 10 (“the parties were not given the opportunity to present evidence, or refute the use of such innovative rate making policy”); see also Williston, 165 F.3d at 63-64 (granting petition to review based on insufficient notice and lack of substantial evidence).

Nor did FERC obviate the need for such a presentation by relying, in the order denying rehearing, on its proposed policy to reward any entity that joins an RTO with a bonus of 50 basis points. The Commission issued that proposal after its sua sponte order and after the filing deadline for rehearing requests in MISO’s case. Moreover, the proposed policy is just that — it is not a rule binding on the public, or even on the agency itself. See Proposed Pricing Policy, 102 FERC at 61,066-67 (inviting public comment and holding off implementation until the issuance of a final policy statement). As such, it plainly cannot govern the outcome of this case.

Likewise, FERC’s assertion that petitioners should have been aware that it always possesses the power to modify rate proposals to ensure that they meet statutory standards plainly proves too much; FERC’s power to take such action does not carry with it the authority to exercise such power without adequate notice of the basis for doing so.

*62In sum, FERC failed to place petitioners on notice that it would consider an incentive-based premium, and ultimately applied the adder in MISO’s case without considering any record evidence. In so doing, FERC denied petitioners — and the other parties to the proceeding, for that matter — a chance to present their side of the case. We express no view on petitioners’ substantive challenges to the incentive-based adder, but grant the petition because FERC failed to provide adequate notice that it would consider such an element in assessing the pending rate proposal. In all other respects, we affirm the Commission.

*523Mr. Justice Rehnquist

delivered the opinion of the Court.

In 1946, Congress enacted the Administrative Procedure Act, which as we have noted elsewhere was not only “a new, basic and comprehensive regulation of procedures in many agencies,” Wong Yang Sung v. McGrath, 339 U. S. 33 (1950), but was also a legislative enactment which settled “long-continued and hard-fought contentions, and enacts a formula upon which opposing social and political forces have come to rest.” Id., at 40. Section 4 of the Act, 5 U. S. C. § 553 (1976 ed.), dealing with rulemaking, requires in subsection (b) that *524“notice of proposed rule making shall be published in the Federal Register . . . describes the contents of that notice, and goes on to require in subsection (c) that after the notice the agency “shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.” Interpreting this provision of the Act in United States v. AlleghenyLudlum Steel Corp., 406 U. S. 742 (1972), and United States v. Florida East Coast R. Co., 410 U. S. 224 (1973), we held that generally speaking this section of the Act established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures.1 Agencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose them if the agencies have not chosen to grant them. This is not to say necessarily that there are no circumstances- which would ever justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute. But such circumstances, if they exist, are extremely rare.

Even apart from the Administrative Procedure Act this Court has for more than four decades emphasized that the formulation of procedures was basically to be left within the discretion of the agencies to which Congress had confided the responsibility for substantive judgments. In FCC v. Schreiber, 381 U. S. 279, 290 (1965), the Court explicated *525this principle, describing it as “an outgrowth of the congressional determination that administrative agencies and administrators will be familiar with the industries which they regulate and will be in a better position than federal courts or Congress itself to design procedural rules adapted to the peculiarities of the industry and the tasks of the agency involved.” The Court there relied on its earlier ease of FCC v. Pottsville Broadcasting Co., 309 U. S. 134, 138 (1940), where it had stated that a provision dealing with the conduct of business by the Federal Communications Commission delegated to the Commission the power to resolve “subordinate questions of procedure . . . [such as] the scope of the inquiry, whether applications should be heard contemporaneously or successively, whether parties should be allowed to intervene in one another’s proceedings, and similar questions.”

It is in the light of this background of statutory and decisional law that we granted certiorari to review two judgments of the Court of Appeals for the District of Columbia Circuit because of our concern that they had seriously misread or misapplied this statutory and decisional law cautioning reviewing courts against engrafting their own notions of proper procedures upon agencies entrusted with substantive functions by Congress. 429 U. S. 1090 (1977). We conclude that the Court of Appeals has done just that in these cases, and we therefore remand them to it for further proceedings. We also find it necessary to examine the Court of Appeals’ decision with respect to agency action taken after full adjudicatory hearings. We again conclude that the court improperly intruded into the agency’s decisionmaking process, making it necessary for us to reverse and remand with respect to- this part of the cases also.

I

A

Under the Atomic Energy Act of 1954, 68 Stat. 919, as amended, 42 U. S. C. § 2011 et seq., the Atomic Energy Comm*526ission2 was given broad regulatory authority over the development of nuclear energy. Under the terms of the Act, a utility seeking to construct and operate a nuclear power plant must obtain a separate permit or license at both the construction and the operation stage of the project. See 42 U. S. C. §§ 2133, 2232, 2235, 2239. In order to obtain the construction permit, the utility must file a preliminary safety analysis report, an environmental report, and certain information regarding the antitrust implications of the proposed project. See 10 CFR §§2.101, 50.30 (f), 50.33a, 50.34 (a) (1977). This application then undergoes exhaustive review by the Commission’s staff and by the Advisory Committee on Reactor Safeguards (ACRS), a group of distinguished experts in the field of atomic energy. Both groups submit to the Commission their own evaluations, which then become part of the record of the utility’s application.3 See 42 U. S. C. §§ 2039, 2232 (b). The Commission staff also undertakes the review required by the National Environmental Policy Act of 1969 (NEPA), 83 Stat. 852, 42 U. S. C. §4321 et seq., and prepares a draft environmental impact statement, which, after being circulated for comment, 10 CFR §§ 51.22-51.25 (1977), is revised and becomes a final environmental impact statement. § 51.26. Thereupon a three-member Atomic Safety and Licensing Board conducts a public adjudicatory hearing, 42 U. S. C. § 2241, and reaches a decision4 which can be *527appealed to the Atomic Safety and Licensing Appeal Board, and currently, in the Commission’s discretion, to the Commission itself. 10 CFR §§ 2.714, 2.721, 2.786, 2.787 (1977). The final agency decision may be appealed to the courts of appeals. 42 U. S. C. § 2239; 28 U. S. C. § 2342. The same sort of process occurs when the utility applies for a license to operate the plant, 10 CFR § 50.34 (b) (1977), except that a hearing need only be held in contested cases and may be limited to the matters in controversy. See 42 U. S. C. § 2239 (a); 10 CFR §2.105 (1977); 10 CFR pt. 2, App. A, V (f) (1977).5

These cases arise from two separate decisions of the Court of Appeals for the District of Columbia Circuit. In the first, the court remanded a decision of the Commission to grant a license to petitioner Vermont Yankee Nuclear Power Corp. to operate a nuclear power plant. Natural Resources Defense Council v. NRC, 178 U. S. App. D. C. 336, 547 F. 2d 633 (1976). In the second, the court remanded a decision of that same agency to grant a permit to petitioner Consumers Power Co. to construct two pressurized water nuclear reactors to generate electricity and steam. Aeschliman v. NRC, 178 U. S. App. D. C. 325, 547 F. 2d 622 (1976).

B

In December 1967, after the mandatory adjudicatory hearing and necessary review, the Commission granted petitioner Vermont Yankee a permit to build a nuclear power plant in Vernon, Vt. See 4 A. E. C. 36 (1967). Thereafter, Vermont Yankee applied for an operating license. Respondent Natural Resources Defense Council (NRDC) objected to the granting *528of a license, however, and therefore a hearing on the application commenced on August 10, 1971. Excluded from consideration at the hearings, over NRDC’s objection, was the issue of the environmental effects of operations to reprocess fuel or dispose of wastes resulting from the reprocessing operations.6 This ruling was affirmed by the Appeal Board in June 1972.

In November 1972, however, the Commission, making specific reference to the Appeal Board’s decision with respect to the Vermont Yankee license, instituted rulemaking proceed-' ings “that would specifically deal with the question of consideration of environmental effects associated with the uranium fuel cycle in the individual cost-benefit analyses for light water cooled nuclear power reactors.” App. 352.' The notice of proposed rulemaking offered two alternatives, both predicated on a report prepared by the Commission’s staff entitled Environmental Survey of the Nuclear Euel Cycle. The first would have required no quantitative evaluation of the environmental hazards of fuel reprocessing or disposal because the Environmental Survey had found them to be slight. The second would have specified numerical values for the environmental impact of this part of the fuel cycle, which values would then be incorporated into a table, along with the other relevant factors, to determine the overall cost-benefit balance for each operating license. See id., at 356-357.

Much of the controversy in this case revolves around the *529procedures used in the rulemaking hearing which commenced in February 1973. In a supplemental notice of hearing the Commission indicated that while discovery or cross-examination would not be utilized, the Environmental Survey would be available to the public before the hearing along with the extensive background documents cited therein. All participants would be given a reasonable opportunity to present their position and could be represented by counsel if they so desired. Written and, time permitting, oral statements would be received and incorporated into the record. All persons giving oral statements would be subject to questioning by the Commission. At the conclusion of the hearing, a transcript would be made available to the public and the record would remain open for 30 days to allow the filing of supplemental written statements. See generally id., at 361-363. More than 40 individuals and organizations representing a wide variety of interests submitted written comments. On January 17, 1973, the Licensing Board held a planning session to schedule the appearance of witnesses and to discuss methods for compiling a record. The hearing was held on February 1 and 2, with participation by a number of groups, including the Commission’s staff, the United States Environmental Protection Agency, a manufacturer of reactor equipment, a trade association from the nuclear industry, a group of electric utility companies, and a group called Consolidated National Intervenors which represented 79 groups and individuals including respondent NRDC.

After the hearing, the Commission’s staff filed a supplemental document for the purpose of clarifying and revising the Environmental Survey. Then the Licensing Board forwarded its report to the Commission without rendering any decision. The Licensing Board identified as the principal procedural question the propriety of declining to use full formal adjudicatory procedures. The major substantive issue was the technical adequacy of the Environmental Survey.

*530In April 1974, the Commission issued a rule which adopted the second of the two proposed alternatives described above. The Commission also approved the procedures used at the hearing,7 and indicated that the record, including the Environmental Survey, provided an “adequate data base for the regulation adopted.” Id., at 392. Finally, the Commission ruled that to the extent the rule differed from the Appeal Board decisions in Vermont Yankee “those decisions have no further precedential significance,” id., at 386, but that since “the environmental effects of the uranium fuel cycle have been shown to be relatively insignificant, ... it is unnecessary to apply the amendment to applicant’s environmental reports submitted prior to its effective date or to Final Environmental Statements for which Draft Environmental Statements have been circulated for comment prior to the effective date,” id., at 395.

Respondents appealed from both the Commission’s adoption of the rule and its decision to grant Vermont Yankee’s license to the Court of Appeals for the District of Columbia Circuit.

C

In January 1969, petitioner Consumers Power Co. applied for a permit to construct two nuclear reactors in Midland, *531Mich. Consumers Power’s application was examined by the Commission’s staff and the ACRS. The ACRS issued reports which discussed specific problems and recommended solutions. It also made reference to “other problems” of a more generic nature and suggested that efforts should be made to resolve them with respect to these as well as all other projects.8 Two groups, one called Saginaw and another called Mapleton, intervened and opposed the application.9 Saginaw filed with the Board a number of environmental contentions, directed over 300 interrogatories to the ACRS, attempted to depose the chairman of the ACRS, and requested discovery of various ACRS documents. The Licensing Board denied the various discovery requests directed to the ACRS. Hearings were then held on numerous radiological health and safety issues.10 Thereafter, the Commission’s staff issued a draft *532environmental impact statement. Saginaw submitted 119 environmental contentions which were both comments on the proposed draft statement and a statement of Saginaw’s position in the upcoming hearings. The staff revised the statement and issued a final environmental statement in March 1972. Further hearings were then conducted during May and June 1972. Saginaw, however, choosing not to appear at or participate in these latter hearings, indicated that it had “no conventional findings of fact to set forth” and had not “chosen to search the record and respond to this proceeding by submitting citations of matters which we believe were proved or disproved.” See App. 190 n. 9. But the Licensing Board, recognizing its obligations to “independently consider the final balance among conflicting environmental factors in the record,” nevertheless treated as contested those issues “as to which intervenors introduced affirmative evidence or engaged in substantial cross examination.” Id., at 205, 191.

At issue now are 17 of those 119 contentions which are claimed to raise questions of “energy conservation.”', The Licensing Board indicated that as far as appeared from the record, the demand for the plant was made up, of normal industrial and residential use. Id., at 207. It went on to state that it was “beyond our province to inquire into whether the customary uses being made of electricity in our society are ‘proper’ or ‘improper.’ ” Ibid. With respect to claims that Consumers Power stimulated demand by its advertising the Licensing Board indicated that “[n]o evidence was offered on this point and absent some evidence that Applicant is creating abnormal demand, the Board did not consider the *533question.” Id., at 207-208. The Licensing Board also' failed to consider the environmental effects of fuel reprocessing or disposal of radioactive wastes. The Appeal Board ultimately-affirmed the Licensing Board’s grant of a construction permit and the Commission declined to further review the matter.

At just about the same time, the Council on Environmental Quality revised its regulations governing the preparation of environmental impact statements. 38 Fed. Reg. 20550 (1973). The regulations mentioned for the first time the necessity of considering in impact statements energy conservation as one of the alternatives to a proposed project. The new guidelines were to apply only to final impact statements filed after January 28, 1974. Id., at 20557. Thereafter, on November 6, 1973, more than a year after the record had been closed in the Consumers Power case and while that case was pending before the Court of Appeals, the Commission ruled in another case that while its statutory power to compel conservation was not clear, it did not follow that all evidence of energy conservation issues should therefore be barred at the threshold. In re Niagara Mohawk Power Corp., 6 A. E. C. 995 (1973). Saginaw then moved the Commission to clarify its ruling and reopen the Consumers Power proceedings.

In a lengthy opinion, the Commission declined to reopen the proceedings. The Commission first ruled it was required to consider only energy conservation alternatives which 'were “ ‘reasonably available,’ ” would in their aggregate effect curtail demand for electricity to a level at which the proposed facility would not be needed, and were susceptible of a reasonable degree of proof. App. 332. It then determined, after a thorough examination of the record, that not all of Saginaw’s contentions met these threshold tests. Id., at 334-340. It further determined that the Board had been willing at all times to take evidence on the other contentions. Saginaw had simply failed to present any such evidence. The *534Commission further criticized Saginaw for its total disregard of even those minimal procedural formalities necessary to give the Board some idea of exactly what was at issue. The Commission emphasized that “[particularly in these circumstances, Saginaw’s complaint that it was not granted a hearing on alleged energy conservation issues comes with ill grace.”11 Id., at 342. And in response to Saginaw’s contention that regardless of whether it properly raised the issues, the Licensing Board must consider all environmental issues, the Commission basically agreed, as did the Board itself, but further reasoned that the Board must have some workable procedural rules and these rules

“in this setting must take into account that energy conservation is a novel and evolving concept. NEPA 'does not require a “crystal ball” inquiry.’ Natural Resources Defense Council v. Morton, [148 U. S. App. D. C. 5, 15, 458 F. 2d 827, 837 (1972) ]. This consideration has led us to hold that we will not apply Niagara retroactively. As we gain experience on a case-by-case basis and hopefully, feasible energy conservation techniques emerge, the applicant, staff, and licensing boards will have obligations to develop an adequate record on these issues in appropriate cases, whether or not they are raised by intervenors.

“However, at this emergent stage of energy conservation principles, intervenors also have their responsibilities. They must state clear and reasonably specific energy conservation contentions in a timely fashion. Beyond that, they have a burden of coming forward with some *535affirmative showing if they wish to have these novel contentions explored further.”12 Id., at 344 (footnotes omitted).

Respondents then challenged the granting of the construction permit in the Court of Appeals for the District of Columbia Circuit.

D

With respect to the challenge of Vermont Yankee’s license, the court first ruled that in the absence of effective rulemaking proceedings,13 the Commission must deal with the environmental impact of fuel reprocessing and disposal in individual licensing proceedings. 178 U. S. App. D. C., at 344, 547 P. 2d, at 641. The court then examined the rulemaking proceedings and, despite the fact that it appeared that the agency employed all the procedures required by 5 U. S. C. § 553 (1976 ed.) and more, the court determined the proceedings to be inadequate and overturned the rule. Accordingly, the Commission’s determination with respect to Vermont Yankee’s license was also remanded for further proceedings.14 178 U. S. App. D. C., at 358, 547 P. 2d, at 6.55.

*536With respect to the permit to Consumers Power, the court first held that the environmental impact statement for construction of the Midland reactors was fatally defective for *537failure to examine energy conservation as an alternative to a plant of this size. 178 U. S. App. D. C., at 331,547F. 2d, at 628. The uourt also thought the report by ACRS was inadequate, although it did not agree that discovery from individual ACRS members was the proper way to obtain further explication of the report. Instead, the court held that the Commission should have sua sponte sent the report back to the ACRS for further elucidation of the “other problems” and their resolution. Id., at 335, 547 F. 2d, at 632. Finally, the court ruled that the fuel cycle issues in this case were controlled by NRDC v. NRC, discussed above, and remanded for appropriate consideration of waste disposal and other unaddressed fuel cycle issues as described in that opinion. 178 U. S. App. D. C., at 335, 547 F. 2d, at 632.

*538II

A

Petitioner Vermont Yankee first argues that the Commission may grant a license to operate a nuclear reactor without any consideration of waste disposal and fuel reprocessing. We find, however, that this issue is no longer presented by the record in this case. The Commission does not contend that it is not required to consider the environmental impact of the spent fuel processes when licensing nuclear power plants. Indeed, the Commission has publicly stated subsequent to the Court of Appeals’ decision in the instant case that consideration of the environmental impact of the back end of the fuel cycle in “the environmental impact statements for individual LWR’s [light-water power reactors] would represent a full and candid assessment of costs and benefits consistent with the legal requirements and spirit of NEPA.” 41 Fed. Reg. 45849 (1976). Even prior to the Court of Appeals’ decision the Commission implicitly agreed that it would consider the back end of the fuel cycle in all licensing proceedings: It indicated that it was not necessary to reopen prior licensing proceedings because “the environmental effects of the uranium fuel cycle have been shown to be relatively insignificant,” and thus incorporation of those effects into the cost-benefit analysis would not change the results of such licensing proceedings. App. 395. Thus, at this stage of the proceedings the only question presented for review in this regard is whether the Commission may consider the environmental impact of the fuel processes when licensing nuclear reactors. In addition to the weight which normally attaches to the agency’s determination of such a question, other reasons support the Commission’s conclusion.

Vermont Yankee will produce annually well over 100 pounds of radioactive wastes, some of which will be highly toxic. The Commission itself, in a pamphlet published by its *539information office, clearly recognizes that these wastes “pose the most severe potential health hazard . . . U. S. Atomic Energy Commission, Radioactive Wastes 12 (1965). Many of these substances must be isolated for anywhere from 600 to hundreds of thousands of years. It is hard to argue that these wastes do not constitute “adverse environmental effects which cannot be avoided should the proposal be implemented,” or that by operating nuclear power plants we are not making “irreversible and irretrievable commitments of resources.” 42 U. S. C. §§ 4332 (2) (C) (ii), (v). As the Court of Appeals recognized, the environmental impact of the radioactive wastes produced by a nuclear power plant is analytically indistinguishable from the environmental effects of “the stack gases produced by a coal-burning power plant.” 178 U. S. App. D. C., at 341, 547 F. 2d, at 638. For these reasons we hold that the Commission acted well within its statutory authority when it considered the back end of the fuel cycle in individual licensing proceedings.

B

We next turn to the invalidation of the fuel cycle rule. But before determining whether the Court of Appeals reached a permissible result, we must determine exactly what result it did reach, and in this case that is no mean feat. Vermont Yankee argues that the court invalidated the rule because of the inadequacy of the procedures employed in the proceedings. Brief for Petitioner in No. 76-419, pp. 30-38. Respondents, on the other hand, labeling petitioner’s view of the decision a “straw man,” argue to this Court that the court merely held that the record was inadequate to enable the reviewing court to determine whether the agency had fulfilled its statutory obligation. Brief for Respondents in No. 76 — A19, pp. 28-30, 40. But we unfortunately have not found the parties’ characterization of the opinion to be entirely reliable; it appears here, as in Orloff v. Willoughby, 345 U. S. 83, 87 (1953), that *540“in this Court the parties changed positions as nimbly as if dancing a quadrille.” 15

After a thorough examination of the opinion itself, we con-*541elude that while the matter is not entirely free from doubt, the majority of the Court of Appeals struck down the rule because of the perceived inadequacies of the procedures employed in the rulemaking proceedings. The court first determined the intervenors’ primary argument to be “that the decision to preclude 'discovery or cross-examination’ denied them a meaningful opportunity to participate in the proceedings as guaranteed by due process.” 178 U. S. App. D. C., at 346, 547 F. 2d, at 643. The court then went on to frame the issue for decision thus:

“Thus, we are called upon to decide whether the procedures provided by the agency were sufficient to ventilate the issues.” Ibid., 547 F. 2d, at 643.

The court conceded that absent extraordinary circumstances it is improper for a reviewing court to prescribe the procedural format an agency must follow, but it likewise clearly thought it entirely appropriate to “scrutinize the record as a whole to insure that genuine opportunities to participate in a meaningful way were provided . . . .” Id., at 347, 547 F. 2d, at 644. The court also refrained from actually ordering the agency to follow any specific procedures, id., at 356-357, 547 F. 2d, at 653-654, but there is little doubt in our minds that *542the ineluctable mandate of the court’s decision is that the procedures afforded during the hearings were inadequate. This conclusion is particularly buttressed by the fact that after the court examined the record, particularly the testimony of Dr. Pittman, and declared it insufficient, the court proceeded to discuss at some length the necessity for further procedural devices or a more “sensitive” application of those devices employed during the proceedings. Ibid. The exploration of the record and the statement regarding its insufficiency might initially lead one to conclude that the court was only examining the sufficiency of the evidence, but the remaining portions of the opinion dispel any doubt that this was certainly not the sole or even the principal basis of the decision. Accordingly, we feel compelled to address the opinion on its own terms, and we conclude that it was wrong.

In prior opinions we have intimated that even in a rule-making proceeding when an agency is making a “ 'quasi-judicial’ ” determination by which a very small number of persons are “ 'exceptionally affected, in each case upon individual grounds,’ ” in some circumstances additional procedures may be required in order to afford the aggrieved individuals due process.16 United States v. Florida East Coast R. Co., 410 U. S., at 242, 245, quoting from Bi-Metallic Investment Co. v. State Board of Equalization, 239 U. S. 441, 446 (1915). It might also be true, although we do not think the issue is presented in this case and accordingly do not decide it, that a totally unjustified departure from well-settled agency procedures of long standing might require judicial correction.17

*543But this much is absolutely clear. Absent constitutional constraints or extremely compelling circumstances the “administrative agencies ‘should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.’ ” FCC v. Schreiber, 381 U. S., at 290, quoting from FCC v. Pottsville *544Broadcasting Co., 309 U. S., at 143. Indeed, our cases could hardly be more explicit in this regard. The Court has, as we noted in FCC v. Schreiber, supra, at 290, and n. 17, upheld this principle in a variety of applications,18 including that case where the District Court, instead of inquiring into the validity of the Federal Communications Commission’s exercise of its rulemaking authority, devised procedures to be followed by the agency on the basis of its conception of how the public and private interest involved could best be served. Examining §4 (j) of the Communications Act of 1934, the Court unanimously held that the Court of Appeals erred in upholding that action. And the basic reason for this decision was the Court of Appeals’ serious departure from the very basic tenet of administrative law that agencies should be free to fashion their own rules of procedure.

We have continually repeated this theme through the years, most recently in FPC v. Transcontinental Gas Pipe Line Corp., 423 U. S. 326 (1976), decided just two Terms ago. In that case, in determining the proper scope of judicial review of agency action under the Natural Gas Act, we held that while a court may have occasion to remand an agency decision because of the inadequacy of the record, the agency should normally be allowed to “exercise its administrative discretion in deciding how, in light of internal organization considerations, it may best proceed to develop the needed evidence and how its prior decision should be modified in light of such evidence as develops.” Id., at 333. We went on to emphasize:

“At least in the absence of substantial justification for doing otherwise, a reviewing court may not, after determining that additional evidence is requisite for adequate *545review, proceed by dictating to the agency the methods, procedures, and time dimension of the needed inquiry and ordering the results to be reported to the court without opportunity for further consideration on the basis of the new evidence by the agency. Such a procedure clearly runs the risk of ‘propel [ling] the court into the domain which Congress has set aside exclusively for the administrative agency.’ SEC v. Chenery Corp., 332 U. S. 194, 196 (1947).” Ibid.

Respondent NRDC argues that § 4 of the Administrative Procedure Act, 5 U. S. C. § 553 (1976 ed.), merely establishes lower procedural bounds and that a court may routinely require more than the minimum when an agency’s proposed rule addresses complex or technical factual issues or “Issues of Great Public Import.” Brief for Respondents in No. 76-419, p. 49. We have, however, previously shown that our decisions reject this view. Supra, at 542 to this page. We also think the legislative history, even the part which it cites, does not bear out its contention. The Senate Report explains what eventually became § 4 thus:

“This subsection states . . . the minimum requirements of public rule making procedure short of statutory hearing. Under it agencies might in addition confer with industry advisory committees, consult organizations, hold informal ‘hearings,’ and the like. Considerations of practicality, necessity, and public interest . . . will naturally govern the agency’s determination of the extent to which public proceedings should go. Matters of great import, or those where the public submission of facts will be either useful to the agency or a protection to the public, should naturally be accorded more elaborate public procedures.” S. Rep. No. 752, 79th Cong., 1st Sess., 14-15 (1945).

The House Report is in complete accord:

“ ‘[U]niformity has been found possible and desirable for all classes of both equity and law actions in the courts .... *546It would seem to require no argument to demonstrate that the administrative agencies, exercising but a fraction of the judicial power may likewise operate under uniform rules of practice and procedure and that they may be required to remain within the terms of the law as to the exercise of both quasi-legislative and quasi-judicial power/

“The bill is an outline of minimum essential rights and procedures. ... It affords private parties a means of knowing what their rights are and how they may protect them ....

"... [The bill contains] the essentials of the different forms of administrative proceedings . . . H. R. Rep. No. 1980, 79th Cong., 2d Sess., 9,16-17 (1946).

And the Attorney General’s Manual on the Administrative Procedure Act 31, 35 (1947), a contemporaneous interpretation previously given, some deference by this Court because of the role played by the Department of Justice in drafting the legislation,19 further confirms that view. In short, all of this leaves little doubt that Congress intended that the discretion of the agencies and not that of the courts be exercised in determining when extra procedural devices should be employed.

There are compelling reasons for construing § 4 in this manner. In the first place, if courts continually review agency proceedings to determine whether the agency employed procedures which were, in the court’s opinion, perfectly tailored to reach what the court perceives to be the “best” or “correct” result, judicial review would be totally unpredictable. And the agencies, operating under this vague injunction to employ *547the “best” procedures and facing the threat of reversal if they did not, would undoubtedly adopt full adjudicatory procedures in every instance. Not only would this totally disrupt the statutory scheme, through which Congress enacted “a formula upon which opposing social and political forces have come to rest,” Wong Yang Sung v. McGrath, 339 U. S., at 40, but all the inherent advantages of informal rulemaking would be totally lost.20

Secondly, it is obvious that the court in these cases reviewed the agency’s choice of procedures on the basis of the record actually produced at the hearing, 178 U. S. App. D. C., at 347, 547 F. 2d, at 644, and not on the basis of the information available to the agency when it made the decision to structure the proceedings in a certain way. This sort of Monday morning quarterbacking not only encourages but almost compels the agency to conduct all rulemaking proceedings with the full panoply of procedural devices normally associated only with adjudicatory hearings.

Finally, and perhaps most importantly, this sort of review fundamentally misconceives the nature of the standard for judicial review of an agency rule. The court below uncritically assumed that additional procedures will automatically result in a more adequate record because it will give interested parties more of an opportunity to participate in and contribute to the proceedings. But informal rulemaking need not be based solely on the transcript of a hearing held before an agency. Indeed, the agency need not even hold a formal hearing. See 5 U. S. C. § 553 (c) (1976 ed.). Thus, the adequacy of the “record” in this type of proceeding is not correlated directly to the type of procedural devices employed, but .rather turns on whether the agency has followed the statutory mandate of the Administrative Procedure Act or other relevant statutes. If the agency is compelled to sup*548port the rule which it ultimately adopts with the type of record produced only after a full adjudicatory hearing, it simply will have no choice but to conduct a full adjudicatory hearing prior to promulgating every rule. In sum, this sort of unwarranted judicial examination of perceived procedural shortcomings of a rulemaking proceeding can do nothing but seriously interfere with that process prescribed by Congress.

Respondent NRDC also argues that the fact that the Commission's inquiry was undertaken in the context of NEPA somehow permits a court to require procedures beyond those specified in § 4 of the APA when investigating factual issues through rulemaking. The Court of Appeals was apparently also of this view, indicating that agencies may be required to “develop new procedures to accomplish the innovative task of implementing NEPA through rulemaking. 178 U. S. App. D. C., at 356, 547 F. 2d, at 653. But we search in vain for something in NEPA which would mandate such a result. We have before observed that “NEPA does not repeal by implication any other statute.” Aberdeen & Bockfish B. Co. v. SCRAP, 422 U. S. 289, 319 (1975). See also United States v. SCBAP, 412 U. S. 669, 694 (1973). In fact, just two Terms ago, we emphasized that the only procedural requirements imposed by NEPA are those stated in the plain language of the Act. Kleppe v. Sierra Club, 427 U. S. 390, 405-406 (1976). Thus, it is clear NEPA cannot serve as the basis for a substantial revision of the carefully constructed procedural specifications of the APA.

In short, nothing in the APA, NEPA, the circumstances of this case, the nature of the issues being considered, past agency practice, or the statutory mandate under which the Commission operates permitted the court to review and overturn the rulemaking proceeding on the basis of the procedural devices employed (or not employed) by the Commission so long as the Commission employed at least the statutory minima, a matter about which there is no doubt in this case.

*549There remains, of course, the question of whether the challenged rule finds sufficient justification in the administrative proceedings that it should be upheld by the reviewing court. Judge Tamm, concurring in the result reached by the majority of the Court of Appeals, thought that it did not. There are also intimations in the majority opinion which suggest that the judges who joined it likewise may have thought the administrative proceedings an insufficient basis upon which to predicate the rule in question. We accordingly remand so that the Court of Appeals may review the rule as the Administrative Procedure Act provides. We have made it abundantly clear before that when there is a contemporaneous explanation of the agency decision, the validity of that action must “stand or fall on the propriety of that finding, judged, of course, by the appropriate standard of review. If that finding is not sustainable on the administrative record made, then the Comptroller’s decision must be vacated and the matter remanded to him for further consideration.” Camp v. Pitts, 411 U. S. 138, 143 (1973). See also SEC v. Chenery Corp., 318 U. S. 80 (1943). The court should engage in this kind of review and not stray beyond the judicial province to explore the procedural format or to impose upon the agency its own notion of which procedures are “best” or most likely to further some vague, undefined public good.21

Ill

A

We now turn to the Court of Appeals’ holding “that rejection of energy conservation on the basis of the 'threshold test’ *550was capricious and arbitrary,” 178 U. S. App. D. C., at 332, 547 F. 2d, at 629, and again conclude the court was wrong.

The Court of Appeals ruled that the Commission’s “threshold test” for the presentation of energy conservation contentions was inconsistent with NEPA’s basic mandate to the Commission. Id., at 330, 547 F. 2d, at 627. The Commission, the court reasoned, is something more than an umpire who sits back and resolves adversary contentions at the hearing stage. Ibid., 547 F. 2d, at 627. And when an intervenor’s comments “bring sufficient attention to the issue to stimulate the Commission’s consideration of it,’ ” the Commission must “undertake its own preliminary investigation of the proffered alternative sufficient to reach a rational judgment whether it is worthy of detailed consideration in the EIS. Moreover, the Commission must explain the basis for each conclusion that further consideration of a suggested alternative is unwarranted.” Id., at 331, 547 F. 2d, at 628, quoting from Indiana & Michigan Electric Co. v. FPC, 163 U. S. App. D. C. 334, 337, 502 F. 2d 336, 339 (1974), cert. denied, 420 U. S. 946 (1975).

While the court’s rationale is not entirely unappealing as an abstract proposition, as applied to this case we think it basically misconceives not only the scope of the agency’s statutory responsibility, but also the nature of the administrative process, the thrust of the agency’s decision, and the type of issues the intervenors were trying to raise.

There is little doubt that under the Atomic Energy Act of 1954, state public utility commissions or similar bodies are empowered to make the initial decision regarding the need for power. 42 U. S. C. § 2021 (k). The Commission’s prime area of concern in the licensing context, on the other hand, is national security, public health, and safety. §§ 2132, 2133, 2201. And it is clear that the need, as that term is conventionally used, for the power was thoroughly explored in the hearings. Even the Federal Power Commission, which regu*551lates sales in interstate commerce, 16 U. S. C. § 824 et seq. (1976 ed.), agreed with Consumers Power’s analysis of projected need. App. 207.

NEPA, of course, has altered slightly the statutory balance, requiring “a detailed statement by the responsible official on . . . alternatives to the proposed action.” 42 U. S. C. § 4332 (C). But, as should be obvious even upon a moment’s reflection, the term “alternatives” is not self-defining. To make an impact statement something more than an exercise in frivolous boilerplate the concept of alternatives must be bounded by some notion of feasibility. As the Court of Appeals for the District of Columbia Circuit has itself recognized:

“There is reason for concluding that NEPA was not meant to require detailed discussion of the environmental effects of 'alternatives’ put forward in comments when these effects cannot be readily ascertained and the alternatives are deemed only remote and speculative possibilities, in view of basic changes required in statutes and policies of other agencies — making them available, if at all, only after protracted debate and litigation not meaningfully compatible with the time-frame of the needs to which the underlying proposal is addressed.” Natural Resources Defense Council v. Morton, 148 U. S. App. D. C. 5, 15-16, 458 F. 2d 827, 837-838 (1972).

See also Life of the Land v. Brinegar, 485 F. 2d 460 (CA9 1973), cert. denied, 416 U. S. 961 (1974). Common sense also teaches us that the “detailed statement of alternatives” cannot be found wanting simply because the agency failed to include every alternative device and thought conceivable by the mind of man. ' Time and resources are simply too limited to hold that an impact statement fails because the agency failed to ferret out every possible alternative, regardless of how uncommon or unknown that alternative may have been at the time the project was approved.

*552With these principles in mind we now turn to the notion of “energy conservation,” an alternative the omission of which was thought by the Court of Appeals to have been “forcefully pointed out by Saginaw in its comments on the draft EIS.” 178 U. S. App. D. C., at 328, 547 F. 2d, at 625. Again, as the Commission pointed out, “the phrase 'energy conservation’ has a deceptively simple ring in this context. Taken literally, the phrase suggests a virtually limitless range of possible actions and developments that might, in one way or another, ultimately reduce projected demands for electricity from a particular proposed plant.” App. 331. Moreover, as a practical matter, it is hard to dispute the observation that it is largely the events of recent years that have emphasized not only the need but also a large variety of alternatives for energy conservation. Prior to the drastic oil shortages incurred by the United States in 1973, there was little serious thought in most Government circles of energy conservation alternatives. Indeed, the Council on Environmental Quality did not promulgate regulations which even remotely suggested the need to consider energy conservation in impact statements until August 1, 1973. See 40 CFR § 1500.8 (a) (4) (1977); 38 Fed. Reg. 20554 (1973). And even then the guidelines were not made applicable to draft and final statements filed with the Council before January 28, 1974. Id., at 20557, 21265. The Federal Power Commission likewise did not require consideration of energy conservation in applications to build hydroelectric facilities until June 19, 1973. 18 CFR pt. 2, App. A., §8.2 (1977); 38 Fed. Reg. 15946, 15949 (1973). And these regulations were not made retroactive either. Id., at 15946. All this occurred over a year and a half after the draft environmental statement for Midland had been prepared, and over a year after the final environmental statement had been prepared and the hearings completed.

We think these facts amply demonstrate that the concept of “alternatives” is an evolving one, requiring the agency to *553explore more or fewer alternatives as they become better known and understood. This was well understood by the Commission, which, unlike the Court of Appeals, recognized that the Licensing Board’s decision had to be judged by the information then available to it. And judged in that light we have little doubt the Board’s actions were well within the proper bounds of its statutory authority. Not only did the record before the agency give every indication that the project was actually needed, but also there was nothing before the Board to indicate to the contrary.

We also think the court’s criticism of the Commission’s “threshold test” displays a lack of understanding of the historical setting within which the agency action took place and of the nature of the test itself. In the first place, while it is true that NEPA places upon an agency the obligation to consider every significant aspect of the environmental impact of a proposed action, it is still incumbent upon intervenors who wish to participate to structure their participation so that it is meaningful, so that it alerts the agency to the intervenors’ position and contentions. This is especially true when the intervenors are requesting the agency to embark upon an exploration of uncharted territory, as was the question of energy conservation in the late 1960’s and early 19'70’s.

“[C]omments must be significant enough to step over a threshold requirement of materiality before any lack of agency response or consideration becomes of concern. The comment cannot merely state that a particular mistake was made ... ; it must show why the mistake was of possible significance in the results . . . .” Portland Cement Assn. v. Ruckelshaus, 158 U. S. App. D. C. 308, 327, 486 F. 2d 375, 394 (1973), cert. denied sub nom. Portland Cement Corp. v. Administrator, EPA, 417 U. S. 921 (1974).

Indeed, administrative proceedings should not be a game or a forum to engage in unjustified obstructionism by making *554cryptic and obscure reference to matters that “ought to' be” considered and then, after failing to do more to bring the matter to the agency’s attention, seeking to have that agency determination vacated on the ground that the agency failed to consider matters “forcefully presented.” In fact, here the agency continually invited further clarification of Saginaw’s contentions. Even without such clarification it indicated a willingness to receive evidence on the matters. But not only did Saginaw decline to further focus its contentions, it virtually declined to participate, indicating that it had “no conventional findings of fact to set forth” and that it had not “chosen to search the record and respond to this proceeding by submitting citations of matter which we believe were proved or disproved.”

We also think the court seriously mischaracterized the Commission’s “threshold test” as placing “heavy substantive burdens ... on intervenors . . . .” 178 U. S. App. D. C., at 330, and n. 11, 547 F. 2d, at 627, and n. 11. On the contrary, the Commission explicitly stated:

“We do not equate this burden with the civil litigation concept of a prima jade case, an unduly heavy burden in this setting. But the showing should be sufficient to require reasonable minds to inquire further.” App. 344 n. 27.

We think this sort of agency procedure well within the agency’s discretion.

In sum, to characterize the actions of the Commission as “arbitrary or capricious” in light of the facts then available to it as described at length above, is to deprive those words of any meaning. As we have said in the past:

“Administrative consideration of evidence . . . always creates a gap between the time the record is closed and the time the administrative decision is promulgated [and, we might add, the time the decision is judicially reviewed]. ... If upon the coming down of the order *555litigants might demand rehearings as a matter of law because some new circumstance has arisen, some new trend has been observed, or some new fact discovered, there would be little hope that the administrative process could ever be consummated in an order that would not be subject to reopening.” ICC v. Jersey City, 322 U. S. 503, 514 (1944).

See also Northern Lines Merger Cases, 396 U. S. 491, 521 (1970).

We have also made it clear that the role of a court in reviewing the sufficiency of an agency’s consideration of environmental factors is a limited one, limited both by the time at which the decision was made and by the statute mandating review.

“Neither the statute nor its legislative history contemplates that a court should substitute its judgment for that of the agency as to the environmental consequences of its actions.” Kleppe v. Sierra Club, 427 U. S., at 410 n. 21.

We think the Court of Appeals has forgotten that injunction here and accordingly its judgment in this respect must also be reversed.22

*556B

Finally, we turn to the Court of Appeals’ holding that the Licensing Board should have returned the ACRS report to ACRS for further elaboration, understandable to a layman, of the reference to other problems.

The Court of Appeals reasoned that since one function of the report was “that all concerned may be apprised of the safety or possible hazard of the facilities,” the report must be in terms understandable to a layman and replete with cross-references to previous reports in which the “other problems” are detailed. Not only that, but if the report does not so elaborate, and the Licensing Board fails to sun sponte return the report to ACRS for further development, the entire agency action, made after exhaustive studies, reviews, and 14 days of hearings, must be nullified.

Again the Court of Appeals has unjustifiably intruded into the administrative process. It is true that Congress thought publication of the ACRS report served an important function. But the legislative history shows that the function of publication was subsidiary to its main function, that of providing technical advice from a body of experts uniquely qualified to provide assistance. See 42 U. S. C. § 2039; S. Rep. No. 296, 85th Cong., 1st Sess., 24 (1957); Joint Committee on Atomic Energy, A Study of AEC Procedures and Organization in the Licensing of Reactor Facilities, 85th Cong., 1st Sess., 32-34 (Comm. Print 1957). The basic information to be conveyed to the public is not necessarily a full technical exposition of every facet of nuclear energy, but rather the ACRS’s position, and reasons therefor, with respect to the safety of a proposed nuclear reactor. Accordingly, the ACRS cannot be faulted for not dealing with every facet of nuclear energy in every report it issues.

Of equal significance is the fact that the ACRS was not obfuscating its findings. The reports to which it referred were matters of public record, on file in the Commission’s *557public-documents room. Indeed, all ACRS reports are on file there. Furthermore, we are informed that shortly after the Licensing Board’s initial decision, ACRS prepared a list which identified its “generic safety concerns.” In light of all this it is simply inconceivable that a reviewing court should find it necessary or permissible to order the Board to sua sponte return the report to ACRS. Our view is confirmed by the fact that the putative reason for the remand was that the public did not understand the report, and yet not one member of the supposedly uncomprehending public even asked that the report be remanded. This surely is, as petitioner Consumers Power claims, “judicial intervention run riot.” Brief for Petitioner in No. 76-528, p. 37.

We also think it worth noting that we find absolutely nothing in the relevant statutes to justify what the court did here. The Commission very well might be able to remand a report for further clarification, but there is nothing to support a court’s ordering the Commission to take that step or to support a court’s requiring the ACRS to give a short explanation, understandable to a layman, of each generic safety concern.

All this leads us to make one further observation of some relevance to this case. To say that the Court of Appeals’ final reason for remanding is insubstantial at best is a gross understatement. Consumers Power first applied in 1969 for a construction permit — not even an operating license, just a construction permit. The proposed plant underwent an incredibly extensive review. The reports filed and reviewed literally fill books. The proceedings took years, and the actual hearings themselves over two weeks. To then nullify that effort seven years later because one report refers to other problems, which problems admittedly have been discussed at length in-other reports available to the public, borders on the Kafkaesque. Nuclear energy may some day be a cheap, safe source of power or it may not. But Congress has made a *558choice to at least try nuclear energy, establishing a reasonable review process in which courts are to play only a limited role. The fundamental policy questions appropriately resolved in Congress and in the state legislatures are not subject to reexamination in the federal courts under the guise of judicial review of agency action. Time may prove wrong the decision to develop nuclear energy, but it is Congress or the States within their appropriate agencies which must eventually make that judgment. In the meantime courts should perform their appointed function. NEPA does set forth significant substantive goals for the Nation, but its mandate to the agencies is essentially procedural. See 42 IT. S. C. § 4332. See also Aberdeen & Bockfish R. Co. v. SCRAP, 422 U. S., at 319. It is to insure a fully informed and well-considered decision, not necessarily a decision the judges of the Court of Appeals or of this Court would have reached had they been members of the decisionmaking unit of the agency. Administrative decisions should be set aside in this context, as in every other, only for substantial procedural or substantive reasons as mandated by statute, Consolo v. FMC, 383 U. S. 607, 620 (1966), not simply because the court is unhappy with the result reached. And a single alleged oversight on a peripheral issue, urged by parties who never fully cooperated or indeed raised the issue below, must not be made the basis for overturning a decision properly made .after an otherwise exhaustive proceeding.

Reversed and remanded.

Mr. Justice Blackmun and Mr. Justice Powell took no part in the consideration or decision of these cases.

Me. Chief Justice Stone

delivered the opinion of the Court.

This is a rate case involving numerous questions which arise out of the Federal Power Commission’s regulation, under §§ 5 (a) and 13 of the Natural Gas Act of 1938, 52 Stat. 821, 15 U. S. C. § 717, of the rates to be charged for the sale of natural gas by cross-petitioners, Natural Gas Pipeline Company of America and Texoma Natural Gas Company.

The two companies are engaged in business as a single enterprise. They produce natural gas from their own reserves in the Panhandle gas fields in Texas, and purchase gas produced there by others. They transport the gas by their own pipeline in interstate commerce to Illinois, where they sell the bulk of it at wholesale to utilities, which distribute and sell it for domestic, commercial and industrial uses.

The companies began operations in 1932 with a capital structure of $60,000,000 of six per cent bonds, later increased by $999,000, and $3,500,000 of common stock, of which $500,000 is stock of the Texoma Company, a nonprofit corporation paying no dividends on its stock. During the first seven years of operation, beginning January 1, 1932, and extending through 1938, the companies charged against gross income various depreciation and depletion deductions aggregating $13,077,48s,1 and in addition *579charged $6,481,322 for “retirements” of property. In that period they paid dividends amounting in all to $9,150,000. Although there were book deficits in earnings for the first two years, the total “net profit” available for dividends and surplus after payment of interest on the bonds was $8,224,436,2 or an annual average of $1,174,919, which is 33.6% per annum on the $3,500,000 stock. The earnings available during the period for return on the capital investment of both stockholders and bondholders — after taking out of income $19,558,810 for depreciation, depletion and retirements — totalled $34,040,883; this makes an average of $4,862,983 annually, which is about 8% on the book figures for investment undepreciated, or 8.8% after deducting from investment the average depreciation and depletion reserves actually charged to earnings by the companies.3 At the time of the hearing, over one-fourth of the bonds issued had been retired out of earnings.

On complaint of the Illinois Commerce Commission, and on its own motion, the Power Commission began separate investigations of the companies’ rates. These proceedings were consolidated and after extensive hearings the Commission, for the purpose of issuing an interim order, accepted the companies’ statement that the book cost of their property existing at the end of 1938 was $6(^172,843, including working capital of $975,000. *580Likewise for the purpose of the order, it accepted the companies’ estimate that the value of all physical property — calculated at reproduction cost new (except for gas reserves taken on the companies’ statement to have a present value of $13,334,775) — was $74,420,424, which the Commission adopted as the rate base. It took the companies’ own estimate of twenty-three years' ending in 1954 as the life of the business, and for the amortization base used their cost figure of $78,284,009 for the total past and estimated future investment after deduction of estimated salvage. It calculated the “annual amortization expense” on that amount for the twenty-three year period, at a 6%% sinking fund interest rate, as $1,557,852, which it allowed.

The Commission also accepted, for the purpose of its interim order, the companies’ estimate of prospective income available for amortization and return for the period 1939 to 1942 inclusive, as averaging $9,511,454 per annum. But making allowance for higher income tax rates under the Revenue Act of 1940, it found that the income available for amortization and return would be decreased to $9,362,032. It concluded that the companies’ estimate of return, less the amortization allowance, ($9,362,032 less $1,557,852), — or $7,804,180 — exceeded the fair return, $4,837,328 (which is 6%% of the rate base of $74,420,424), by $2,966,852, which , amount was available for reduction of net revenues. Taking into account the decrease of $783,909 in federal income taxes which would result from such a decline in revenues, the Commission decided there was a total of $3,750,000 annually available for reduction of rates. It found the existing rates were “unjust, unreasonable and excessive,” and made its interim order directing the companies to file a new schedule of rates and charges effective after September 1, 1940, which would bring about an annual reduction of $3,750,000 in operating revenues. The *581order also provided that the record should “remain open” for such further proceedings as the Commission may deem necessary or desirable.

On the companies’ petition for review of the order pursuant to § 19 (b) of the Act, the Court of Appeals for the Seventh Circuit, 120 F. 2d 625, upheld the validity of the rate regulation provisions of the Act, and the Commission’s authority under the statute to issue the interim order directing reduction of the rates and requiring respondents to file new schedules reflecting that reduction. But the court vacated the Commission’s order on the sole grounds that “going concern value” to the extent of $8,500,000 should have been included in the rate base, and that the amortization period for the entire property, instead of the full twenty-three year estimated life of the business taken by the Commission, should have been dated from the passage of the Act or the time of the Commission’s order.

We granted certiorari, 314 U. S. 593, because of the novelty and importance of the questions presented upon the Commission’s petition challenging the grounds of reversal below, and on the companies’ cross petition assailing the constitutionality of the Act, the authority of the Commission to make the interim order, the prescribed 6y%°fo return, the computation of the amortization allowance on the same rate of interest as the fair rate of return, and other features of the Commission’s order presently to be discussed.

The Natural Gas Act declares that “the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest,” and that federal regulation of interstate commerce in natural gas “is necessary in the public interest.” § 1 (a). The Act directs that all rates and charges in connection with the transportation or sale of natural gas, subject to the jurisdiction of the Commission, shall be “just and rea*582sonable” and declares to be unlawful any rate or charge which is not just and reasonable. § 4 (a). By § 5 the Commission, on its own motion or the complaint of a State, municipality, state commission or gas distributing company, is empowered to investigate the rates charged by any natural gas company in connection with any transportation or sale of any natural gas subject to the jurisdiction of the Commission, and after a hearing to determine just and reasonable rates.

Constitutionality of the Act. The argument that the provisions of the statute applied in this case are unconstitutional on their face is without merit. The sale of natural gas originating in one State and its transportation and delivery to distributors in any other State constitutes interstate commerce, which is subject to regulation by Congress. Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U. S. 498. It is no objection to the exercise of the power of Congress that it is attended by the same incidents which attend the exercise of the police power of a State. The authority of Congress to regulate the prices of commodities in interstate commerce is at least as great under the Fifth Amendment as is that of the States under the Fourteenth to regulate the prices of commodities in intrastate commerce. Compare United States v. Carolene Products Co., 304 U. S. 144; United States v. Rock Royal Co-op., 307 U. S. 533, 569; Sunshine Coal Co. v. Adkins, 310 U. S. 381, 393-97; United States v. Darby, 312 U. S. 100, with Nebbia v. New York, 291 U. S. 502; Olsen v. Nebraska, 313 U. S. 236.

The price of gas distributed through pipelines for public consumption has been too long and consistently recognized as a proper subject of regulation under the Fourteenth Amendment to admit of doubts concerning the propriety of like regulations under the Fifth. Willcox v. Consolidated Gas Co., 212 U. S. 19; Cedar Rapids *583 Gas Co. v. Cedar Rapids, 223 U. S. 655; Railroad Commission v. Pacific Gas Co., 302 U. S. 388. And the fact that the distribution here involved is by wholesale rather than retail sales presents no differences of significance to the protection of the public interest which is the object of price regulation. Cf. Illinois Natural Gas Co. v. Central Illinois Public Service Co., supra. The business of cross-petitioners is not any the less subject to regulation now because the Government has not seen fit to regulate it in the past. Cf. Nebbia v. New York, supra, 538-39.

Validity of the Interim Order. The companies contend that the Federal Power Commission has no authority under the Act to enter the type of order now under review, and that the order is invalid because the Commission did not itself fix reasonable rates as required by the Act but instead merely directed the companies to file a new rate schedule which would result in the prescribed reduction in operating revenues. Section 5 (a) of the Act provides: “Whenever the Commission, after a hearing . . ., shall find that any rate ... is in just, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate . . . and shall fix the same by order.” It also contains a proviso that the Commission shall not have power to order an increase of rates on file unless in accordance with a new schedule filed by the company. But without mention of new rate schedules the proviso adds that the Commission “may order a decrease where existing rates are unjust ... or are not the lowest reasonable rates.” And § 16 gives the Commission “power to . . . issue . . . such orders ... as it may find necessary or appropriate to carry out the provisions of this Act.”

The first prerequisite to an order by the Commission is that it shall be preceded by a hearing and findings. In this case, while the proceedings were not ended by the *584interim, order, the companies had full opportunity to offer all their evidence both direct and in rebuttal, and full opportunity to cross-examine every witness offered by both the Federal Power Commission and the Illinois Commerce Commission. All the evidence tendered was received and considered by the Commission, and before the interim order was entered counsel for the companies stated to the Commission that they had concluded the direct testimony in support of their case. So far as the order is supported by the evidence, the companies cannot complain that they were denied a full hearing because they had not been able to examine on redirect their own witnesses who had not been cross-examined or because they had no opportunity to cross-examine or rebut witnesses who were not offered by the Commission. The right to a full hearing before any tribunal does not include the right to challenge or rely on evidence not offered or considered. See New England Divisions Case, 261 U. S. 184, 201.

The establishment of a rate for a regulated industry often involves two steps of different character, one of which may appropriately precede the other. The first is the adjustment of the general revenue level to the demands of a fair return. The second is the adjustment of a rate schedule conforming to that level so as to eliminate discriminations and unfairness from its details. Such an orderly procedure for establishing the rates prescribed by the Act would seem to be an appropriate means of carrying out its provisions. Section 5 of the Act was modelled on the provisions of the Transportation Act, 49 U. S. C. §§ 13, 15, which have been interpreted as giving to the Interstate Commerce Commission authority to establish a general level of rates and divisions in advance of a schedule to be filed by the carriers. See New England Divisions Case, supra, 201-202, 203, n. 21. Cf. Sharfman, The Interstate Commerce *585Commission, vol. 2, pp. 381-82; Driscoll v. Edison Co., 307 U. S. 104.

We think that the proviso of § 5, already quoted, contemplates that, when existing rates are found to be unjust and unreasonable, an order decreasing revenues may be filed without establishing a specific schedule of rates. Since such an order may be in the interests of the public, as well as the regulated company, and is in harmony with the purposes of the Act, it is one which the Commission has discretion to make under § 16 as appropriate to carry out the provisions of the Act.

The Scope of Judicial Review of Rates Prescribed by the Commission. The ultimate question for oar decision is whether the rate prescribed by the Commission is too low. The statute declares, § 4 (a), that the rates of natural gas companies subject to the Act “shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.” Section 5 (a) directs the Commission to “determine the just and reasonable rate” to be observed, and requires the Commission to “fix the same by order.” It also provides that “the Commission may order a decrease where existing rates are unjust . . . unlawful, or are not the lowest reasonable rates.” On review of the Commission’s orders by a Circuit Court of Appeals as authorized by § 19 (b), the Commission’s findings of fact “if supported by substantial evidence, shall be conclusive.”

By long standing usage in the field of rate regulation, the “lowest reasonable rate” is one which is not confiscatory in the constitutional sense. Los Angeles Gas Co. v. Railroad Commission, 289 U. S. 287, 305; Railroad Commission v. Pacific Gas Co., supra, 394, 395; Denver Stock Yard Co. v. United States, 304 U. S. 470, 475. Assuming that there is a zone of reasonableness within which the Commission is free to fix a rate varying in amount and higher than a confiscatory rate, see Banton v. Belt *586 Line Ry. Corp., 268 U. S. 413, 422, 423; Columbus Gas Co. v. Commission, 292 U. S. 398, 414; Denver Stock Yard Co. v. United States, supra, 483, the Commission is also free under § 5 (a) to decrease any rate which is not the “lowest reasonable rate.” It follows that the Congressional standard prescribed by this statute coincides with that of the Constitution, and that the courts are without authority under the statute to set aside as too low any “reasonable rate” adopted by the Commission which is consistent with constitutional requirements.

The Constitution does not bind rate-making bodies to the service of any single formula or combination of formulas. Agencies to whom this legislative power has been delegated are free, within the ambit of their statutory authority, to make the pragmatic adjustments which may be called for by particular circumstances. 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. If the Commission’s order, as applied to the facts before it and viewed in its entirety, produces no arbitrary result, our inquiry is at an end.

Going Concern Value. The companies insist that their business has a going concern value of $8,500,000, which the Commission did not include in the rate base and on which they are entitled to earn a return. In establishing the rate base for the purposes of the interim order the Commission “reluctantly” accepted the estimates of value, presented by the companies’ own witnesses, as follows:

Reproduction Cost New of Physical Properties (exclusive of Gas Reserves)......$56,302,250 4

Value of Gas Reserves as of June 1,1939.. 13,334,775

*587Capital Additions from June 1,1939, to December 31,1942...................... 13,808,399* **5

Working Capital...................... 975, 000

Total Rate Base................. $74,420,424

While no item for going concern value is separately stated in the rate base, the computation of cost new of physical equipment included — in addition to labor and cost of materials — large amounts for overhead, interest, taxes, administration, legal and supervisory charges, and expenses paid or incurred in assembling the plant as that of a going concern.

The Commission spoke of the rate base thus arrived at as “liberal” and as a “generous allowance.” That the estimate of reproduction costs new is liberal is indicated by the circumstances that the companies’ structures other than gas reserves were built in 1930-1931 at a time, as the record shows, of relatively high prices, and that their reproduction cost depreciated is greater than actual cost, which was about $50,000,000. And the allowed “present-value” of leases as of June 1,1939, $13,334,775, is approximately $4,000,000 more than book cost, even without taking into account a substantial reduction for depletion reserves of $1,152,854, which the companies had accrued on *588their own books by the end of 1938. The Commission declined to include going concern value as an additional item in the rate base.

The companies urge, as the Court of Appeals held, that there are items of cost or expense incurred in the establishment and development of the business during the seven-year period prior to regulation, which were not included in the companies’ estimate of value accepted by the Commission, and which, in view of the special characteristics of the business, should be capitalized and added to the rate base to the extent of $8,500,000 for going concern value. They include, in amounts not now material, the following: expenditures for securing new business; interest on money invested in non-productive plant capacity; taxes paid on non-productive capacity; fixed operating expenses attributable to non-productive capacity, and depreciation on non-productive capacity.6 The companies’ contentions with respect to all these items are predicated upon the limited life of the business, twenty-three years, and on testimony that in anticipation of its growth larger gas mains and facilities were constructed than were required during the earlier years of the business. The reproduction cost new of this excess of equipment is admittedly included in- the rate base.

None of these items appears in the companies’ capital account. With the possible exception of expenditures for securing new business, they are synthetic figures arrived at by estimating the amount of expense attributable to the current cost of maintenance of the excess capacity of the plant during periods when the excess capacity was not *589used. But the interest charges, taxes and other costs of maintaining this excess capacity during the period when not in use have not been capitalized by the companies on their books and so far as appears were paid from current-earnings. The same is true of the expenditure for advertising and other expenses of acquiring new business. .

The novel question is thus presented whether confiscation, proscribed by Congress as well as the Constitution, results from the exclusion from the rate base of the previous costs of maintaining excess plant capacity and of getting new business. The Commission gave full consideration to this contention. It said: “The companies’ claim for $8,500,000 for going concern value must be disallowed. The amount obviously is an arbitrary claim, not supported by substantial evidence warranting its allowance. Its allowance would mean the acceptance of a deceptive fiction, resulting in an unfair imposition upon consumers. We are convinced that we are allowing in our rate base more than an adequate amount to cover all elements of value.”

There is no constitutional requirement that going concern value, even when it is an appropriate element to be included in a rate base, must be separately stated and appraised as such. This Court has often sustained valuations for rate purposes of a business assembled as a whole, without separate appraisal of the going concern element. Columbus Gas Co. v. Commission, 292 U. S. 398, 411; Dayton P. & L. Co. v. Commission, 292 U. S. 290, 309; Denver Stock Yard Co. v. United States, supra, 478-480; Driscoll v. Edison Co., supra, 117. When that has been done, the burden rests on the regulated company to show that this item has neither been adequately covered in the rate base nor recouped from prior earnings of the business. Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 166.

*590The total value of the companies’ plant, including equipment in excess of immediate needs when beginning business, has been included in the rate base adopted. If rightly included, as the Commission has assumed for purposes of the order, the companies would have been entitled to earn a fair return upon its value, had the business been regulated from the start. But it does not follow that the companies’ property would be confiscated by denying to them the privilege of capitalizing the maintenance cost of excess plant capacity, which would allow them to earn a return and amortization allowance upon such costs during the entire life of the business. It is only on the assumption that excess capacity is a part of the utility’s equipment used and useful in the regulated business, that it can be included as a part of the rate base on which a return may be earned. When so included, the utility gets its return not from capitalizing the maintenance cost, but from current earnings by rates sufficient, having in view the character of the business, to secure a fair return upon the rate base, provided the business is capable of earning it. But regulation does not insure that the business shall produce net revenues, nor does the Constitution require that the losses of the business in one year shall be restored from future earnings by the device of capitalizing the losses and adding them to the rate base on which a fair return and depreciation allowance is to be earned. Galveston Electric Co. v. Galveston, 258 U. S. 388; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 446-47. The deficiency may not be thus added to the rate base, for the obvious reason that the hazard that the property will not earn a profit remains on the company in the case of a regulated, as well as an unregulated, business.

Here the companies, though unregulated, always treated their entire original investment, together with subsequent additions, as capital on which profit was to be earned. *591They charged the out-of-pocket cost of maintenance of plant, whether used to capacity or not, as operating expenses deductible from earnings before arriving at net profits. They have thus treated the items now sought to be capitalized in the rate base as operating expenses to be compensated from earnings, as in the case of regulated companies. The history of the first seven years of operation before regulation shows an average annual return,7 after deduction of operating expenses, of approximately 8% on the undepreciated investment. This high return was earned during a period which included the severest depression in our history.

Whether there is going concern value in any case depends upon the financial history of the business. Houston v. Southwestern Tel. Co., 259 U. S. 318, 325. This is peculiarly true of a business which derives its estimates of going concern value from a financial history preceding regulation. That history here discloses no basis for going concern value, both because the elements relied upon for that purpose could rightly be rejected as capital investment in the case of a regulated company, and because in the present case it does not appear that the items, which have never been treated as capital investment, have not been recouped during the unregulated period.

We cannot say that the Commission has deprived the companies of their property by refusing to permit them to earn for the future a fair return and amortization on the costs of maintenance of initial excess capacity — costs which the companies fail to show have not already been recouped from earnings before computing the substantial “net profits” earned during the first seven years. The items for advertising and acquiring new business have been treated in the same way by the companies, and do *592not, in the circumstances of this case, stand on any different footing. Cf. West Ohio Gas Co. v. Commission, 294 U. S. 63, 72.

The Amortization Base. The Commission took as the amortization base the sum of $78,284,009. This was made up of the companies’ total investment, at the end of 1938, of $67,173,761 (without deduction of property retirements already made), plus estimated future capital additions through 1954, including replacements, amounting to $12,159,380,8 less estimated salvage at the predicted end of the project in 1954. It is not questioned that the Commission’s annual amortization allowance of $1,557,852, accumulated at the sinking fund interest rate of 6y%°/o adopted by the order, will be sufficient in 1954 to restore the capital investment so computed.

The companies argue that the amortization base, computed on a basis of reproduction cost, should be $84,-341,218 9 rather than cost plus estimated future capital additions. But the purpose of the amortization allowance and its justification is that it is a means of restoring from current earnings the amount of service capacity of the business consumed in each year. Lindheimer v. Illinois *593 Tel. Co., 292 U. S. 151, 167. When the property is devoted to a business which can exist for only a limited term, any scheme of amortization which will restore the capital investment at the end of the term involves no deprivation of property. Even though the reproduction cost of the property during the period may be more than its actual cost, this theoretical accretion to value represents no profit to the owner, since the property dedicated to the business, save for its salvage value, is destined for the scrap-heap when the business ends. The Constitution does not require that the owner who embarks in a wasting-asset business of limited life shall receive at the end more than he has put into it. We need not now consider whether, as the Government urges, there can in no circumstances be a constitutional requirement that the amortization base be the reproduction value rather than the actual cost of the property devoted to a regulated business. Cf. United Railways Co. v. West, 280 U. S. 234, 265. It is enough that here the business, by hypothesis, will end in 1954, and that the amortization base, computed at cost and including property already retired, will be completely restored by 1954 by the annual amortization allowances. As the Commission declared: “The amounts of amortization are recognized and treated as operating expenses. Operating expenses are stated on the basis of cost. . . . We refuse to make an allowance of amortization in excess of cost. To do so would not be the computation of a proper expense, but instead the allowance of additional profit over and above a fair return. Manifestly such an additional return would unjustly penalize consumers.”

The Amortization Period. The court below held that, since the business was unregulated for the first seven years, the adoption by the Commission of the estimated twenty-three year life of the business as the amortization period involved a denial of due process. In view of the estimate by the Commission and the companies that the *594gas properties would be exhausted in about sixteen years from the date of the Act, the court thought, as the companies argue, that a rate of return would be confiscatory which would not provide, in addition to a fair return, an annual amortization allowance sufficient to restore the total investment over the final sixteen-year period. But this argument overlooks the fact that the depreciation of physical property attributed to use, and the obsolescence of the entire property attributable to lapse of time in the case of a business having a limited life, had been taking place during the seven years before regulation and that those items must be recouped if at all from earnings. Capital investment loss at the end of the life of a business can only be avoided by restoration of the investment from earnings, and is avoidable so far as is humanly possible only by an appropriate charge of amortization to earnings as they accrue.

Here, there is no question but that the Commission’s annual amortization allowance, if applied over the entire twenty-three year life of the business, is sufficient to restore the total capital investment at the end, or that earnings of the past and those estimated for the future together are sufficient to provide for the amortization allowance and a fair return, given an appropriate rate base and rate of return. Making that assumption, we cannot say that adequate provision has not been made for restoration of the companies’ investment from earnings, and a fair return on the investment. Even though the companies were unregulated for seven years, earnings during that period were available and adequate for amortization. In fact, the companies’ charges to earnings, for depreciation, depletion and retirements, totalled $19,558,810, or an average of $2,794,115 per annum. This was in conformity with the established business practice, in the case of unregulated as well as regulated businesses, to make such a depreciation or amortization *595allowance chargeable annually to earnings as an operating expense in order to provide adequately for annual consumption of capital in the business. Lindheimer v. Illinois Tel. Co., supra.

The companies are not deprived of property by a requirement that they credit in the amortization account so much of the earnings received during the prior period as are appropriately allocable to it for amortization. Only by that method is it possible to determine the amount of earnings which may justly be required for amortization during the remaining life of the business.

Amortization Interest Rate. The annual amortization allowances of $1,557,852, if accumulated at a 6%% compound interest rate until the assumed exhaustion of the gas reserves in 1954, will be sufficient to restore the undepreciated total investment less the salvage value of the property. The companies urge that the interest rate should have been lower, say 2%, on the assumption that only some such lower rate would be earned by a hypothetical sinking fund to be created from the annual amortization allowances. But the argument ignores the fact that the amortization method adopted by the Commisssion contemplates not a sinking fund of segregated securities purchased with cash withdrawn from the business, but merely a sinking fund reserve charged to earnings and not distributable as ordinary dividends. Under this method there is no deduction of the amortization allowances from the rate base on which a fair return— 6under the current interim order — is to be allowed during the life of the business.

The companies are thus allowed to earn in each year, in addition to the amortization allowance, 6%% on both the amortized and the unamortized portions of the base. If the amortization interest were computed at a 2% rate without deducting the amortized portion from the rate base, the companies would continue to receive a 6%% *596instead of only a 2% return on that portion of the investment. True, the method of amortization adopted means that the companies look to the earnings of the business for the hypothetical interest on amortization reserve. This, it is argued, may involve more business risk than a method of amortization contemplating the actual withdrawal from the business of the amortization allowances and their investment in segregated securities bearing a lower rate of interest. But here the 6%% rate of return allowed on the amortized portion of the rate base includes compensation for the business risk, and the risk is an incident of the business in which the companies have hazarded their capital and in which they propose to invest additional capital. The Commission declared it adopted this method to avoid the inequitable result which would follow if the companies were permitted to include in their charges to the public 6%% on the amortized portion of the base, while treating it as earning only 2%. The Commission’s conclusion that this is an appropriate method is supported by the evidence, and in any case it does not appear that it has deprived or will deprive the companies of property.

Fair Rate of Return. The Commission found that “6% per cent is a fair annual rate of return upon the rate base allowed,” which it had characterized as “a generous allowance.” The courts are required to accept the Commission’s findings if they are supported by substantial evidence. § 19(b). We cannot say, on this record, that the Commission was bound to allow a higher rate.

The evidence shows that profits earned by individual industrial corporations declined from 11.3% on invested capital in 1929 to 5.1% in 1938. The profits of utility corporations declined during the same period from 7.2% to 5.1%. For railroad corporations, the decline was from 6.4% to 2.3%. Interest rates were at a low level on all forms of investment, and among the lowest that have *597ever existed. The securities of natural gas companies were sold at rates of return of from 3% to 6%, with yields on most of their bond issues between 3% and 4%. The interest on large loans ranged from 2% to 3.25%.

The regulated business here seems exceptionally free from hazards which might otherwise call for special consideration in determining the fair rate of return. Substantially all its product is distributed in the metropolitan area of Chicago, a stable and growing market, through distributing companies which own 26% of the investment of the Natural Gas Pipeline Company. Ninety per cent of its gas is taken under contract by the Chicago District Pipeline Company. The contract runs until 1946 or until 1951, at the option of the companies. Under it the District Company is bound to take, or at least pay for, 66%% of the companies’ gas, and performance is guaranteed by the three companies distributing the gas in Chicago.

The danger of early exhaustion of the gas field was fully taken into account in the estimate of its life, and the companies’ estimate was accepted. Provision for the complete amortization of the investment within that period affords a security to the investment which is lacking to those industries whose capital investments must be continued for an indefinite period. The companies’ affiliation with the six large corporations which directly or indirectly own all the stock, places them in a strong position for their future financing. The business is in the same position as other similar businesses with respect to increased taxation, inflation and costs of operation. Other factors, such as credit risks, risks of technological changes, varying demands for product, relatively small labor requirements, and conversion of inventory into cash, compare more favorably. After a full consideration of all of these factors and of expert testimony, the Commission concluded that the prescribed reduction in *598revenues was just and reasonable, and that the 6%% was a fair rate of return.

Disposition of Excess Charges Collected Since the Commission’s Order. The Circuit Court of Appeals stayed the Commission’s order pending appeal. The companies state that, as a condition of the stay, the court required them to give a bond in the sum of 11,000,000, conditioned upon their refund of excess charges to customers, in the event that the Commission’s order should be sustained. The bond is not in the record and its precise terms are not before us.

The companies point out that substantially all the gas affected by the reduction in revenues is sold to wholesalers who distribute it for ultimate consumption. They argue that the purpose of the rate regulation is the protection of consumers, and that the purposes of the Act will not be effectuated by the refunds to wholesalers. They insist that such refunds, being the wholesalers’ profits from past business, cannot be resorted to for reducing future rates to the consumers. Cf. Knoxville v. Knoxville Water Co., 212 U. S. 1, 14; Galveston Electric Co. v. Galveston, supra, 258 U. S. at 395.

Of this contention it is enough to say that the question of the disposition of the excess charges is not before us for determination on the present record. Cf. Morgan v. United States, 304 U. S. 1, 26. Amounts collected in excess of the Commission’s order are declared to be unlawful by § 4 (a) of the Act. If there is any basis, either in the bond or the circumstances relied upon by the companies, for not compelling the companies to surrender these illegal exactions, it does not appear from the record.

We have considered but find it unnecessary to discuss other objections of lesser moment to the Commission’s order. We sustain the validity of the order and reverse the judgment below.

Reversed.

*599Me. Justice Black, Mr. Justice Douglas, and Mr. Justice Murphy,

concurring.

I

We concur with the Court’s judgment that the rate order of the Federal Power Commission, issued after a fair hearing upon findings of fact supported by substantial evidence, should have been sustained by the court below. But insofar as the Court assumes that, regardless of the terms of the statute, the due process clause of the Fifth Amendment grants it power to invalidate an order as unconstitutional because it finds the charges to be unreasonable, we are unable to join in the opinion just announced.

Rate making is a species of price fixing. In a recent series of cases, this Court has held that legislative price fixing is not prohibited by the due process clause.1 We believe that, in so holding, it has returned, in part at least, to the constitutional principles which prevailed for the first hundred years of our history. Munn v. Illinois, 94 U. S. 113; Peik v. Chicago & N. W. Ry. Co., 94 U. S. 164. Cf. McCart v. Indianapolis Water Co., 302 U. S. 419, 427-*600428. The Munn and Peik cases, decided in 1877, Justices Field and Strong dissenting, emphatically declared price fixing to be a constitutional prerogative of the legislative branch, not subject to judicial review or revision.

In 1886, four of the Justices who had voted with him in the Munn and Peik cases no longer being on the Court, Chief Justice Waite expressed views in an opinion of the Court which indicated a yielding in part to the doctrines previously set forth in Mr. Justice Field’s dissenting opinions, although the decision, upholding a state regulatory statute, did not require him to reach this issue. See Railroad Commission Cases, 116 U. S. 307, 331. For an interesting discussion of the evolution of this change of position, see Swisher, Stephen J. Field, 372-392. By 1890, six Justices of the 1877 Court, including Chief Justice Waite, had been replaced by others. The new Court then clearly repudiated the opinion expressed for the Court by Chief Justice Waite in the Munn and Peik cases, in a holding which accorded with the views of Mr. Justice Field. Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418. Under those views, first embodied in a holding of this Court in 1890, “due process” means no less than “reasonableness judicially determined.” 2 3In accordance with this elastic meaning which, in the words of Mr. Justice Holmes, makes the sky the limit3 of judicial power to declare legislative acts unconstitutional, the conclusions of judges, substituted for those of legislatures, become a broad and varying standard of constitutionality.4 ***We *601shall not attempt now to set out at length the reasons for our belief that acceptance of such a meaning is historically unjustified and that it transfers to courts powers which, under the Constitution, belong to the legislative branch of government. But we feel that we must record our disagreement from an opinion which, although upholding the action of the Commission on these particular facts, nevertheless gives renewed vitality to a “constitutional” doctrine which we are convinced has no support in the Constitution.

The doctrine which makes of “due process” an unlimited grant to courts to approve or reject policies selected by legislatures in accordance with the judges’ notion of reasonableness had its origin in connection with legislative attempts to fix the prices charged by public utilities. And in no field has it had more paralyzing effects.5

II

We have here, to be sure, a statute which expressly provides for judicial review. Congress has provided in § 5 of the Natural Gas Act that the rates fixed by the Commission shall be “just and reasonable.” The provision for judicial review states that the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” § 19 (b). But we are not satisfied that the opinion of the Court properly delimits the scope of that review under this Act. Furthermore, since this case starts *602a new chapter in the regulation of utility rates, we think it important to indicate more explicitly than has been done the freedom which the Commission has both under the Constitution and under this new statute. While the opinion of the Court erases much which has been written in rate cases during the last half century, we think this is an appropriate occasion to lay the ghost of Smyth v. Ames, 169 U. S. 466, which has haunted utility regulation since 1898. That is especially desirable lest the reference by the majority to “constitutional requirements” and to “the limits of due process” be deemed to perpetuate the fallacious “fair value” theory of rate making in the limited judicial review provided by the Act.

Smyth v. Ames held (pp. 546-547) that “the basis of all calculations as to the reasonableness of rates to be charged by a corporation maintaining a highway under legislative sanction must be the fair value of the property being used by it for the convenience of the public. And in order to ascertain that value, the original cost of construction, the amount expended in permanent improvements, the amount and market value of its bonds and stock, the present as compared with the original cost of construction, the probable earning capacity of the property under particular rates prescribed by statute, and the sum required to meet operating expenses, are all matters for consideration, and are to be given such weight as may be just and right in each case. We do not say that- there may not be other matters to be regarded in estimating the value of the property. What the company is entitled to ask is a fair return upon the value of that which it employs for the public convenience. On the other hand, what the public is entitled to demand is that no more be exacted from it for the use of a public highway than the services rendered by it are reasonably worth.”

(1) This theory derives from principles of eminent domain. See Mr. Justice Brewer, Ames v. Union Pacific Ry. *603 Co., 64 F. 165, 177; West v. Chesapeake & Potomac Telephone Co., 295 U. S. 662, 671; Hale, Conflicting Judicial Criteria of Utility Rates, 38 Col. L. Rev. 959. In condemnation cases the “value of property, generally speaking, is determined by its productiveness — the profits which its use brings to the owner.” Monongahela Navigation Co. v. United States, 148 U. S. 312, 328, 329. Cf. Consolidated Rock Products Co. v. Du Bois, 312 U. S. 510, 525-526. But those principles have no place in rate regulation. In the first place, the value of a going concern in fact depends on earnings under whatever rates may be anticipated. The present fair value rule creates, but offers no solution to, the dilemma that value depends upon the rates fixed and the rates upon value. See Mr. Justice Brandeis, Southwestern Bell Telephone Co. v. Public Service Commission, 262 U. S. 276, 292; Hale, The Fair Value Merry-Go-Round, 33 Ill. L. Rev. 517; 2 Bonbright, Valuation of Property, pp. 1094 et seq. In the second place, when property is taken under the power of eminent domain the owner is “entitled to the full money equivalent of the property taken, and thereby to be put in as good position pecuniarily as it would have occupied if its property had not been taken.” United States v. New River Collieries Co., 262 U. S. 341, 343. But in rate-making, the owner does not have any such protection. We know, without attempting any valuation, that if earnings are reduced the value will be less. But that does not stay the hand of the legislature or its administrative agency in making rate reductions. As we have said, rate-making is one species of price-fixing. Price-fixing, like other forms of social legislation, may well diminish the value of the property which is regulated. But that is no obstacle to its validity. As stated by Mr. Justice Holmes in Block v. Hirsh, 256 U. S. 135, 155: “The fact that tangible property is also visible tends to give a rigidity to our conception of our rights in it that we do not attach to others less con*604cretely clothed. But the notion that the former are exempt from the legislative modification required from time to time in civilized life is contradicted not only by the doctrine of eminent domain, under which what is taken is paid for, but by that of the police power in its proper sense, under which property rights may be cut down, and to that extent taken, without pay.” Somewhat the same view was expressed in Nebbia v. New York, 291 U. S. 502, 532, where this Court said: “The due process clause makes no mention of sales or of prices any more than it speaks of business or contracts or buildings or other incidents of property. The thought seems nevertheless to have persisted that there is something peculiarly sacrosanct about the price one may charge for what he makes or sells, and that, however able to regulate other elements of manufacture or trade, with incidental effect upon price, the state is incapable of directly controlling the price itself. This view was negatived many years ago. Munn v. Illinois, 94 U. S. 113.” Explicit recognition of these principles will place the problems of rate-making in their proper setting under this statute.

(2) The rule of Smyth v. Ames, as construed and applied, directs the rate-making body in forming its judgment as to “fair value” to take into consideration various elements — capitalization, book cost, actual cost, prudent investment, reproduction cost. See Mr. Justice Brandeis, Southwestern Bell Telephone Co. v. Public Service Commission, supra, pp. 294-295. But as stated by Mr. Justice Brandéis: “Obviously 'value’ cannot be a composite of all these elements. Nor can it be arrived at on all these bases. They are very different; and must, when applied in a particular case, lead to widely different results. The rule of Smyth v. Ames, as interpreted and applied, means merely that all must be considered. What, if any, weight shall be given to any one, must practically rest in the judicial discretion of the tribunal which makes the deter*605mination. Whether a desired result is reached may depend upon how any one of many elements is treated.” Id., pp. 295-296. The risks of not giving weight to reproduction cost have been great. Southwestern Bell Telephone Co. v. Public Service Commission, supra; St. Louis & O’Fallon Ry. Co. v. United States, 279 U. S. 461. The havoc raised by insistence on reproduction cost is now a matter of historical record. Mr. Justice Brandéis in the Southwestern Bell Telephone case demonstrated how the rule of Smyth v. Ames has seriously impaired the power of rate-regulation and how the “fair value” rule has proved to be unworkable by reason of the time required to make the valuations, the heavy expense involved, and the unreliability of the results obtained.6 And see Mr. Justice Brandeis concurring, St. Joseph Stock Yards Co. v. United States, 298 U. S. 38, 73; dissenting opinion, McCart v. Indianapolis Water Co., 302 U. S. 419, 423 et seq.; Mr. Justice Stone dissenting, West v. Chesapeake Potomac Telephone Co., supra. The result of this Court’s rulings in rate cases since Smyth v. Ames has recently been summarized as follows: “Under the influence of these precedents, commission regulation has become so cumbersome and so ineffective that it may be said, with only slight exaggeration, to have broken down. Even the investor,7 on whose behalf the constitutional safeguards have *606been developed, has received no protection against the rebounds from the inflated stock-market prices that are stimulated by the ‘fair-value’ doctrine.” Bonbright, op. cit., p. 1164.

As we read the opinion of the Court, the Commission is now freed from the compulsion of admitting evidence on reproduction cost or of giving any weight to that element of “fair value.” The Commission may now adopt, if it chooses, prudent investment as a rate base— the base long advocated by Mr. Justice Brandéis. And for the reasons stated by Mr. Justice Brandéis in the Southwestern Bell Telephone case, there could be no constitutional objection if the Commission adhered to that formula and rejected all others.

Yet it is important to note, as we have indicated, that Congress has merely provided in § 6 of the Natural Gas Act that the rates fixed by the Commission shall be “just and reasonable.” It has provided no standard beyond that. Congress, to be sure, has provided for judicial review. But § 19(b) states that the “finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive.” In view of these provisions, we do not think it is permissible for the courts to concern themselves with any issues as to the economic merits of a rate base. The Commission has a broad area of discretion for selection of an appropriate rate base. The requirements of “just and reasonable” embrace, among other factors, two phases of the public interest: (1) the *607investor interest; (2) the consumer interest. The investor interest is adequately served if the utility is allowed the opportunity to earn the cost of the service. That cost has been defined by Mr. Justice Brandéis as follows: “Cost includes not only operating expenses, but also capital charges. Capital charges cover the allowance, by way of interest, for the use of the capital, whatever the nature of the security issued therefor; the allowance for risk incurred; and enough more to attract capital.” Southwestern Bell Telephone Co. v. Public Service Commission, supra, 262 U. S. at p. 291. Irrespective of what the return may be on “fair value,” if the rate permits the company to operate successfully and to attract capital all questions as to “just and reasonable” are at an end so far as the investor interest is concerned. Various routes to that end may be worked out by the expert administrators charged with the duty of regulation. It is not the function of the courts to prescribe what formula should be used. The fact that one may be fair to investors does not mean that another would be unfair. The decision in each case must turn on considerations of justness and fairness which cannot be cast into a legalistic formula. The rate of return to be allowed in any given case calls for a highly expert judgment. That judgment has been entrusted to the Commission. There it should rest.

One caveat, however, should be entered. The consumer interest cannot be disregarded in determining what is a “just and reasonable” rate. Conceivably, a return to the company of the cost of the service might not be “just and reasonable” to the public. The correct principle was announced by this Court in Covington & Lexington Turnpike Co. v. Sandford, 164 U. S. 578, 596: “It cannot be said that a corporation is entitled, as of right, and without reference to the interests of the pub-*608lie, to realize a given per cent upon its capital stock. When the question arises whether the legislature has exceeded its constitutional power in prescribing rates to be charged by a corporation controlling a public highway, stockholders are not the only persons whose rights or interests are to be considered. The rights of the public are not to be ignored. It is alleged here that the rates prescribed are unreasonable and unjust to the company and its stockholders. But that involves an inquiry as to what is reasonable and just for the public. If the establishing of new lines of transportation should cause a diminution in the number of those who need to use a turnpike road, and, consequently, a diminution in the tolls collected, that is not, in itself, a sufficient reason why the corporation, operating the road, should be allowed to maintain rates that would be unjust to those who must or do use its property. The public cannot properly be subjected to unreasonable rates in order simply that stockholders may earn dividends.” Cf. Chicago & Grand Trunk Ry. Co. v. Wellman, 143 U. S. 339, 345-346; United Gas Co. v. Texas, 303 U. S. 123, 150-151.

This problem carries into a field not necessary to develop here. It reemphasizes, however, that the investor interest is not the sole interest for protection. The investor and consumer interests may so collide as to warrant the rate-making body in concluding that a return on historical cost or prudent investment, though fair to investors, would be grossly unfair to the consumers. The possibility of that collision reinforces the view that the problem of rate-making is for the administrative experts, not the courts, and that the ex post facto function previously performed by the courts should be reduced to the barest minimum which is consistent with the statutory mandate for judicial review. That review should be as confined and restricted as the review, under similar statutes, of orders of other administrative agencies.

*609Mr. Justice Feankfubtee,

concurring:

I wholly agree with the opinion of the Chief Justice.

Congress has in the Natural Gas Act specifically cast upon courts the duty to review orders of the Federal Power Commission fixing “just and reasonable” rates. The constitutional scope of judicial review of rate orders where Congress has denied judicial review is therefore not in issue in this case. Discussion of the problem is academic, especially since we all concur in the Chief Justice’s conclusions on the rate order here made by the Commission. But since the issue has been stirred, I add a few words because legal history still has its claims.

While the doctrine of “confiscation,” as a limitation to be enforced by the judiciary upon the legislative power

to fix utility rates, was first applied in Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, that decision followed principles expounded in Stone v. Farmers’ Loan & Trust Co., 116 U. S. 307, especially at 331. See 134 U. S. at 465-56. Mr. Chief Justice Waite, who delivered the opinion in the Stone case as well as in the earlier decision in Munn v. Illinois, 94 U. S. 113, was therefore the author of the doctrine of “confiscation” and its corollary, “judicial review.” His view was shared by such stout respecters of legislative power over utilities as Mr. Justice Miller (see Fairman, Mr. Justice Miller and the Supreme Court, passim), Mr. Justice Bradley (see his dissent in Chicago, M. & St. P. Ry. Co. v. Minnesota, 134 U. S. 418, 461), and Mr. Justice Harlan. The latter, indeed, agreed with Mr. Justice Field' that the regulatory power exercised in the Railroad Commission Cases, 116 U. S. 307, constituted an impairment of the obligation of contract. By no one was the doctrine of judicial review more emphatically accepted, and applied in favor of a public utility, than by Mr. Justice Harlan in the decision and opinion in Covington & Lexington Turnpike Co. v. Sandford, 164 U. S. 578, especially at 591-95.

*610But while this historic controversy over the constitutional limitations upon the power of courts in rate cases is not presented here, if it be deemed that courts have nothing to do with rate-making because that task was committed exclusively to the Commission, surely it is a usurpation of the Commission’s function to tell it how it should discharge this task and how it should protect the various interests that are deemed to be in its, and not in our, keeping.

Me. Justice McReynolds

delivered the opinion of the Court.

The Supreme Court of Missouri (233 S. W. 425) affirmed a judgment of the Cole County Circuit Court *282which sustained an order of the Public Service Commission of Missouri, effective -December 1, 1919. That order undertook to reduce rates for exchange service and to abolish the installation and moving charges theretofore demanded by plaintiff in error. It is challenged as confiscatory and in conflict with the Fourteenth Amendment.

During the period of federal control — August 1, 1918, to August 1, 1919 — the Postmaster General advanced the rates for telephone service and prescribed a schedule of charges for installing and moving instruments. The Act of Congress approved July 11, 1919, c. 10, 41 Stat. 157, directed that the lines be returned to their owners at midnight July 31, 1919, and further—

“That the existing toll and exchange telephone rates as established or approved by the Postmaster General on or prior to June 6, 1919^ shall continue in force for a period not to exceed four months after this Act takes effect, unless sooner modified or changed by the public authorities — State, municipal, or otherwise — having control or jurisdiction of tolls, charges, and rates or by contract or by voluntary reduction.”

August 4, 1919, the Commission directed plaintiff in error to show why exchange service rates and charges for installation and moving as fixed by the Postmaster General should be continued. After a hearing, it made an elaborate report and directed that the service rates should be reduced and the charges discontinued.

The Company produced voluminous evidence, including its books, to establish the value of its property dedicated to public use. The books showed that the actual cost of “total plant, supplies, equipment and working capital,” amounted to $22,888,943. Its engineers estimated the reproduction cost new as of June 30, 1919, thus — Physical telephone property, $28,454,488; working capital, $1,051,564; establishing business, $5,594,816; total $35,100,868. They also estimated existing values *283(after allowing depreciation) upon the same date — Physical telephone property, $24,709,295; working capital, $1,051,564; establishing business, $5,594,816; total; $31,355,675.

The only evidence offered in opposition to values claimed by the Company, were appraisals of its property at St. Louis, Caruthersville and Springfield, respectively, as of December 1913, February 1914 and September 1916, prepared by the Commission’s engineers and accountants, together with statements showing actual cost of additions subsequent to those dates.

Omitting a paragraph relative to an unimportant reduction — $17,513.52—from working capital account, that part of the Commission’s report which deals with property values follows.

“The Company offered in evidence exhibits showing the value of its property in the entire State (outside the cities of Kansas City and Independence, whose rates are not involved in this case), and also at forty-six of its local exchanges in the State. It shows by such exhibits that the value of the property in the entire State (and when speaking of the property in the State in this report we mean exclusive of Kansas City and Independence) is as follows: Reproduction cost new, $35,100,471; reproduction cost new, less depreciation, $31,355,278; and cost as per books, $22,888,943. It also shows the Company’s estimate of reproduction cost new, reproduction cost new less depreciation, and the prorated book cost, at each of the forty-six local exchanges mentioned.

“The engineers of this Commission have made a detailed inventory and appraisal and this Commission has formally valued the Company’s property at only three of its exchanges, viz: at the City of Caruthersville, reported in re Southwestern Tel. & Tel. Company, 2 Mo. P. S. C. 492; at the City of St. Louis in cases No. 234 and No. 235 as yet unreported; and at the City of Springfield, reported *284in re Missouri and Kansas Telephone Company, 6 Mo. P. S. C. 279, and as a result we have only the estimates and appraisals of the Company before us -in relation to the value of the property at the other exchanges. We think it is clear, however, from the data at hand that the values placed by the Company upon the property are excessive and not a just basis for rate making.

“ The values fixed by this Commission at Caruthers-ville, St. Louis and Springfield in the cases above mentioned aggregate $11,003,898, while the Company estimates the aggregate cost of reproduction new of these plants in this case at $18,971,011. The ratio of the latter figure is 172.4 per cent. This percentage divided into' $35,100,471, the Company’s estimate of the aggregate cost of reproduction new of its property in Missouri in this case, equals $20,350,000, which might be said to be one measure of the value of the property.

“Again, the Company’s estimate of the aggregate cost of reproduction new, less depreciation, of its properties at Caruthersville, St. Louis and Springfield, in this case is $16,913,673. The ratio of this figure to the aggregate value fixed by the Commission at these exchanges, plus additions reported by the Company, is 153.7 per cent. This percentage divided into $31,355,278, the Company’s estimate of the aggregate cost of reproduction new, less depreciation, of Jts .property in Missouri in this case, equals $20,400,000, which may be said to be another measure of the value of the property.

“ The Company also shows by Exhibits 19 and 212 that its return under the Postmaster General’s rates on $22,888,943, the book value of its property in the State, is at the rate of 11.65 per cent per annum for depreciation and return on the investment, which would yield the Company 6 per cent for depreciation and 5.65 per cent for return on the book cost of the property. As stated, however, we do not think that the book cost or the *285‘ prorated book cost ’ of the property as claimed by the Company would be a fair basis for rate making.

“As we understand it, the ‘ prorated book cost ’ given in evidence by the Company for the various exchanges is simply the percentage relation of reproduction cost new which the original cost of all property bears to reproduction cost new of all property and in individual instances the actual cost might vary greatly, either up or down, from what an appraisal would show. If the Company, to eliminate competition, paid a price in excess of the value or because of discouraged local operation were enabled to purchase a plant far below its actual value, the ‘ prorated book cost ’ basis would not reflect anything like the original cost.

“We also think that the figure of $22,888,943, claimed by the Company to represent the book cost or original cost of its property in the State, is subject to certain adjustments with reference to the amount of non-useful property included, working capital, and the amount to be deducted account extinguished value recouped from patrons by charges to depreciation.

“ In the St. Louis case, supra, the original cost of the non-useful property deducted and disallowed by the Commission amounted to $454,689.16. It appears from the Company’s Exhibit 256 that the ‘ prorated book cost ’ of the St. Louis exchange is just about half of that given for the State. However, it is clear that the proportion of non-used and non-useful property in St. Louis bears a much larger percentage relation to useful property than would obtain throughout the State. It would appear that estimating the Company’s property not used and useful for the entire State at $500,000 would be a fair approximation. This sum at least should be deducted. . . .

“The depreciation reserve applicable to the Missouri property is not shown by the Company. However, on *286the Company’s Exhibit 15, the balance sheet as of June 30, 1919, of the Southwestern Bell Telephone Company (Missouri corporation) operating in Missouri, Kansas and Arkansas, the reserve for accrued depreciation and reserve for amortization of intangibles is given as $7,963,082.37. The same exhibit shows the original cost of fixed capital for Missouri, Kansas and Arkansas property as $46,061,162.76. The total fixed capital of the Missouri property shown on the Company’s Exhibit 19 is $21,837,759, which is 47.4 per cent of $46,061,162.76 and 47.4 per cent of the reserve for depreciation, $7,963,082.37 equals $3,774,501, or the portion assignable to the Missouri property.

“Adjusting in accordance with the above, we have: Total plant and equipment, including working capital, as per Company’s Exhibit No. 19, $22,888,943. Deduct property not used or useful, $500,000.00; deduct excess working capital, $17,513.52; deduct depreciation reserve, $3,774,501.00; [total to be deducted] $4,292,014.52. [Net total] $18,596,928.48; add for intangibles, 10 per cent, $1,859,692.85; total adjusted original cost, $20,-456,621.33.

“After carefully considering all the evidence as to values before us in this case, we are of the opinion that the value of the Company’s property in the State, exclusive of Kansas.City and Independence, devoted to exchange service, will not exceed the sum of $20,400,000, and we will tentatively adopt this sum as the value of the property for the purposes of this case. As stated supra, this Commission has formally valued only a part of this property, and we should not be understood as authoritatively fixing the value of the property at this time.”

The three earlier valuations to which the Commission referred are — St. Louis, December 1913, $8,500,000; Caruthersville, February 1914, $25,000; Springfield, Sep*287tember 1916, $815,000; total, $9,340,000. Between those dates and June 30, 1919, additions were made to these properties which cost, respectively, $1,623,765, $5,992 and $34,141. Adding these to the original valuations gives $11,003,898, the base sum used by the Commission for the estimates now under consideration.

Obviously, the Commission undertook to value the property without according any weight to the greatly enhanced costs of material, labor, supplies, etc., over those prevailing in 1913, 1914 and 1916. As matter of common knowledge, these increases were large. Competent witnesses estimated them as 45 to 50 per centum.

In Willcox v. Consolidated Gas Co., 212 U. S. 19, 41, 52, this Court said:

“ There must be a fair return upon the reasonable value of the property at the time it is being used for the public. .. . And we concur with the court below in holding that the value of the property is to be determined as of the time when the inquiry is made regarding the rates. If the property, which legally enters into the consideration of the question of rates, has increased in value since it was acquired, the company is entitled to the benefit of such increase.”

In the Minnesota Rate Cases, 230 U. S. 352, 454, this was said:

“ The making of a just return for the use of the property involves the recognition of its fair value if it be more than its cost. The property is held in private ownership and it is that property, and not the original cost of it, of which the owner may not be deprived without due process of law.”

See also Denver v. Denver Union Water Co., 246 U. S. 178, 191; Newton v. Consolidated Gas Co., 258 U. S. 165 (March 6, 1922); and Galveston Electric Co. v. Galveston, 258 U. S. 388 (April 10, 1922).

It'is impossible to ascertain what will amount to a fair return upon properties devoted to public service with*288out giving consideration to the cost of labor, supplies, etc., at the time the investigation is made. An honest and intelligent forecast of probable future values made upon a view of all the relevant circumstances, is essential. If the highly important element of present costs is wholly disregarded such a.forecast becomes impossible. Estimates for to-morrow cannot ignore prices of to-day.

Witnesses for the Company asserted — and there was no substantial evidence to the contrary — that excluding cost of establishing the business the property was worth at least 25% more than the Commission’s estimates, and we think the proof shows that for the purposes of the present case the valuation should be at least $25,000,000.

After disallowing an actual expenditure of $174,048.60 for rentals and services by the American Telephone & Telegraph Company and some other items not presently important, the Commission estimated the annual net profits on operations available for depreciation and return as $2,828,617.60 — approximately 114% of $25,000,-000. That 6% should be allowed for depreciation appears to be accepted by the Commission. Deducting this would leave a possible 54% return upon the minimum value of the property, which is wholly inadequate considering the character of the investment and interest rates then prevailing.

The important item of expense disallowed by the Commission — $174,048.60—is 55% of the 4|% of gross revenues paid by plaintiff in error to the American Telephone & Telegraph Company as rents for receivers, transmitters, induction coils, etc., and for licenses and services under the customary form of contract between the latter Company and its subsidiaries. Four and one-half per cent, is the ordinary charge paid voluntarily by local companies of the general system; There is nothing to indicate bad faith. So far as appears, plaintiff in error’s board of directors has exercised a proper discretion about this matter *289requiring business judgment. It must never be forgotten that while the State may regulate with a view to enforcing reasonable rates and charges, it is not the owner of the property of public utility companies and is not clothed with the general power of management incident to ownership. The applicable general rule is well expressed in State Public Utilities Commission ex rel. Springfield v. Springfield Gas and Electric Company, 291 Ill. 209, 234.

“ The commission is not the financial manager of the corporation and it is not empowered to substitute its judgment for that of the directors of the corporation; nor can it ignore items charged by the utility as operating expenses unless there is an abuse of discretion in that regard by the corporate officers.”

See Interstate Commerce Commission v. Chicago Great Western Ry. Co., 209 U. S. 108; Chicago, Milwaukee & St. Paul R. R. Co. v. Wisconsin, 238 U. S. 491; People ex rel. v. Stevens, 197 N. Y. 1.

Reversed.

Mr. Justice Brandéis

dissenting from opinion,

with whom Mr. Justice Holmes

concurs.

I concur in the judgment of reversal.. But I do so on the ground that the order of the state commission prevents the utility from earning a fair return on the amount prudently1 invested in it. Thus, I differ fundamentally from my brethren concerning the rule to be applied in determining whether a prescribed rate is confiscatory. The Court, adhering to the so-called rule of Smyth v. Ames, *290169 U. S. 466, and further defining it, declares that what is termed value must be ascertained by giving weight, among other things, to estimates of what it would cost to reproduce the property at the time of the rate hearing.

The so-called rule of Smyth v. Ames is, in my opinion, legally and economically unsound. The thing devoted by the investor to the public use is not specific property, tangible and intangible, but capital embarked in the enterprise. Upon the capital so invested the Federal Constitution guarantees to the utility the opportunity to earn a fair return.2 Thus, it sets the limit to the power of the State to regulate rates. The Constitution does not guarantee to the utility the opportunity to earn a return on the value of all items of property used by the utility, or of any of them. The several items of property constituting the utility, taken singly, and freed from the public use, may conceivably have an aggregate value greater than if the items are used in combination. The owner is at liberty, in the absence of controlling statutory provision, to withdraw his property from the public service; and, if he does so, may obtain for it exchange value. Compare Brooks-Scanlon Co. v. Railroad Commission of Louisiana, 251 U. S. 396; Erie R. R. Co. v. Public Utility Commissioners, 254 U. S. 394, 411; Texas v. Eastern Texas R. R. Co., 258 U. S. 204. But so long as the specific items of property are employed by the utility, their exchange value is not of legal significance.

The investor agrees, by embarking capital in a utility, that its charges to the public shall be reasonable. *291His company is the substitute for the State in the performance of the public service; thus becoming a public servant. The compensation which the Constitution guarantees an opportunity to earn is the reasonable cost of conducting the business. Cost includesl not only operating expenses, but also capital charges. Capital charges cover the allowance, by way of interest, for the use of the capital, whatever the nature of the security issued therefor; the allowancé for risk incurred; and enough more to attract capital. The reasonable rate to be prescribed by a commission may allow an efficiently managed utility much more. But a rate is constitutionally compensatory, if it allows to the utility the opportunity to earn the cost of the service as thus defined.

To decide whether a proposed fate is confiscatory, the tribunal must determine both what sum would be earned under it, and whether that sum would be a fair return. The decision involves ordinarily the making of four subsidiary ones:

1. What the gross earnings from operating the utility under the rate in controversy would be. (A prediction.)

2. What the operating expenses and charges, while so operating, would be. (A prediction.)

3. The rate-base, that is, what the amount is on which a return should be earned. (Under Smyth v. Ames, an opinion, largely.)

4. What rate of return should be deemed fair. (An opinion, largely.)

A decision that a rate is confiscatory (or compensatory) is thus the resultant of four subsidiary determinations. Each of the four involves forming a judgment, as distinguished from ascertaining facts. And as to each factor, there is usually room for difference in judgment. But the first two factors do not ordinarily present serious difficulties. The doubts and uncertainties incident to *292prophecy, which affect them, can, often, be resolved by a test period; and meanwhile protection may be afforded by giving a bond. Knoxville v. Knoxville Water Co., 212 U. S. 1, 18, 19; St. Louis, Iron Mountain & Southern Ry. Co. v. McKnight, 244 U. S. 368. The doubts and uncertainties incident to the last two factors can be eliminated, or lessened, only by redefining the rate base, called value, and the measure of fairness in return, now applied under the rule of Smyth v. Ames. The experience of the twenty-five years since that case was decided has demonstrated that the rule there enunciated is delusive. In the attempt to apply it insuperable obstacles have been encountered. It has failed to afford adequate protection either to capital or to the public. It leaves open the door to grave injustice. To give to capital embarked in public utilities the protection guaranteed by the Constitution, and to secure for the public reasonable rates, it is essential that the rate base be definite, stable, and readily ascertainable; and that the percentage to be earned on the rate base be measured by the cost, or charge, of the capital employed in the enterprise. It is consistent with the Federal Constitution for this Court now to lay down a rule which will establish such a rate base and such a measure of the rate of return deemed fair. In my opinion, it should do so.

The rule of Smyth v. Ames sets the laborious and baffling task of finding the present value of the utility. It is impossible to find an exchange value for a utility, since utilities, unlike merchandise or land, are not commonly bought and sold in the market. Nor can the present value of the utility be determined by capitalizing its net earnings, since the earnings are determined, in large measure, by the rate which the company will be permitted to charge; and, thus, the vicious circle would be encountered. So, under the rule of Smyth v. Ames, it is usually sought to prove the present value of a utility by ascer-*293taming what it actually cost to construct and instal it; or by estimating what it should have cost; or by estimating what it would cost to reproduce, or to replace, it. To this end an enumeration is made of the component elements of the utility, tangible, and intangible.3 Then the actual, or the proper, cost of producing, or of reproducing, each part is sought. And finally, it is estimated how much less than the new each part, or the whole, is *294worth. That is, the depreciation is estimated.4 Obviously each step in the process of estimating the cost of reproduction, or replacement, involves forming an opinion, or exercising judgment, as distinguished from merely ascertaining facts. And this is true, also, of each step in the process of estimating how much less the existing plant is worth, than if it were new. There is another potent reason why, under the rule of Smyth v. Ames, the room for difference in opinion as to the present value of a utility is so wide. The rule does not measure the present value either by what the utility cost to produce; or by what it should have cost; or by what it would cost to reproduce, or to replace, it.5 Under that rule the tribunal is directed, in forming its judgment, to take into consideration all those and also, other elements, called relevant facts.6

*295Obviously “ value ” cannot be a composite of all these elements. Nor can it be arrived at on all these bases. They are very different; and must, when applied in a particular case, lead to widely different results. The rule of Smyth v. Ames, as interpreted and applied, means merely that all must be considered. What, if any, weight shall be given to any one, must practically rest in the judicial discretion of the tribunal which makes the deter*296mination. Whether a desired result is reached may depend upon how any one of many elements is treated. It is true that the decision is usually rested largely upon records of financial transactions, on statistics and calculations. But as stated in Louisville v. Cumberland Telegraph & Telephone Co., 225 U. S. 430, 436, “ every figure . . . that we have set down with delusive exactness ” is “speculative.”

The efforts of courts to control commissions’ findings of value have largely failed. The reason lies in the character of the rule declared in Smyth v. Ames. The rule there stated was to be applied solely as a means of determining whether rates already prescribed by the legislature were confiscatory. It was to be applied judicially after the rate had been made; and by a court which had had no part in making the rate. When applied under such circumstances the rule, although cumbersome, may occasionally be effective in destroying an obstruction to justice, as the action of a court is, when it sets aside the verdict of a jury. But the commissions undertook to make the rule their standard for constructive action. They used it as a guide for making, or approving, rates. And the tendency developed to fix as reasonable, the rate which is not so low as to be confiscatory.7 Thus the rule which assumes that rates of utilities will ordinarily be higher than the minimum required by the Constitution has, by the practice of the commissions, eliminated the margin between a reasonable rate and a merely compensatory rate; and, in the process of rate making, effective judicial review is very often rendered impossible.8 The *297result, inherent in the rule itself, is arbitrary action, on the part of the rate regulating body. For the rule not *298only fails to furnish any applicable standard of judgment, but directs consideration of so many elements, that almost any result may be justified.

The adoption of present value of the utility’s property, as the rate base, was urged in 1893, on behalf of the community; and it was adopted by the courts, largely, as a protection against inflated claims based on what were then deemed inflated prices of the past. See argument in Smyth v. Ames, 169 U. S. 466, 479, 480; San Diego Land & Town Co. v. National City, 174 U. S. 739, 757, 758; San Diego Land & Town Co. v. Jasper, 189 U. S. 439, 442, 443; Stanislaus County v. San Joaquin & Kings River Canal & Irrigation Co., 192 U. S. 201, 214. Reproduction cost, as the measure, or as evidence, of present value was, also, pressed then by representatives of the public who sought to justify legislative reductions of railroad rates.9 The long depression which followed the panic of 1893 had brought prices to the lowest level reached in the Nineteenth Century. Insistence upon reproduction cost was the shippers’ protest against burdens believed to have resulted from watered stocks, reckless financing, and unconscionable construction contracts. Those were, the days before state legislation prohibited the issue of public utility securities without authorization from state officials; before accounting was prescribed and supervised; when outstanding bonds and stocks were hardly an indication of the amount of capital embarked in the enterprise; when depreciation accounts were unknown; and when book values, or property accounts, furnished no trustworthy evidence either of cost or of real value. Estimates of reproduction cost were then offered, largely as a means, either of supplying lacks in the proof of actual cost and investment, or of testing *299the credibility of evidence adduced, or of showing that the cost of installation had been wasteful. For these purposes evidence of the cost of reproduction is obviously appropriate.

At- first reproduction cost was welcomed by commissions as evidence of present value. Perhaps it was because the estimates then indicated values lower than the actual cost of installation. For, even after the price level had begun to rise, improved machinery and new devices tended for some years to reduce construction costs.10 Evidence of reproduction costs was certainly welcomed, because it seemed to offer a reliable means for performing the difficult task of fixing, in obedience to Smyth v. Ames, the value of a new species of property to which the old tests — selling price or net earnings— were not applicable. The engineer spoke in figures — a language implying certitude. His estimates seemed to be free of the infirmities which had stamped as untrustworthy the opinion evidence of experts common in condemnation cases. Thus, for some time, replacement cost, on the basis of prices prevailing at the date of the valuation, was often adopted by state commissions as the standard for fixing the rate base. But gradually it came to be realized that the definiteness of the engineer’s calculations was delusive; that they rested upon shifting theories; and that their estimates varied so widely as to intensify, rather than -to allay doubts.11 When the price *300levels had risen largely, and estimates of replacement cost indicated values much greater than the actual cost of installation, many commissions refused to consider valuable what one declared to be assumptions based on things that never happened and estimates requiring the projection of the engineer’s imagination into the future and methods of construction and installation that have never been and never will be adopted by sane men.12 Finally, the great fluctuation in price levels incident to the World War led to the transfusion of the engineer’s estimate of cost with the economist’s prophecies concerning the future price plateaus. Then, the view that these estimates were not to be trusted as evidence of present *301value, was frequently expressed. And state utility commissions, while admitting the evidence in obedience to Smyth v. Ames, failed, in ever-increasing numbers, to pay heed to it in fixing the rate base.13 The conviction is wide-spread that a sound conclusion as to the actual value of a utility is not to be reached by a meticulous study of conflicting estimates of the cost of reproducing new the congeries of old machinery and equipment, called the plant, and the still more fanciful estimates concerning the value of the intangible elements of an established business.14 Many commissions, like that of Massachusetts, have declared recently that “ capital honestly and *302prudently invested must, under normal conditions, be taken as the controlling factor in fixing the basis for computing fair and reasonable rates.” 15

To require that reproduction cost at the daté of the rate hearing be given weight in fixing the rate base, may subject investors to heavy losses when the high war and post-war price levels pass — and the price trend is again *303downward.16 The aggregate of the investments which have already been made at high costs since 1914, and of those which will be made before prices and costs can fall heavily, may soon exceed by far the depreciated value of all the public utility investments made theretofore at relatively low cost. For it must be borne in mind that depreciation is an annual charge. That accrued on plants constructed in the long years prior to 1914 is much larger than that *304accruing on the properties installed in the shorter period since.17

That part of the rule of Smyth v. Ames which fixes the rate of return deemed fair, at the percentage customarily paid on similar investments at the time of the rate hearing, also exposes the investor and the public to danger of serious injustice. If the replacement-cost measure of value and the prevailing-rate measure of fairness of return should be applied, a company which raised, in 1920, *305for additions to plant, $1,000,000 en a 9 per cent, basis, by a stock issue, or by long-term bond issue, may find a decade later, that the value of the plant (disregarding depreciation) is only $600,000, and that the fair return on money then invested in such enterprise is only 6 per cent. Under the test of a compensatory rate, urged in reliance upon Smyth v. Ames, a prescribed rate would not be confiscatory, if it appeared that the utility could earn under it $36,000 a year; whereas $90,000 would be required to earn the capital charges. On the other hand, if a plant had been built in times of low costs, at $1,00Q,000 and the capital had been raised to the extent of $750,000 by an issue at par of 5 per cent. 30-year bonds and to the extent of $250,000 by stock at par, and ten years later the price level was 75 per cent, higher and the interest rates 8 per cent., it would be a fantastic result to hold that a rate was confiscatory, unless it yielded 8 per cent, on the then reproduction cost of $1,750,000. For that would yield an income of $140,000, which would give the bondholders $37,500; and to the holders of the $250,000 stock $102,500, a return of 41 per cent, per annum. Money required to establish in 1920 many necessary plants has cost the utility 10 per cent, on thirty-year bonds. These long-time securities, issued to raise needed capital, will in 1930 and thereafter continue to bear the extra high rates of interest, which it was necessary to offer in 1920 in order to secure the required capital. The prevailing rate for such investments may in 1930 be only 7 per cent.; or indeed 6 per cent.; as it was found to be in 1904, in Stanislaus County v. San Joaquin & Kings River Canal & Irrigation Co., 192 U. S. 201; in 1909, in Knoxville v. Knoxville Water Co., 212 U. S. 1; and in 1912, in Cedar Rapids Gas Light Co. v. Cedar Rapids, 223 U. S. 655, 670. A rule which limits the guaranteed rate of return on utility investments to that which *306may prevail at the time* of the rate hearing, may fall far short of the capital charge then resting upon the company.

In essence, there is no difference between the capital charge and operating expenses, depreciation, and taxes. Each is a part of the current cost of supplying the service; and each should be met from current income. When the capital charges are for interest on the floating debt paid at the current rate, this is readily seen. But it is no less true of a legal obligation to pay interest on long-term bonds, entered into, years before the rate hearing and to continue for years"thereafter; and it is true also of the economic obligation to pay dividends on stock, preferred or common. The necessary cost, and hence the capital charge, of the money embarked recently in utilities, and of that which may. be invested in the near future, may be more, as it may be less, than the prevailing rate of return required to induce capital to enter upon like enterprises at the time of a rate hearing ten years hence. To fix the return by the rate which happens to prevail at such future day, opens the door to great hardships. Where the financing has been proper, the cost to the utility of the capital, required to construct, equip and operate its plant, should measure the rate of return which the Constitution guarantees opportunity to earn.18

The adoption of the amount prudently invested as the rate base and the amount of the capital charge as the measure of the rate of return would give definiteness to these two factors involved in rate controversies which are now shifting and treacherous, and whicfi render the proceedings peculiarly burdensome and largely futile. Such measures offer a basis for decision which is certain and stable. The rate base would be ascertained as a fact, not determined as matter of opinion. It would not fluctuate *307with the market price of labor, or materials, or money. It would not change with hard times or shifting populations. It would not be distorted by the fickle and varying judgments of appraisers, commissions, or courts. It would, when once made in respect to any utility, be fixed, for all time, subject only to increases to represent additions to plant, after allowance for the depreciation included in the annual operating charges. The wild uncertainties of the present method of fixing the rate base under the so-called rule of Smyth v. Ames would be avoided; and likewise the fluctuations which introduce into the enterprise unnecessary elements of speculation, create useless expense, and impose upon the public a heavy, unnecessary burden.

In speculative enterprises the capital cost of money is always high; partly because the risks involved must be covered; partly because speculative enterprises appeal only to the relatively small number of investors who are unwilling to accept a low return on their capital. It is to the interest both of the utility and of the community that the capital be obtained at as low a cost as possible. About 75 per cent, of the capital invested in utilities is represented by bonds. He who buys bonds seeks primarily safety. If he can obtain it, he is content with a low rate of interest. Through a fluctuating rate base the bondholder can only lose. He can receive no benefit from a rule which increases the rate base as the price leVel rises; for his return, expressed in dollars, would be the same, whatever the income of the company.19 That *308the stockholder does not in fact receive an increased return in time of rapidly rising prices under the rule of Smyth v. Ames, as applied, the financial record of the last six years demonstrates. But the burden upon the community is heavy because the risk makes the capital cost high.

The expense and loss now incident to recurrent rate controversies is also very large. The most serious vice of the present rule for fixing the rate base is not the existing uncertainty; but that the method does not lead to certainty. Under it, the value for rate-making purposes must ever be an unstable factor. Instability is a standing menace of renewed controversy. The direct expense to the utility of maintaining an army of experts and of counsel is appalling. The indirect cost is far greater. The attention of officials high and low is, necessarily, diverted from the constructive tasks .of efficient operation and of development. The public relations of the utility to the community are apt to become more and more strained. And a victory for the utility, may in the end, prove more disastrous than defeat would have been. The community defeated, but unconvinced, remembers; and may refuse aid when the company has occasion later to require its consent or cooperation in the conduct and development of its enterprise. Controversy with utilities is obviously injurious also to the public interest. The prime needs of the community are that facilities be ample and that rates be as low and as stable as possible. The community can get cheap service from private companies, only through cheap capital. It can get efficient service, only if managers of the utility are free to devote themselves to problems of operation and of development. It can get ample service through private companies, only if investors may be assured of receiving continuously a fair return upon the investment.

What is now termed the prudent investment is, in essence, the same thing as that which the Court has always *309sought to protect in using the term present value.20 Twenty-five years ago, when Smyth v. Ames was decided, it was impossible to ascertain with accuracy, in respect to most of the utilities, in most of the States in which rate controversies arose, what it cost in money to establish the utility; or what the money cost with which the utility was established; or what income had been earned by it; or how the income had been expended. It was, therefore, not feasible, then, to adopt, as the rate base, the amount properly invested or, as the rate of fair return, the amount of the capital charge. Now the situation is fundamentally different. These amounts are, now, readily ascertainable in respect to a large, and rapidly increasing, proportion of the utilities. The change in this respect is due to the enlargement, meanwhile, of the powers and functions of state utility commissions. The issue of securities is now, and for many years has been, under the control of commissions, in the leading States. Hence the amount of capital raised (since the conferring of these powers) and its cost are definitely known, through current supervision and prescribed accounts, supplemented by inspection of the commission’s engineering force. Like knowledge concerning the investment of that part of the capital raised and expended before these broad functions were exercised by the utility commissions has been secured, in many cases, through investigations undertaken later, in connection with the issue of new securities or the regulation of rates. The amount and disposition of current earnings of all the *310companies are also known. It is, therefore, feasible now to adopt as the measure of a compensatory rate — the annual cost, or charge, of the capital prudently invested in the utility.21 And, hence, it should be done.

Value is a word of many meanings. That with which commissions and courts in these proceedings are concerned, in so-called confiscation cases, is a special value for rate-making purposes, not exchange value. This is illustrated by our decisions which deal with the elements to be included in fixing the rate base. In Cedar Rapids Gas Light Co. v. Cedar Rapids, 223 U. S. 655, 669; and Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 165, good will and franchise value were excluded from the rate base in determining whether the prescribed charges *311of the public utility were confiscatory. In Galveston Electric Co. v. Galveston, 258 U. S. 388, the cost of developing the business as a financially successful concern was excluded from the rate base. In Des Moines Gas Co. v. Des Moines, 238 U. S. 153, 171, the fact that the street had been paved (and hence the reproduction cost of laying gas mains greatly increased), was not allowed as an element of value. But, obviously, good will and franchise value are important elements when exchange value is involved. And where the community acquires a public utility by purchase or condemnation, compensation must be made for its good will and earning power; at least under some circumstances. Omaha v. Omaha Water Co., 218 U. S. 180, 202, 203; National Waterworks Co. v. Kansas City, 62 Fed. 853, 865. Likewise, as between buyer and seller, the good will and earning power due to effective organization are often more important elements than tangible property. These cases would seem to require rejection of a rule which measured the rate base by cost of reproduction or by value in its ordinary sense.

The rulé by which the utilities are seeking to measure the return is, in essence, reproduction cost of the utility or prudent investment, whichever is the higher. This is indicated by the instructions contained in the Special Report on Valuation of Public Utilities, made to the American Society of Civil Engineers, October 28, 1916, Proceedings, Vol. 42:

“ So long as the company owner keeps a sum equivalent to the total investment at work for the public, either as property serving the public, or funds held in reserve for such property, no policy should be followed in estimating depreciation that will reduce the property to a value less than the investment. . . . ” (p. 1726).

“ Estimates of the cost of reproduction should be based on the assumption that the identical property is to be *312reproduced,rather than a substitute property” (p. 1719), —“ although such a substitute property, much less costly than the existing plant, might furnish equal or better service, it is not reproduction of service, but of property, that is under consideration; and clearly the estimate should be of existing property created with public approval, rather than of a substituted property ” (p. 1772).

If the aim were to ascertain the value (in its ordinary sense) of the utility property, the enquiry would be, not what it would cost to reproduce the identical property, but what it would cost to establish a plant which could render the service, or in other words, at what cost could an equally efficient substitute be then produced. Surely the cost of an equally efficient substitute must be the maximum of the rate base, if prudent investment be rejected as the measure. The utilities seem to claim that the constitutional protection against confiscation guarantees them a return both upon unearned increment and upon the cost of property rendered valueless by obsolescence.

Opinion for the Court filed by

Circuit Judge BORK.

Concurring opinion filed by Circuit Judge STARR.

Dissenting opinion filed by Circuit Judge MIKVA, with whom Chief Judge WALD and Circuit Judges SPOTTSWOOD W. ROBINSON, III and HARRY T. EDWARDS join.

BORK, Circuit Judge:

Jersey Central Power and Light Company petitions for review of Federal Energy Regulatory Commission orders modifying the electric utility’s proposed rate schedules and requiring the company to file reduced rates. Jersey Central charges that it alleged facts which, if proven, show that the reduced rates are confiscatory and violate its statutory and constitutional rights as defined by the Supreme Court in FPC v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944). Though it is probable that the facts alleged, if true, would establish an invasion of the company’s rights, the Commission refused the company a hearing and reduced its rates summarily.

Throughout the extensive proceedings before both the Commission and this court, the Commission has steadfastly maintained that its summary dismissal of Jersey Central’s filing was justified by prior Commission precedent. Faced with the claim that the rate order was inconsistent with the Commission's statutory responsibility to provide just and reasonable rates and with the constitutional prohibition against uncompensated takings, the Commission briefs advance a legal theory which, if *191adopted by this court, would immunize virtually all rate orders from this type of challenge. The Commission’s theory flies in the face of every Supreme Court decision that addresses this subject, and we are bound to reject it.

The intervenors, customers of Jersey Central, advance a quite different rationale for affirming the Commission. They attempt to justify the denial of a hearing with the argument that Jersey Central followed the wrong procedures and therefore lost the opportunity to have its substantive claims heard. Thus, it is said, it was the company’s fault, not the Commission’s, that no hearing was held.

That reasoning provides no basis for affirming the Commission. It fails to come to grips with the character of the Commission decision we review. That decision does not rest on adjective law. The Commission in fact reached and peremptorily decided the merits of the utility’s claim. The substantive Hope Natural Gas issue is, therefore, squarely before us and cannot be avoided by faulting the utility for employing defective tactics. The Commission ruled that Jersey Central’s allegations and proffered testimony would not support a higher rate. That substantive ruling means that a hearing would have been pointless. The ruling is inconsistent with Hope as well as with other controlling precedent of the Supreme Court and of this court. Reversal and remand for a hearing are thus required.

Though the fact that the Commission reached the merits renders irrelevant the intervenors’ procedural rationale, it should be noted that if procedural fault is to be assigned, it should be laid at the Commission’s doorstep. In dealing with Jersey Central’s rate filings, the Commission applied unclear rules arbitrarily. Moreover, the Commission made plain, contrary to the intervenors’ rationale, that no procedure could have been followed that would have guaranteed the hearing sought. The explanation for what has taken place in these convoluted proceedings appears to be less that Jersey Central followed incorrect procedures than that the Commission resists “end result” examination at the agency level, and is deeply antagonistic to court review of ratemaking under the guidelines laid down by Hope.

The decision of the Commission is vacated and the case remanded for a hearing at which Jersey Central may finally have its claim addressed.

I.

This case has already prompted two opinions from this court, both of which we have since vacated. See Jersey Central Power & Light Co. v. FERC, 730 F.2d 816 (D.C. Cir.1984) (“Jersey Central I”); Jersey Central Power & Light Co. v. FERC, 768 F.2d 1500 (D.C.Cir.1985) (“Jersey Central II”). The case has now been reheard en banc, and the court has had the benefit of supplemental briefing and oral argument from the parties, the intervenors, and several amici curiae. 1

On March 31, 1982, Jersey Central filed proposed rate schedules with the Commission for wholesale service to six customers. Jersey Central divided its filing into two separate rate increases designated Phase A and Phase B. Phase A has gone into effect, and Phase B is the subject of this litigation.

At issue is the utility’s proposed treatment of the $397 million investment lost when it suspended construction of its nuclear generating station at Forked River, New Jersey. The Forked River project was initiated about a decade and a half ago, when federal and state agencies were encourag*192ing utilities to commit substantial amounts of capital to nuclear generating plants that required lead times of eight to twelve years. The consensus prediction was of substantial and steady increases in the demand for electricity and substantial and continued increases in the price of oil due to the operation of an international oil cartel. Regulated public utilities are under statutory obligations to plan and build the facilities necessary to meet the projected needs of their customers. See, e.g., 16 U.S.C. § 824a(g) (1982); N.J.Stat.Ann. 48:3-3 (West 1969). If firms and households were not to face catastrophic energy prices in the future, it was thought essential that nuclear generating plants be built. All parties agree that Jersey Central’s investment at Forked River was prudent when made.

The forecasts of both demand and supply proved wrong: Due to conservation, demand did not rise nearly as much as expected, and, with the collapse of the international cartel, the oil market has experienced a world-wide glut and a dramatic decline in prices. Furthermore, the protracted litigation and political controversy which attended the construction of nuclear power projects resulted in extensive delays and dramatic increases in their ultimate cost. Thus, many investments which were prudent, indeed considered essential, when made, have now by necessity been can-celled. Forked River was one, and in 1980 Jersey Central abandoned it, having concluded “that it must devote whatever resources it had available to ... less capital intensive and more politically acceptable alternatives.” Testimony of Dennis Baldassari at 7, Joint Appendix (“J.A.”) at 34.

Jersey Central sought to recover the cost of the Forked River investment by amortizing the $397 million over a fifteen-year period, a proposal to which the Commission agreed. Jersey Central also requested, however, that the unamortized portions be included in the rate base, with a rate of return sufficient to cover the carrying charges on the debt and the preferred stock portions of that unamortized investment. Jersey Central expressly did not seek a return on that portion of the unamortized investment allocable to its common equity investors.

In support of its proposal, Jersey Central submitted to the Commission the testimony of Dennis Baldassari, its Vice-President and Treasurer. J.A. at 28-39. Baldassari sought to demonstrate that the financial problems faced by Jersey Central made necessary earnings and revenues at the level contemplated by its filing. Baldassari characterized the utility’s financial condition as “delicate.” Testimony of Dennis Baldassari at 9, J.A. at 36. Jersey Central was wholly dependent for short-term credit, he explained, on a Revolving Credit Agreement which was subject to termination at any time. The only long-term securities it was able to issue were themselves subject to mandatory repurchase by the utility should the short-term credit then available to it be for any reason terminated. Jersey Central’s credit standing was, therefore, predictably low. Standard & Poor’s Corporation rated its senior debt securities “BB-”, i.e., “regarded, on-balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation.” Moody’s Investors Service had also downgraded Jersey Central’s rating, classifying its securities “Ba”, i.e., “judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.” Id. at 4, J.A. at 31.

Jersey Central’s lack of access to long-term capital, and the precariousness of its short-term credit, placed it in serious financial difficulty. Baldassari described the rate increase requested as “the minimum amount necessary to restore the financial integrity of the Company thereby providing the means by which Jersey Central will be able to meet its obligation to provide safe and dependable service in the future.” Testimony of Dennis Baldassari at 12, J.A. *193at 39. The focus of his testimony, therefore, was on the overall rate necessary to preserve his company’s access to capital markets and its financial integrity.

The Commission responded by issuing an order summarily excluding the unamortized portion of the investment from the rate base. Order Accepting for Filing and Suspending Revised Rates, Granting Interventions, Granting in Part and Denying in Part Motions for Summary Disposition, and Establishing Procedures, 19 F.E.R.C. (CCH) fl 61,208 (May 28, 1982). No discussion or analysis accompanied this portion of the order. The Commission simply noted that “consistent with Commission precedent ... unamortized investment in can-celled plants must be excluded from rate base.” Id. at 61,403 (footnote omitted). The precedent to which the Commission referred was New England Power Co., 8 F.E.R.C. (CCH) ¶ 61,054 (July 19, 1979), affd sub nom. NEPCO Municipal Rate Comm. v. FERC, 668 F.2d 1327 (D.C.Cir. 1981), cert. denied sub nom. New England Power Co. v. FERC, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982) (“NEP-CO”). The utility in NEPCO had been permitted to recover the costs of its failed investment by amortizing it over a five-year period, but was denied its request to include the unamortized portion in the rate base.

NEPCO’s proposal differed from that later made by Jersey Central in several respects. NEPCO’s requested amortization period was only one-third as long as that proposed by Jersey Central; NEPCO proposed a full return on the unamortized portion of the investment, including that allocable to common equity, as opposed to simply a return sufficient to cover the carrying charges on debt and preferred stock portions; and NEPCO never alleged that its financial integrity and its ability to maintain access to capital markets depended upon the rate it was requesting.

Upon receiving the Commission’s order, Jersey Central filed an Application for Rehearing, J.A. at 99-135, seeking a full evidentiary hearing in which its proposal, and the factual foundation supporting it, could be examined. Jersey Central argued that NEPCO did not control because the allocation of risk in Jersey Central’s proposal was different from, and more favorable to consumers than, the allocation proposed and rejected in NEPCO. Jersey Central argued as well that more recent Commission precedent on the treatment of abandoned investments in gas pipeline facilities provided support for its proposal. Finally, Jersey Central advanced a position that became the central issue briefed and argued in this appeal. It is axiomatic that the end result of Commission rate orders must be “just and reasonable” to both consumers and investors, and that, in achieving this balance, the Commission must consider the impact of its rate orders on the financial integrity of the utility. Jersey Central argued that, for these reasons, the Commission may not summarily exclude an investment from the rate base when the utility has alleged that its ability to attract capital will be seriously jeopardized as a result. Jersey Central contended that it was entitled to a hearing at which it would have the opportunity to prove its allegations and demonstrate that the end result of the Commission's orders violated the applicable statutory and constitutional standards, a hearing that would create a record through which the Commission’s effort to balance the relevant consumer and investor interests would be subject to judicial review.

Alternatively, since Jersey Central’s concern was with the end result of the rate order, it requested an evidentiary hearing at which it could justify a rate of return higher than that included in its original filing to compensate for the rate base limitation that the agency claimed was necessitated by Commission precedent. The rate allowed a utility is the sum of (1) its cost of service, and (2) its rate base multiplied by its rate of return. Since the Commission’s order had excluded Forked River from the rate base, Jersey Central suggested that the necessary rate could be achieved through raising the rate of return.

*194The Commission again refused to grant Jersey Central a hearing. The Commission explained, somewhat cryptically:

We recognize that, in accord with Hope Natural Gas Co., supra, it is the “end result” which must be just and reasonable.. Nonetheless, the reasonableness of that end result cannot be evaluated without regard to the individual components which comprise a rate____

... JCP & L’s argument that our decision to exclude cancelled project costs from rate base is not mandated by Commission precedent is ... without merit. Furthermore, the argument that a hearing is required in order to implement this policy determination, is erroneous. Since Opinion No. 49, the Commission has consistently resolved this issue through summary disposition.

Order Granting in Part and Denying in Part Application for Rehearing, 20 F.E. R.C. (CCH) 1161,083, at 61,181-82 (July 23, 1982) (footnote omitted). The Commission then denied the request for a hearing on the alternative proposal of a higher rate of return, on the grounds that modifying the filing at that stage would unfairly present the Commission and the intervenors with a “moving target,” and, further, that Jersey Central’s “case-in-chief contained] no testimony or exhibits which would support a higher return.” Id. at 61,182. When the Commission denied Jersey Central’s Application for Rehearing and Reconsideration as well, this appeal was filed.

A unanimous panel of this court affirmed the Commission. The utility claimed that the Commission’s orders were not the product of reasoned decisionmaking because they were inconsistent with the gas pipeline cases and because application of the NEPCO precedent to the facts of this case was irrational. The utility also claimed that it was entitled to an evidentiary hearing in which it could justify its alternative request for a higher rate of return. All these claims were rejected. We then turned to Jersey Central’s contention that Hope Natural Gas required that there be a hearing to ensure that the “end result” of the rate order was “just and reasonable.” The path we took in resolving this issue was later challenged by both parties:

Jersey Central argues that, as a result of the Commission’s orders, its rate of return overall will be too low to be characterized as “just and reasonable.” In denying rehearing, however, the Commission responded that “the reasonableness of that end result cannot be evaluated without regard to the individual components which comprise a rate.” Commission Order at 61,181. This is a rather terse explanation and we wish that in the future the Commission would share its undoubted expertise with us a bit more generously. We understand the Commission to be saying, however, that the end result is to be judged by the rate of return allowed on items for which a rate of return is allowable, the Forked River expenditure is not such an item, and the rates are just and reasonable as to those cost items that are properly in the rate base. The dispute thus boils down to the question of whether the end result test is to be applied to a utility overall or only to those assets which valid Commission rules permit to be included in the rate base.

Jersey Central /, 730 F.2d at 823. Having thus defined the dispute, we accepted what we thought to be the Commission’s position and concluded that the end result test applied only “to those assets which valid Commission rules permit to be included in the rate base.”

In its petition for rehearing before this court, Jersey Central stated that we had mischaracterized the “end result” test by focusing not on the result of the rate order but on the determination of the rate base, which is only one component of that order. We asked the Commission for a response, and it provided one we found incomprehensible:

In the Commission’s view the Court characterized the “end result” test more narrowly than the Commission would have; and, accordingly, it believes it would be appropriate for the Court to amend this aspect of its opinion. Nevertheless, the *195Commission believes the Court properly affirmed the Commission’s orders in this case, since it is well-settled that the end-result test only has application to items which are legitimately included in the rate base as “used and useful.”

Response of Respondent FERC to Petition for Rehearing at 2. Since this response seemed both to reject and accept our reasoning, the Commission had still not offered us any guidance as to how it construed Hope’s “end result” test. Dissatisfied, the court entered a further order which read, in pertinent part:

[W]e direct the Commission to elaborate on its cryptic comment that, “[i]n the Commission’s view the Court characterized the ‘end result’ test more narrowly than the Commission would have; and, accordingly, it believes it would be appropriate for the Court to amend this aspect of its opinion.” Response at 2. This statement is unhelpful. The Commission should explain how and why it believes that the opinion should be amended. We therefore order that the Commission provide further explanation of its position in the brief we have today directed it to file. Throughout these proceedings the court has found the Commission’s submissions singularly terse and uninformative.

Order of July 16, 1984. The Commission filed a second response in which it now agreed with Jersey Central that the end result test does not only apply to those assets which valid Commission rules permit to be included in the rate base. Brief for Respondent FERC in Response to the Court’s Order of July 16, 1984, at 4. The second response described the “end result” test as “simply an expression for broadly gauging whether, based on all the facts before it, the Commission’s orders in a particular' case produce a reasonable result.” Id. at 5. The Commission nevertheless suggested that the end result test was not a standard under which a court was authorized to set aside an unjust end result, but rather “was designed to accord the Commission broad discretion over all aspects of rate-making methodology.” Id. at 6.

This response meant that the “end result” test applied to the overall situation produced by the Commission's action but that the Commission not only refused to hold a hearing on that subject but also believed its refusal to be virtually immune from judicial review. Finding no support for the arresting proposition that the Commission was immune from challenges in court over rate orders alleged to violate statutory and constitutional guarantees explicated by the Supreme Court, the panel-now divided — vacated its prior decision. Jersey Central had alleged that “for four years [it] had been unable to pay any dividends on its common stock”; that in part as a consequence of the Commission’s orders it had been “repeatedly on the edge of being forced into bankruptcy”; and that since 1979 it

has had no access to the long-term capital markets and has been wholly dependent upon a short-term revolving credit agreement which was subject to termination at a moment’s notice. [The company] has been allowed sufficient cash flow to enable [it] to avoid bankruptcy (but not to provide earnings [sufficient] to enable [it] to attract capital or maintain credit).

Petition for Rehearing and Suggestion for Hearing En Banc at 14. Since the Commission had never held a hearing, there was no way of knowing whether these allegations were true, but we noted that if they were, it “would suggest that FERC’s actions were illegal under the end result test of Hope Natural Gas,” Jersey Central II, 768 F.2d at 1502, because the Commission might well have failed to achieve “a reasonable balancing of investor and consumer interests in keeping with the requirement that rates be ‘reasonable, just, and non-discriminatory.’ ” Id. at 1503. We therefore remanded the case to the Commission for a hearing at which Jersey Central would have the opportunity to present its evidence on the inadequacy of the rates allowed it. Jersey Central II was vacated when a majority of the court voted to rehear this case en banc.

*196II.

"A.

The parties offer radically differing views of the Commission’s obligations under Hope Natural Gas, a decision in which the Supreme Court set forth the applicable standard of judicial review when rates ordered by an agency are challenged in court as failing to meet the statutory requirement that they be “just and reasonable.” The Hope Court was construing the Natural Gas Act of 1938, §§ 4(a), 5(a), 52 Stat. 821, 822, 823-24 (codified as amended at 15 U.S.C. §§ 717c(a), 717d(a) (1982)). The Federal Power Act, 16 U.S.C. § 824d(a) (1982), the source of the claim in this case, also requires that rates be “just and reasonable,” and courts rely interchangeably on cases construing each of these Acts when interpreting the other. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577 n. 7, 101 S.Ct. 2925, 2930 n. 7, 69 L.Ed.2d 856 (1981). Since the Court had previously indicated that “the Congressional standard prescribed by this statute coincides with that of the Constitution,” FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 743, 86 L.Ed. 1037 (1942), the Hope test defines the point at which a rate becomes unconstitutionally confiscatory as well.

In these proceedings the Commission itself has never stated what the “end result” test of Hope Natural Gas requires of it or of a reviewing court. In Jersey Central I and II, the Commission’s appellate counsel offered us only the vague statements of the Commission’s duties already quoted. As to the reviewing court’s power under Hope, counsel told the panel in those proceedings essentially that the reviewing court had little, if any, function to perform. However, at oral argument before the court en banc, counsel finally advanced the novel proposition that the “end result” test empowers a court to set aside a rate order on the utility’s petition only if the order would put the utility into bankruptcy. In order to show how dramatically at odds with the law that position is, we review the history of the doctrine at issue.

Hope Natural Gas reaffirmed a doctrinal shift, begun in FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 62 S.Ct. 736, 86 L.Ed. 1037 (1942), away from the more exacting and detailed standard of judicial review exemplified by Smyth v. Ames, 169 U.S. 466, 185 S.Ct. 418, 42 L.Ed. 819 (1898). Under Smyth v. Ames, courts had meticulously scrutinized rate orders to ensure that investors received the “fair value” of the property dedicated to public use. The “fair value” standard required courts to estimate the current market value of the property, and rates that provided anything less were deemed confiscatory. The governing theory required that consumers pay the market value of the property they were using because the property was regarded as having been taken. Recovery was therefore required only on property “used and useful” to the public, for property that was not being used could not be considered to have been taken. The Supreme Court cases of the 1940's eliminated the requirement that the market value of the property be recovered, and regulated industries now collect rates calculated to generate a reasonable return on the original cost of the investment. The companies are still generally permitted to include in the rate base only property considered used and useful, but with the demise of “fair value,” “used and useful” ceased to have any constitutional significance, and the Commission has at times departed from this standard. It is now simply one of several permissible tools of ratemaking, one that need not be, and is not, employed in every instance. See Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951).

In setting aside the rigorous judicial scrutiny that had previously characterized review of rate orders, the Supreme Court substituted a far more deferential standard of review:

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 *197been overstepped. If the Commission’s order, as applied to the facts before it and reviewed in its entirety, produces no arbitrary result, our inquiry is at an end.

FPC v. Natural Gas Pipeline Co., 315 U.S. at 586, 62 S.Ct. at 743. This new emphasis — on whether the order “viewed in its entirety” was the product of “proper findings” and was not “arbitrary” — evolved two years later into the “end result” test of Hope Natural Gas.

The Hope Court made clear that when a rate was claimed to be beyond “just and reasonable” boundaries, the focus of analysis was to be the end result of that order:

[I]t is the result reached not the method employed which is controlling____ It is not theory but the impact of the rate order which counts. If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end____ And he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.

320 U.S. at 602, 64 S.Ct. at 287 (citations omitted). Judging a rate order’s consequences, the Court held, necessarily required a “balancing of the investor and the consumer interests.” Id. at 603, 645 S.Ct. at 288. The legitimate investor interest, which is the interest Jersey Central claims received inadequate attention in the proceedings before the Commission, was defined in Hope to include:

the financial integrity of the company whose rates are being regulated. From the investor or company point of view it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock.

Id. The return, therefore, “should be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital.” Id.

Thus, in reviewing the rate order challenged in Hope, the Court considered the detailed findings made by the Commission concerning the financial condition of Hope Natural Gas Company. 320 U.S. at 603-05, 64 S.Ct. 288-89. After examining all of the relevant figures, the Commission had concluded that “[t]he company’s efficient management, established markets, financial record, affiliations, and its prospective business place it in a strong position to attract capital upon favorable terms when it is required.” 44 P.U.R. (N.S.) 1, 33 (1942), quoted in Hope, 320 U.S. at 605, 64 S.Ct. at 289. After summarizing the Commission’s findings and conclusions concerning the company’s financial health, the Court held:

In view of these various considerations we cannot say that an annual return of $2,191,314 is not “just and reasonable” within the meaning of the Act. Rates which enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed certainly cannot be condemned as invalid, even though they might produce only a meager return on the so-called “fair value” rate base.

320 U.S. at 605, 64 S.Ct. at 289.

In Hope Natural Gas, the rate was challenged as too low to account adequately for the legitimate interests of the investor. In Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951), this court heard a challenge by a consumer who claimed that a rate increase approved by the Public Utilities Commission of the District of Columbia was too high to account adequately for the legitimate interests of the purchaser. The court applied the same analytical framework. Because the local public utilities commission was governed by the same standard as the Federal Power Commission, 188 F.2d at 14, Judge Bazelon’s opinion examined the rate order under the rule set forth in Hope Natural Gas:

So long as the public interest — i.e., that of investors and consumers — is safeguarded, it seems that the Commission *198may formulate its own standards. But there are limits inherent in the statutory mandate that rates be “reasonable, just, and nondiscriminatory.” Among those limits are the minimal requirements for protection of investors outlined in the Hope case. And from the earliest cases, the end of public utility regulation has been recognized to be protection of consumers from exorbitant rates. Thus, there is a zone of reasonableness within which rates may properly fall. It is bounded at one end by the investor interest against confiscation and at the other by the consumer interest against exorbitant rates.

Id. at 15 (footnotes omitted). The court then set aside the rate order and remanded for further proceedings, on the ground that the Commission had not made sufficiently detailed findings of fact concerning the financial health of the company involved to support the reasonableness of its rate increase. “Despite the broad limits allowed the Commission, it remains imperative that its findings, under whatever formula adopted, be based upon substantial evidence in the record.” Id. (footnote omitted). In that case, this court also indicated that the Commission was not obligated to exclude from the rate base all property not presently “used and useful,” but was free to include prudent but cancelled investments. Id. at 19.

The Supreme Court has repeatedly reaffirmed the “end result” standard of Hope Natural Gas. See, e.g., FPC v. Memphis Light, Gas & Water Division, 411 U.S. 458, 474, 93 S.Ct. 1723, 1732, 36 L.Ed.2d 426 (1973) (“under Hope Natural Gas rates are ‘just and reasonable’ only if consumer interests are protected and if the financial health of the pipeline in our economic system remains strong”); Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 605, 65 S.Ct. 829, 840, 89 L.Ed. 1206 (1945) (“end result” test “is not a standard so vague and devoid of meaning as to render judicial review a perfunctory process. It is a standard of finance resting on stubborn facts.”). In Permian Basin Area Rate Cases, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968), the Court reviewed Commission orders setting area-wide rates for gas producers. Writing for the majority, Justice Harlan stated that a court reviewing rate orders must assure itself both that “each of the order’s essential elements is supported by substantial evidence” and that “the order may reasonably be expected to maintain financial integrity, attract necessary capital, and fairly compensate investors for the risks they have assumed, and yet provide appropriate protection to the relevant public interests, both existing and foreseeable.” Id. at 792, 88 S.Ct. at 1373. In examining the end result of the rate order, he made clear, a court cannot affirm simply because each of the component decisions of that order, taken in isolation, was permissible; it must be the case “that they do not together produce arbitrary or unreasonable consequences.” Id. at 800, 88 S.Ct. at 1377 (emphasis added). The Court in Permian Basin emphasized the necessity for Commission findings, the existence of which is a necessary predicate to judicial deference:

The court's responsibility is not to supplant the Commission’s balance of these interests with one more nearly to its liking, but instead to assure itself that the Commission has given reasoned consideration to each of the pertinent factors. Judicial review of the Commission’s orders will therefore function accurately and efficaciously only if the Commission indicates fully and carefully the methods by which, and the purposes for which, it has chosen to act, as well as its assessment of the consequences of its orders for the character and future development of the industry.'

Id. at 792,'88 S.Ct. at 1373. And the Court once again reviewed the findings below and affirmed upon concluding that “the record before the Commission contained evidence sufficient to establish that these rates, as adjusted, will maintain the industry’s credit and continue to attract capital.” Id. at 812, 88 S.Ct. at 1383.

The teaching of these cases is straightforward. In reviewing a rate order courts must determine whether or not the *199end result of that order constitutes a reasonable balancing, based on factual findings, of the investor interest in maintaining financial integrity and access to capital markets and the consumer interest in being charged non-exploitative rates. Moreover, an order cannot be justified simply by a showing that each of the choices underlying it was reasonable; those choices must still add up to a reasonable result. Because the language of these cases is so plain, and the standard applied in each is the same, the preceding lengthy account may have appeared unduly repetitious. We have set out guiding precedent comprehensively, however, because the legal position taken by the Commission is at odds with every one of the requirements specified by these decisions.

In the face of a serious Hope challenge, the Commission made no findings, performed' nó balancing, offered no reasoned consideration of Jersey Central’s allegations and proffered testimony, misstated the law by saying that the reasonableness of the end result cannot be evaluated without regard to the individual components that go into a rate, and, most recently, claimed that our reviewing function was ended if the rate order did not cast Jersey Central into bankruptcy.

This performance alone would justify reversal and a remand for a Hope hearing. But there was more: the Commission reached the merits and ruled that Jersey Central’s allegations and testimony did not even raise a Hope issue. That was plain legal error.

B.

The allegations made by Jersey Central and the testimony it offered track the standards of Hope and Permian Basin exactly. The Hope Court stated that the return ought to be “sufficient to ensure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital,” and that “it is important that there be enough revenue not only for operating expenses but also for the capital costs of the business. These include service on the debt and dividends on the stock.” 320 U.S. at 603, 64 S.Ct. at 288. Permian Basin reaffirmed that the reviewing court “must determine” whether the Commission’s rate order may reasonably be expected to “maintain financial integrity” and “attract necessary capital.” 390 U.S. at 792, 88 S.Ct. at 1373. Jersey Central alleged that it had paid no dividends on its common stock for four years and faced a further prolonged inability to pay such dividends. Baldassari’s testimony explained that the company was unable to sell senior securities; that its only source of external capital was the Revolving Credit Agreement, which was subject to termination and which placed the outstanding bank loans the company was allowed to maintain below the level necessary for the upcoming year; that the need to pay interest on the company’s debt and dividends on its preferred stock meant that common equity investors not only were earning a zero return, but were also forced to pay these interest costs and dividends and that “continued confiscation of earnings from the common equity holder ... will prolong the Company’s inability to restore itself to a recognized level of credit worthiness”; that its “inability to realize fully its operating and capital costs so as to provide a fair rate of return on its invested capital has pushed its financial capability to the limits”; that “[a]dequate and prompt relief is necessary in order to maintain the past high quality of service”; and that the rate increase requested was “the minimum necessary to restore the financial integrity of the Company.” Testimony of Dennis Baldassari at 5-6, 7, 10, 12, J.A. at 32-33, 34, 37, 39.

Inexplicably, the Commission ruled that Jersey Central’s showing did not require a hearing because there were “no testimony or exhibits which would support a higher return.” That ruling is flatly at odds with Hope and Permian Basin. Moreover, the Commission, having held no hearing, made no findings in support of its ruling and gave not a single reason for it. If the Commission and this court are bound by *200Supreme Court precedent, and we are, the Commission’s ukase cannot stand.

C.

The Commission’s apparent understanding of Hope Natural Gas, adopted by the dissent in Jersey Central II, is that the “end result” test acts only as a limitation of, and not at all as an authorization for, judicial review of rate orders. While the Commission “may also look to the criteria of Hope in determining whether its rate order is just and reasonable and may make pragmatic adjustments based on the perceived need to balance investor and consumer interests,” Brief on Rehearing En Banc for Respondent FERC at 16 (emphasis added), it apparently considers a decision whether or not to do so completely within its discretion. While the Commission’s briefs have never explicitly claimed that courts are without authority to set aside rate orders deemed unjust and unreasonable in their consequences, or based upon insufficient findings, at no point in response to our numerous requests for briefing has the Commission indicated any role it believes proper for courts to play in reviewing the reasonableness of rate orders, save that of passively affirming them. Only at oral argument before the en banc court did Commission counsel concede that a court might set aside a rate order under Hope if the order would drive the company into bankruptcy, but that was the limit of the judicial power acknowledged.

The rationale for the Commission’s position is difficult to discern, for, as noted in Section IIA, supra, that position can derive no support from the case law it purports to embody. The Commission, it appears, rests its theory in part on the fact that Hope Natural Gas represented a shift from strict to deferential judicial review, and, in the historical context in which it was decided, constituted a limitation on judicial review when compared to the standard it was replacing. But judicial review, while limited, was not eliminated, and the “end result” standard — like any standard of judicial review — confines judicial power not by eliminating review but by defining its reach. The delineation marked by the “end result” test thus simultaneously authorizes and constrains the courts that apply it. This is elementary jurisprudence.

The Commission also apparently locates support in language set forth in Hope: “If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end.” Hope, 320 U.S. at 602, 64 S.Ct. at 288. See also Jersey Central II, 768 F.2d at 1511 (Mikva, J., dissenting). The Commission’s litigating stance appears to interpret the Court’s statement as if it were but one half of a larger proposition the Court meant to enunciate: judicial review is at an end if either the end result is just and reasonable or if it is not. Had he meant any such thing, Justice Douglas would simply have said that there is no more judicial review. Instead, he said that “he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.” Hope, 320 U.S. at 602, 64 S.Ct. at 288 (emphasis added). He then went on to review the financial situation of the company, an exercise that would have been wholly superfluous if he had just announced the demise of judicial review. If the contrary view apparently embraced by the Commission were adopted, the end result standard would become “so vague and devoid of meaning as to render judicial review a perfunctory process.” Colorado Interstate Gas Co. v. FPC, 324 U.S. 581, 605, 65 S.Ct. 829, 840, 89 L.Ed. 1206 (1945).

The Commission maintains that because excluding the unamortized portion of a can-celled plant investment from the rate base had previously been upheld as permissible, any rate order that rests on such a decision is unimpeachable. But that would turn our focus from the end result to the methodology, and evade the question whether the component decisions together produce just and reasonable consequences. We would be back with the assertion made in Jersey Central I that “the end result test is to be *201applied ... only to those assets which valid Commission rules permit to be included in the rate base.” 730 F.2d at 823. That statement was one which neither party endorsed. It was incorrect. The fact that a particular ratemaking standard is generally permissible does not per se legitimate the end result of the rate orders it produces. Justice Harlan said just that in Permian Basin.

The position presented on behalf of the Commission, as we earlier observed, shifted to a minor extent during the course of these proceedings. At oral argument before the en banc court, counsel for the Commission indicated that the “end result” test did allow a court to set aside a rate order when the company would otherwise go bankrupt and the Commission had refused to take that into account. The source of this constricted standard is elusive, not to say invisible. Hope Natural Gas talks not of an interest in avoiding bankruptcy, but an interest in maintaining access to capital markets, the ability to pay dividends, and general financial integrity. While companies about to go bankrupt would certainly see such interests threatened, companies less imminently imperiled will sometimes be able to make that claim as well. Jersey Central alleges that it is such a company. The contention that no company that is not clearly headed for bankruptcy has a judicially enforceable right to have its financial status considered when its rates are determined must be rejected.

The dissent agrees with the Commission that Hope stands generally for a restriction on judicial review of a rate order, but erects its own constricted standard to determine when a company may obtain consideration of its financial status in review of a rate order. According to the dissent, Jersey Central could get a Hope hearing only by first making a sufficient showing on three critical points: that a “critical nexus” exists between the rate order and the utility’s financial plight; that the proposed rate filing would not lead to the exploitation of consumers; and that the overall return allowed on this project is not reasonable, and thus puts the company in need of protection at this phase of the ratemaking process. Dissent at 1205-09. It is remarkable that the dissent would affirm the Commission on a legal theory that neither the Commission nor its counsel ever advanced. The Commission offered no legal theory and counsel offered the unique bankruptcy-only theory. It is impossible to affirm on the basis of the Commission’s silence or counsel’s rationale. It should be equally impossible to suggest affirmance on the basis of a legal theory never surfaced until today. Indeed, the only correspondence between the three different positions taken by the Commission, its counsel, and the dissent, aside from their common hostility to Hope, is that none of them has any basis in any decision of any previous court. The dissent’s new three-part barrier flatly ignores the factors that, according to the Supreme Court’s controlling opinion in Hope, would necessitate an “end result” hearing into whether any revision of a rate order is necessary in light of a company’s financial plight. Since Jersey Central submitted figures and testimony to support its claim that the rate order caused its financial distress, that its proposed rates would not exploit consumers, and that the overall rate of return allowed is not just and reasonable, one can only suppose that the dissent demands proof beyond doubt of its three criteria before the hearing is even held. That, most certainly, is not what Hope requires. The dissent thus joins the Commission in rejecting the Supreme Court's law.

In addition to prohibiting rates so low as to be confiscatory, the holding of Hope Natural Gas makes clear that exploitative rates are illegal as well. If the inclusion of property not currently used and useful in the rate base automatically constituted exploitation of consumers, as one of the amici maintains, then the Commission would be justified in excluding such property summarily even in cases where the utility pleads acute financial distress. A regulated utility has no constitu*202tional right to a profit, see FPC v. Natural Gas Pipeline Co., 315 U.S. at 590, 62 S.Ct. at 745, and a company that is unable to survive without charging exploitative rates has no entitlement to such rates. Market Street Ry. v. Railroad Comm’n of Cal., 324 U.S. 548, 65 S.Ct. 770, 89 L.Ed. 1171 (1945). But we have already held that including prudent investments in the rate base is not in and of itself exploitative, Washington Gas Light Co. v. Baker, and no party has denied that the Forked River investment was prudent. Indeed, when the regulated company is permitted to earn a return not on the market value of the property used by the public, see Smyth v. Ames, but rather on the original cost of the investment, placing prudent investments in the rate base would seem a more sensible policy than a strict application of “used and useful,” for under this approach it is the investment, and not the property used, which is viewed as having been taken by the public. The investor interest described in Hope, after all, is an interest in return on investment. Hope, 320 U.S. at 603, 64 S.Ct. at 288.2

The central point, however, is this: it is impossible for us to say at this juncture whether including the unamortized portion of Forked River in the rate base would exploit consumers in this case, or whether its exclusion, on the facts of this case, constitutes confiscation, for no findings of fact have been made concerning the consequences of the rate order.3 Nor, for the same reason, can we make a judgment about the higher rate of return the utility sought as an alternative to inclusion in the rate base of its unamortized investment. Jersey Central has presented allegations which, if true, suggest that the rate order almost certainly does not meet the requirements of Hope Natural Gas, for the company has been shut off from long-term capital, is wholly dependent for short-term capital on a revolving credit arrangement that can be cancelled at any time, and has been unable to pay dividends for four years. In addition, Jersey Central points out that the rates proposed in its filing would remain lower than those of neighboring utilities, see, e.g., Petition for Rehearing and Suggestion for Hearing En Banc at 8, which at least suggests, though it does not demonstrate, that the proposed rates would not exploit consumers. The Commission treated those allegations as irrelevant and hence has presented us with no basis on which to affirm its rate order. The necessary findings are simply not there for us to review. When the Commis*203sion conducts the requisite balancing of consumer and investor interests, based upon factual findings, that balancing will be judicially reviewable and will be affirmed if supported by substantial evidence. That is the point at which deference to agency expertise will be appropriate and necessary. But where, as here, the Commission has reached its determination by flatly refusing to consider a factor to which it is undeniably required to give some weight, its decision cannot stand. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).4 The case should therefore be remanded to the Commission for a hearing at which the Commission can determine whether the rate order it issued constituted a reasonable balancing of the interests the Supreme Court has designated as relevant to the setting of a just and reasonable rate.5

III.

The intervenors, Allegheny Electric Cooperative and four boroughs of New Jersey, all purchasers of energy from Jersey Central, present an argument different from that advanced by the Commission. Intervenors urge that we affirm the Commission on the sole ground that Jersey Central made the wrong filing. The dissent agrees.

The argument made by the dissent and the intervenors is purely procedural. They assert that the Commission has a “rule” against including the unamortized portion of an abandoned investment in the rate base; that Jersey Central “ignored” this “rule” when it made its filing; that Jersey Central could have “received what it wanted” — i.e., a hearing before the Commission on its Hope claim — had it filed instead a request for a higher rate of return or a shorter amortization period; that those filings, in contrast to the filing actually made, would have been consistent with Commission rules; and that Jersey Central has therefore forfeited whatever claim it might have had to a higher rate, and, accordingly, that the summary dismissal ought to be affirmed. Supplementary Brief Submitted by Intervenors at 9-11, 14-15.

This procedural rationale, it is worth noting, was never advanced by the Commis*204sion: not m the orders under review, not at the original hearing before a panel of this court, not in its first response to the petition for rehearing, not in its second response, and not in its submission to the en banc court. Moreover, the point that the intervenors and the dissent seek to make the pivot of this case was not perceived by the panel in its unanimous first decision or by either the majority or the dissent in the panel’s second decision. The point was not the reason we granted rehearing era banc. That was done entirely to rehear the Hope “end result” issue. The procedural argument was raised only at the era banc stage.

But the oddest aspect of this entire history is that the Commission has never said what the intervenors and the dissent say: that Jersey Central could have had a hearing on the Hope “end result” test if only it had followed some other procedure. The fact that the Commission never relied on this argument might be reason enough to reject it. And, in any event, because the Commission did rule that Jersey Central’s proffer was inadequate, and thus committed legal error under Hope, it is not strictly necessary that we discuss the procedural point. The merits were reached and the claims were wrongly dispatched without any provision of the “end result” hearing required by Hope. Nonetheless, even though it makes no difference to the ultimate resolution of this case, we think it well to show this procedural contention is wrong. The intervenors’ characterization of the utility’s filing and its interpretation of the available Commission procedures do not withstand analysis.

A..

The intervenors and the dissent assert that in requesting rate-base treatment for the unamortized portion of the costs of the cancelled plant, Jersey Central violated the “rule” established by the Commission in NEPCO. There was, however, no suggestion in that case that the Commission was establishing any ironclad rule. The subject of that, proceeding was the proper treatment of a cancelled generating unit at NEPCO’s Salem Harbor facility. The Commission was faced with a number of issues, such as the length of the amortization period and the percentage of costs the utility would be permitted to amortize. It was also faced with the question of whether the unamortized portion of those costs should be included in the rate base. The Commission resolved that question by simply quoting from, and indicating its agreement with, the findings of the Administrative Law Judge, who had concluded that “[tjhere is no precedent, or reasonable justification in the record of this proceeding, to require ratepayers to pay a return on an expenditure that has not resulted in productive plant that is used or useful in the public service." NEPCO, 8 F.E.R.C. (CCH) at 61,175 (emphasis added). The Commission had decided that application of the used and useful principle in that case, on the basis of the facts presented, would yield a reasonable balancing of the competing interests. It was not, as the intervenors suggest and the dissent states, establishing a rigid rule.

When NEPCO challenged the Commission’s decision before this court, it was unsuccessful. NEPCO Municipal Rate Comm. v. FERC, 668 F.2d 1327 (D.C.Cir. 1981), cert. denied sub nom. New England Power Co. v. FERC, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982). NEP-CO argued that any application of the used and useful principle that led to the denial of a return on prudently-invested capital was unconstitutionally confiscatory. We rejected that argument, and accepted that advanced by the Commission in its brief: “In The Circumstances Of This Case, The Commission Correctly Allowed The Utility To Recover Costs (But No Profit) For Can-celled Facilities,” Brief for Respondent FERC at 18 (Argument Subheading I.B. 2) (emphasis added). We did not hold that the balance struck in NEPCO would be upheld in any future proceeding to which it was applied, regardless of the facts involved. Instead, we simply declined to hold, as urged by the utility, that failure to allow a return on prudently-invested capital was per se unconstitutional, and we affirmed *205the Commission’s decision to employ the “used and useful” principle, finding that NEPCO had “set forth no compelling reason for departing from that approach in this case.” NEPCO, 668 F.2d at 1335 (emphasis added).

In at least four subsequent proceedings, the Commission relied on NEPCO in summarily excluding the unamortized costs of cancelled plants from the rate base. While the intervenors overstate the matter by referring to the NEPCO precedent as a rule, it is fair to say that application of the precedent to routine cases like those was becoming a practice. Jersey Central’s filing, however, was anything but routine. It presented allegations suggesting material differences between its situation and those presented in the NEPCO line of cases. First, the amount of the loss was on an entirely different scale. The Commission had never applied NEPCO to a loss at the order of magnitude of nearly $400 million. (Ohio Edison Co., 18 F.E.R.C. (CCH) ¶ 61,010 (Jan. 8, 1982), for example, involved a loss of $773,146.) Second, in none of the previous cases had the petitioner suggested that it was facing financial distress of the sort threatening Jersey Central. Third, Jersey Central’s filing proposed an amortization period three times longer than that established in NEPCO. A longer amortization period strikes a balance more favorable to ratepayers, and Jersey Central was apparently willing to accept lower revenues in exchange for the higher recorded earnings which would have accompanied rate-base treatment of the cancelled plant, since it needed to record earnings in order to regain its access to the capital markets.

These factual differences distinguishing NEPCO from the case before us are substantial. In Michigan Wisconsin Pipe Line Co. v. FPC, 520 F.2d 84 (D.C.Cir. 1975), we explained that “the Commission may attach precedential, and even controlling weight to principles developed in one proceeding and then apply them under appropriate circumstances in a stare decisis manner.” Id. at 89. In that case, however, the Commission’s decision to attach such weight to a prior proceeding was remanded, because

a rudimentary prerequisite to such an application is that the factual composition of the case to which the principle is being applied bear something more than a modicum of similarity to the case from which the principle derives. This is not to say that factual patterns must be virtually identical for a principle to control, but rather that there is a point where the patterns are so diverse that a per se application of the principle, without at least recognition and accommodation of the factual distinctions, brings into question the rationality of the application.

Id. Given the importance of a utility’s financial condition to the balancing required of the Commission, and Jersey Central’s willingness to accept smaller revenues in order to record higher earnings so as to maintain that integrity, Jersey Central must have thought, as we do, that it had presented allegations that required reasoned examination, not summary dismissal in reliance on a precedent dealing with vastly different facts.

Trailblazer Pipeline Co., 18 F.E.R.C. (CCH) ¶ 61,244 (Mar. 12, 1982), presented Jersey Central with some additional grounds for believing that the Commission would take a more flexible approach. While the procedural posture was different — this was not a rate filing, but a proceeding brought to obtain Commission certification to construct and operate a gas pipeline — the Commission discussed in its opinion what rate treatment would be accorded gas projects in the event of abandonment. When prudent, conventionally-financed projects were cancelled, the Commission indicated that the company would be able to recover debt service and a return of, but not on, the equity portion of the investment. Id. at 61,502-03. The Commission explained in a footnote:

The rationale is that while companies should be able to recover the amount of their investment in failed projects, they should not be allowed to profit from their failures. Correlatively, loss of the time *206value of their equity in failed projects represents a reasonable sharing with ratepayers of the losses of a failed project.

Id. at 61,511 n. 17. The application of these principles to electric utilities was suggested by the Commission’s statement that “[tjhere is no obvious reason why the treatment of abandoned plant costs as between gas and electric companies should differ.” Id. at 61,511 n. 15. And though this statement was made in a context where electric companies are treated more generously than gas companies, see id. at 61,511 & n. 15, the clear implication was that treatment of the two should in every sense be the same. Given Trailblazer’s holding that gas companies would be able to recover debt service and a return of, but not on, the equity portion of the investment, id. at 61,502-03, this statement strongly suggests that the Commission would also consider extending the same treatment to electric companies.6

The proposed pipeline in Trailblazer was financed through project financing. The discussion of conventionally-financed projects was not, however, dicta. The Commission was presenting Trailblazer Co. with a choice between conventional and project financing, and explaining the consequences of each alternative. The Commission was offering to be bound by the rule it laid down for conventional financing if Trailblazer elected to proceed in that fashion. Trailblazer’s discussion of “Commission policy with respect to abandoned plant,” 18 F.E.R.C. (CCH) at 61,501, plausibly led Jersey Central to believe that what the intervenors and the dissent characterize as a well-established rule in fact was open to further evolution. Indeed, the Commission’s discussion of the question (published two weeks before Jersey Central made its filing) was prompted by its recognition that “Commission treatment of the issue of abandoned plant in rate proceedings has been uncertain. In fact, it has been characterized by a somewhat distressing degree of inconsistency. That inconsistency is important because it tends to leave both lenders and equity investors with a sense of uncertainty____” Id. 7

The intervenors’ and the dissent’s characterization of Jersey Central’s filing as an intentional deviation from the Commission’s “rules” is an unreasonable one. There was no reason for the company to adopt a suicidal course and it is wrong to impute an intent for which there is no evidence. This characterization is particularly unfair since, under that analysis, one must read into the filing an implied waiver of statutory and constitutional rights. Jersey Central was not mounting a frontal assault on a firm rule. To the contrary, it argued throughout the proceedings below that the cases in which the practice had developed were not similar enough to what was now at issue to warrant their application as dispositive precedent, and that recently articulated Commission policy and the threat in Jersey Central’s situation to the investor interests that the Supreme *207Court had deemed protected required some consideration more detailed than that given by summary dismissal.8

B.

Essential to the intervenors’ and the dissent’s analysis is the assertion that Jersey Central had other means of getting the hearing it sought. It is only by positing alternative filings through which Jersey Central would have received a hearing on financial integrity that the intervenors and the dissent are able to place the responsibility for what occurred on the utility. Quite clearly, the Commission may not maintain a system of rules that provides no opportunity at all for Hope allegations to be raised, heard, considered, and made the subject of findings. Yet that opportunity is precisely what the Commission tells us it routinely denies. For this reason, too, the intervenors’ and the dissent’s argument fails.

As noted earlier, supra p. 1179, the Commission in its brief will say only that it “may also look to the criteria of Hope in determining whether its rate order is just and reasonable.” There is in that no promise of a Hope hearing under any circumstances; only a declaration that one is not required.

The following exchange from the en banc oral argument further illuminates the Commission’s belief that it owes no one a hearing on Hope issues:

COURT: Suppose everything else in this case were the same, you would apply the NEPCO rule, et cetera, but the utility came in with even stronger showing and they came in and showed that if this rate went into effect, by God, they would be the first utility in the history of American utilities to go into actual bankruptcy or—

COUNSEL: I think there is no—

COURT: Let me finish the question.

COUNSEL: All right.

COURT: If that kind of showing were made, do you think that the Commission under Hope Natural Gas had a responsibility to, despite the fact that it applied some general rules, to look at the situation and say, gee, the end results are pretty scary and maybe we had better do some fooling around with—

COUNSEL: I think the answer is yes, Your Honor, and it reminds us of the—

COURT: Well, my second question then is do you, and, if so, how? In most cases that are close, a little closer than that, do you do anything comparable at the end of the day after you have applied the NEPCO and other rules, to look back over your shoulder and say this is the situation, we ought to do some tinkering around and, if so, do you make any such findings?

COUNSEL: The answer to the question is yes, we do tinker around after we pursue these normal ratemaking policies. And the tinkering around or making those pragmatic adjustments, the nice adjustments is the way the Commission has in the past viewed its responsibility under the end result test—

COURT: Do we ever know, do we—

COUNSEL: No, you don’t. As long—

COURT: We don’t know whether you did that or not?

COUNSEL: It essentially turns on the rate of return, the tinkering with the rate of return.

Tr. at 28-30 (emphasis added). The Commission’s apparent practice of taking these issues into account by “tinkering” and without making open, factual findings follows quite naturally from its mistaken premise that meaningful judicial review of these decisions is never, or almost never, in order. For us to hold now that Jersey *208Central could have had its Hope claim considered had it made a different filing would be to rest upon a theory that the Commission has never put forward, indeed, a theory the Commission apparently has rejected.

The only constant in these proceedings has been the Commission’s manifest hostility to serious “end result” examination under Hope. That alone can account for the Commission’s peremptory ruling on the merits. That hostility, and not the Commission’s desire, made clear only in this proceeding, to elevate its used-and-useful principle to the status of an impregnable barrier, appears to underlie the Commission’s abrupt and uninformative procedural rulings. At the time of Jersey Central’s filing, counsel could well have concluded that used-and-useful was a rule of thumb that would be modified when circumstances warranted. But if the Commission wished to eliminate its previous circumstance-bound enunciation of the rule and to make it universal and unyielding, it should have allowed Jersey Central to get to the merits of its Hope “end result” claim in some other way. Instead, it met each of Jersey Central’s renewed efforts with a fresh procedural rebuff and never once gave the slightest indication of how Jersey Central could get the hearing it sought.

The intervenors and the dissent suggest that Jersey Central could have requested a shorter amortization period, perhaps the period allowed in NEPCO, and received higher rates through that method. That technique would have been of little help, however, for while it would have led to quicker, higher revenues, Jersey Central needed to record earnings in order to lay a foundation for the issuance of securities and regain access to the capital markets. That could not be done through faster recovery of costs.

The intervenors and the dissent also state that Jersey Central could have requested a higher rate of return, and, had it done so, would have received the Hope hearing it wanted. Given the excerpt we have quoted from oral argument, it is impossible to know why they believe that to be true. Nothing the Commission has said provides any such assurance. To the contrary, when Jersey Central suggested a higher rate of return in its petition for rehearing, the Commission dismissed the request as presenting a “moving target.” That maneuver was particularly pointless since it would merely have required the company to come back with a new filing requesting the same higher rate of return based upon the same data. The Commission thus saved no effort of its own but cost the company the higher return in the interval. (Of course, in the same order the Commission made it clear that a fresh filing would be futile.) The Commission could have entertained the company’s request for a higher rate of return. Given the very unusual circumstances here, which may have amounted to a denial of constitutional rights, that course would not have jeopardized deployment of the “moving target” doctrine in the ordinary case.

The Commission has yet to articulate anything approaching a coherent conception of what Hope requires, when hearings and findings are necessary, which facts are relevant, or how judicial review of rate orders should proceed. It is clear that the Commission would not have granted Jersey Central a Hope hearing if the company had somehow anticipated and followed every one of the dissent’s freshly-invented prescriptions. The Commission below and its counsel here have said as much. It is, therefore, preposterous to contend that the Commission's multiple failures with respect to the “end result” test were caused, and hence excused, by Jersey Central’s alleged procedural intransigence.

IV.

The Commission is not precluded from employing “used and useful,” or any other specific rate-setting formula. It must ensure, however, that the resulting rate is just and reasonable. A remand will afford the Commission the opportunity to find the facts necessary to a determination of whether the rate order meets the requirements of Hope Natural Gas, and, if it *209finds that it does not, the Commission has the flexibility to determine how the rate order should be modified — whether through enlarging the rate base, increasing the rate of return, or a combination of both. That will fulfill its obligations under the law.

So Ordered.

STARR, Circuit Judge,

concurring:

Although I agree with my dissenting colleagues that Jersey Central has mounted an ill-conceived and overly broad attack on the “used and useful” principle, see Dissenting Opinion at 1197,1 am satisfied that under the circumstances presented this case must be returned to the Commission. For the reasons that follow, I concur in the opinion of the court and in the decision to vacate and remand the Commission’s orders.

I

The Commission has acted cavalierly in this case. As the court’s opinion persuasively demonstrates, the Commission failed to take seriously the allegations of severe financial plight confronting Jersey Central. Its discussion of that plight is intolerably terse. In its order on reconsideration, the Commission stated that no testimony or exhibits had been proffered to justify a higher return. Yet the allegations of financial plight were highly detailed and specific, indicating that the utility was skating on the edge of bankruptcy.

The Commission’s stated justification for summarily dismissing these allegations was the weight of its prior “used and useful” precedent. But as the court’s opinion shows, that body of precedent did not constitute as ironclad a rule as the Commission would have us believe. It is certainly not evident from those precedents that the rule could be summarily applied in the face of the financial demise of the regulated entity.

Indeed, the Commission as a matter of policy has departed over the years from the strictures of the “used and useful” rule. This is illustrated by its treatment of “construction work in progress” (CWIP), part of which, the Commission recently determined, can be included in a utility’s rate base. See Mid-Tex Electric Corporation v. FERC, 773 F.2d 327 (D.C.Cir.1985). In that proceeding, the Commission recognized that its own practice admits of “widely recognized exceptions and departures” from the “used and useful” rule, “particularly when there are countervailing public interest considerations.” See 48 Fed.Reg. 24,323, 24,335 (June 1, 1983) (CWIP final rule). In that setting, financial difficulties in the electric utility industry played a significant role in the Commission’s decision to bend the rule. See id. at 24,332; 773 F.2d at 332-34. See also, e.g., Tennessee Gas Pipeline Co. v. FERC, 606 F.2d 1094, 1109-10 (D.C.Cir.1979) (departure from “used and useful” to permit rate base treatment of natural gas prepayment is justified as means of encouraging development of additional gas reserves), cert. denied, 445 U.S. 920, 100 S.Ct. 1284, 63 L.Ed.2d 605 (1980).

This policy of flexibility, it seems to me, reflects the practical reality of the electric utility industry, namely that investments in plant and equipment are enormously costly. Rigid adherence to “used and useful” doctrines would doubtless imperil the viability of some utilities; thus, while not articulating its results in Hope or “takings” terms, the Commission — whether as a matter of policy or perceived constitutional obligation — has in the past taken these realities into account and provided relief for utilities in various forms.

What the Commission now confronts in Jersey Central’s rate filing is an investment, prudent when made, in a nuclear power facility that was doomed to failure. The cost of that project prior to abandonment was enormous — $397 million. Under these circumstances, the Commission, in order to engage in reasoned decisionmaking, has a duty to consider the entire financial circumstances confronting the utility, as it did in the CWIP context, not to rely blindly on precedents which do not involve similarly situated utilities facing the most dire *210financial consequences. Should the Commission nonetheless choose to adhere to the “used and useful” principle in these circumstances, it must provide a reasoned explanation for that decision. “Judicial review of the Commission’s order [ ] will ... function accurately and efficaciously only if the Commission indicates fully and carefully the methods by which, and the purposes for which, it has chosen to act, as well as its assessment of the consequences of its order [ ] for the character and future development of the industry.” Permian Basin Area Rate Cases, 390 U.S. 747, 792, 88 S.Ct. 1344, 1373, 20 L.Ed.2d 312 (1968). It is scarcely reasoned decisionmaking to dismiss out of hand allegations that go to the heart of the utility’s financial viability.

II

The Commission’s arbitrary and capricious treatment of the issues presented by Jersey Central necessitates the return of this case for further proceedings. The specific questions on remand will be whether the Commission’s treatment of Jersey Central’s request is consistent with prior precedent and whether the rate order entered in this instance violates Hope’s “end result” test. To address the latter question, it will be necessary to take into account the constitutional considerations at stake, namely whether the rate order or any other agency action which preceded that order worked a “taking” within the compass of the Fifth Amendment’s Takings Clause. Those would appear to be novel issues for a Commission that seems determined to avoid an “end result” inquiry as such, while at the same time making various adjustments to bring relief to troubled, parts of the electric utility industry. Under these circumstances, a comment or two is in order as to why I have concluded that, notwithstanding the Commission’s agnosticism, Jersey Central’s complaint “sounds” in the constitutional demands of the Fifth Amendment. Whether the facts would indeed make out a constitutional violation is obviously not before us, Majority Opinion at 1174, and must await the Nope-mandated hearing which must now be held.

The utility business represents a compact of sorts; a monopoly on service in a particular geographical area (coupled with state-conferred rights of eminent domain or condemnation) is granted to the utility in exchange for a regime of intensive regulation, including price regulation, quite alien to the free market. Cf Permian Basin, 390 U.S. at 756-57, 88 S.Ct. at 1354-55 (unlike public utilities, producers of natural gas “enjoy no franchises or guaranteed areas of service” and are “intensely competitive”). Each party to the compact gets something in the bargain. As a general rule, utility investors are provided a level of stability in earnings and value less likely to be attained in the unregulated or moderately regulated sector; in turn, ratepayers are afforded universal, non-discriminatory service and protection from monopolistic profits through political control over an economic enterprise. Whether this regime is wise or not is, needless to say, not before us. See generally Posner, Natural Monopoly and Its Regulation, 21 Stan.L.Rev. 548 (1969); Demsetz, Why Regulate Utilities?, 11 J. Law & Econ. 55 (1969).

In the setting of rate regulation, when does a taking from the investors occur? It seems to me that it occurs only when a regulated rate is confiscatory, which is a short-hand way of saying that an unreasonable balance has been struck in the regulation process so as unreasonably to favor ratepayer interests at the substantial expense of investor interests. Thus, in my view, a taking does not occur when financial resources are committed to the enterprise. That is especially so since a utility's capital investment is made not simply in satisfaction of legal obligations to provide service to the public but in anticipation of profits on the investment. The utility is not a servant to the state; it is a for-profit enterprise which incurs legal obligations in exchange for state-conferred benefits. A profit-seeking capital investment is scarcely the sort of deprivation of possession, use, enjoyment, and ownership of property which can conceptually be deemed a taking. See generally R. Epstein, Takings 63-92 *211(1985). Indeed, it would seem odd to consider as a taking government’s disavowal of any interest in property which remains unregulated and which reflects a profit-seeking investment.

It is also of significance to the constitutional inquiry whether the regulators forbade completion of construction. Cf. In re Public Service Co., 122 N.H. 1062, 454 A.2d 435 (1982) (holding that under the New Hampshire constitution, the State cannot prevent completion of construction of the Seabrook nuclear power facility without providing just compensation). But see Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) (New York City historic preservation law employed to forbid development of office building). It would seem that, at least conceptually, a taking of investment funds in the Forked River project would have occurred if government so regulated as to prevent the property, in whole or in part, from being employed in the manner desired by the owner. But as we know, these ■ conditions did not occur.

Nor would a taking (pro tanto) automatically occur when regulation itself takes place, for that was part of the original compact between investors and the state. Rate regulaton is, in theory, the substitute for competition. The state stands in the shoes, as it were, of competitors, keeping the utility within bounds that would be drawn by market forces in a non-monopolistic market. Whether economically sound or not, utility rate regulation in itself raises no constitutional concerns.

Under one line of analysis, inclusion of prudent investments in the rate base is not in and of itself exploitative. See Washington Gas Light Co. v. Baker, 188 F.2d 11 (D.C.Cir.1950), cert. denied, 340 U.S. 952, 71 S.Ct. 571, 95 L.Ed. 686 (1951). I am not so sure that such an easy rule can automatically be properly employed consistent with the demands of the Fifth Amendment. Prudence is, of course, relevant to the process of striking a reasonable balance in rate-setting for public utilities. Requiring an investment to be prudent when made is one safeguard imposed by regulatory authorities upon the regulated business for benefit of ratepayers. As I see it, the “used and useful” rule is but another such safeguard. The prudence rule looks to the time of investment, whereas the “used and useful” rule looks toward a later time. The two principles are designed to assure that the ratepayers, whose property might otherwise of course be “taken” by regulatory authorities, will not necessarily be saddled with the results of management’s defalcations or mistakes, or as a matter of simple justice, be required to pay for that which provides the ratepayers with no discernible benefit.1

The two principles thus provide assurances that ill-guided management or management that simply proves in hindsight to have been wrong will not automatically be bailed out from conditions which government did not force upon it. That is, government forced upon the utility an obligation to provide service, but that obligation, as we have seen, is the quid pro quo for a protected area of service (and eminent domain authority). What is fundamental is that government did not force upon the utility a specific course of action for achieving the mandated goal.

Indeed, it would be curious if the Constitution protected utility investors entirely from business dangers experienced daily in the free market, the danger that managers will prove to have been overly sanguine about business prospects or the danger that a particular capital investment will not prove successful. In the face of anticipated demand, an airline may acquire additional aircraft, only to face unhappy consequences when passenger traffic does not meet expectations, perhaps due to economic *212factors entirely beyond management’s control. Utilities are not exempt from comparable forces.2 As the cases have repeatedly held, the Fifth Amendment does not provide utility investors with a haven from the operation of market forces. See, e.g., FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 590, 62 S.Ct. 736, 745, 86 L.Ed. 1037 (1942) (“[Regulation does not insure that the business shall produce net revenues.”). Yet, the prudent investment rule, in full vigor, would accomplish virtually that state of insulation, all in the guise of preventing government from effecting a taking without just compensation.

For me, the prudent investment rule is, taken alone, too weighted for constitutional analysis in favor of the utility. It lacks balance. But so too, the “used and useful” rule, taken alone, is skev/ed heavily in favor of ratepayers.3 It also lacks balance. In the modern setting, neither regime, mechanically applied with full rigor, will likely achieve justice among the competing interests of investor and ratepayers so as to avoid confiscation of the utility’s property or a taking of the property of ratepayers through unjustifiably exorbitant rates. Each approach, however, provides important insights about the ultimate object of the regulatory process, which is to achieve a just result in rate regulation. And that is the mission commanded by the Fifth Amendment. Unlike garden-variety takings, the requirements of the Takings Clause are satisfied in the rate regulatory setting when justice is done, that is to say the striking of a reasonable balance between competing interests.

Thus it is that a taking occurs not when an investment is made (even one under legal obligation), but when the balance between investor and ratepayer interests— the very function of utility regulation — is struck unjustly. Although the agency has broad latitude in striking the balance, the Constitution nonetheless requires that the end result reflect a reasonable balancing of the interests of investors and ratepayers. As we have seen, both investors and ratepayers were the intended beneficiaries of the Forked River investment; both should presumptively have to share in the loss.4 Filling in the gaps, the making of the specific judgments that constitutes the difficult part of this enterprise, belongs in the first instance to the politically accountable branches, specifically to the experts in the agency, not to generalist judges.

It is here that Hope’s “end result” test comes into play. The judiciary is not to micromanage the rate regulation process, just as we are to be restrained in reviewing the other work of administrative agencies. We are not to impose procedures that we think are wise or methodologies that we think strike a better balance than that *213struck by the regulators. Our limited but vital role is to ensure that the end result of a rate order reasonably balances investor and ratepayer interests.

We are, fortunately, not left completely in a web of subjectivity in making these judgments. To be sure, Takings Clause law has not been marked by analytical consistency, as Professor Epstein has brilliantly demonstrated in his recent book. Nor has it been characterized, as much as we might care for them, by bright-line rules. In the words of then-justice Rehnquist speaking for the Court in Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979), the inquiry is “essentially ... ad hoc [and] factual” in nature. Nonetheless, we have been taught that several factors are worthy of consideration in determining whether regulation works a taking, including “the economic impact of the regulation, the extent to which it interferes with investment-backed expectations, and the character of the gov-< ernmental action.” Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432, 102 S.Ct. 3164, 3174, 73 L.Ed.2d 868 (1982); see also PruneYard Shopping Center v. Robins, 447 U.S. 74, 83, 100 S.Ct. 2035, 2041, 64 L.Ed.2d 741 (1980); Kaiser Aetna, 444 U.S. at 175, 100 S.Ct. at 390.

While it is premature to pass ultimate judgment on the question, some preliminary observations are in order. The first of the three considerations enumerated in Supreme Court decisions points powerfully in favor of Jersey Central. Forked River represents an enormous loss, and the very enormity of it must weigh heavily in the balance. No one maintains that exclusion of the abandoned plant from the rate base is de minimis, not affecting the return on property. Cf. Loretto, 458 U.S. at 445, 102 S.Ct. at 3181. (Blackmun, J., dissenting); PruneYard, 447 U.S. at 83, 100 S.Ct. at 2041. To the contrary, Jersey Central represents that it is perilously close to the edge of bankruptcy, unable to secure long-term credit, and unable to attract capital to the enterprise.

The second consideration — the extent to which the agency’s action interferes with investment-backed expectations — is mixed. As a general rule, it would appear that investors purchase utility stocks as a mechanism for conservative, safe investments. Drobak, From Turnpike to Nuclear Power: The Constitutional Limit on Utility Rate Regulation, 65 B.U.L.Rev. 65, 106-107 (1985). Potentially high rewards are foresworn in favor of stability and safety. And now the situation of Jersey Central’s investors is grim. There is no prospect, we are told, for those investors to earn a return on their investment. Thus, in holding over strenuous dissents that no taking was occasioned by New York City’s interference with Penn Central's plans to erect an office building atop Grand Central Station, the Supreme Court emphasized that the property owner could still earn a reasonable return on the investment notwithstanding the restrictive effects of the historic preservation law.5 Jersey Central’s investors have nothing but bleak days ahead, we are told, unless regulatory relief is forthcoming.6

On the other hand, FERC has already moved somewhat in the direction of balancing competing interests by permitting recovery of the costs of building the plant in the cost of service. Investor interests have not, therefore, been entirely ignored. In addition, as I indicated above, utilities are not shielded by the Constitution from the forces of competition and the uncertainties of economic life, and investors purchasing common stock are after all engaged in *214economic risk-taking. In addition, it surely cannot be reasonable for an investor to assume that each and every expenditure by a utility will be allowed by regulatory authorities. The very existence of regulation carries with it the hard fact that not every rate increase will be granted, not every expenditure will be allowed. Yet, “reasoned consideration” of investor interests requires more than the mechanical application of everyday rules to the loss of a $397 million investment in a power plant. Permian Basin, 390 U.S. at 792, 88 S.Ct. at 1373.

Finally, the character of the government action weighs for takings analysis in favor of the agency. The classic taking is when government invades and possesses property, partly or entirely. Permanent physical occupation provides the clearest example. United States v. Lynah, 188 U.S. 445, 468-70, 23 S.Ct. 349, 356-57, 47 L.Ed. 539 (1903). Occupation can, of course, be partial, and the taking can be the consequence of a private invasion if accomplished under the state’s auspices. Loretto, 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982). A taking can occur when government imposes a right of access on private property, at least when the landowner had reasonably relied on government consent in making the improvements that purportedly opened the property to uninvited outsiders. Kaiser Aetna, 444 U.S. 164, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979). The latter case teaches that the elimination of a basic incident of ownership — the right to exclude unwanted visitors from property — can constitute a taking. And, while the issue was sharply disputed in the Court and the resolution seemingly in conflict with Kaiser Aetna, it appears from the PruneYard case that the conduct of the landowner is of relevance in the constitutional analysis. That case teaches that willfully surrendering one of the “bundle” of property rights may result in greater, state-protected intrusion by outsiders than the property owner intended. Specifically, a shopping center owner may find that individuals may be permitted, over his objection, to exercise certain noncommercial rights on the shopping center property.7 PruneYard, 447 U.S. at 83, 100 S.Ct. at 2041. Thus, in contrast to Kaiser Aetna, the owner of the PruneYard Shopping Center found that he had lost the right to exclude some visitors by issuing an invitation to the public generally to visit the center for commercial purposes.8

The nature of the government action in this case obviously seems unintrusive in contrast to more typical takings cases. There has been no invasion, temporary or permanent. As I have previously indicated, the regulatory entity has not forbidden the Forked River project to proceed. What government has done is to forbid the investment to garner a return, thus balancing competing principles of utility regulation. Forbidding a profit on an investment gone sour strikes me, conceptually, as recreating in part the marketplace environment; indeed, FERC’s permitting recovery of the investment itself through cost of service works an interference with what would otherwise occur in the unregulated setting, since the investors as risk takers would obviously bear the entire risk that the investment would not pan out. In addition, FERC’s obligation to consider consumer needs and expectations must be evaluated in determining whether its order arbitrarily limited the return to investors. Permian Basin, 390 U.S. at 769, 88 S.Ct. at 1361 (“[IJnvestors’ interests provide only one of the variables in the constitutional calculus of reasonableness.”).

*215But it is not for us to finally resolve these questions in the first instance. That job, as I have said, belongs to regulators, not judges. See Permian Basin, 390 U.S. at 792, 88 S.Ct. at 1373. In my view, this case must now be resolved by the Commission, facing up to the hard question of whether, under all the circumstances, a violation of Hope has been worked by this rate order. That determination, it seems to me, can only be made by a careful balancing of the competing considerations that are inevitably present in the setting of utility regulation. Id. While I am unable to pass judgment on the ultimate issue in this case, I am convinced that FERC has completely failed to come to grips with the question and that the question is now squarely before it for resolution.

MIKVA, Circuit Judge, with whom Chief Judge WALD, and Circuit Judges SPOTTSWOOD W. ROBINSON, III and HARRY T. EDWARDS join, dissenting:

After two prior opinions, confounded by the Commission’s ever-shifting position, it is small wonder that this court is having difficulty seeing the forest for the trees. In its attempt to beat a clear path to resolution of the issues, however, the majority treads with heavy foot over some well-held doctrines regarding takings, unreasonableness of return, and the obligation of the Federal Energy Regulatory Commission (the Commission or FERC) to guarantee the financial solvency of a utility. Perhaps the greatest damage is rendered by the implications of the majority opinion for the scope of judicial review of Commission ratemaking procedures. Although we believe the Commission has been less than forthright in defending its action, we cannot join in the havoc our colleagues have wreaked in order to slap its hands.

The ramifications of today’s decision are inescapably broad. Whenever a utility files a proposed rate schedule and alleges that the revenues and earnings contemplated produce the “minimum amount” necessary for it to have access to capital markets and to maintain its financial integrity, the Commission is constrained to take no interim rate-reducing action without first holding a hearing and making findings pursuant to the test formulated in Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944). The majority reads Hope as authorizing the court to direct FERC, when faced with such allegations, to abandon its otherwise permissible summary disposition procedures. This holding constitutes a blatant interference with the ratemaking procedures adopted by the Commission. Such intrusion into the Commission’s authority would have been deemed outrageous even in the days before Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978). We cannot believe that it is unobjectionable in this age of judicial deference. Therefore, we respectfully dissent.

I. Background

A full appreciation of the impact of today’s decision requires an understanding of the posture in which this case comes to us. At an intermediate stage of the rate-making proceeding, the Commission summarily rejected a non-conforming portion of Jersey Central’s filing pursuant to longstanding policy and procedure. Jersey Central loudly complained and refused to go further with the ratemaking process. In rushing headlong into the Hope issue, the majority loses sight of what we have here — Jersey Central is attempting to convert its rate case into a rulemaking proceeding. The majority allows the utility to succeed. It responds to Jersey Central’s complaints by directing FERC to abandon agency rules as applied to the utility and to implement the utility’s rates according to procedures the Commission would not normally follow.

On March 31,1982, Jei^éy Central Power and Light Company (Jersey Central) filed a proposed two-phase increase in its rate schedules for six wholesale customers. Phase A has gone into effect and is not at issue here. In Phase B, the utility proposed to amortize over 15 years a $397 *216million investment lost when it abandoned construction of a nuclear power plant project at Forked River, New Jersey. That is, Jersey Central sought to recover the project expenditure from its ratepayers as costs over time. It also sought to include in its rate base the current carrying charges (computed at 5.2%) on the debt and on the preferred stock portions of the unamortized investment in the plant. The total return a public utility captures is, simply put, the product of its permitted rate base and rate of return. Thus, the inclusion of the desired items in the rate base would generate a return on them over the amortization period; current ratepayers would bear the cost. The exclusion of these items from the rate base would require Jersey Central’s common equity investors to bear a financial burden; they would not obtain a return on the investment and would pay current charges.

Jersey Central’s wholesale customers protested the increased rates tendered for filing and petitioned the Commission to intervene in the ratemaking proceedings. Among other requests, the wholesalers moved for a partial rejection of the second phase of the rate filing. Adhering to its policy regarding abandoned investments, the Commission granted the wholesalers’ motion for summary disposition of the rate base inclusion of the unamortized investment in the cancelled plant. Under settled FERC policy, expenditure for an item may be included in a public utility’s rate base only when the item is “used and useful” in rendering service to the ratepayers. Accordingly, the Commission’s interim order allowed amortization of the Forked River investment as requested, but required Jersey Central to exclude the unamortized items from its rate base. 19 FERC (CCH) ff 61,208 (May 28, 1982).

In ordering this exclusion, FERC relied on New England Power Co., 8 FERC (CCH) ¶ 61,054 (July 19, 1979), affd sub nom. NEPCO Municipal Rate Committee v. Federal Energy Regulatory Commission, 668 F.2d 1327 (D.C.Cir.1981), cert. denied, 457 U.S. 1117, 102 S.Ct. 2928, 73 L.Ed.2d 1329 (1982) (“NEPCO ”). NEPCO held that utilities could amortize the full investment loss suffered from abandoned projects, but could not include the unamortized portion of these investments in the rate base because the abandoned projects were not “used or useful.” By following NEPCO, the Commission allowed Jersey Central to recover its total investment in the project to the point of cancellation, but denied the utility any return on the capital invested in the cancelled plant.

In concluding, the Commission ordered Jersey Central to file revised Phase B rates and cost support reflecting the summary disposition. The revision ordered would presumably be downward. Notably, because its preliminary review “indicate[d] that [the Phase B increase] may produce substantially excessive revenues,” the Commission suspended implementation of Phase B and ordered that a public hearing be held “concerning the justness and reasonableness of [Jersey Central’s] rates.” 19 FERC (CCH) ¶ 61,208, at 61,404.

Jersey Central did not file the revised material ordered. Instead, on June 24, 1982, it applied for rehearing, requesting reconsideration of the summary disposition or, in the alternative, a higher rate of return than that originally proposed in order to compensate for its diminished rate base. The Commission denied rehearing as to exclusion of the investment in the cancelled nuclear facility from the rate base. It noted that its decisions since NEPCO had reaffirmed the exclusion of current charges on unamortized investments. Jersey Central Power & Light Co., 20 FERC (CCH) ¶ 61,083, at 61,181 (July 23, 1982). In rejecting Jersey Central’s alternative proposed approach, the Commission ruled that the company could not support its revenue request on rehearing simply “by inflating the rate of return to recover dollars equal to those attributable to its impermissible rate base inclusion.” Id. at 61,182. Pursuant to settled policy, the Commission refused to consider increasing the rate of return when that alternative was raised in the first instance on application for review without supporting documentation. See id.

*217After the denial of rehearing, Jersey Central again failed to revise its filings. Had it done so, an Administrative Law Judge (ALT) would have held a hearing, pursuant to the Commission’s initial order, on the “justness and reasonableness” of the rates. At this hearing, the wholesalers could have intervened and presented their arguments that the rates, although reduced from those originally proposed, were nonetheless excessive. See 19 FERC (CCH) 11 61,208, at 61,404. Similarly, Jersey Central could have testified as to its belief that the reduced rates were too low.

Furthermore, the utility had two additional avenues open to it. First, Jersey Central could have refiled for a proposed rate increase after its application for rehearing was denied by operation of law. See 18 C.F.R. § 385.714(f) (1986). In pointing out the inadequacies of Jersey Central’s initial filing, the Commission clearly left the way open for a new rate proceeding that would include testimony and exhibits supporting a higher rate of return, as required by the Commission’s rules. See id. § 35.13 (1986). In such a request the utility could have proposed a shorter amortization period than that it had initially requested or offered evidence of cost of service elements justifying a higher overall return on the remaining assets in the rate base. Second, Jersey Central could have petitioned the Commission for a rulemaking concerning the continued validity of the “used and useful” principle when applied to cancelled plants generally. See generally Administrative Procedure Act, 5 U.S.C. § 553(e) (1982). At the proposed rulemaking proceeding, Jersey Central could have presented testimony in support of its position that the Commission’s present used and useful policy unnecessarily penalizes utility investors. See 18 C.F.R. § 385.505 (1986). Instead of pursuing either, or both, of these administrative alternatives, Jersey Central appealed to this court.

The majority seems to have lost sight of the juncture at which we stand in reviewing the Commission’s orders. It is too anxious to reach the end of the road. The majority contends that the Commission “reached” and “wrongly dispatched” Jersey Central’s Hope claim. Majority Opinion (Maj. Op.) at 1183; see also id. at 1170. Its reasoning runs as follows: “The Commission ruled that Jersey Central’s allegations and proffered testimony would not support a higher rate. That substantive ruling means that a hearing would have been pointless.” Id. at 1170. Although the Commission’s interim order has implications for the utility’s Hope claim, this construction is unfounded. Furthermore, it makes a mockery of the Commission’s order to hold a hearing on the very issue of the justness and reasonableness of the revised rates.

Contrary to the majority’s postulation, it is not the Commission's position that it need not make an “end result” examination. See id. Throughout its briefings and arguments before this court, the Commission has allowed that it must construct a rate within the confines of the “zone of reasonableness” informed by Hope. Rather, the Commission maintains that it need not hold a hearing to make that inquiry before it excludes a non-conforming element from a proposed rate base — at least not on the facts alleged here. The “end result” inquiry is made at the end of the ratemaking process, not at an intermediate, summary disposition stage. Thus, a hearing on inclusion of the unamortized portion of the cancelled plant in the rate base would be “pointless.” A hearing on the resultant rates would not be. In fact, as counsel for FERC explained at oral argument, it was the post-appeal settlement adjusting Jersey Central’s rate of return that obviated the need for the rate hearing ordered by the Commission.

No one disputes Jersey Central’s right to have the end result of the ratemaking proceeding subjected to a Hope inquiry. The issue is one of timing. FERC provided for a hearing on the adequacy of the rates allowed Jersey Central after the Commission’s reduction. The final rate order that emanated from that hearing would in any event be subject to judicial review. See Hope, supra. Jersey Central demands a *218hearing before the reduction — now, not at the end. No wonder the majority and separate opinions complain of not having a record through which to examine the Commission’s effort to balance the relevant interests. Maj.Op. at 1172, 1178; Separate Opinion (Sep.Op.) at 1188-89. Jersey Central elected to forego a hearing on the reduced rates and instead chose to clamor to this court for review of the Commission’s actions taken before the final balancing was performed. It is an interim rate-reducing order of which Jersey Central seeks review, not a final rate-setting order. The majority’s decision to yield to Jersey Central’s demands directly implicates the Commission’s ratemaking authority and its capacity to exercise its valid, established procedures free of judicial improvements.

The question this court addresses is the question that Jersey Central reserved its right to appeal under the settlement agreement: whether the Commission acted properly in limiting the rate base to used and useful property. As the majority recounts, Maj.Op. at 1173, Jersey Central’s challenge to the Commission’s orders takes three principal tacks. The utility first claims that the Commission has not established a used and useful rule applicable to its proposed filing. Second, the utility claims that, even if there were such a rule, application of the doctrine under the circumstances would lead to unconstitutionally confiscatory rates; therefore, it contends, the Commission cannot summarily apply the rule and must provide an evidentiary hearing. Finally, Jersey Central complains that, in the alternative, it is entitled to a hearing on an increased rate of return on its initial filing.

The majority finds that there is no ironclad rule regarding rate base treatment of cancelled electric utility plants and holds that Jersey Central is automatically entitled to a hearing on its proposed filing. Our inquiry leads us to the firm conclusion that the Commission acted reasonably and that Jersey Central is not entitled to a hearing on rate base treatment of the unamortized cost items of its rate schedule or on an inflated rate of return. The Commission followed established agency rules and procedures and Jersey Central cannot complain. There may be times when FERC is not free to summarily apply settled doctrine during the ratemaking process, but Jersey Central has not presented such a case.

II. The Commission’s Application of the Used and Useful Rule

At the heart of Jersey Central’s complaint is its dislike of the used and useful principle, especially as elaborated in NEP-CO, supra. In its attempt to have the Commission reconsider the doctrine, Jersey Central argues that the precedent does not, or should not, apply to it. Unlike the majority, we find that, in NEPCO and subsequent cases, the Commission firmly established a valid rulé for the calculation of rate base in electric utilities’ rate filings. Unmoved by Jersey Central’s endeavors to distinguish itself, we conclude that the Commission’s summary rejection in this case precisely follows that precedent.

It is, of course, widely accepted that the Commission may develop principles in one proceeding and then attach precedential or even controlling weight to them in later proceedings. See, e.g., Michigan Wisconsin Pipe Line Co. v. Federal Power Commission, 520 F.2d 84, 89 (D.C.Cir.1975). And the Commission can properly implement that policy, in order to protect consumers, at the summary judgment stage of its proceedings. See Municipal Light Boards v. Federal Power Commission, 450 F.2d 1341 (D.C.Cir.1971), cert. denied, 405 U.S. 989, 92 S.Ct. 1251, 31 L.Ed.2d 455 (1972). The majority seems to have no quarrel with this premise. Like Jersey Central, however, it disputes that the Commission had developed a principle or rule against including the unamortized portion of an abandoned investment in the rate base. Although not the ground on which it remands the proceeding, the majority implies that the application of the used and useful doctrine to Jersey Central’s rate *219schedule was inconsistent with any practice established by the Commission. See Maj.Op. at 1185-86. The majority’s reasoning distorts the NEPCO precedent established by the Commission, contradicts this court’s interpretation of the doctrine, and manipulates inapposite Commission decisions.

A. The NEPCO Approach

The majority asserts that rather than establishing a general policy in NEPCO, the Commission was engaging in a case-specific balancing of interests. Id. at 1183. The majority thus conceives the crucial factor underlying NEPCO as the reasonable balance that was struck by the Commission’s compromise between the NEPCO rate-payers and investors. In its view, the NEPCO decision was as much dependent on the length of the amortization period, the percentage of costs the utility would be permitted to amortize, and the size of the investment as it was on the question of whether the unamortized portion of those costs should be included in the rate base. Id. Therefore, because Jersey Central proposed a different amortization period, presented a much larger investment and faced financial distress, a fact not alleged in NEPCO, the utility had substantially distinguished itself from NEPCO. Id. at 1184. Under the majority’s interpretation, the Commission must strike a new reasonable balance between ratepayers and investors in this case and cannot do so through summary adjudication. The majority’s interpretation jibes with neither the Commission’s nor this court’s decision. Moreover, it virtually destroys 'any usefulness of NEPCO as a substantive rule of policy.

NEPCO concerned the used and useful principle in general, not just as applied to one cancelled plant. In NEPCO: we approved the Commission’s policy against permitting a utility to reap a return on the unamortized portion of its investment in an abandoned generating station. This policy is based on a principle of ratemaking upheld long ago by the Supreme Court: a utility may not include in its rate base properties that are not “used and useful” in serving its ratepayers. See Denver Union Stock Yard Co. v. United States, 304 U.S. 470, 475, 58 S.Ct. 990, 994, 82 L.Ed. 1469 (1938). Thus, in NEPCO the Commission allowed the utility to recover the money it owed on a partially constructed and then cancelled generating plant, but not to receive a return on that investment over the amortization period. Abandoned projects are neither used nor useful and therefore properly can be excluded from the rate base. Only as a result of that standard did the Commission note that a reasonable balance had been attained.

The AU’s decision and the Commission’s adoption of it were based clearly — and exclusively — on the used and useful principle. In selectively cribbing from the Commission’s quote of the AU opinion, the majority strives to create the impression that the decision was fact-based. See Maj.Op. at 1184. Nothing could be farther from the truth. In reaching his conclusion, the AU indicated that “[t]he equitable method of handling this issue requires a balancing of the interest of ratepayers and security holders.” J.A. in NEPCO, 668 F.2d at 1332. In balancing these interests, the AU made no mention of the amortization period, or the size of the investment, or any other specific fact. Nor did the Commission make mention of such facts in adopting the AU’s findings. In rejecting NEP-CO’s argument that ratepayers should be required to pay a return on the expenditure related to an aborted project, the Commission simply quoted from (and thereby indicated its agreement with) the AU’s determinations:

Ratepayers are not required to insure that a utility receive a return on all monies invested in the enterprise; ratepayers are required to pay a return on only those investments in properties that are used and useful in the public service. The argument that the security holders should be fully insulated from all risk in this matter is rejected. While a regulated utility may have a lesser degree of risk than unregulated companies that *220must compete for their markets, this is not to say that it is in the public interest to shield utility security holders from all risks, including the risk that management may initiate projects that do not become productive. This is a risk of any business.

While it is clear that investors in utilities would prefer to have ratepayers absorb losses resulting from aborted projects, such preference does not constitute justification for casting the entire burden of such losses upon ratepayers.

NEP’s proposal to afford rate base treatment for the unrecovered portion of this expenditure is rejected.

NEPCO, 8 FERC (CCH) 1161.054, at 61,-175-76. Nothing in the NEPCO decision indicates that the Commission would act differently in a factually different case.

Similarly, this court’s decision in NEPCO gave Jersey Central no reason to question the veracity of the Commission’s NEPCO decision as establishing a substantive rule of ratemaking. The only question before us was “whether FERC’s refusal to include project expenditures in the rate base, while allowing their recovery as costs over time, is a valid approach to allocating the risks of project cancellation.” 668 F.2d at 1333. NEPCO complained that “[t]he sole ground for [the Commission’s NEPCO] decision was that the expenditures for those facilities did not result in the operation of any used and useful plant.” NEPCO Brief at 7. The Commission in turn defended its ruling in a justification of the used and useful rule. FERC Brief in NEPCO at 13-20. We held that FERC’s approach was valid, without reference to the specific facts of the case, based solely on the Commission’s consistent application of the used and useful doctrine. 668 F.2d at 1333-35. In rejecting NEPCO’s Hope and takings arguments and upholding the Commission’s treatment, we held that current ratepayers should bear only the legitimate costs of providing service to them; items not “used and useful” could not be included in the utility’s rate base. Id. at 1333. Nothing in our opinion could lead Jersey Central to believe we would have found differently had its factual situation been before us.

Significantly, at one time Jersey Central conceded this very point. In appealing the decision of the New Jersey Board of Public Utilities (BPU) to disallow recovery of the carrying charges on the Forked River investment, Jersey Central acknowledged that the BPU decision was consistent with this court’s decision in NEPCO. Excerpts from Brief on Behalf of Appellant Jersey Central Power and Light Company, before the Superior Court of New Jersey, Appellate Division, J.A. at 22 [hereinafter Excerpts from Jersey Central Brief]. In that proceeding, Jersey Central expended its energies in attacking the reasoning of our decision and in attempting to convince the court that it should encourage the BPU to employ the “prudent investment” rate base formulation. Jersey Central was motivated by its belief that, unlike the used and useful formulation, the prudent investment approach would afford it the recovery it sought. Id., J.A. at 22-26. Unsuccessful in its undertaking before the state court, Jersey Central apparently rethought the application of our NEPCO decision to its case. Its reconstruction does not hold up.

B. The Commission’s Generalization of the NEPCO Rule

As the majority admits, at least four subsequent decisions laid down the same rule before Jersey Central filed its rates. Maj.Op. at 1184. In NEPCO’s second attempt “to include in rate base the unamortized investment in abandoned generating projects,” the Commission admonished that it had previously “clearly stated” that such inclusions were “improper.” New England Power Co., 16 FERC (CCH) ¶ 61,249, at 61,538 (Sept. 29, 1981) (citing NEPCO and summarily disposing of nonconforming portion of filing). In Northern States Power Co., 17 FERC (CCH) ¶ 61,196 (Dec. 3, 1981), affd sub nom. South Dakota Public Utilities Commission v. Federal Energy Regulatory Commission, 690 F.2d 674 (8th Cir.1982), the Commission again held that the utility could not obtain a return on its lost investment. The case left *221no room for ambiguity; Jersey Central itself conceded that in Northern States, “FERC made clear that its intention was that the investors receive back their entire investment but be denied all return on that investment during the amortization period.” Initial Brief of Jersey Central at 19. The Commission applied the NEPCO rule summarily, rejecting tariff filings that sought a return on investments not “used and useful.” In both Ohio Edison Co., 18 FERC (CCH) tl 16,010 (Jan. 8, 1982), and Central Maine Power Co., 18 FERC (CCH) 11 61,126 (Feb. 12, 1982), the agency cited NEPCO as its authority for the summary dispositions. These decisions thus clearly established a general rule of summary denial of non-conforming filings by the time Jersey Central made its initial filing in March 1982. See Black Hills Power and Light Co., 19 FERC (CCH) 1161,302, at 61,592 (June 24, 1982) (referring to rate base treatment of cancelled plants as “contrary to well-established precedent”); see also Violet v. FERC, 800 F.2d 280, 281 n. 2 (1st Cir.1986) (referring to NEPCO’s 1982 agreement not to request reimbursement of the unamortized portion of its cancelled plant as “consistent with Commission policy”) (citing NEPCO).

The majority belittles the import of these eases by brushing them off as “routine” and comparing them to Jersey Central’s filing, which the majority characterizes as “anything but routine.” Maj.Op. at 1184. This supposed distinction misses the mark. The Commission had established firm rate-making procedure — summary disposal of unamortized costs of cancelled plants included in electric utilities’ rate base filings. The procedure did not vary with “factual differences,” no matter how substantial. As to the critical fact, Jersey Central stood in exactly the same position as each other utility — it wanted rate base treatment of its abandoned investment. Jersey Central had no reason to think it would not receive identical treatment — summary refusal.

C. The Natural Gas Pipeline Cases

In a laborious attempt to show that the Commission had begun to waiver in its policy, or indeed was inviting a utility to request the treatment that Jersey Central in fact sought, Jersey Central cites several gas pipeline cases. The utility maintains that it reasonably read the cases as suggesting a shift by the Commission away from the NEPCO rule. The majority agrees. Despite such distinguished ratification of Jersey Central’s misreading of Commission precedents regarding gas pipelines, we find nothing in those cases to indicate any waivering by the Commission in its long-standing policy toward the can-celled construction projects of electric utilities.

Trailblazer Pipeline Company, 18 FERC (CCH) ¶ 61,244 (Mar. 12, 1982), the case upon which Jersey Central relies heavily and the majority relies exclusively, fails to validate Jersey Central’s non-conforming rate filing. Trailblazer involved not a rate filing, but a preconstruction proceeding brought to obtain Commission certification of the appropriateness of the pipeline’s financing. The Commission allowed the pipeline to recover debt service on an abandoned project because it was paid for through project financing, in which the stream of income generated by the project was the primary security for the loan. See also Ozark Gas Transmission System, 16 FERC (CCH) 1116,099 (July 28, 1981) (approving recovery of actual debt interest for project paid for by project financing). It conditioned approval of inclusion of debt service in rate base “on applicants’ waiver of their right to apply for the recovery of their equity investment in this project should it fail.” 18 FERC 1161,244, at 61,503.

The majority declares that Trailblazer “presented Jersey Central with some additional grounds for believing that the Commission would take a more flexible approach” in its case because the Commission had signalled its frustration with the disparate treatment given gas and electric companies. Maj.Op. at 1184. Yet the majority fails to substantiate the grounds for this belief. In its many permutations, the majority opinion has been unable to come *222up with an interpretation of Trailblazer that both supports Jersey Central’s position and withstands scrutiny.

Trailblazer does not even announce a blanket rule allowing recovery of debt service and a return of, but not on, an investment by a natural gas company. It certainly does not hold that such a rule should or could be extended to electric utilities. More important, even if Trailblazer were read to control Jersey Central’s filing, the utility would not recover the relief it seeks. In fact, the disparity between treatment of gas and electric cases identified in Trailblazer is that treatment of cancelled electric plants was more generous than treatment of cancelled gas facilities. The majority admits as much. Id. at 1185.

As was pointed out in the panel’s first opinion in this case, the rule for gas companies would not permit Jersey Central to recover its equity investment, the debt, the carrying charges on the debt, and the preferred stock costs, all of which it attempted to do by including the Forked River investment in its rate base. Arguing that this understanding of Trailblazer is erroneous, the majority maintains that the Commission “suggest[ed]” that conventionally-financed pipelines would not have to waive their right to recover the equity investment in order to recover a return. Id. at 1185 n. 6. We cannot locate any such suggestion in anything the Commission said. Indeed, any suggestion to be found is quite to the contrary.

In dicta, Trailblazer discussed the tariff that the Commission would consider if the pipeline opted for conventional rather than project financing. The Commission indicated that it would permit the applicant to “apply for recovery of the total investment in the project should it fail.” 18 FERC (CCH) ¶ 61,244, at 61,504 (emphasis added). The Commission observed that the policy consideration of encouraging investment in prudent yet possibly risky projects pointed “in the direction of a consistent and more liberal allowance of abandoned plant costs in cost of service.” Id. at 61,502 (referring to amortization of abandoned projects) (emphasis added). This observation, however, had no bearing on the Commission’s policy of excluding a current return on an abandoned plant from the rate base. There is no suggestion that any utility should in addition receive a return on the equity portion of the investment. See id. at 61,-503 & n. 17. Indeed, the Commission expressed concern that even allowing a return of that investment creates too great an incentive for imprudent investments. See id. at 61,503 (stating that FERC’s rate-making procedures should “not promote investment in projects undertaken simply because the bill can be passed on to the ratepayers”).

The majority misunderstands the ramifications of the Commission’s assertion that there “is no obvious reason why the treatment of abandoned plant costs as between gas and electric companies should differ,” id. at 61,511 n. 15. It was saying that in an appropriate natural gas case, one not paid for by project financing, amortization of abandoned plant costs should be allowed because it was already allowed in the electric company context. See id. (citing NEP-CO, supra, and Northern States Power Company, supra); cf. Natural Gas Pipeline Co. v. Federal Energy Regulatory Commission, 765 F.2d 1155 (D.C.Cir.1985) (establishing on its facts that a pipeline was not entitled to amortize its out-of-pocket expenses, to say nothing of its debt or carrying charges, for abandoned projects), cert. denied, — U.S.-, 106 S.Ct. 794, 88 L.Ed.2d 771 (1968). Jersey Central has already benefited from this investment-fostering liberal approach. Unlike gas companies, Jersey Central was allowed to recover the expenditure made on its failed construction project.

The majority inexplicably seems to elevate Jersey Central’s reliance on Trailblazer’s supposed indication of the Commission’s “flexibility” to a point of independent legal significance. See Maj.Op. at 1185 & n. 7. Regardless of the reasonableness of the company’s expectation, one must query just how much Jersey Central “relied” upon Trailblazer in making its filing. In *223its initial brief to this court for review, the utility cited Trailblazer as additional support for its argument that the Commission should permit full amortization and a return on the debt and preferred portions of the unamortized amount. Initial Brief of Jersey Central at 20. However, it characterized the Trailblazer opinion as having been issued “shortly after Jersey’s Central filing,” id. at 8 (emphasis added), even though, as the majority notes, the opinion was published two weeks before the filing, Maj.Op. at 1185.

Whatever Jersey Central’s intent, belief, or expectation, Trailblazer cannot carry the utility where it desperately wants to go, and where the majority is all too willing to usher it. Trailblazer never questions the continuing validity of the used and useful principle, which it would have to do to raise a reasonable doubt in Jersey Central’s mind that the continuing validity of NEPCO was open to question. We therefore conclude that summary disposition of Jersey Central’s initial rate filing was appropriate under settled NEPCO used and useful doctrine. See 18 C.F.R. § 385.217 (1986) (summary disposition procedure). At the time Jersey Central filed its proposed rate revision, the requirement that the rate base exclude certain unallowable items had been upheld by this court; the Commission had stated its practice of applying this requirement; and the agency had not deviated from this position. Under these circumstances, the Commission properly rejected the non-conforming portion of Jersey Central’s filing pursuant to its standard policy.

Petitioner stated at oral argument that in its proceeding before the Commission it set out to test the NEPCO doctrine. Everyone can appreciate Jersey Central’s frustration with what it believed to be an unwise and ill-conceived rule. But the proper forum for challenging an agency rule is in a regulatory rulemaking proceeding, not in a ratemaking proceeding. See generally 1 K. Davis, Administrative Law Treatise, § 6:1 et seq. (1978). FERC is now, pursuant to a Notice of Inquiry, re-evaluating its entire approach to the regulation of wholesale electric requirements service. The agency intends to focus, in particular, on “the pricing and risk allocation policies,” including its cancelled plant policy. See 31 FERC (CCH) ¶ 61,376 (June 28, 1985); Regulation of Electricity Sales-for-Resale and Transmission Service, 50 Fed.Reg. 27,604, at 67,612-14. (July 5, 1985). That is where Jersey Central should make its stand. The utility should not be allowed to convert a rate case into an involuntary rulemaking and manipulate this court into approving procedures FERC has rejected.

The majority puts this Notice of Inquiry to preposterous use. Although it buries its point in a footnote, the majority makes the remarkable assertion that the fact that the Commission has initiated this rulemaking proceeding “indicate[s]” that the agency had no “genuine rule with respect to the treatment of cancelled plants.” Maj.Op. at 1185 n. 7. The fact that the Commission’s regulatory policy with regard to electric utilities is evolving lends absolutely no support to the majority's and Jersey Central’s contention that the agency had not established a firm rule in NEPCO and its progeny. An agency has every right, and indeed the responsibility, to reconsider and restructure its rules and policies when the circumstances warrant change. Regulatory policies are always in “a state of flux.” See id. This evolution does not render the rules promulgated any less authoritative. Indeed, Congress has chosen to regulate through agencies in order to avoid the cumbersome, legislative process and to take advantage of agencies’ ability to respond to everchanging industry practices and economic environments.

The Notice of Inquiry issued by the Commission cannot excuse the majority’s willingness to second-guess the agency’s policies. Courts have no place substituting themselves for agencies. Had Congress intended the courts to act as the supreme regulatory bodies, they would have made us subject to strictures, beyond Article III, that would preclude the freewheeling approach taken by the majority in its opinion today.

*224D. The Inappropriateness of Using Rate Base Calculation to Address Utilities' Financial Concerns

The infirmity of the majority’s decision extends beyond its disregard for NEPCO as a rule of policy regarding rate base calculation. Ratemaking is a complex process involving consideration of a myriad of factors. See generally Regulation of Electricity Sales-for-Resale and Transmission Service, 50 Fed.Reg. 27,604 (July 5, 1985) (discussing pricing and risk allocation policies toward electric utility requirements service). The more systematic the practice, the easier and more efficient the process can be for both the Commission and the individual utility. See, e.g., 18 C.F.R. §§ 35 and 290 et seq. (1986) (outlining rules and procedures for filing of rate schedules and collection of cost of service information). If the majority’s rationale is followed, items such as cancelled nuclear power plants will be included or excluded from utility rate bases dependent on the financial condition of the utility. Ad hoc rules for rate base composition invite a chaotic state of the law in a regulatory arena where certainty and predictability help ensure that just and reasonable rates are established.

Furthermore, rate base calculation is much too clumsy a tool for adjusting total return to accommodate the state of the utility’s finances. Generally, the rate base is comprised of total capital invested in facilities minus depreciation plus cash working capital. The rate of return, on the other hand, is a weighted average of different rates applied to debt, preferred stock and common stock. Thus, the rate of return is the normal and most suitable vehicle for taking account of a given utility’s fluctuating financial needs. Not surprisingly, as the Commission explained at oral argument, it is here that FERC does most of its “tinkering.” See Maj.Op. at 1186-87. Indeed, it was through adjusting rate of return that FERC and Jersey Central settled their differences in this rate filing.

In addition, the majority’s approach creates disincentives for a utility to operate efficiently. As the Commission observed, “[a] firm is more likely to work to minimize its costs if its financial health is at stake____ Thus, firms that bear significant business risk are more likely to produce efficiently than those [who] are sheltered from this risk.” 50 Fed.Reg. at 27,-612. Yet, under the majority’s rationale not only are producers able to shift the risk of loss onto their ratepayers, but they are more likely to be able to do so if the loss is great and they are otherwise under financial strain. A healthy utility does not get its prudently incurred but cancelled expenditure included in its rate base, but a sickly utility does.

The Commission has expressed its concern that allowing recovery of the expenditure through amortization may reduce incentives for utilities to “avoid embarking upon questionable construction projects, or to stop work on partially constructed ones after their economic value has become unclear,” or “to minimize construction costs.” 50 Fed.Reg. at 27,614. If the company is more likely to recover not only its out-of-pocket costs but also a return on those costs if it is in financial decline, then the incentives for efficient production are reduced even further. And, as the concurrence points out, we are not dealing with small change. See Sep.Op. at 1188. The disincentives are large ones. Thus, the majority’s method of treating rate base calculation frustrates the Commission’s goal of “achievpng] the most efficient allocation of resources possible.” See Northern Natural Gas Co. v. FPC, 399 F.2d 953, 959 (D.C.Cir.1968).

The majority asserts that it is not insisting that Jersey Central receive the financial relief it seeks through a rate base adjustment. See Maj.Op. at 1182 n. 5. The majority protests too much. Rate base treatment of Jersey Central's cancelled plant is, of course, the very thing at issue. The utility, as stated in its filing and as credited by the majority, has presented the rate package that it alleges will provide the minimum amount necessary to avoid non-*225confiscatory rates; each element of the proposed rate structure is essential. Indeed, the majority argues, in response to our point that Jersey Central had other forms of relief open to it (other than inclusion of its cancelled plant in the rate base), that other alternatives would not meet the utility’s specific financial needs. See Maj.Op. at 1186-87. The majority cannot have it -both ways, and its refusal to accept the ramifications of its opinion in this regard reveals the extent to which it is blind to Jersey Central’s real motivation— nullification of the NEPCO doctrine.

III. The Utility’s Right to an Evidentiary Hearing

There may be times when the Commission cannot issue an interim summary disposition order even when based on a long-established settled rule. Jersey Central argues that this is such a time. It claims that the substantive policies and procedural filing requirements that the Commission established for recovery of abandoned power projects, whatever their merit for utilities facing less dire financial straits, were invalid as applied to Jersey Central’s particular rate filing. The utility contends that the Commission’s rate base requirements so jeopardized Jersey Central’s financial integrity and long-term ability to attract capital that the Commission’s order threatened to confiscate the capital that its owners had invested, in contravention of the Hope end result test. Accordingly, it asserts that the Commission cannot summarily apply its NEPCO rule; rather, it must hold an evidentiary hearing concerning proper treatment of the utility’s proposed rate base items. While acknowledging the electric utility industry’s need to attract investors, we find that Jersey Central presents no valid reason why these concerns justify exemption from the Commission’s clear requirements. The majority obviously disagrees. It is here that the majority opinion may cause the most confusion and caprice.

Ratemaking calls for “pragmatic adjustments” clearly within the province of the Commission, which “must be free ... to devise methods of regulation capable of equitably reconciling diverse and conflicting interests.” Mobil Oil Corp. v. FPC, 417 U.S. 283, 331, 94 S.Ct. 2328, 2356, 41 L.Ed.2d 72 (1974) (quoting Permian Basin Area Rate Cases, 390 U.S. 747, 767, 88 S.Ct. 1344, 1360, 20 L.Ed.2d 312 (1968)). The broad discretion the Commission enjoys in its ratemaking determinations, however, must be bridled in accordance with the statutory mandate that the resulting rates be “just and reasonable.” In Hope, the Supreme Court articulated the standard by which a reviewing court examines a challenged rate. “Under the statutory standard of ‘just and reasonable’ it is the result reached not the method employed which is controlling____ If the total effect of the rate order cannot be said to be unjust and unreasonable, judicial inquiry under the Act is at an end.” 320 U.S. at 602, 64 S.Ct. at 288 (citations omitted). Thus, Hope is a limit on judicial scrutiny, not a probing device for courts restless to enter the fray between utilities and the Commission on the actual rates to be approved.

Remarkably, the majority invokes Hope to direct the methods the Commission may employ in fashioning Jersey Central’s rates. Our colleagues accept Jersey Central’s contention that “the Commission may not summarily exclude an investment from the rate base when the utility has alleged that its ability to attract capital will be seriously jeopardized as a result.” Maj.Op. at 1172. They therefore conclude that the company is entitled to a hearing in order to have the opportunity to prove its allegations and demonstrate that the end result of the Commission’s order — were it carried out — would violate the Hope standards. Regardless of the propriety of the Commission’s used and useful policy, the majority holds that, given Jersey Central’s allegations regarding its financial status, a hearing is required in order to implement this policy. To the contrary, we find nothing in Jersey Central’s initial filing and its application for rehearing that demonstrates a need for a hearing at this stage of the proceeding.

*226Section 205 of the Federal Power Act, 16 U.S.C. § 824d(e) (1982), provides that “the Commission shall have authority ... to enter upon a hearing” on the legality of a rate increase. This provision authorizes, but does not require, the Commission to conduct full-scale evidentiary hearings; the Commission may dispose of issues summarily if there is no need for a hearing. See Cities of Batavia v. Federal Energy Regulatory Commission, 672 F.2d 64, 91 (D.C. Cir.1982). In particular, a utility is not entitled to a hearing before the non-conforming portion of its rate filing is rejected, see Southern California Edison Co. v. Federal Energy Regulatory Commission, 686 F.2d 43, 47 (D.C.Cir.1982), or when it challenges an established policy. See Papago Tribal Utility Authority v. Federal Energy Regulatory Commission, 628 F.2d 235, 242 (D.C.Cir.), cert. denied, 449 U.S. 1061, 101 S.Ct. 784, 66 L.Ed.2d 604 (1980); Municipal Light Boards v. FPC, 450 F.2d 1341, 1345-46 (D.C.Cir.1971); see also 3 K. Davis, Administrative Law Treatise § 14.5 at 26-27 (1980) (“When a utility’s entire filing consists of a legal challenge to well-entrenched policy, there is no need for the Commission to grant the challenger a hearing.”). The Commission is under an obligation to grant a hearing- only if the utility raises an “issue of adjudicative fact.” See United States v. Storer Broadcasting Co., 351 U.S. 192, 205, 76 S.Ct. 763, 771, 100 L.Ed. 1081 (1956); Citizens for Allegan County, Inc. v. FPC, 414 F.2d 1125 (D.C.Cir.1969).

Had Jersey Central raised a “serious Hope challenge,” as the majority believes it did, Maj.Op. at 1178, there would be an issue of adjudicative fact which necessitates a hearing rather than summary disposition. The issue would be whether any action taken by the Commission to reduce the rates permitted Jersey Central would produce an unjust and unreasonable end result; that is, whether Jersey Central had proposed the “minimum” non-confiscatory rates possible. In summarily excluding the non-conforming costs from the rate base, the Commission impliedly determined that the utility had raised no issue of fact. Based on Jersey Central’s allegations and the evidence before the Commission, we find this conclusion reasonable.

A. The Showing Necessary to Obtain a Hope Hearing

In order for Jersey Central to raise a serious Hope challenge, its allegations, if true, must suggest that the Commission's interim order — the exclusion of unamortized abandoned plant costs from the rate base — would result in unjust and unreasonable rates. According to the majority, Jersey Central has made the showing necessary to obtain a Hope hearing. Maj.Op. at 1169. The majority is convinced by the utility’s allegation that “the company has been shut off from long-term capital, is wholly dependent for short-term capital on a revolving credit arrangement that can be cancelled at any time, and has been unable to pay dividends for four years.” Id. at 1181. This proffer simply echoes the investor interest described in Hope. See 320 U.S. at 603,64 S.Ct. at 288, Maj.Op. at 1171-72. A utility must do more than recite the frustration of its stockholders’ interests in order to obtain a Hope hearing. Thus, we cannot agree with the majority that “[t]he allegations made by Jersey Central and the testimony it offered track the standards of Hope and Permian Basin exactly.” See Maj.Op. at 1178.

We need not adopt what the majority relentlessly maintains is FERC’s interpretation of the required showing--“the order would put the utility into bankruptcy” — in order to reject the showing presented by Jersey Central. See id. at 1175, 1177, 1179, 1180. Nor need we decide what precise allegations and evidence would ultimately comprise the necessary showing. The court need only find, as we do, that Jersey Central's showing does not suffice. There are at least three types of showings which, in our view, are crucial to any attempt to obtain a Hope hearing at this intermediate stage of the rate proceeding and which are largely overlooked in the majority’s opinion and absent from Jersey Central’s filing.

*2271. The Nexus Between the Rate Order and the Utility’s Financial Plight

It is axiomatic that FERC is not a guarantor of Jersey Central’s financial health and that a utility may even go bankrupt for reasons beyond the regulator’s control. See, e.g., Hope, 320 U.S. at 603, 64 S.Ct. at 288. The Act and its constitutional limits ensure that the governmental ratemaking process does not “produce arbitrary or unreasonable consequences.” Permian Basin, 390 U.S. at 800, 88 S.Ct. at 1377. They do not protect the utility from market forces. Market Street Railway Co. v. Railroad Commission of California, 324 U.S. 548, 567, 65 S.Ct. 770, 779, 89 L.Ed. 1171 (1945). Establishing a link between a utility’s bad health and the actions of the regulator is thus essential to raising a viable Hope claim.

Jersey Central has not established this critical nexus. It simply complains that the government’s ratemaking actions are the source of its problems; our colleagues never question this assumed causal connection. An examination of the evidence laid before FERC, however, leads us to doubt the validity of this assumption.

In its present financial circumstances, Jersey Central bears greater resemblance to the failing Market Street Railway Company than it does to the Hope Natural Gas Company, “which had advantage of an economic position which promised to yield what was held to be an excessive return on its investment and on its securities.” Market Street, 324 U.S. at 566, 65 S.Ct. at 779 (finding investor considerations advanced in Hope “inapplicable to a company whose financial integrity already is hopelessly undermined”). Jersey Central had not been able to pay dividends for the four years prior to its filing; its access to capital had been hampered for about as long. Essentially, the utility is asking the Commission to relieve its economic miseries by approving dramatically increased rates. See Testimony of Dennis Baldassari, J.A. at 34 (testifying that the continuation of the present rate “will prolong the Company’s inability to restore itself to a recognized level of credit worthiness”); compare Permian Basin, 390 U.S. at 812, 88 S.Ct. at 1384 (noting that the rates proposed would “maintain the industry’s credit and continue to attract capital”) (emphasis added). Jersey Central’s problems appear to stem largely from the operations of the free market, perhaps exacerbated by the actions of other regulators. FERC cannot be made responsible for curing those ills.

The Supreme Court has enunciated this principle quite frankly:

The due process clause has been applied to prevent governmental destruction of existing economic values. It has not and cannot be applied to insure values or to restore values that have been lost by the operation of economic forces.

Market Street, 324 U.S. at 567, 65 S.Ct. at 780.

The entire electric utility industry faces a “financial crisis.” See Excerpts from Jersey Central Brief, J.A. at 26 n. 19. As Baldassari remarked, the October 1973 oil embargo and the impact of inflation are problems generic to the industry. Testimony of Dennis Baldassari, J.A. at 33. Those utilities that invested heavily in nuclear facilities were particularly hard hit, not in the least by adverse public and political attitudes to nuclear power and its attendant dangers. See id. at 33-34. Any fair reading of Baldassari’s testimony before FERC leads to the conclusion that economic forces, rather than any action on the part of FERC, have strapped Jersey Central into the financial straightjacket.

It should be noted that Jersey Central’s investment portfolio places it in a uniquely tight predicament. Jersey Central is a subsidiary of the General Public Utilities Corporation, the electric utility that has among its “prudent” investments the Metropolitan Edison Company and the infamous Three Mile Island (TMI) nuclear generating plant. Jersey Central intimates that the horrendous financial burden caused by the TMI-2 accident was the pivotal force in suspending construction of Forked River. See id. Presumably it also landed a heavy blow to *228Jersey Central's credit worthiness and financial integrity.

The market is not the only force potentially at work against Jersey Central. Many regulatory bodies have influence over Jersey Central’s economic destiny; therefore, the utility must effectively link its financial distress to FERC. This showing is particularly important, since the federal government is responsible — on the whole — for the value of only about ten percent of electricity sales in the United States. The states regulate the major part of the utility business. As noted earlier, the New Jersey BPU has historically refused Jersey Central a return on unproductive facilities. See Excerpts from Jersey Central Brief, J.A. at 17 (blaming the company’s financial woes on BPU’s lack of rate relief). In addition, there are other federal agencies who share regulatory control with FERC. The Nuclear Regulatory Commission, for example, prohibited the company from starting up the unharmed TMI-1 generator, thereby severing the company’s access to its prime source of desperately needed service and revenues.

If Jersey Central’s problems derive from economic forces or from the actions of other regulatory bodies, then even FERC’s full rate base treatment of the amounts at issue will not alter the company’s inability to pay dividends or obtain long-term credit. At a minimum, a company claiming an unconstitutional taking should have to show that FERC’s actions caused or substantially contributed to the conditions alleged to be the result of the taking. Jersey Central has made no such showing. In fact, it appears as if the Commission’s interim rate-reducing order is a small factor in the forces contributing to the utility’s financial dilemma.

The majority takes the remarkable position that the Commission must alter its ratemaking procedures even if the utility can only show that the Commission’s action only affects “a minor portion of Jersey Central's business.” Maj.Op. at 1182 n. 5. Such a position is untenable. From this perspective, the agency would be obliged to abandon its ratemaking procedures in every industry which experienced financial hardship, regardless of the principal causes of those conditions. Neither Hope nor the due process clause requires as much. See Market Street, 324 U.S. at 567, 65 S.Ct. at 779.

2. The Effect on Consumers

The burden is ultimately on Jersey Central to establish that the return allowed by FERC is constitutionally inadequate; part of the showing necessary to raise an issue of fact must include attention to the consumer interests which form an important part of the Hope balancing test. Under Hope, a taking occurs only when the agency has misbalanced the interests of investors and consumers. As the Court stated in Permian Basin,

[t]he Commission cannot confine its inquiries [to the Hope investor criteria]; it is instead obliged at each step of its regulatory process to assess the requirements of the broad public interests entrusted to its protection by Congress. Accordingly, the “end result” of the Commission’s orders must be measured as much by the success with which they protect those interests as by the effectiveness with which they “maintain ... credit and ... attract capital.”

390 U.S. at 791, 88 S.Ct. at 1372.

The consumer interest essential to the just and reasonable balance is that of not being subjected to exploitative rates. The Commission stands as the watchdog providing “a complete, permanent and effective bond of protection from excessive rates and charges.” Id. at 795, 88 S.Ct. at 1374 (quoting Atlantic Refining Co. v. Public Service Commission, 360 U.S. 378, 388, 79 S.Ct. 1246, 1253, 3 L.Ed.2d 1312 (1959)). Thus, this court has described utility consumers as the agency’s “prime constituency.” See Maryland People’s Counsel v. FERC, 761 F.2d 780, 781 (D.C.Cir.1985) (citing Hope, 320 U.S. at 620, 64 S.Ct. at 296). The exact boundaries of an exorbitant rate are indeterminate. Ultimately, however, they must relate to the cost of service, see *229 Farmers Union Central Exchange, Inc. v. FERC, 734 F.2d 1486, 1502 (D.C.Cir.) (citing Hope, 320 U.S. at 602-03, 64 S.Ct. at 287-88), cert. denied sub nom., Williams Pipe Line Co. v. Farmers Union Central Exchange, Inc., 469 U.S. 1034, 105 S.Ct. 507, 83 L.Ed.2d 298 (1984), and the distribution of associated risk, see Washington Gas Light Co. v. Baker, 188 F.2d 11, 20 (D.C.Cir.1950).

Jersey Central argues that the agency has discriminated against its investors’ interests, but it does not address how the Commission’s balance weighed the consumer interests. More significantly, it does not show that paying more attention to its investors’ interests would not exploit the consumer. See 18 C.F.R. § 35.13(e)(3)(1986) (stating that the utility has the burden of “establishing that the rate increase is just and reasonable and not unduly discriminatory or preferential”).

The majority is in seeming confusion as to the showing the company made with regard to protection of consumer interests. It states, without support, that “Jersey Central submitted figures and testimony to support its claim that ... its proposed rates would not exploit consumers.” Maj.Op. at 1180. Yet, in fact, Jersey Central itself never made this “claim”; it never broached the issue. The majority resurrects an unpersuasive argument in support of its contention — namely, that “the rates proposed in its filing would remain lower than those of neighboring utilities.” Id. at 1181; see Jersey Central Power & Light Co. v. FERC, 768 F.2d 1500, 1502 (D.C.Cir.1985). Perhaps this point would lend support to the majority’s assertion were there a competitive market for electricity service. But of course there is no competition in this market; electric utilities are natural monopolies subject to rate regulation. “What rates are ‘just and reasonable’ will in general depend on a utility’s legitimate costs, and those costs can of course vary widely even among neighboring utilities____ That some utilities with monopoly markets adjacent to Jersey Central’s are allowed to charge more than Jersey Central thus presumably signifies nothing more than that Jersey Central has access to cheaper sources of power, or for some other reasons has fewer legitimate costs.” 768 F.2d at 1512 (Mikva, J., dissenting). It certainly does not show that Jersey Central’s proposed rates would not exploit its customers.

The majority admits that “it is impossible for us to say at this juncture whether including the unamortized portion of Forked River in the rate base would exploit consumers in this case.” Maj.Op. at 1181. Since Jersey Central alleges that its proposed rate schedule would yield the lowest nonconfiscatory rate possible, how can the majority then say that the company has made a Hope showing? Without a showing that its filing would not exploit consumers, Jersey Central has not presented allegations suggesting that the rate order does not meet the requirements of Hope. Contra id. at 1181. Absent such allegations, the utility is not entitled to a Hope hearing.

3. The Reasonableness of the Overall Return Allowed on the Forked River Project

Regardless of the formulation employed, the rates fixed by the Commission may not shift the risk of loss onto the consumer and then exact the practice of the loss from him in the event it occurs. Such a double taxing “would clearly violate the consumer interest against ‘exorbitant’ rates.” Washington Gas Light, 188 F.2d at 20. Before questioning the application of the used and useful rule, therefore, it is important to discover if the investors in Forked River have already been compensated for the risk that the project would be cancelled before the investment in it was entirely recovered. See id. at 19-20.

The total return received by a utility is a function of both the rate base and the rate of return, and the total return on any given investment is a function of the allowable return over a period of time. Jersey Central has focused only on the “used and useful” method of rate base calculation *230with no attention to the rate of return, especially to the manner in which that return may arguably have already compensated its investors for the exclusion of the cancelled investment from the rate base. Without an explanation of the company’s historic allowed return, it is impossible to judge the reasonableness of the Commission’s treatment of the Forked River plant.

In Washington Gas Light, the case so heavily relied upon by the majority, this court upheld a departure from the “used and useful” method of rate base calculation to the “prudent investment” approach. However, before approving the application of that formulation to the abandoned plant in that case, we remanded for further proceedings by the Commission. Contrary to the majority’s explanation, we did not require findings concerning the “financial health” of the company. See Maj.Op. at 1177. A remand was necessary because Judge Bazelon realized that it was possible that the investors had already been compensated for the risk that the plant at issue would be abandoned. As Judge Bazelon observed, “[i]t seems likely ..., in view of the prevalence in the past of the doctrine that abandoned property would not be included in the rate base (regardless of whether [rate orders] had resulted in complete recovery to the investor), that investors had been compensated for the risk of obsolescence.” 188 F.2d at 20. Thus, it was possible that the rate of return allowed the company in earlier years — if properly calculated to reflect the risks of the utility business — would have compensated the company in advance for the risk that it would not obtain full rate base treatment of its investment later on. If the rate of return had Served that risk compensation function, allowing additional recovery by switching rate base formulations midstream would overcompensate the utility and exploit the consumers. Id. at 19-20.

Jersey Central has made no allegations regarding the prior treatment of the Forked River plant in its approved rate of return. Compare Testimony of Dennis Baldassari, J.A. at 35 (“[T]he rates of return allowed in previous regulatory proceedings were never intended to compensate the investor for the risk of exposure to the costs of decontaminating TMI-2.”). If Jersey Central has been compensated for the plant all along because its rate of return has historically been set in a world where one of the risks of being a utility is having an investment declared not to be “used and useful,” then FERC has probably fulfilled its obligations under Hope.

In sum, in order to obtain a Hope hearing, Jersey Central must show that, due to the Commission's actions, it is in need of protection at this phase of the ratemaking process. That showing is conspicuously missing. Without it, the court has no business calling upon the Commission to alter its ratemaking procedures and provide a hearing at this interim stage. Once again, a protective device — the Hope end result test — is being used as a first strike weapon.

B. Limits of a “Just and Reasonable” Rate

In that Jersey Central is not entitled to a Hope hearing, it would normally be thought unnecessary to consider what the utility would have to prove, were it granted a hearing, in order to establish that the Commission’s rates are confiscatory. The concurrence’s attempt to analyze the evidence presented, while thoughtful, is premature. Because of breadth of the majority’s opinion today, however, we are compelled to discuss the issue.

The real mischief of today’s decision lies not in the majority’s belief that the utility has raised an issue of fact necessitating a hearing, but in its determination that Jersey Central has actually made out a case of constitutional confiscation. As Justice Douglas remarked, “he who would upset the rate order under the Act carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.” Hope, 320 U.S. at 602, 64 S.Ct. at 288. The majority believes that Jersey Central can meet this burden. We simply cannot swal*231low the majority’s assertion that “it is probable that the facts alleged [by Jersey Central], if true, would establish an invasion of the company’s rights.” See Maj.Op. at 1169. In our view, it is beyond cavil that Jersey Central has not presented allegations which, if true, would establish that the Commission’s orders result in unjust and unreasonable rates.

Despite the majority’s seeming confidence, the precise contours of this required showing are unclear. The just and reasonable statutory standard is imprecise. As this court once explained, “the words themselves have no intrinsic meaning applicable alike to all situations.” City of Chicago v. FPC, 458 F.2d 731, 750 (D.C.Cir.1971) (quoting City of Detroit v. FPC, 230 F.2d 810, 815 (D.C.Cir.1955)), cert. denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1972). Congress itself has provided no formula for determining an unjust and unreasonable rate. Hope, 320 U.S. at 600, 64 S.Ct. at 286. Cases subsequent to Hope have loosely defined this “deliberately broad” standard as drawing a “zone of reasonableness in which rates may properly fall. It is bounded at one end by the investor interest against confiscation and at the other by the consumer interest against exorbitant rates.” See, e.g., Washington Gas Light, 188 F.2d at 15. Thus, the only way that a rate may fall outside the zone of reasonableness, from the utility’s point of view, is if it is so low that it amounts to a unconstitutional taking under the fifth amendment. See FPC v. Natural Gas Pipeline Co., 315 U.S. 575, 586, 62 S.Ct. 736, 743, 86 L.Ed. 1037 (1942).

Ascertaining what constitutes a taking in the rate regulatory context is difficult, in part because there is no deprivation of typical property interests, the conceptual cornerstone of takings law. The Supreme Court has repeatedly stressed that price fixing does not effect an uncompensated taking merely because investors are denied their expected return. Indeed, even in traditionally competitive industries, “loss of future profits — unaccompanied by any physical property restrictions — provides a slender reed upon which to rest a takings claim.” Andrus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 327, 62 L.Ed.2d 210 (1979).

In Permian Basin, the Court restated the Hope doctrine as follows:

Price control is “unconstitutional ... if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt____” ¡Nonetheless, the just and reasonable standard of the Natural Gas Act “coincides” with the applicable constitutional standards, and any rate selected by the Commission from the broad zone of reasonableness cannot be attacked as confiscatory.

Accordingly, there can be no constitutional objection if the Commission, in its calculation of rates, takes fully into account the various interests which Congress has required it to reconcile.

390 U.S. at 769-70, 88 S.Ct. at 1361 (citations omitted).

Permian Basin teaches that if the Commission reasonably balances consumer and investor interests, then the resulting rate is not confiscatory. Id. at 770, 88 S.Ct. 1361. The separate opinion ably translates this into a working definition of a confiscatory rate: it exists when “an unreasonable balance has been struck in the regulation process so as unreasonably to favor ratepayer interests at the substantial expense of investor interests.” Sep.Op. at 1189. The majority appears to agree with the teaching of Permian Basin. See Maj.Op. at 1177-78. The lesson it gleans, however, is incongruous. According to the majority, balancing competing interests is not enough; a rate is confiscatory if it does not satisfy the “legitimate investor interest” outlined by the Court in Hope. Maj.Op. at 1177-78, 1180, 1181 n. 3, 1181-82 (insisting that the factors outlined in Hope describe a taking). This interpretation of Hope and Permian Basin is implausible.

The majority’s assessment of Jersey Central’s showing evinces a fundamental misunderstanding of the context in which the Hope Court discussed investor interests. It specified the interests at issue but did not require that rates fulfill them in order *232to be non-confiscatory. In Hope, the Court faced an assertion by the utility that the rates fixed by the Commission were so low as to be unjust and unreasonable. In testing this challenge, the Court essentially questioned whether the utility’s shareholders had anything to complain about. The Court examined what was “important” “from the investor or company point of view” and found that the rate at issue fully satisfied any legitimate investor interest. 320 U.S. at 603, 64 S.Ct. at 288. Accordingly, the Court held that the rate could not be condemned from the investor viewpoint. Id. at 64 S.Ct. at 288, 289. One year later, Justice Jackson, speaking for a unanimous Court, refuted the majority’s interpretation of the Court’s holding in Hope: “All that was held was that a company could not complain if the return which was allowed made it possible for the company to operate successfully.” Market Street, 324 U.S. at 566, 65 S.Ct. at 779. The Hope Court did not define “unjust or unreasonable”; nor did it articulate when a rate would be confiscatory. It certainly did not hold that the end result could be condemned if the investor criteria defined in the case were not fulfilled. Indeed, it expressly noted that its holding made no suggestion that more or less might not be allowed. 320 U.S. at 603, 64 S.Ct. at 288; see Market Street, 324 U.S. at 566, 65 S.Ct. at 779.

This understanding of Hope is the only way to reconcile the Court’s recitation of investor interests with its avowal that “regulation does not insure that the business shall produce net revenues.” See Hope, 320 U.S. at 603, 64 S.Ct. at 288 (quoting Natural Gas Pipeline, 315 U.S. at 590, 62 S.Ct. at 745). Investor interests are only one factor in the assessment of constitutionally reasonable, therefore non-confiscatory, rates. Permian Basin, 390 U.S. at 769, 88 S.Ct. at 1361. In any instance, the rate must also “provide appropriate protection to the relevant public interests, both existing and foreseeable.” Id. at 792, 88 S.Ct. at 1373. A just and reasonable rate which results from balancing these conflicting interests might not provide “enough revenue not only for operating expenses but also for the capital costs of the business ... including] service on the debt and dividends on the stock.” See Hope, 320 U.S. at 603, 64 S.Ct. at 288.

The Court made this abundantly clear in Market Street. The Commission rate order in Market Street was claimed to be confiscatory. 324 U.S. at 562, 65 S.Ct. at 777. Like Jersey Central, the complaining company asserted that Hope “entitled [it] to a return ‘sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital’ and to ‘enable the company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed.’ ” Id. at 566, 65 S.Ct. at 779 (quoting Hope, 320 U.S. at 603, 605, 64 S.Ct. at 288, 289). The Court dismissed the argument out of hand. In approving a rate that concededly consigned the company to operating at a loss, the Court made clear that a just and reasonable rate might not satisfy the investor “considerations” expounded in Hope. At the very least, the Court revealed that the Hope test does not guarantee rates that are fixed to provide a return “on an investment after it has vanished, even if once prudently made, or to maintain the credit of a concern whose securities already are impaired.” Id. at 567, 65 S.Ct. at 780.

Neither the regulatory process nor the fifth amendment shelter a utility from market forces. See id. Thus, contrary to the majority’s intimations, rates do not fall outside the zone of reasonableness merely because they do not enable the company to operate at a profit or do not permit investors to recover all their losses.

The zone of reasonableness can be viewed as circumscribing the appropriate allocation of costs and benefits in the regulatory context. In an unregulated environment, the customer would not be deemed a risk-taker. He invests no capital in the enterprise and therefore bears neither the upside nor the downside risk. The investors are the risk-takers. Under price regulations, which affords the utility a “natural monopoly” on service, some of the risk at *233either end of the spectrum is shifted onto the ratepayer. The transfer, however, is not so dramatic as to relieve the stockholder of the entire risk of loss.

Application of this principle is readily apparent in the Commission’s current treatment of electric utility plants, investments prudent when made but sometimes frustrated in fruition. If the investment is successful, the customer benefits from controlled rates for the service provided. But the ratepayer also shares the costs if the investment fails; he must pay for the expenditure made on an unproductive facility from which he obtains no service. From the investor’s viewpoint, price regulation cabins both his upside and downside risk. He cannot collect the windfall benefits if the project is a boon; he does not bear all costs if the project is a bust. Electric utility stockholders do not lose equity in the non-serviceable facility, as they might in the marketplace. They simply do not procure a return on the investment.

The majority quibbles with this risk allocation; it would prefer a world in which the investor is guaranteed a return on his investment, if prudent when made. See Maj.Op. at 1180-81 & n. 2. Its resultant holding today is directly at odds with fundamental principles laid out in Hope and its progeny. Adherence to the majority’s insistance on the inclusion of prudent investments in the rate base would virtually insulate investors in public utilities from the risks involved in free market business. See Sep.Op. at 1190. This would drastically diminish protection of the public interest by thrusting the entire risk of a failed investment onto the ratepayers. See id. at 1190. Jersey Central and the majority would convert utility stockholders from risk-takers into annuity holders. See Excerpts from Jersey Central Brief, J.A. at 18 (analogizing its suggested “cost-sharing” to a levelized mortgage or annuity). Neither Hope nor the fifth amendment takings clause sanctions such radical results. Cf. Hope, 320 U.S. at 603, 64 S.Ct. at 288 (stating that the “return to the equity owner should be commensurate with returns on investments in other enterprises having corresponding risks”).

In any event, this court should not ordain the drastic risk shifting that Jersey Central advocates in its filing. The proper allocation of risk between shareholders and ratepayers is a serious ongoing question. See supra page 1202. It raises cross-cutting issues too broad to be ventilated in a single rate proceeding. “The importance of this issue ... transcends the impact on a single jurisdictional utility.” New England Power Co., 32 FERC (CCH) ¶ 61,453, at 62,042 (Sept. 30, 1985). The majority’s conclusion that the allocation reached by the Commission may be unconstitutional on the facts alleged has serious and troubling implications, especially for the twenty-five states that currently exclude cancelled facility expenses from a utility’s rate base.

IV. Hearing on the Altered Rate Filing

As we have indicated, the Commission reasonably applied its settled rate base filing rule to Jersey Central according to its established summary disposition procedures. Nothing in Jersey Central's allegations automatically entitled it to a hearing. The utility was entitled to, and was afforded, a hearing on its proposed rate of return on the conforming items in its rate base. Jersey Central nevertheless makes one additional complaint against the Commission. In its final challenge, Jersey Central objects to the Commission’s refusal to entertain the utility’s attempt to inflate the rate of return proffered in its initial filing. This is yet another move by Jersey Central designed to convince this court to endorse its skirting of valid agency procedures.

In rejecting Jersey Central’s plea, the Commission invoked its long-standing rule that “utilities may not present a ‘moving target’ by offering alternative justifications for previously filed rates.” 20 FERC (CCH) ¶ 61,108, at 61,182. As this court noted in its original opinion, this rule is not arbitrary. It is justified by the “administrative necessity of closing the books at a time certain,” as well as the need for a “mechanism to prevent utilities from delay*234ing refund orders by offering alternative justifications for the rate increases [they have] filed. FPC staff and intervenors cannot be expected to follow a moving target.” New England Power Co. v. FPC, No. 75-1379, slip op. at 3 (1st Cir. Nov. 13, 1975), cited in 20 FERC (CCH) ¶ 61,108, at 61,182.

The majority never questions the Commission’s authority to implement this rule. Rather, it questions the appropriateness of its application in Jersey Central’s case. The majority seems to believe that the Commission’s refusal to grant a hearing on the higher rate of return stripped petitioner of any chance to plead its case and obtain the rates it desired. Despite the majority’s protestations to the contrary, Jersey Central had sufficient opportunities to seek the revenues it requested. We are therefore unpersuaded by the utility’s contention that it was denied a fair hearing.

As noted at the outset, the utility had at least two separate opportunities to raise its concerns and to request the full rate increase anticipated by its rejected filing. Either approach would have raised an issue of fact, precluding summary disposition. First, Jersey Central could have filed initially for a higher rate of return on its used and useful property, or for a shorter amortization period on its Forked River investment. Because a shorter amortization period would allow the utility to recover its investment sooner, it would have had the same effect of increasing total return as did Jersey Central’s attempt, flatly contradicted by the clear precedent in NEPCO and later cases, to increase the size of the rate base. Indeed, Jersey Central concedes this point. If the utility had followed NEP-CO, and supported its proposed rate increase by filing for amortization of its investment in cancelled projects over five years instead of fifteen, rates higher than those it initially proposed would have been justified.

Second, Jersey Central could have made the same requests by refiling its rates, using a proper rate base. This new filing, of course, could not have stood alone without supporting exhibits and affidavits. As the Commission observed, “the company’s [initial] case-in-chief did not include testimony seeking to support a return other than 19% based on any alternative scenario of events, including summary disposition of rate base items.” 20 FERC (CCH) ¶ 61,-108, at 61,182. In order to recover a higher return, petitioner would be required to offer cost and market data at the time of their filing that would support that rate of return. See 18 C.F.R. § 35.13(e) (1986) (testimony and exhibits supporting filing of changes in rate schedules).

Where the majority reads “in the [rehearing denial] order [that] the Commission made it clear a fresh filing would be futile” escapes comprehension. See Maj.Op. at 1187. The utility certainly did not get that message. The following exchange from en banc oral argument amplifies Jersey Central's recognition that it was free to submit a new rate filing and thereby obtain a hearing:

COURT: But you could have put in a new filing, couldn’t you?

COUNSEL: We could have, sir, but

COURT: At any time, even now?

COUNSEL: [W]e could but we believed then and we believe today that that precedent was wrong and we would not have had an opportunity to—

COURT: That is really what I wanted to clear up. Your concern really is you strongly disagree with the NEPCO precedent—

COUNSEL: Yes, we do, sir.

COURT: —I understand that, but as far as you are concerned the use of the useful rule as applied in NEPCO is a bad idea and you would like this Court to change its mind.

COUNSEL: Yes, sir, no question about it.

Tr. at 8.

As an alternative to submitting a different rate filing, Jersey Central could have asked for an individualized exemption from the NEPCO rule. The Commission’s filing requirements provide that “[i]f any filing does not comply with any applicable stat*235ute, rule, or order, the filing may be rejected, unless the filing is accompanied by a motion requesting a waiver of the applicable requirement of a rule or order and the motion is granted.” 18 C.F.R. § 385.-2001(b)(1) (1986). By providing this waiver process, the Commission exercises its inherent power to relax, modify, or waive its filing requirements. See Papago Tribal Utility Authority, 628 F.2d at 247; Municipal Electric Utility Association v. Federal Power Commission, 485 F.2d 967, 975 n. 28 (D.C.Cir.1973). Jersey Central did not move for such an exemption.

As its responses at oral argument illustrate, Jersey Central declined these multiple opportunities because it wanted to challenge the NEPCO rule directly, and none of the permissible options allowed it to do so. The hearing it would have obtained had it made a new filing would not have enabled it to address the NEPCO doctrine; nor would the filing of a complying tariff in the first instance have provided that vantage. Similarly, merely asking for an exemption would in no way threaten the viability of the doctrine. The majority demonstrates that such a “characterization” of the utility’s filings would be “an unreasonable one,” Maj.Op. at 1185, but no characterization is necessary. Jersey Central plainly stated its purpose and acted upon it.

Jersey Central could have sought review of what it perceives as an unsound rule without trampling on the Commission’s filing policies and procedures and without asking this court to become involved. It could have petitioned the Commission for a rulemaking. NEPCO took this approach in its 1985 submission for filing of a proposed rate increase. See New England Power Co., 32 FERC (CCH) ¶ 61,454 (Sept. 30, 1985) (Phase II). NEPCO “requested] that the Commission reexamine its policy regarding the treatment of the costs of cancelled plant.” Id. at 62,042 (citing NEPCO). Unlike Jersey Central, however, NEPCO did not factor its suggested treatment of abandoned plants into the rates it proposed; rather, it sought only a prospective change in the policy. Id. at 62,043 n. 5. In this way, the Commission was able to begin reexamining NEPCO “as well as the economic and legal underpinnings for a cancelled plant policy” in the rulemaking context. Id. at 62,042; see also Pennsylvania Electric Co., 34 FERC (CCH) ¶ 61,141, 61,244 n. 8 (Feb. 4, 1986) (“[A]ny change in Commission policy would be prospective only, and utilities are required to adhere to the precedent established in [NEPCO ] pending reconsideration of our policy.”); New England Power Co., 35 FERC (CCH) ¶ 61,353 (June 18, 1986) (denying motion to limit generic scope of NEPCO Phase II hearing).

In light of these opportunities, deliberately avoided, we cannot question the reasonableness of the Commission’s application of its rule against presenting a “moving target.” Of course, we do not suggest that an agency may implement any policy through;any procedure, no matter how unreasonable, and compel the applicant to adhere to them in order to preserve its right to seek relief from the agency. We find only that the Commission acted validly in requiring Jersey Central to follow reasonable policy and filing requirements. The measure of their reasonableness is that they afforded Jersey Central ample opportunity to contend that, taking its balance sheet and troubled history of investments into account, the total return it requested was just and reasonable. They also provided the company with a platform for advocating the discontinued application of the used and useful doctrine to cancelled electric utility facilities. Given these opportunities, Jersey Central cannot seek from this court the relief and the individualized attention to its financial plight that it could have obtained from the Commission.

Conclusion

This is a case of modest proportions about one segment of the sweeping rate-making responsibilities that Congress has entrusted to the Commission. Like all arms of the government, the agency must abide by its statutes and by the constitutional prohibition against taking property *236without due process of law. But the due process claims of a regulated utility are not coupons which can be exchanged for a hearing at a time, place, and manner of the utility's choosing. Such an approach would wreak havoc with the agency’s ability to administer a complex rate regulation system that must assess many rate filings annually.

There may indeed be times when the Commission is not free to employ the used and useful principle in a summary fashion. However, Jersey Central has not made the case for its exception. Its allegations do not raise a question of fact sufficient to trigger a Hope hearing before application of well-settled, court-approved ratemaking procedure and policy. The concerns about financial integrity and investor return that Jersey Central held in reserve for a hearing challenging the NEPCO rule should have been raised by following the Commission’s established rules and procedures. We express no view on substantive rate-base requirements that may come before this court in another case; we find only that on these facts the Commission was not obligated to hold a hearing before entering its interim rate-reducing order. The Commission’s administrative processes offered ample opportunities for Jersey Central to request and present supporting evidence for whichever rate of return and amortization period the utility deemed necessary to preserve its financial integrity, and to seek review of the NEPCO doctrine. Jersey Central chose not to avail itself of these opportunities, and now cries foul.

There is, in the end, only one reason that Jersey Central wants its hearing before the unamortized portion of its unproductive investment is excluded from the rate base. That timing is the only means it perceives as enabling it both to launch its frontal attack on the Commission's NEPCO doctrine and to immediately reap the rewards of any victory in the battle. The majority’s sympathy for Jersey Central appears driven by its agreement that the used and useful doctrine is outdated and should be replaced with a pure prudent investment approach. See Maj.Op. at 1175, 1180-81 & n. 2. By granting a hearing to Jersey Central at this stage of the long and complex ratemaking process, the majority provides the utility a forum in which to argue its causes. But it also interferes with the Commission’s discretion in implementing ratemaking policies and procedures. It thereby threatens the well-held maxim that the Commission is “not bound to use any single formula or combination of formulae in determining rates.” See Hope, 320 U.S. at 602, 64 S.Ct. at 287.

In an era of heightened deference to administrative decisions and procedures, this court especially ought to be sensitive to the line between legitimate judicial review and judicial substitutions for agency processes. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d'694 (1984); Vermont Yankee, supra. The majority has reordered the very filing procedures that FERC may prescribe, has redirected the kinds of hearings in which FERC may consider changes in its policies and, worst of all, has thrust the courts back into the very complicated forest of making the rates that regulated industries may charge. We ignore at our peril the hard-learned lessons of restraint expressed by the Supreme Court in Natural Gas Pipeline and Hope. The majority would have us relive that painful period.