## Facts

- The Federal Power Commission (FPC) initiated a rulemaking proceeding under Natural Gas Act § 16 and APA § 4 to address indefinite price-escalation clauses in natural gas contracts used in certificate applications.
- After notice and an opportunity for interested parties to submit written comments, the FPC adopted regulations defining permissible pricing provisions and authorizing summary rejection of applications relying on impermissible clauses.
- Texaco and another independent natural gas producer applied for Natural Gas Act § 7 certificates to sell gas to interstate pipelines and disclosed contract clauses barred by the new regulations.
- The FPC summarily rejected the applications without case-specific evidentiary hearings, reasoning that nonconforming contracts failed threshold regulatory requirements.
- The producers sought judicial review in the Tenth Circuit under Natural Gas Act § 19(b); one producer had its principal place of business in the Tenth Circuit, while the other did not, and both were incorporated outside the circuit.
- The Tenth Circuit exercised jurisdiction over both petitions and set aside the FPC’s orders, holding that § 7 required an individualized “hearing” before denial.

## Issues

1. Under Natural Gas Act § 19(b), does “is located” for a corporate natural-gas company mean the state of incorporation (as opposed to any place of business or operations), affecting venue for judicial review?
2. Does Natural Gas Act § 7’s “after a hearing” requirement prevent the FPC from using APA § 4 rulemaking to set generally applicable eligibility standards and then summarily rejecting certificate applications that facially fail to comply?
3. When, if ever, must the FPC provide a plenary adversary-type hearing under Natural Gas Act § 7 and APA § 5 in connection with certificate applications rejected under generally applicable rules?

## Decision

- The Supreme Court reversed the Tenth Circuit in an 8–1 decision (Douglas, J.).
- The Court held venue was improper in the Tenth Circuit for the respondent whose incorporation and principal place of business were outside the circuit; for corporations, “is located” in § 19(b) refers to the state of incorporation.
- The Court upheld the FPC’s regulations and procedure: the rulemaking process satisfied APA § 4, and § 7 did not require a full evidentiary hearing before summarily rejecting applications that did not meet valid, generally applicable regulatory qualifications.
- The Court indicated that a plenary adversary-type hearing under § 7 and APA § 5 would be required if the agency undertook an adjudication on the merits of whether an applicant could qualify (including disputes requiring factfinding), rather than rejecting a facially nonconforming application.

## Legal Principles

- For corporate entities under Natural Gas Act § 19(b), “is located” means the state of incorporation; venue is not established merely by operational or physical presence in a circuit.
- An agency may use APA § 4 notice-and-comment rulemaking to establish generally applicable standards that implement statutory certification criteria and may reject at the outset applications that plainly fail those standards.
- A statutory “hearing” requirement for individual applications does not bar summary rejection when the agency applies a valid rule prescribing applicant qualifications and the application does not meet the rule or present a basis for waiver in the public interest.
- Formal, adversary adjudicatory procedures under APA § 5 and a plenary hearing are required when the agency adjudicates contested merits questions about an applicant’s entitlement to a certificate, not when it applies a threshold eligibility rule to a nonconforming filing.

## Conclusion

The Court held that judicial review venue for a corporate natural-gas company under § 19(b) lies in its state of incorporation or where it has its principal place of business, and it sustained the FPC’s use of APA notice-and-comment rulemaking to set certificate-qualification rules permitting summary rejection of facially noncompliant applications, while reserving plenary hearings for true merits adjudications.


Fed. Power Comm'n v. Texaco, Inc., 377 U.S. 33 (1964)