Full opinion text
Opinion for the Court filed by Circuit Judge WILLIAMS. Opinion concurring in the judgment in part and dissenting in part filed by Circuit Judge MIKVA. WILLIAMS, Circuit Judge: TABLE OF CONTENTS Page I. Introduction.993 A. Parties.994 B. Regulatory and Economic Context.995 II. Open-Access Requirements.997 A. Claimed Deficiencies in Statutory Authority to Require Open Access. 997 1. Natural Gas Act. 997 2. Natural Gas Policy Act.1001 B. Alleged Failure to Comply with Mandate of Outer Continental Shelf Lands Act_1003 C. Claims of Arbitrariness and Caprice.1004 1. Failure to impose the nondiscriminatory access conditions on § 7(c) transportation’ certificates.1004 2. Capacity allocation on a “first-come, first served" basis.1005 III. Rate Conditions.1007 A. Absence of Finding that Prior Rates Were Unlawful.1008 B. Allowance of Discounting Generally..1009 C. Potential Discrimination Between Bundled and Unbundled Transportation.1009 D. Selective as Opposed to Uniform Discounts.1010 E. Consistency of "Value-of-Service” Discounting with MPC II.1010 F. Impact of Discounting on Pipeline Solvency — .1012 IV. Contract Demand (“CD") Adjustment..1013 A. Legal Authority.1014 1. Violation of Panhandle doctrine.1014 2. Alleged lack of compliance with § 7(b)_1015 B. Adequacy of the Commission's Reasoning in Support of CD Conversion_ 1016 C. Adequacy of the Commission’s Reasoning in Support of CD Reduction.1018 D. Insufficiency Under MPC III...1020 V. Producer-Pipeline Contracts.1021 A. The Commission's Prior Activity and Its Inactivity in This Proceeding.. — 1021 B. Analysis of FERC's Decision.. — 1023 1. Lack of need for additional steps_1023 a. Likely effects of Order No. 436 on take- or-pay build-up.1023 b. Pipeline ability to shift costs downstream _1025 2. Policy considerations militating against any intervention..1026 3. Reasons for rejection of specific proposals. 1027 a. Section 5 action against jurisdictional contracts.1027 b. Conditioning producer access.1028 Page C. Conclusion.1030 VI. Optional Expedited Certification.1080 A. Ripeness.1031 B. Legality of the Presumption.1038 1. Alleged disregard of legally relevant factorsl034 2. Unsupported assumptions.1087 3. Alleged failures of reasoned decisionmaking 1038 VII. Miscellaneous Arguments.1038 A. Pipeline Sales Service Issues.1038 B. Notice Provisions.1039 C. Transportation Policies.1039 D. Construction of Facilities for Use in § 311 Transportation_1040 E. Grandfathering Decisions.1040 F. System Supply Limitation.1042 G. Transportation for Fuel-Switchable End Users 1043 VIII. Conclusion.1044 I. Introduction On October 9, 1985 the Federal Energy Regulatory Commission (“FERC”) issued Order No. 436, 50 Fed.Reg. 42,408 (1985) (codified at scattered sections of 18 C.F.R.). The Order envisages a complete restructuring of the natural gas industry. It may well come to rank with the three great regulatory milestones of the industry: the passage of the Natural Gas Act, 15 U.S.C. §§ 717 et seq. (1982) (“NGA”) in 1938, the imposition of price controls oh independent producers’ wellhead sales under Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 74 S.Ct. 794, 98 L.Ed. 1035 (1954), and adoption of the Natural Gas Policy Act (“NGPA”), 15 U.S.C. §§ 3301 et seq. (1982) in 1978. At stake is the role of interstate natural gas pipelines. Although they are obviously transporters of gas, they have until recently operated primarily as gas merchants. They buy gas from producers at the wellhead and resell it, mainly to local distribution companies (“LDCs”) but also to relatively large end users. The Commission has concluded that a prevailing pipeline practice — particularly their general refusal to transport gas for third parties where to do so would displace their own sales (Joint Appendix (“J.A.”) 318-19) — has caused serious market distortions. It has found this practice “unduly discriminatory” within the meaning of § 5 of the NGA. Order No. 436 is its response. The essence of Order No. 436 is a tendency, in the industry metaphor, to “unbun-dle” the pipelines’ transportation and merchant roles. If it is effective, the pipelines will transport the gas with which their own sales compete; competition from other gas sellers (producers or traders) will give consumers the benefit of a competitive wellhead market. Virtually every sector of the natural gas industry has challenged the Order, asserting a dazzling array of errors and omissions. They have filed some 85 briefs totaling about 2,000 pages. Oral argument spanned two days in a well-filled courtroom. We here uphold most elements of the Order, but remand the record to the Commission on certain issues. A. Parties. The bulk of the petitions for review are filed by representatives of the mam actors in the industry: (1) producers, (2) pipelines, (3) LDCs and (4) end users. A word follows as to the varieties and regulatory status of each, and as to the developments underlying the Commission’s decision. Producers are primarily independents, in the sense of being unaffiliated with any pipeline. Pipelines and pipeline affiliates produce only about 11% of the gas sold by pipelines in the interstate market. Interstate Natural Gas Ass’n of America, “The Gas Contracts Problem: Results of an IN-GAA Survey” 13 (Policy Analysis 83P-1, May 1983) (cited at J.A. 301 n. 34; data for 1982). The producers typically operate under oil-and-gas leases with owners of the land or mineral interests, subject to a duty to pay royalty and at some risk of losing their leases if production ceases. Producers' interstate wellhead sales have, through the operation of law or economics, achieved virtually complete release from binding price controls. The NGPA provided this almost immediately for certain categories of “high cost” gas. NGPA § 121(b), 15 U.S.C. § 3331(b) (1982). For most “new” gas, the NGPA established new ceilings, higher than those previously set by the Commission, and provided for gradual increases until scheduled deregulation on January 1, 1985 or July 1, 1987. NGPA §§ 102, 103, 121(a) & (c), 15 U.S.C. §§ 3312, 3313, 3331(a) & (c) (1982). In fact, current market prices at the wellhead are significantly below the ceilings remaining in these categories. Compare Selected National Average Natural Gas Prices, Natural Gas Monthly 10 (Jan. 1987) (average price at wellhead for March 1986 $2.16) with Natural Gas Ceiling Prices by Category of Gas, Type of Sale, or Contract, Natural Gas Monthly 30 (Jan. 1987) (ceiling price for § 102 and § 103 gas for same period ranged from $3,083 to $4,216). The NGPA made no provision for deregulation of “old” interstate gas, but, besides allowing escalation to reflect general price inflation, authorized the Commission to raise the former ceilings to higher “just and reasonable” levels. (The Commission actually exercised this authority on June 6, 1986, in Order No. 451, III FERC Statutes & Regulations ¶ 30,701, at 30,197 (1986).) The pipelines are either intrastate or interstate. Since enactment of the NGA, the interstate pipelines have been subject to pervasive Commission regulation. Before performing any significant act — construction of new facilities or initiation of new transportation service or new sales for resale — they must secure a certificate of convenience and necessity from the Commission. NGA § 7(c), 15 U.S.C. § 717f(c) (1982). They also require Commission approval when they abandon any “certificated” facility, transportation or sale. NGA § 7(b), 15 U.S.C, § 717f(b) (1982). Finally, the Commission limits to "just and reasonable” levels the prices at which the interstates sell gas for resale or provide transportation service. NGA § 4(a), 15 U.S.C. § 717c(a) (1982). Under conventional public utility principles this allows the pipelines, at least in theory, to recover no more than cost of service, including a reasonable return on investment. LDCs purchase gas for resale to end users, large and small. Their services and prices are subject to state regulation but not to that of FERC. End users run the gamut both in size and in ability to use substitutes. At one end is the ordinary householder, who even in the intermediate run is limited to such expedients as installing better insulation, wearing more sweaters, or turning the thermostat down. At the other end of the spectrum are users that need only flick a switch to replace gas with oil. B. Regulatory and Economic Context. The Natural Gas Act has the fundamental purpose of protecting interstate gas consumers from pipelines’ monopoly power. See Sen. Doc. No. 92, part 84A, 70th Cong., 1st Sess. 588-91 (FTC Utility Corporations Rep. 1935). By the early 1980s, a number of developments suggested, for the first time since enactment, that assuring customer access to the wellhead market could be an important potential ingredient in Commission fulfillment of that goal. First, by then a nationwide pipeline network had matured. J.A. 279, 284-92. This made it physically possible, for the first time, for consumers to acquire gas supplies from virtually any region. It also ended, or at least sharply reduced, pipeline monopsony power over wellhead purchases, a power that had the tendency to keep wellhead prices below competitive levels. See S. Breyer, Regulation and its Reform 243 (1982); cf. Note, Federal Price Control of Natural Gas Sold to Interstate Pipelines, 59 Yale L.J. 1468, 1478-79 (1950). Second, the removal of wellhead price controls greatly increased an underlying risk of the regulatory system — that pipelines’ gas purchase costs would rise above competitive market levels. For while cost-based price regulation at least in principle prevented pipelines from enjoying monopoly profits, the combination of market power and regulation tended to blunt their incentives for careful gas purchasing. The pipelines’ market power dampened any fear of being unable to recover exorbitant costs; regulation dampened any hope of direct profit from thrifty purchases, as it prevented them from making any mark-ups not based on cost. Cf. Pierce, Reconsidering the Roles of Regulation and Competition in the Natural Gas Industry, 97 Harv.L. Rev. 345, 357-65 (1983). As it proved, this lulling effect of regulation — coupled with the gyrations of the energy market from 1973 to the present-brought on the phenomenon of embedded contract prices well above competitive levels at the wellhead. For example, the Commission has recently estimated average prices paid by pipelines at the wellhead at about $2.50 per thousand cubic feet (“Mcf”), compared with less than $2 per Mcf in the spot market. See Order No. 451, III FERC Statutes & Regulations ¶ 30,701, at 30,210 (1986). (If the volume of the interstate market is about seven trillion cubic feet (“Tcf”), this would amount to a $3.5 billion price discrepancy.) The Commission’s estimate of the price specified in long-term new contracts as of mid-1986 was about the same as the average price then being paid by the pipelines (about $2.50), see id.; but the pipelines attained their figure for average price actually paid in part by refusing to take high-priced gas and thus subjecting themselves to a build-up of very substantial take-or-pay liability (discussed immediately below). Third, the conditions under which the NGPA began to relax wellhead price controls — namely acute gas shortage and sharply rising prices for alternative fuels— tended to divert pipeline attention from the hazards of incurring long-term obligations to buy high-priced gas. Under pressure from the Commission, the pipelines had typically purchased gas under contracts for very long terms. See, e.g., 18 C.F.R. § 2.61 (requiring pipelines to maintain supply reserves of up to 12-years’ projected demand); Columbia Gas Transmission Corp., 21 F.E.R.C. 1161,026, at 61,160-61 (1982) (example of long-term supply arrangements pipeline must make in order to extend new service); Department of Energy, The First Report Required by Section 123 of the Natural Gas Policy Act of 1978 3-2 (1984) (producer-pipeline contracts for 10 or more years are common). Besides incorporating high prices (and provisions for escalation upward), the contracts commonly included “take-or-pay” provisions, requiring the pipeline to pay for some specified percentage, say 75%, of the deliverable gas even if it took less. While usually subject to recoupment later, and while a perfectly natural allocation of risk between producer and purchaser, the take-or-pay provisions effectively committed the pipelines to high gas costs in what by 1982 proved to be a time of falling prices, both for competing fuels and for substitute supplies of gas not covered by contract. Fourth, various economic forces, including exhaustion of the cheaper supplies and the decline of pipeline monopsony at the wellhead, see S. Breyer, Regulation and Its Reform 243 (1982), raised the wellhead price — and thereby the potential loss to consumers if they should be saddled with the results of pipelines’ readiness to bid high prices. After hovering in the range of $.50 (in constant 1984 dollars) per million British thermal units (“Btu”) from 1930 to 1973, it rose to over $2.50 by 1982. See Energy Information Administration, An Analysis of the Department of Energy’s Notice of Proposed Rulemaking (NOPR), “Ceiling Prices: Old Gas Pricing Structure” 3 (1986). While the wellhead price in 1972 represented only about 28% of the delivered price to consumers, by 1981 that fraction had risen to 57%. Id. at 5. These developments lie in the background of the key Commission findings in support of Order No. 436. (1) Despite the growth of a competitive wellhead market, the interstate pipelines retain market power in gas transportation. J.A. 306. (2) Pipelines have generally declined to transport gas in competition with their own sales (except for transportation to customers that can switch to alternative fuels at little or no extra cost). J.A. 318-19. (8) Pipeline discrimination in transportation has denied consumers access to gas at the lowest reasonable rates. J.A. 320, 352. Thus the early 1980s created the likelihood, for the first time, that the Commission could best fulfill the purposes of the NGA by adopting rules enabling customers to buy gas at the wellhead and to overcome the interstate pipelines’ general refusal to move gas that would compete with their own sales. Besides protecting consumers from the burden of the pipelines’ purchase contracts at supra-market prices, such rules would have the long-term effect of subjecting pipelines to the ordinary constraints of a middleman under competitive conditions. This the Commission set out to achieve in Order No. 436. The Order’s regulatory package includes these elements: (1) If a pipeline seeks to take advantage of “blanket certification” of transportation (i.e., a certificate authorizing transportation services generically and thus obviating the need for unwieldy individual certification), it must commit itself to provide transportation on a nondiscriminatory basis (and thus become an “open-access” pipeline). (2) When demand outruns capacity for open-access transportation, the open-access pipeline shall allocate capacity on a “first-come, first-served” basis. (3) Rate regulation for open-access transportation will take the form of ceilings and floors, with the pipeline free to adjust rates within that band. (4) Any open-access pipeline, by applying for certification, agrees to allow its LDC customers to convert their “contract demand” (“CD”) (ie., contract commitment to purchase gas) from an obligation to purchase gas to an obligation to use (or pay for) transportation services. The point of the option is to make open access a reality for the pipelines’ LDC customers despite long-term contractual service arrangements previously certificated by the Commission. The Order also requires an open-access pipeline to give its LDC customers the option to reduce contract demand. (5) The Commission will issue “Optional, Expedited Certificates” for new facilities, services and operations where the pipeline undertakes the entire economic risk of the project. The Commission declined to include in the package any special provision to relieve pipelines from the burden of take-or-pay contracts providing for prices well above current competitive levels. Each component of the package contains many details not given above, some of them the source of challenges in this case. The details will be developed as appropriate in the opinion. II. Open-Access Requirements A. Claimed Deficiencies in Statutory Authority to Require Open Access. Order No. 436 imposes an “open-access” commitment on any pipeline that (1) secures a “blanket certificate” to provide gas transportation, pursuant to § 7 of the NGA, 15 U.S.C. § 717f (1982), or (2) actually provides transportation under § 311 of the NGPA, 15 U.S.C. § 3371 (1982). See 18 C.F.R. §§ 284.8(b), 284.9(b). Several pipelines and others attack these conditions as beyond the scope of the Commission’s authority under the two statutes. The arguments under both statutes rely on the proposition that the “open-access” condition is equivalent to a “common carriage” requirement, as both the condition and common carriage have at their core a duty to accept shipments from all would-be shippers. The two statutes differ radically in their language, however, so we treat the claims separately, rejecting both. 1. Natural Gas Act. The pipelines can point to no language in the NGA barring the Commission from imposing common carrier status on natural gas pipelines, and certainly none barring it from imposing upon the pipelines a specific duty that happens to be a typical or even core component of such status. They seek to overcome the statutory silence by means of legislative history. The task is uphill; “courts have no authority to enforce principles gleaned solely from legislative history that has no statutory reference point.” IBEW, Local No. 474 v. NLRB, 814 F.2d 697, 712 (D.C. Cir.1987) (emphasis deleted) (citing United States v. American College of Physicians, 475 U.S. 834,106 S.Ct. 1591, 1598, 89 L.Ed.2d 841 (1986)). The legislative history here consists entirely of congressional inaction. In 1906, when Congress brought oil pipelines under the wing of the Interstate Commerce Commission, it amended the Interstate Commerce Act to exclude natural gas pipelines from the category of common carrier, thus making clear that they were not covered by the extension of jurisdiction. Pub.L. No. 59-397, § 1, 34 Stat. 584, 584 (codified as amended at 49 U.S.C. §§ 10,102, 10,501 (1982)). In 1913 a bill was introduced in the Senate that would have reversed the 1906 decision, see S. 3345, 63d Cong., 2d Sess., 50 Cong. Rec. 5847-49 (1913), but it was never enacted. Finally, in 1935 a bill presaging the NGA — similar to the ultimate statute but explicitly imposing common carrier duties — died in committee. See H.R. 5423, 74th Cong., 1st Sess., 70 Cong. Rec. 1624 (1935). This history provides strong support only for the point that Congress declined itself to impose common carrier status on the pipelines — a proposition that is unquestioned and is evident from the language of the statute itself. The chain of inference gets steadily weaker as we move toward more relevant issues. The history supplies modest support for the view that Congress did not intend the Commission to impose common carriage conditions at will. It affords weak — almost invisible — support for the idea that the Commission could under no circumstances whatsoever impose obligations encompassing the core of a common carriage duty. The weakness of the legislative history is underscored when we examine the very component of “common carriage” on which the challenging pipelines rest their case: the duty to carry without discrimination. Insofar as they argue that a concern about discrimination has been a driving force behind legislative imposition of common carriage regulation, history is on their side. See, e.g., Louisville & Nashville R.R. v. United States, 282 U.S. 740, 749-50, 51 S.Ct. 297, 300-01, 75 L.Ed. 672 (1931); L. Gorton, The Concept of the Common Carrier in Anglo-American Law 42-43 (1971). But in the NGA Congress affirmatively addressed itself to that issue, giving the Commission power to stamp out undue discrimination; it is precisely that power that the Commission has here sought to exercise. The Act fairly bristles with concern for undue discrimination. Section 4 prohibits any “undue preference” and any “unreasonable difference in rates, charges, service, facilities, or in any other respect,” and empowers the Commission to review tariffs filed by pipelines in order to reject ones violating the prohibition. 15 U.S.C. § 717c (1982). Section 5 — the primary authority invoked by the Commission here — directs the Commission to adopt corrective measures whenever it finds a “rate, charge or classification,” or any “rule, regulation, practice, or contract” affecting the same, to be “unjust, unreasonable, unduly discriminatory, or preferential.” Id. § 717d. The issue seems to come down to this: Although Congress explicitly gave the Commission the power and the duty to achieve one of the prime goals of common carriage regulation (the eradication of undue discrimination), the Commission’s attempted exercise of that power is invalid because Congress, in 1906 and 1914 and 1935 and 1938 itself, refrained from affixing common carrier status directly onto the pipelines and from authorizing the Commission to do so. And this proposition is said to control no matter how sound the Order may be as a response to the facts before the Commission. We think this turns statutory construction upside down, letting the failure to grant a general power prevail over the affirmative grant of a specific one. Thus we find little relevance in cases relied on by the pipelines for the proposition that a duty to provide service to all comers is the essence of common carriage. In each of those cases the court was construing the term as used in a statute, in one instance stating that a particular class of persons “shall not ... be deemed a common carrier,” FCC v. Midwest Video Corp., 440 U.S. 689, 699-702, 99 S.Ct. 1435, 1440-1442, 59 L.Ed.2d 692 (1979), in the others prohibiting agency exercise of jurisdiction over activities of certain persons classified as common carriers, see National Ass’n of Regulatory Utility Commissioners v. FCC, 525 F.2d 630 (D.C. Cir.1976); National Ass’n of Regulatory Utility Commissioners v. FCC, 533 F.2d 601 (D.C. Cir.1976). Such cases are not helpful on the issue of whether Congress’s omission of the term common carrier significantly undercuts its explicit provision of authority to prevent or correct undue discrimination. Petitioners cite Florida Power & Light Co. v. FERC, 660 F.2d 668 (5th Cir.1981), and Richmond Power & Light v. FERC, 574 F.2d 610 (D.C. Cir.1978), for the following proposition: that any order by the Commission conditioning its approval of any “wheeling” (i.e., transmission of electricity owned by another) on the utility’s agreement to wheel for all constitutes an attempt by the Commission to impose indirectly duties that the Federal Power Act prevents it from imposing directly, namely common carriage. As the Federal Power Act establishes a regulatory scheme for electricity paralleling that which the NGA creates for gas, see, e.g., FPC v. Sierra Pacific Power Co., 350 U.S. 348, 353, 76 S.Ct. 368, 371, 100 L.Ed. 388 (1956), petitioners contend that the Richmond and Florida cases compel invalidation of the Commission’s open-access condition. We think petitioners read Richmond and Florida far too broadly. First, we note that the legislative history of the two acts is, on this point, materially different. In its deliberations on the bill that ultimately emerged as the Federal Power Act, Congress considered and rejected a provision that would have “empowered the Federal Power Commission to order wheeling if it found such action to be ‘necessary or desirable in the public interest.’ ” Otter Tail Power Co. v. United States, 410 U.S. 366, 374, 93 S.Ct. 1022, 1028, 35 L.Ed.2d 359 (1973) (quoting S. 1725, 74th Cong., 1st Sess.). The evidence as to the NGA (surveyed above) is less direct: it consists exclusively of various occasions on which Congress did not adopt proposals actually making the natural gas pipelines into common carriers. Second, neither Richmond nor Florida comes anywhere near stating that the Commission is barred from imposing an open-access condition in all circumstances. In Florida, the court expressly left open the question whether the Commission would be entitled to use open-access conditions as a remedy for anti-competitive conduct. 660 F.2d at 677-79. It stressed the failure of the Commission, in the orders under review, to “make any findings of anti-competitive activities or violations.” Id. at 678. Evidently because no party raised the issue, the court did not address the Commission’s power to exact such conditions as a remedy for undue discrimination. Cf. FPC v. Conway Corp., 426 U.S. 271, 276-77, 96 S.Ct. 1999, 2003-04, 48 L.Ed.2d 626 (1976) (accepting assumption that the Commission could not remedy a utility’s discrimination between wholesale (jurisdictional) rates and retail (nonjurisdictional) rates by ordering increases in the latter). In Richmond the Commission had repulsed Richmond Power & Light’s demand that it condition approval of any transmission by either of two large interstate systems on their agreeing to transmit for all. In upholding the Commission we said little more than that unwillingness to transmit for all comers could not be automatically deemed an undue discrimination: Thus Richmond spurned the opportunity to demonstrate that particular activities were unreasonably anticompetitive or discriminatory and claimed instead that the mere failure to wheel energy to and from Richmond while wheeling for any other utility was unlawful discrimination. 574 F.2d at 623. We went on to say that the Commission’s rejection of a per se rule (i.e., a rule that selective transmission was necessarily undue discrimination) followed logically from Congress’s refusal to impose common carrier duties on electric utilities. Id. Petitioners’ reading of Richmond, moreover, is belied by this court’s later decision in Central Iowa Power Coop. v. FERC, 606 F.2d 1156 (D.C.Cir.1979). Pursuant to § 205 of the Federal Power Act, 16 U.S.C. § 824d (1982) (paralleling § 4 of the NGA), the Commission had reviewed the terms of a power-pooling agreement that established two classes of membership, one of them entitled to fewer privileges than the other. Finding the distinction discriminatory on its face, the Commission conditioned its approval on removal of the membership criteria that prevented the inferior class of participants from enjoying the privileges of the favored ones. We upheld the decision as a proper exercise of its power to prevent undue discrimination. 606 F.2d at 1170-72. See Reiter, Competition and Access to the Bottleneck: The Scope of Contract Carrier Regulation Under the Federal Power and Natural Gas Acts, 18 Land & Water L.Rev. 1, 47-50 (1983). The Commission’s open-access condition relies on precisely that principle. It is true that in Central Iowa the court rejected South Dakota’s claim that the Commission should have conditioned approval of the power-pooling agreement on the parties agreeing to wheel for nongener-ating electrical systems. See 606 F.2d at 1169. Such a condition would in effect have forced on the participants a broad extension of their agreement to wheel for each other. See id. at 1160 n. 7. Though the court brushed the request aside in fairly sweeping language, its approval of the Commission’s elevation of the inferior class of members clearly limits the negative impact of the discussion. The case upholds the power of the Commission to subject approval of a set of voluntary transactions to a condition that providers open up the class of permissible users. Neither Florida nor Richmond presented the extreme factual circumstances that are now present in the gas industry. Here the Commission has found (a) that pipelines continue to possess substantial market power, J.A. 306; (b) that they have exercised that power to deny their own sales customers, and others without fuel-switching capability, access to competitively priced gas, J.A. 318; and (c) that this practice has denied consumers access to gas at the lowest reasonable rates, J.A. 318-21, 352. Thus, despite the removal of regulation over the price and non-price aspects of wellhead transactions, and the evolution of an interconnected nationwide pipeline grid, discrimination in transportation has denied gas users, and the economy generally, the benefits of a competitive wellhead market. Despite a sweeping suggestion that the Order is “unsupported,” Brief of Interstate Pipeline Group at 35, the pipelines do not in fact challenge these factual findings. Their objection is rather on matters of policy, grounded on beliefs that the kind of discrimination here prohibited is not “undue” within the meaning of the NGA. Indeed, the burden of their attack on the Order is precisely that it may disable them from passing on to customers gas purchase costs that they incur under contracts entered into years ago under premises now obsolete. Id. at 37-38. In other words, enforcement of Order No. 436 will expose them to competition that their discriminatory practices enable them to avoid. Their claim thus tends to substantiate the Commission’s views (1) that in the absence of Order No. 436 competition will be thwarted and (2) that the practices controlled by Order No. 436 are indeed anti-competitive and discriminatory. The electricity cases cited thus provide only very weak support for the challenge. In contrast, our decision in Maryland People’s Counsel v. FERC, 761 F.2d 780 (D.C. Cir.1985) (“MPC II”), came about as close to endorsing the Commission’s approach as Article III permits. There we vacated orders of the Commission that had established “blanket certificate” transportation without any specific effort to prevent pipelines from offering such transportation on a discriminatory basis. We did not, of course, explicitly find “undue discrimination” such as would obligate the Commission to act under § 5. But we did find that the petitioners there had made a strong enough showing to require the Commission to address the issue. Specifically, we made it clear that blanket-certificate transportation, unconstrained by any nondiscriminatory access provision, might well require remedial action under § 5. We ended by saying: We vacate the challenged orders to the extent that they allow transportation of direct-sale gas to fuel-switchable, non-“high-priority” end users without requiring pipelines to furnish the same service to LDCs and captive consumers on nondiscriminatory terms. 761 F.2d at 789 (footnote omitted). Our holding in MPC II obviously did not require the Commission to make the findings that it has. It surely carried the implication, however, that if it did make supportable findings of undue discrimination in pipeline use of the old blanket certificates, it would have the authority to employ suitable remedies. And it carried the further implication that among them might be a requirement that any pipeline offering blanket-certificate transportation agree to serve “LDCs and captive consumers on non-discriminatory terms.” Id. The interstate pipelines appear to suggest that Order No. 436’s impact on their financial integrity is so grave as to be equivalent to a rule denying them the legal right to pass on costs, and invalid as such a rule would be. It is true that the Commission has only very limited power to deny the pipelines the legal right to pass gas purchase costs through to customers. See § 601(c)(2) of the NGPA, 15 U.S.C. § 3431(c)(2) (1982) (providing that the Commission must allow interstate pipelines to pass through gas costs not violating NGPA wellhead ceilings “except to the extent the Commission determines that the amount paid was excessive due to fraud, abuse, or similar grounds”); Office of Consumers’ Counsel v. FERC, 783 F.2d 206 (D.C.Cir.1986). But petitioners have called our attention to nothing that bars the Commission from devising rules that remedy a lack of competition by exposing pipelines to competition and its normal consequences. The Supreme Court has made clear, for example, that the due process clause affords no protection from losses inflicted by market conditions. In Market Street Ry. v. Railroad Comm’n, 324 U.S. 548, 65 S.Ct. 770, 89 L.Ed. 1171 (1945), it said of its decision in FPC v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333 (1944): 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. There was no suggestion that less might not be allowed when the amount allowed was all the company could earn.... The due process clause ... has not and cannot be applied to insure values or to restore values that have been lost by the operation of economic forces. 324 U.S. at 566-67, 65 S.Ct. at 779-80. Similarly, nothing in the NGA protects the pipelines from the market forces to which Order No. 436 subjects their gas marketing business, even though those forces are derived in part from a restriction on their discrimination in transportation. It is finally argued that the Commission’s not having imposed any requirements like those of Order No. 436 in the period from enactment in 1938 until the present demonstrates the lack of any power to do so. Cf. FPC v. Panhandle Eastern Pipe Line Co., 337 U.S. 498, 513-14, 69 S.Ct. 1251, 1260-61, 93 L.Ed. 1499 (1949). But as our introductory review of the economic background sought to illustrate, the Commission here deals with conditions that are altogether new. Thus no inference may be drawn from prior non-use. While the Supreme Court’s decision in 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 not a wand by which courts can turn an unlawful frog into a legitimate prince, the case bolsters our conclusion. Congress has given the Commission in § 5 of the NGA a broad power to stamp out undue discrimination; in § 7 the power to approve certificates of service subject to “such reasonable terms and conditions as the public convenience and necessity may require”; and in § 16 the power to “perform any and all acts, and to prescribe ... such orders, rules, and regulations as it may find necessary or appropriate to carry out the [NGA’s] provisions.” The alleged negative restriction on this power is at best ambiguous, if indeed it exists at all. Under these circumstances, Chevron binds us to defer to Congress’s decision to grant the agency, not the courts, the primary authority and responsibility to administer the statute. The Commission’s view represents “a reasonable interpretation” of the Act, for which we may not substitute our view. 467 U.S. at 844, 104 S.Ct. at 2782. 2. Natural Gas Policy Act. In enacting the NGPA Congress endeavored to break down the regulatory barriers between the interstate and intrastate markets. Sections 311 and 602(b)(2) were added to “facilitate[ ] development of a national natural gas transportation network without subjecting intrastate pipelines, already regulated by State agencies, to FPC regulation over the entirety of their operations.” H.R.Rep. No. 543, 95th Cong., 1st Sess. 45 (1977). See also Public Service Comm’n v. Mid-Louisiana Gas Co., 463 U.S. 319, 342-43, 103 S.Ct. 3024, 3037-38, 77 L.Ed.2d 668 (1983). Thus, § 311(a) permits the Commission to authorize transportation by an interstate pipeline on behalf of an intrastate or LDC and by an intrastate on behalf of an interstate or LDC. 15 U.S.C. § 3371(a) (1982). The Commission has exercised this authority, permitting such transportation as a general matter. See 18 C.F.R., part 284, subparts B and C. It has also exercised the authority provided by § 311(c), 15 U.S.C. § 3371(c) (1982), to prescribe terms and conditions. Order No. 436 would add to these the requirement that any interstate or intrastate pipeline offering such transportation shall do so on a nondiscriminatory basis. 18 C.F.R. §§ 284.8(b) and 284.9(b). Petitioners challenge these open-access conditions, relying here on express statutory language. Section 602 of the NGPA, captioned “Effect on State Laws,” provides in subsection (b): (b) Common carriers. No person shall be subject to regulation as a common carrier under any provision of Federal or State law by reason of any transportation— (1) pursuant to any order under section 3362(c) or section 3363(b), (c), (d), or (i) of this title; or (2) authorized by the Commission under section 3371(a) of this title [section 311(a) of the NGPA]. 16 U.S.C. § 3432(b) (1982). Petitioners read this language as stultifying any effort by the Commission to control discrimination where that effort imposes on pipelines a duty — even though it be a conditional one — equivalent to the common carrier’s duty to provide nondiscriminatory service. We believe this interpretation is incorrect. It seems to us that § 602(b)(2) was a congressional effort to protect § 311(a) from the consequences of pipeline concern that service thereunder would expose them generally to classification as common carriers, most likely by states, and thus to an unprecedented range of legal burdens. If pipelines shied away from use of § 311(a), its purpose would be defeated. Section 602(b)(2) could protect against that threat by assuaging the pipelines’ concern. A duty not to discriminate, imposed by the Commission on the basis of findings that the duty is necessary to assure consumers access to competitively priced gas, is utterly different. The imposition of the duty here facilitates the accomplishment of Congress’s purposes. At least it will do so if the gains in enhanced access offset whatever losses may result from the disincentive effect on pipelines. The judgment balancing those consequences is for the Commission to make, and it has made it in favor of imposing the duty. Congress had ample reason to fear that the risk of extraneous legal burdens would chill pipeline interest. Take the laws of Texas. Two years before enactment of the NGPA a Texas court ruled that “[w]hether the business conducted by a pipe line company is actually that of a common carrier is a question of fact,” which would depend on the court’s perception of whether “the line is available to all producers seeking its services.” China-Nome Gas Co. v. Riddle, 541 S.W.2d 906, 908 (Tex.Civ.App.1976). A pipeline’s transportation under § 311(a) would expose it to the risk of such “fact” findings, and thus enmesh it in state regulations. In Texas, for example, such classification would subject it to the jurisdiction of the Railroad Commission, see Op.Atty. Gen. No. M-175 (1967), to certain health requirements, see Tex.Civ.Stat.Ann. art. 4477-1 §§ 1 & 22 (Vernon 1976 & Supp. 1987), and to such duties and liabilities as a court might find the common law to prescribe, see id. arts. 882-884 (Vernon 1964 & Supp.1987). Most notably, a firm declared a common carrier is required under Texas law to carry, for anyone, any goods of the type for which it is suited. Id. § 884. Pipeline fear of such extraneous burdens might well have rendered § 311 a dead letter. Though we have not identified similar federal hazards, we believe that Congress might well have included the reference to federal law out of anxiety that some overlooked federal provision would operate to thwart § 311’s purposes. Viewed in this light, § 602 has nothing to do with a Commission decision to impose a duty of nondiscrimination. The structure of § 602 favors this reading over the broader one urged by the petitioners. Section 602 also provides that no one shall be subject to regulation as a common carrier by reason of providing transportation under 15 U.S.C. §§ 3362(c) or 3363(b), (c), (d), or (i), which involve presidential orders to transport in a natural gas supply emergency. The President’s emergency powers are extremely broad, and their exercise could well impose duties quite like those of common carriage, with the President dictating detailed priorities about whom the pipelines should serve. See id. § 3363. If the President determined that imposition of something like common carriage were necessary to meet such an emergency, it is hardly credible that § 602 would stand in the way. By the same token, that section must not flatly bar the Commission from imposing similar conditions on gas transportation under § 311. Congress may conceivably have intended § 602 to bar FERC from conditioning § 311 transportation upon assurances of nondiscrimination. We doubt it. But apart from our independent conclusion that it has no such purpose, we regard FERC’s interpretation as reasonable. The reasonableness is underscored by FERC’s broad duties to assure consumers access to natural gas at prices such as would prevail in the absence of pipeline market power and its conclusion that under the present circumstances fulfillment of that duty requires such conditioning. Cf. American Trucking Ass’ns, Inc. v. Atchison, T & S.F. Ry., 387 U.S. 397, 87 S.Ct. 1608, 18 L.Ed.2d 847 (1967). We are therefore under Chevron bound to uphold the Commission. A parallel attack on Order No. 436 stresses § 601(a)(2)(A) of the NGPA, 15 U.S.C. § 3431(a)(2)(A) (1982), providing that transportation under § 311 (or under the Presidential emergency powers discussed above) shall not constitute “transportation in interstate commerce” within the meaning of § 1(b) of the NGA. But for this provision, a transporting intrastate pipeline would fall prey to the Commission’s NGA jurisdiction. Several petitioners argue that Order No. 436 imposes burdens substantially identical to those encompassed by NGA jurisdiction. Thus, they argue, application of the open-access condition to intrastate pipelines is an impermissible interference with state regulatory authority. See Brief of the American Gas Ass’n at 42-43; Brief of Intrastate Petitioners & Intervenors at 22-29. Again consideration of the purpose of the provision refutes the attack. Section 601(a)(2)(A) is clearly intended to assure that pipelines’ fear of the automatic imposition of the burdens of NGA jurisdiction does not make them so chary of § 311 that it languishes unused. This is altogether different from regulatory burdens imposed by the Commission in the exercise of its discretion under § 311(c) in order to make sure that § 311 transportation operates in harmony with the congressional purpose. Thus, even if it were true that the regulatory impact of Order No. 436 were identical to that of NGA jurisdiction, the decision to condition § 311 on acceptance of those burdens would not violate § 601(a)(2)(A). In fact, of course, the nondiscrimination duties imposed by Order No. 436 by no means encompass all the burdens of NGA jurisdiction. (1) New service under § 311 does not require § 7 certification, and Order No. 436 carries that distinction forward where a pipeline brings itself under the Order: operations under a § 7 blanket transportation certificate entail notice-and-protest procedures more burdensome than the reporting requirements for § 311 transportation. See infra part VII.B. (2) Construction of facilities to be used exclusively for § 311 transportation requires no certification or FERC review at all. See infra part VII.D. (3) § 311 transportation does not subject an intrastate pipeline to the detailed accounting provisions applicable to a natural gas company under the NGA. Compare 18 C.F.R. part 201. (4) Intrastate pipelines may provide firm or inter-ruptible service without providing both, while interstate pipelines providing one type must also provide the other. Compare 18 C.F.R. §§ 284.8(a)(1) & 284.9(a)(1) with id. §§ 284.8(a)(2) & 284.9(a)(2). B. Alleged Failure to Comply with Mandate of Outer Continental Shelf Lands Act. The Petitioner Industrial Groups (the Process Gas Consumers Group and American Iron and Steel Institute) claim that under §§ 5(e) and 5(f) of the Outer Continental Shelf Lands Act, 43 U.S.C. §§ 1334(e) & (f) (1982), the Commission must require every gas pipeline operating in the OCS to provide nondiscriminatory access for others’ OCS gas throughout the entire system of the “pipeline entity.” Congress included § 5(e) in OCSLA at the time of original adoption, and then sought to “strengthen[]” it in 1978 by adding § 5(f): (f) Competitive Principles Governing Pipeline Operation (1) Except as provided in paragraph (2) [the gathering exemption], every permit, license, easement, right-of-way, or other grant of authority for the transportation by pipeline on or across the outer Continental Shelf of oil or gas shall require that the pipeline be operated in accordance with the following competitive principles: (A) The pipeline must provide open and nondiscriminatory access to both owner and nonowner shippers.... 43 U.S.C. § 1334(f) (1982). The language will not bear the proposed load. The statute demands that any permit for transportation by pipeline on the OCS require that “the pipeline” be operated according to specified principles. The natural reading is that the subject pipeline is the physical facility in the OCS, not every facility owned or operated by the corporation operating that facility. The petitioners call our attention to remarks on the Senate floor reflecting concern about pipeline discrimination. See, for example, Senator Kennedy’s observation, “This amendment seeks to insure that OCS pipelines are true common carriers.” 123 Cong.Rec. 23,252 (July 15, 1977). But none of the remarks supports petitioners’ proposed inference. All are completely consistent with a focus on what Congress had before it — the OCS. C. Claims of Arbitrariness and Caprice. 1. Failure to impose the nondiscriminatory access conditions on § 7(c) transportation certificates. Maryland People’s Counsel finds Order No. 436 defective in that it (potentially) allows a pipeline to provide transportation under an individual certificate issued under § 7(c) without agreeing to provide the same on a nondiscriminatory basis. We lack jurisdiction over the claim. Section 19(a) of the NGA, 15 U.S.C. § 717r(a) (1982), prohibits any “proceeding to review” an order of the Commission in the absence of an application for rehearing filed within 30 days after issuance of the order, setting forth specifically the ground on which the application is based. The Commission addressed the problem of individual § 7 certificates in Order No. 436, stating in its analysis of comments that it did not intend to apply the nondiscriminatory access provision “on a generic basis to all section 7 certificates at this time.” J.A. 388. MPC did not file an application raising the point until March 1986, long after expiration of the 30 days from issuance of Order No. 436 on October 9, 1985. MPC acknowledges the jurisdictional difficulty, but states that it could not have realized, until February 1986, that the Commission’s refusal encompassed certificates for transportation to fuel-switchable customers. At that time, in Texas Gas Transmission Corp., 34 F.E.R.C. 1161,203 (1986), the Commission actually did issue such a certificate without open-access conditions. MPC argues that, in view of the obligations imposed by MPC II, and language of the Commission elsewhere in Order No. 436, it was entitled to believe that the Commission’s statement referred only “to transport in support of [the pipelines’] merchant function {e.g., where one pipeline transports gas owned by another pipeline) or in ways that would not create the discrimination that the Commission found unlawful in Order No. 436 {e.g., transportation for high priority customers ...).” Reply Brief of MPC at 4. We must reject MPC’s reading of Order No. 436’s disclaimer. The statement is broadly phrased to encompass “section 1 transportation certificates,” and is justified in terms of the Commission’s opportunity to scrutinize “individual section 7 transportation arrangements ... on a case-by-case basis when [the certificates] are applied for.” J.A. 388. Both the language and the explanation are fully as applicable to transportation to fuel-switchable users as to any other transportation. MPC of course remains free to challenge the policy by seeking review of individual § 7 orders in which the Commission applies it. The Commission briefly sought to refute MPC’s contention in Order No. 436-D, issued on March 28, 1986. Such discussion was merely dictum, as MPC's March 1986 application was time-barred under § 19 and the Commission so recognized. In any event, the Commission cannot waive the jurisdictional bar of § 19 by selective discussion of belated rehearing applications. See Boston Gas Co. v. FERC, 575 F.2d 975, 979-80 (1st Cir.1978). 2. Capacity allocation on a “first-come, first-served,” basis. Several parties attack as arbitrary and capricious the Commission’s “first-come, first-served” formula for determining priorities among those who seek transportation service under the Order. The Commission did not announce this formula in any regulation but merely in material supporting the regulations. See J.A. 342, 401-04. It also said that certain claims on pipeline capacity might enjoy favored treatment, “outside the general first-come, first-served rule.” J.A. 400. These preferred claims include those of “a firm sales customer,” on the grounds that such a customer “has already booked the transportation capacity currently ‘bundled’ with ... the sale.” Id. (emphasis in original). A similar special priority applies to LDCs that exercise the CD conversion option discussed in part IV of this opinion. Id. at 401. Further, the “first-come, first-served” concept is evidently not to apply in cases of sudden capacity interruption, but only to the process of “contracting for available capacity.” Id. at 1095-96 (emphasis in original). But see El Paso Natural Gas Co., 35 F.E.R.C. 1161,440, at 62,061 (June 27, 1986). Apart from introducing the complexity of these exceptions and superior claims, Order No. 436 and its supporting statements contain no guidance about how pipelines are to implement this formula. “First come, first served” is an easy principle to apply in a bakery where each customer pulls a numbered ticket on entering and is served in that order. But in an industry such as natural gas transportation it may often be difficult to say who “comes first.” Here are a few sample questions that the rule fails to resolve: (1) Suppose that A, an end user, contracts with a pipeline for the right to transmit up to five billion Btu per day for five years. At the end of four years A seeks to renew the contract on the same terms. But others have earlier filed requests that in the aggregate exceed the pipeline’s capacity. Does A go to the end of the line? Such a result would probably disrupt most notions of ordinary business arrangements in this market. But if A and persons similarly situated enjoy a sort of super-priority, open access will be an empty promise for new would-be users. (The Commission appears to lay great stress on the date on which a request is filed, J.A. 1191, but the full implications are nowhere spelled out.) (2) What of efforts by A to secure not merely continued but additional transportation at the end of a fixed-term contract? Would A go to the end of the line for the increment? (See El Paso Natural Gas Co., supra, at 62,060.) (3) What is the impact of a minor change in point of receipt? If such a change forces the user to go to the end of the line, then an LDC or end user may find it hard to shift from one supplier to another. See Brief of Baltimore Gas & Elec. Co. at 17. (4) May a pipeline charge a fee for accepting requests for service? If not, how can it prevent all potential users from filing immediately for virtually unlimited claims on capacity for an indefinite period of time? The most potent objection to the Commission’s treatment of the problem — and one that is unquestionably ripe — is the contention that it leaves an intolerable gap in the regulatory structure. That gap creates some risk that pipelines may use the resulting leeway to persist in the discrimination that Order No. 436 nominally forbids. It leaves even the most willing pipeline uncertain as to what full compliance requires. On the other side, shippers cannot know what steps they must take to secure adequate priority status or what should guide them in choosing between bundled and unbundled service. The Commission’s brief treats the problem dismissively, noting that aggregate annual gas consumption has fallen from a peak of 22.6 trillion cubic feet in 1973 to only about 17-18 Tcf currently. FERC Brief at 101. This comment seems utterly irrelevant: the problem is surely capacity at peak periods. The Commission expressly concedes that generally pipelines have operated at capacity during the winter peak. See FERC Brief at 103 n.,3; J.A. 280. Nonetheless, as each pipeline elects to become an open-access transporter, it must file tariffs with the Commission to govern the service, which tariffs must include any “operational conditions” the pipeline proposes to apply. 18 C.F.R. §§ 284.7(a), 284.-8(c), 284.9(c). See, e.g., El Paso Natural Gas Co., 35 F.E.R.C. 1161,440 (June 27, 1986). These filings afford the Commission an opportunity to develop standards of permissible capacity allocation. Accordingly, the essential legal issue is the validity of the Commission’s choice to address the problem in that format rather than in the format of generic rulemaking. It is clear that this choice “lies primarily in the informed discretion of the administrative agency.” SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947). The Supreme Court has noted that such resolution is appropriate where problems arise that the agency could not reasonably foresee, or where its experience makes adoption of a “hard-and-fast” rule unsuitable, or where the problem is so specialized and variable as to be “impossible of capture within the boundaries of a general rule.” Id. at 202-03, 67 S.Ct. at 1580-81. See also NLRB v. Bell Aerospace, 416 U.S. 267, 294, 94 S.Ct. 1757, 1771, 40 L.Ed.2d 134 (1974). While the Commission has said little or nothing to explain why it is sensible to postpone these decisions to the stage of review of individual proposals, the necessity of its conducting that review seems to us, at this point, an adequate ground for deferring to its judgment. This is not to say, however, that the Commission may endlessly postpone the necessary decisions. Failure to make the rule reasonably determinate by the time a pipeline starts Order No. 436 operations would severely constrain the Commission’s authority to enforce the Order against the pipeline. Such failure would at least complicate actions seeking injunctive relief against pipelines under § 20 of the NGA, 15 U.S.C. § 717s (1982), and would probably make impossible any effort to secure penalties under § 21, 15 U.S.C. § 717t (1982). See NLRB v. Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir.1966) (Friendly, J.) (“the [judicial] hackles bristle still more when a financial penalty is assessed for action that might well have been avoided if the agency’s changed disposition had been earlier made known, or might even have been taken in express reliance on the standard previously established”). Cf. Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 340, 72 S.Ct. 329, 330, 96 L.Ed. 367 (1952) (requirement of adequate notice for criminal enforcement of administrative regulations). Moreover, if the Commission approves plans of compliance so vague that enforcement is impaired, its posture will be essentially that found fatally defective in MPCII: it will have authorized blanket certificate transportation under rules not adequately grappling with the potentially discriminatory effects. The Commission’s oracular procrastination (a blend of Delphi and Fabius) makes challenges to the specifics of “first come, first served” unripe. These challenges include assertions that the policy (1) gives inadequate attention to contractual commitments or to “dependency” as bases of distinction; (2) unduly threatens the security of supply of LDCs; and (3) disregards equities based on prior payments for pipeline capacity. See, e.g., Brief of Interstate Pipeline Group at 35-36; Brief of Associated Gas Distributors at 39-41. One intervenor also poses a carefully reasoned attack on the Commission for its failure to consider alternatives such as an auction system. See Brief of Baltimore Gas & Elec. Co. at 19-20. Though the point is much closer, the Commission’s vagueness and lack of commitment are such that even this attack appears unripe. The ripeness doctrine seeks to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties. Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515-16, 18 L.Ed.2d 681 (1967). As the Commission confined its disposition of the issue to some general remarks in its supporting statement, our involvement in the merits at this stage would defy these principles. III. Rate Conditions With the stated intention of imposing on pipelines more of the risk and responsibility for their own business decisions, the Commission has established a system of flexible rates. See 18 C.F.R. §§ 284.7, 284.8(d), 284.9(d). Tariffs are to provide for ceilings and floors, with the pipeline free to charge anywhere within that band. Each maximum rate is to be based on what is typically known as “fully allocated cost,” i.e., a rate such that, if the pipeline carries projected volume at the specified unit price, it should exactly recover all costs allocable to the relevant service for the period. See 18 C.F.R. § 284.7(c)(3). Minimum rates are to be based on average variable cost. See 18 C.F.R. § 284.7(d)(4)(ii). The maximum rates are to vary depending on whether the service is in a peak or off-peak period, and on whether it is firm or interruptible service. A pipeline discounting any service from the maximum rate must, within 15 days of the close of the billing period, report the maximum rate for the transaction, the rate actually charged, the shipper’s identity, and any corporate affiliation between pipeline and shipper. 18 C.F.R. § 284.7(d)(5)(iv). Pipelines may charge a “reservation fee” for firm service. Otherwise shippers could request whatever volume they liked, without cost and regardless of intent to use. As requests would vastly exceed capacity, the pipeline could not rationally plan capacity allocation. See J.A, 457-60. Apart from the reservation fee, pipelines are required to charge on a “volumetric” basis, i.e., a simple charge per unit actually transported, without a “demand charge” or “minimum bill.” A. Absence of Finding that Prior Rates Were Unlawful. The Interstate Pipeline Group objects that the Commission did not make specific findings that any rates charged by individual pipelines were unlawful before imposing the new rate conditions. The Commission is not required to make individual findings, however, if it exercises its § 5 authority by means of a generic rule. See, e.g., Wisconsin Gas Co. v. FERC, 770 F.2d 1144, 1165-68 (D.C.Cir.1985), cert. denied, — U.S. -, 106 S.Ct. 1969, 90 L.Ed.2d 653 (1986). The pipelines seek to distinguish Wisconsin Gas on the ground that it “involved specific findings as to