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Subject: 89-1452 & 89-1453 -- OPINION, MOBIL OIL EXPLORATION v. UNITED DISTRIBUTION

NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


Nos. 89-1452 and 89-1453


MOBIL OIL EXPLORATION & PRODUCING SOUTHEAST INC., et al., PETITIONERS v.
89-1452
UNITED DISTRIBUTION COMPANIES et al.


FEDERAL ENERGY REGULATORY COMMIS-
SION, PETITIONER
v.
89-1453
UNITED DISTRIBUTION COMPANIES et al.


on writs of certiorari to the united states court of appeals for the fifth
circuit

[January 8, 1991]



    Justice White delivered the opinion of the Court.

    These cases involve the validity of two orders, No. 451 and No. 451-A,
promulgated by the Federal Energy Regulatory Commission (Commission) to
make substantial changes in the national market for natural gas.  On
petitions for review, a divided panel of the Court of Appeals for the Fifth
Circuit vacated the orders as exceeding the Commission's authority under
the Natural Gas Policy Act of 1978 (NGPA), 92 Stat. 3352, 15 U. S. C. MDRV
3301 et seq.  885 F. 2d 209 (1989).  In light of the economic interests at
stake, we granted certiorari and consolidated the cases for briefing and
oral argument.  496 U. S. --- (1990).  For the reasons that follow, we
reverse and sustain the Commission's orders in their entirety.
I
    The Natural Gas Act of 1938 (NGA), 52 Stat. 821, 15 U. S. C. MDRV 717
et seq. was Congress' first attempt to establish nationwide natural gas
regulation.  Section 4(a) mandated that the present Commission's
predecessor, the Federal Power Commission  {1}, ensure that all rates and
charges requested by a natural gas company for the sale or transportation
of natural gas in interstate commerce be "just and reasonable."  15 U. S.
C. MDRV 717c(a).  Section 5(a) further provided that the Commission order a
"just and reasonable rate, charge, classification, rule, regulation,
practice, or contract" connected with the sale or transportation of gas
whenever it determined that any of these standards or actions were "unjust"
or "unreasonable."  15 U. S. C. 717d(a).
    Over the years the Commission adopted a number of different approaches
in applying the NGA's "just and reasonable" standard.  See Public Serv.
Comm'n of N. Y. v. Mid-Louisiana Gas Co., 463 U. S. 319, 327-331 (1983).
Initially the Commission, construing the NGA to regulate gas sales only at
the downstream end of interstate pipelines, proceeded on a
company-by-company basis with reference to the historical costs each
pipeline operator incurred in acquiring and transporting gas to its
customers.  The Court upheld this approach in FPC v. Hope Natural Gas Co.,
320 U. S. 591 (1944), explaining that the NGA did not bind the Commission
to "any single formula or combination of formulae in determining rates."
Id., at 602.
    The Commission of necessity shifted course in response to our decision
in Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672 (1954).  Phillips
interpreted the NGA to require that the Commission regulate not just the
downstream rates charged by large interstate pipeline concerns, but also
upstream sales rates charged by thousands of independent gas producers.
Id., at 682.  Faced with the regulatory burden that resulted, the
Commission eventually opted for an "area rate" approach for the independent
producers while retaining the company-by-company method for the interstate
pipelines.  First articulated in 1960, the area rate approach established a
single rate schedule for all gas produced in a given region based upon
historical production costs and rates of return.  See Statement of General
Policy No. 61-1, 24 F. P. C. 818 (1960).  Each area rate schedule included
a twotiered price ceiling: the lower ceiling for gas prices established in
"old" gas contracts and a higher ceiling for gas prices set in "new"
contracts.  Id., at 819.  The new two-tier system was termed "vintage
pricing" or "vintaging."  Vintaging rested on the premise that the higher
ceiling price would provide incentives for the production of new gas that
would be superfluous for old gas already flowing because "price could not
serve as an incentive, and since any price above historical costs, plus an
appropriate return, would merely confer windfalls."  Permian Basin Area
Rate Cases, 390 U. S. 747, 797 (1968).  The balance the Commission hoped to
strike was the development of gas production through the "new" gas ceilings
while ensuring continued protection of consumers through the "old" gas
price limits.  At the same time the Commission anticipated that the
differences in price levels would be "reduced and eventually eliminated as
subsequent experience brings about revisions in the prices in the various
areas."  Statement of General Policy, supra, at 818.  We upheld the vintage
pricing system in Permian Basin, holding that the courts lacked the
authority to set aside any Commission rate that is within the " `zone of
reasonableness.' "  390 U. S., at 797 (citation ommitted).
    By the early 1970's, the two-tiered area rate approach no longer
worked.  Inadequate production had led to gas shortages which in turn had
prompted a rapid rise in prices.  Accordingly, the Commission abandoned
vintaging in favor of a single national rate designed to encourage
production.  Just and Reasonable National Rates for Sales of Natural Gas,
51 F. P. C. 2212 (1974).  Refining this decision, the Commission prescribed
a single national rate for all gas drilled after 1972, thus rejecting an
earlier plan to establish different national rates for succeeding biennial
vintages.  Just and Reasonable National Rates for Sales of Natural Gas, 52
F. P. C. 1604, 1615 (1974).  But the single national pricing scheme did not
last long either.  In 1976 the Commission reinstated vin taging with the
promulgation of Order No. 770.  National Rates for Jurisdictional Sales of
Natural Gas, 56 F. P. C. 509 (1976).  At about the same time, in Order No.
749, the Commission also consolidated a number of the old vintages for
discrete areas into a single nationwide category for all gas already under
production before 1973.  Just and Reasonable National Rates for Sales of
Natural Gas, 54 F. P. C. 3090 (1975).  Despite this consolidation, the
Commission's price structure still contained 15 different categories of old
gas, each with its own ceiling price.  Despite all these efforts, moreover,
severe shortages persisted in the interstate market because low ceiling
prices for interstate gas sales fell considerably below prices the same gas
could command in intrastate markets, which were as yet unregulated.
    Congress responded to these ongoing problems by enacting the NGPA, the
statute that controls this controversy.  See Mid-Louisiana Gas Co., supra,
at 330-331.  The NGPA addressed the problem of continuing shortages in
several ways.  First, it gave the Commission the authority to regulate
prices in the intrastate market as well as the interstate market.  See
Transcontinental Gas Pipe Line Corp. v. State Oil and Gas Bd. of Miss., 474
U. S. 409, 420-421 (1986) (Transco).  Second, to encourage production of
new reserves, the NGPA established higher price ceilings for new and
hard-to-produce gas as well as a phased deregulation scheme for these types
of gas.  15 102, 103, 105, 107 and 108; 15 U. S. C. 15 3312, 3313, 3315,
3317, 3318.  Finally, to safeguard consumers, 15 104 and 106 carried over
the vintage price ceilings that happened to be in effect for old gas when
the NGPA was enacted while mandating that these be adjusted for inflation.
15 U. S. C. 15 3314 and 3316.  Congress, however, recognized that some of
these vintage price ceilings "may be too low and authorize[d] the
Commission to raise [them] whenever traditional NGA principles would
dictate a higher price."  Mid-Louisiana Gas, supra, at 333.  In particular,
15 104(b)(2) and 106(c) provided that the Commission "may, by rule or
order, prescribe a maximum lawful ceiling price, applicable to any first
sale of natural gas (or category thereof, as determined by the Commission)
otherwise subject to the preceding provisions of this section."  15 U. S.
C. 15 3314(b)(2) and 3316(c).  The only conditions that Congress placed on
the Commission were first, that the new ceiling be higher than the ceiling
set by the statute itself and second, that it be "just and reasonable"
within the meaning of the NGA.  15 U. S. C. 15 3314(b)(1), 3316(a).
    The new incentives for production of new and difficult-toproduce gas
transformed the gas shortages of the 1970s into gas surpluses during the
1980s.  One result was serious market distortions.  The higher new gas
price ceilings prevented the unexpected oversupply from translating into
lower consumer prices since the lower, vintage gas ceilings led to the
premature abandonment of old gas reserves.  App. 32-36.  Accordingly, the
Secretary of Energy in 1985 formally recommended that the Commission issue
a notice of proposed rulemaking to revise the old gas pricing system.  50
Fed. Reg. 48540 (1985).  After conducting two days of public hearings and
analyzing approximately 113 sets of comments, the Commission issued the two
orders under dispute in this case: Order No. 451 promulgated in June 1986,
51 Fed. Reg. 22168 (1986); and Order No. 451-A, promulgated in December
1986, which reaffirmed the approach of its predecessor while making certain
modifications. {2}  51 Fed. Reg. 46762 (1986).
    The Commission's orders have three principal components.  First, the
Commission collapsed the 15 existing vintage price categories of old gas
into a single classification and established an alternative maximum price
for a producer of gas in that category to charge, though only to a willing
buyer.  The new ceiling was set at $2.57 per million BTUs, a price equal to
the highest of the ceilings then in effect for old gas (that having the
most recent, post-1974, vintage) adjusted for inflation.  51 Fed. Reg.
22183-22185 (1986); see 18 CFR MDRV 271.402(c)(3)(iii) (1986).  When
established the new ceiling exceeded the then-current market price for old
gas.  The Commission nonetheless concluded that this new price was "just
and reasonable" because, among other reasons, it generally approximated the
replacement cost of gas based upon the current cost of finding new gas
fields, drilling new wells, and producing new gas.  See Shell Oil Co. v.
FPC, 520 F. 2d 1061 (CA5 1975) (holding that replacement cost formula
appropriate for establishing "just and reasonable" rates under the NGA).
In taking these steps, the Commission noted that the express and
unambiguous terms of 15 104(b)(2) and 106(c) gave it specific authorization
to raise old gas prices so long as the resulting ceiling met the just and
reasonable requirement.  51 Fed. Reg., at 22179.
    The second principal feature of the orders establishes a "Good Faith
Negotiation" (GFN) procedure that producers must follow before they can
collect a higher price from current pipeline customers.  18 CFR MDRV
270.201 (1986).  The GFN process consists of several steps.  Initially, a
producer may request a pipeline to nominate a price at which the pipeline
would be willing to continue purchasing old gas under any existing
contract.  MDRV 270.201(b)(1).  At the same time, however, this request is
also deemed to be an offer by the producer to release the purchaser from
any contract between the parties that covers the sale of old gas.  MDRV
270.201(b)(4).  In response, the purchaser can both nominate its own price
for continuing to purchase old gas under the contracts specified by the
purchaser and further, request that the producer nominate a price at which
the producer would be willing to continue selling any gas, old or new,
covered under any contracts specified by the purchaser that cover at least
some old gas.  If the parties cannot come to terms, the producer can either
continue sales at the old price under existing contracts or abandon its
existing obligations so long as it has executed a new contract with another
purchaser and given its old customer 30-days' notice.  15 157.301,
270.201(c)(1), (e)(4).  The Commission's chief rationale for the GFN
process was a fear that automatic collection of the new price by producers
would lead to market disruption given the existence of numerous gas
contracts containing indefinite price-escalation clauses tied to whatever
ceiling the agency established.  51 Fed. Reg., at 22204.  The Commission
further concluded that NGA MDRV 7(b), which establishes a "due hearing"
requirement before abandonments could take place, did not prevent it from
promulgating an across the board rule rather than engage in case-by-case
adjudication.  15 U. S. C. MDRV 717f(b).
    Finally, the Commission rejected suggestions that it undertake
completely to resolve the issue of take-or-pay provisions in certain
natural gas contracts in the same proceeding in which it addressed old gas
pricing. {3}  The Commission explained that it was already addressing the
take-or-pay problem in its Order 436 proceedings.  It further pointed out
that the GFN procedure, in allowing purchaser to propose new higher prices
for old gas in return for renegotiation of takeor-pay obligations, would
help resolve many take-or-pay disputes.  The Commission also reasoned that
the expansion of old gas reserves resulting from its orders would reduce
new gas prices and thus reduce the pipelines' overall take-or-pay exposure.
51 Fed. Reg., at 22174-22175, 22183, 22196-22197, 46783-46784, 22197.
    A divided panel of the Court of Appeals for the Fifth Circuit vacated
the orders on the ground that the Commission had exceeded its statutory
authority.  The court first concluded that Congress did not intend to give
the Commission the authority to set a single ceiling price for old gas
under 15 104(b)(2) and 106(c).  The court also dismissed the ceiling price
itself as unreasonable since it was higher than the spot market price when
the orders were issued and so amounted to "de facto deregulation."  885 F.
2d, at 218-222.  Second, the court rejected the GFN procedure on the basis
that the Commission lacked the authority to provide for across the board,
preauthorized abandonment under MDRV 7(b).  Id., at 221-222.  Third, the
court chided the Commission for failing to seize the opportunity to resolve
the take-or-pay issue, although it did acknowledge that the Commission was
addressing that matter on remand from the District of Columbia Circuit's
decision in Associated Gas Distributors v. FERC, 824 F. 2d 981 (CADC 1987),
cert. denied, 485 U. S. 1006 (1988).  The dissent disagreed with all three
conclusions, observing that the majority should have deferred to the
Commission as the agency Congress delegated to regulate natural gas.  885
F. 2d, at 226-235 (Brown, J., dissenting).  We now reverse and sustain the
Commission's orders.
II
    Section 104 (a) provides that the maximum price for old gas should be
computed as provided in MDRV 104(b). {4}  The general rule under MDRV
104(b)(1) is that each category of old gas would be priced as it was prior
to the enactment of the NGPA, but increased over time in accordance with an
inflation formula.  This was the regime that obtained under the NGPA until
the issuance of the orders at issue here.  Section 104(b)(2), however,
plainly gives the Commission authority to change this regulatory scheme
applicable to old gas:

    "The Commission may, by rule or order, prescribe a maximum lawful
ceiling price, applicable to any first sale of any natural gas (or category
thereof, as determined by the Commission) otherwise subject to the
preceding provisions of this section, if such price is --
    "(A) higher than the maximum lawful price which would otherwise be
applicable under such provisions; and
    "(B) just and reasonable within the meaning of the Natural Gas Act [15
U. S. C. MDRV 717 et seq.]."  15 U. S. C. 15 3314(b)(2) and 3316(c).


    Nothing in these provisions prevents the Commission from either
increasing the ceiling price for multiple old gas vintages or from setting
the ceiling price applicable to each vintage at the same level.  To the
contrary, the statute states that the Commission may increase the ceiling
price for "any natural gas (or category thereof, as determined by the
Commission)."  Likewise, 15 104(b)(2) allows the Commission to "prescribe a
ceiling price" applicable to any natural gas category.  Insofar as "any"
encompasses "all," this language enables the Commission to set a single
ceiling price for every category of old gas.  As we have stated in similar
contexts, "[i]f the statute is clear and unambiguous, `that is the end of
the matter, for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.' "  Sullivan v. Stroop, 496 U.
S. --- (1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U. S. 281, 291
(1988).
    Respondents counter that the structure of the NGPA points to the
opposite conclusion.  Specifically, they contend that Congress could not
have intended to allow the Commission to collapse all old gas vintages
under a single price where the NGPA created detailed incentives for new and
difficultto-produce gas on one hand, yet carefully preserved the old gas
vintaging scheme on the other.  Brief for Respondents 33-37.  We disagree.
The statute's bifurcated approach implies no more than that Congress found
the need to encourage new gas production sufficiently pressing to deal with
the matter directly, but was content to leave old gas pricing within the
discretion of the Commission to alter as conditions warranted.  The plain
meaning of MDRV 104(b)(2) confirms this view.
    Further, the Commission's decision to set a single ceiling fully
accords with the two restrictions that the NGPA does establish.  With
respect to the first, the requirement that a ceiling price be "higher than"
the old vintage ceilings carried over from the NGA does nothing to prevent
the Commission from consolidating existing categories and setting one price
equivalent to the highest previous ceiling.  15 U. S. C. 15 3314(b)(2)(A)
and 3316(c)(A).  With respect to the second, collapsing the old vintages
also comports with the mandate that price ceilings be "just and reasonable
within the meaning of the Natural Gas Act."  15 U. S. C. 15 3314(b)(2)(B)
and 3316(c)(B).
    Far from binding the Commission, the "just and reasonable" requirement
accords it broad ratemaking authority that its decision to set a single
ceiling does not exceed.  The Court has repeatedly held that the just and
reasonable standard does not compel the Commission to use any single
pricing formula in general or vintaging in particular.  FPC v. Hope Natural
Gas Co., 320 U. S. 591, 602 (1944); FPC v. Natural Gas Pipeline Co., 315 U.
S. 575, 586 (1942); Permian Basin, 390 U. S., at 776-777; FPC v. Texaco,
Inc., 417 U. S. 380, 386-89 (1974); Mobil Oil Corp. v. FPC, 417 U. S. 283,
308 (1974).  Courts of appeal have also consistently affirmed the
Commission's use of a replacement cost-based method under the NGA.  E. g.
Shell Oil Co. v. FPC, 520 F. 2d 1061, 1082-1083 (CA5 1975), cert. denied,
426 U. S. 941 (1976); American Public Gas Assn. v. FPC, 567 F. 2d 1016,
1059 (CADC 1977), cert. denied, 435 U. S. 907 (1978).  By incorporating the
"just and reasonable" standard into the NPGA, Congress clearly meant to
preserve the pricing flexibility the Commission had historically exercised
under the NGPA.  See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,
456 U. S. 353, 378-382 (1982).  In employing a replacement cost formula,
the Commission did no more than what it had previously done under the NGA:
collapse vintage categories together because the replacement cost for
natural gas is the same regardless of when it was placed in production.
See Opinion No. 749, Just and Reasonable National Rates for Sales of
Natural Gas, 54 FPC 3090 (1975), aff'd sub nom. Tenneco Oil Co. v. FERC,
571 F. 2d 834 (CA5), cert. dismissed, 439 U. S. 801 (1978). {5}
    Respondents contend that even if the statute allows the Commission to
set a single old gas ceiling, the particular ceiling it has set is unjustly
and impermissibly high.  They first argue that the Commission conceded that
actual collection of the new price would not be just and therefore
established the GFN procedures as a requisite safeguard.  The Commission
correctly denies having made any such concession.  In its orders, in its
briefs, and at oral argument, the agency has been at pains to point out
that its ceiling price, which was no higher than the highest of the
ceilings then applicable to old gas, falls squarely within the "zone of
reasonableness" mandated by the NGA.  See Permian Basin, supra at 767.
What the agency has acknowledged is that automatic collection of prices up
to the ceiling under the escalator clauses common to industry contracts
would produce "inappropriate" market distortion, especially since the
market price remains below the ceiling.  Reply Brief for Petitioner in No.
89-1453, p. 12.  In consequence the Commission instituted the GFN process
to mitigate too abrupt a transition from one pricing regime to the next.
Respondents have not sought to challenge (and we do not today consider) the
Commission's authority to require this process, but they assert that the
requiring of it amounts to an acknowledgment by the Commission that the new
ceiling price is in fact unreasonable.  We disagree.  There is nothing
incompatible between the belief that a price is reasonable and the belief
that it ought not to be imposed without prior negotiations.  We decline to
disallow an otherwise lawful rate because additional safeguards accompany
it.
    We likewise reject respondents' more fundamental objection that no
order "deregulating" the price of old gas can be deemed just and
reasonable.  The agency's orders do not deregulate in any legally relevant
sense.  The Commission adopted an approved pricing formula, set a maximum
price, and expressly rejected proposals that it truly deregulate by
eliminating any ceiling for old gas whatsoever.  App. 170-171.  Nor can we
conclude that deregulation results simply because a given ceiling price may
be above the market price.  United Gas Pipe Line Co. v. Mobile Gas Serv.
Corp., 350 U. S. 332, 343 (1956); FPC v. Sierra Pacific Power Co., 350 U.
S. 348, 353 (1956); FPC v. Texaco, Inc. 417 U. S. 380, 397 (1974).
III
    We further hold that Order No. 451's abandonment procedures fully
comport with the requirements set forth in MDRV 7(b) of the NGA.  15 U. S.
C. MDRV 717(b).  In particular, we reject the suggestion that this
provision mandates individualized proceedings involving interested parties
before a specific abandonment can take place.
    Section 7(b), which Congress retained when enacting the NGPA, states:

    "No natural-gas company shall abandon all or any portion of its
facilities subject to the jurisdiction of the Commission, or any service
rendered by means of such facilities, without the permission and approval
of the Commission first had and obtained, after due hearing, and a finding
by the Commission that the available supply of natural gas is depleted to
the extent that the continuance of service is unwarranted, or that the
present or future public convenience or necessity permit such abandonment."
15 U. S. C. MDRV 717(b).


As applied to this case MDRV 7(b) prohibits a producer from abandoning its
contractual service obligations to the purchaser unless the Commission has
first, granted its "permission and approval" of the abandonment; second,
made a "finding" that "present or future public convenience or necessity
permit such abandonment"; and third, held a "hearing" that is "due."  The
Commission has taken each of these steps.
    First, Order No. 451 permits and approves the abandonment at issue.
That approval is not specific to any single abandonment but is instead
general, prospective, and conditional.  These conditions include: failure
by the purchaser and producer to agree to a revised price under the GFN
procedures; execution of a new contract between the producer and a new
purchaser; and thirty-days notice to the previous purchaser of contract
termination.  18 CFR MDRV 270.201(c)(1) (1986).  Neither respondents nor
the Court of Appeals holding directly questions the Commission's orders for
failing to satisfy this initial requirement.  As we have previously held,
nothing in MDRV 7(b) prevents the Commission from giving advance approval
of abandonment.  FPC v. Moss, 424 U. S. 494, 499-502 (1976).  See Permian
Basin, 390 U. S., at 776.
    Second, the Commission also made the necessary findings that "present
or future public interest or necessity" allowed the conditional abandonment
that it prescribed.  51 Fed. Reg., at 46785-46787.  Reviewing "all relevant
factors involved in determining the overall public interest," the
Commission found that pre-authorized abandonment under the GFN regime would
generally protect purchasers by allowing them to buy at market rates
elsewhere if contracting producers insisted on the new ceiling price;
safeguard producers by allowing them to abandon service if the contracting
purchaser fails to come to terms; and serve the market by releasing
previously unused reserves of old gas.  See Felmont Oil Corp. and Essex
Offshore, Inc., 33 FERC MDRV 61,333, p. 61,657 (1985), rev'd on other
grounds sub nom. Consolidated Edison Co. of N. Y. v. FERC, 262 U. S. App.
D. C. 222, 823 F. 2d 630 (1987).  At bottom these findings demonstrate the
agency's determination that the GFN conditions make certain matters common
to all abandonments.  Contrary to respondents' theory, MDRV 7(b) does not
compel the agency to make "specific findings" with regard to every
abandonment when the issues involved are general.  As we held in the
context of disability proceedings under the Social Security Act, "general
factual issue[s] may be resolved as fairly through rulemaking" as by
considering specific evidence when the questions under consideration are
"not unique" to the particular case.  Heckler v. Campbell, 461 U. S. 458,
468 (1983).
    Finally, it follows from the foregoing that the Commission discharged
its MDRV 7(b) duty to hold a "due hearing."  Before promulgating Order No.
451, the agency held both a notice and comment hearing and an oral hearing.
As it correctly concluded, MDRV 7(b) required no more.  Time and again,
"[t]he Court has recognized that even where an agency's enabling statute
expressly requires it to hold a hearing, the agency may rely on its
rulemaking authority to determine issues that do not require case-by-case
consideration."  Heckler v. Campbell, supra, at 467; Permian Basin, supra,
at 774-777; FPC v. Texaco Inc., 377 U. S. 33, 41-44 (1964); United States
v. Storer Broadcasting Co., 351 U. S. 192, 205 (1956).  The Commission's
approval conditions establish, and its findings confirm, that the
abandonment at issue here is precisely the type of issue in which "[a]
contrary holding would require the agency continually to relitigate issues
that may be established fairly and efficiently in a single rulemaking
proceeding."  Heckler v. Campbell, supra, at 467.  See Panhandle Eastern
Pipe Line Co. v. FERC, --- U. S. App. D. C. ---, 907 F. 2d 185, 188 (1990);
Kansas Power & Light Co. v. FERC, 271 U. S. App. D. C. 252, 256-259, 851 F.
2d 1479, 1483-1486 (1988); Associated Gas Distributors v. FERC, 263 U. S.
App. D. C. 1, 35, n. 17,, 824 F. 2d 981, 1015, n. 17 (1987), cert. denied,
485 U. S. 1006 (1988).
    Neither the Court of Appeals nor respondents have uncovered a
convincing rationale for holding otherwise.  Relying on United Gas Pipe
Line Co. v. McCombs, 442 U. S. 529 (1979), the panel majority held that
Order No. 451's prospective approval of abandonment was impermissible given
the "practical" control the GFN process afforded producers.  885 F. 2d, at
221-223.  McCombs, however, is inapposite since that case dealt with a
producer who attempted to abandon with no Commission approval, finding, or
hearing whatsoever.  Nor can respondents object that the Commission made no
provision for individual determinations under its abandonment procedures
where appropriate.  Under Order No. 451, a purchaser who objects to a given
abandonment on the grounds that the conditions the agency has set forth
have not been met may file a complaint with the Commission.  See 18 CFR
MDRV 385.206 (1986).
IV
    We turn, finally, to the problem of "take-or-pay" contracts.  A
take-or-pay contract obligates a pipeline to purchase a specified volume of
gas at a specified price and, if it is unable to do so, to pay for that
volume.  A plausible response to the gas shortages of the 1970s, this
device has created significant dislocations in light of the oversupply of
gas that has occurred since.  Today many purchasers face disastrous
take-or-pay liability without sufficient outlets to recoup their losses.
The Court of Appeals cited this problem as a further reason for
invalidating Order No. 451.  Specifically, the court chastised the
Commission for its "regrettable and unwarranted" failure to address the
take-or-pay problem in the rulemaking under consideration.  885 F. 2d, at
224.
    Exactly what the court held, however, is another matter.  The dissent
viewed the majority's discussion as affirmatively ordering the Commission
"once and for all to solve" the entire take-or-pay issue.  885 F. 2d, at
234 (Brown, J., dissenting).  Respondents more narrowly characterize the
holding as that the Commission should have addressed the take-or-pay
problem at least to the extent that Order No. 451 exacerbated it.  Brief
for Respondents 67-70.  We have no need to chose between these
interpretations because the Court of Appeals erred under either view.
    The court clearly overshot the mark if it ordered the Commission to
resolve the take-or-pay problem in this proceeding.  An agency enjoys broad
discretion in determining how best to handle related yet discrete issues in
terms of procedures, Vermont Yankee Nuclear Power Corp. v. National
Resources Defence Council, Inc., 435 U. S. 519 (1978), and priorities,
Heckler v. Chaney, 470 U. S. 821, 831-832 (1985).  We have expressly
approved an earlier Commission decision to treat the take-or-pay issue
separately where a different proceeding would generate more appropriate
information and where the agency was addressing the question.  FPC v.
Sunray DX Oil Co., 391 U. S. 9, 49-51 (1968).  The record in this case
shows that approximately two-thirds of existing take-or-pay contracts do
not involve old gas.  We are satisfied that the agency could compile
relevant data more effectively in a separate proceeding.  We are likewise
satisfied that "the Commission itself has taken steps to alleviate
takeor-pay problems."  Id., at 50.  In promulgating Order No. 451, the
agency explained that it had chosen not to deal with the take-or-pay matter
directly primarily because it was addressing the matter on remand from the
D. C. Circuit.  Associated Gas Distributors v. FERC, supra. {6}
    The court likewise erred if it meant that the Commission should have
addressed the take-or-pay problem insofar as Order No. 451 "exacerbated"
it.  This rationale does not provide a basis for invalidating the
Commission's orders.  As noted, an agency need not solve every problem
before it in the same proceeding.  This applies even where the initial
solution to one problem has adverse consequences for another area that the
agency was addressing.  See Vermont Yankee, supra, at 543-544 (agencies are
free to engage in multiple rulemaking "[a]bsent constitutional constraints
or extremely compelling circumstances").  Moreover, the agency articulated
rational grounds for concluding that Order No. 451 would do more to
ameliorate the take-or-pay problem than worsen it.  51 Fed. Reg. 22196,
46783-46784.  The agency reasoned that the GFN prodedures would encourage
the renegotiation of take-or-pay provisions in contracts involving the sale
of old gas or old gas and new gas together.  51 Fed. Reg. 22196-22197.  The
agency further noted that the release of old gas would reduce the market
price for new gas and thus reduce the pipelines' aggregate liability.  We
are neither inclined nor prepared to second-guess the agency's reasoned
determination in this complex area.  See Motor Vehicle Mfrs. Assn. of
United States, Inc. v. State Farm Mutual Automobile Ins. Co., 463 U. S. 29,
43 (1983).
V
    We disagree with the Court of Appeals that the Commission lacked the
authority to set a single ceiling price for old gas; possessed no power to
authorize conditional preauthor ized abandonment of producers' obligations
to provide old gas; or had a duty to address the take-or-pay problem more
fully in this proceeding.  Accordingly, we reverse the judgment of the
Court of Appeals and sustain Orders No. 451 and 451-A in their entirety.
So ordered.


Justice Kennedy took no part in the decision in this case.







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1
    The term "Commission" will refer to both the Federal Energy Regulatory
Commission, and its predecessor the Federal Power Commission.

2
    Order No. 451 shall refer to both orders where the distinction is not
relevant.

3
    A take-or-pay clause requires a purchasing pipeline to take a specified
volume of gas from a producer or, if it is unable to do so, to pay for the
specified volume.  See Transco, 474 U. S. 409, 412 (1986).

4
    Section 104 in its entirety reads:
    "Ceiling price for sales of natural gas dedicated to interstate
commerce.

    "(a) Application. -- In the case of natural gas committed to dedicated
to interstate commerce on [November 8, 1978,] and for which a just and
reasonable rate under the Natural Gas Act [15 U. S. C. MDRV 717 et seq.]
was in effect on such date for the first sale of such natural gas, the
maximum lawful price computed under subsection (b) shall apply to any first
sale of such natural gas delivered during any month.

    "(b) Maximum lawful price. --
    "(1) General rule. -- The maximum lawful price under this section for
any month shall be the higher of --
    "(A)(i) the just and reasonable rate, per million Btu's, established by
the Commission which was (or would have been) applicable to the first sale
of such natural gas on April 20, 1977, in the case of April 1977; and
    "(ii) in the case of any month thereafter, the maximum lawful price,
per million Btu's, prescribed under this subparagraph for the preceding
month multiplied by the monthly equivalent of the annual inflation
adjustment factor applicable for such month, or
    "(B) any just and reasonable rate which was established by the
Commission after April 27, 1977, and before [November 9, 1978,] and which
is applicable to such natural gas.
    "(2) Ceiling prices may be increased if just and reasonable. -- The
Commission may, by rule or order, prescribe a maximum lawful ceiling price,
applicable to any first sale of any natural gas (or category thereof, as
determined by the Commission) otherwise subject to the preceding provisions
of this section, if such price is --
    "(A) higher than the maximum lawful price which would otherwise be
applicable under such provisions; and
    "(B) just and reasonable within the meaning of the Natural Gas Act [15
U. S. C. MDRV 717 et seq.]."

Section 106(c), deals in almost identical language with the ceiling prices
for sales under "rollover" contacts, which the NGPA defines as contracts
entered into on or after November 8, 1978, for the first sale of natural
gas that was previously subject to a contract tht expired at the end of a
fixed term specified in the contract itself.  15 U. S. C. MDRV 3301(12).  A
reference to MDRV 104(b)(2) is here used to refer to both provisions.

5
    Even had we concluded that 15 104(b)(2) and 106(c) failed to speak
unambiguously to the ceiling price question, we would nonetheless be
compelled to defer to the Commission's interpretation.  It follows from our
foregoing discussion that the agency's view cannot be deemed either
arbitrary, capricious, or manifestly contrary to the NPGA.  See Chevron U.
S. A., Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837,
843-844 (1984); K Mart Corp. v. Cartier, Inc. 486 U. S. 281, 292 (1988).

6
    The Court of Appeals for the D. C. Circuit has since invalidated the
Commission's principal attempt at solving the problem.  Associated Gas
Distributors v. FERC, 283 U. S. App. D. C. 265, 899 F. 2d 1250 (1990).  See
also American Gas Assn. v. FERC, 912 F. 2d 1496 (1990) (approving other
aspects of the Commission's take-or-pay proceedings).  Nothing in our
holding today precludes interested parties from petitioning the Commission
for further rulemaking should it become apparent that the agency is no
longer addressing the take-or-pay problem.  See Panhandle Eastern Pipe Line
Co. v. FERC, 281 U. S. App. D. C. 318, 890 F. 2d 435 (1989).