278 U.S. 322
49 S.Ct. 157
73 L.Ed. 402
UNITED FUEL CO.v.PUBLIC SERVICE COMMISSION OF WEST VIRGINIA et al.
No. 4.
Reargued Oct. 15, 16, 1928.
Decided Jan. 2, 1929.

Messrs. John W. Davis, of New York City, and Harold A. Ritz, of Charleston, W. Va., for appellants.
Messrs. Robert S. Spilman, of Charleston, W. Va., and George S. Wallace, of Huntington, W. Va., for appellee.
Mr. Justice STONE delivered the opinion of the Court.


1
Appellant is a west Virginia corporation engaged in producing natural gas which it sells in West Virginia, Pennsylvania, Ohio, and Kentucky. A part of its business is the sale of gas at wholesale to distributors, and is not regulated by any public body. Another part is the sale of gas direct to consumers in West Virginia cities, and is subject to regulation by the appellee commission. In April, 1924, appellant filed with the commission a schedule increasing its rates in its 'regulated' business in West Virginia. The commission, after an extensive hearing, denied this application for an increase, holding that the existing schedule yielded a fair return on appellant's property. P. S. C. W. Va. Bulletin, 91. Appellant then sought, by the present suit in the District Court for the Southern District of West Virginia, an injunction restraining the commission from interfering with appellant in putting into effect its new and higher rate schedule. Application for a preliminary injunction was heard by a court of three judges upon the record before the commission and some additional testimony, and was denied. 14 F.(2d) 209. The case is here by direct appeal from the order of the District Court, under section 266 of the Judicial Code (28 USCA § 380).


2
An earlier proceeding before the commission in 1917 had resulted in its order for an increase in the rate of 5 cents per 1,000 cubic feet which, in 1923, was set aside by the Supreme Court of West Virginia. City of Charleston v. Public Service Commission, 95 W. Va. 91, 120 S. E. 398. A similar case, United Fuel Gas Co. v. Railroad Comm. of Kentucky, 13 F.(2d) 510, coming here by appeal from a final decree of the District Court for Eastern Kentucky, involving similar and some additional questions and denying the relief asked, was heard with this, and is discussed in a separate opinion. 278 U. S. 300, 49 S. Ct. 150, 73 L. Ed. —. The two cases involve substantially the same property and business. The issues as to valuation are identical, and, so far as material here, the records as to them are practically the same.


3
Appellant, through ownership in fee and leases or contracts on a rental or royalty basis, controls the production of natural gas from 814,910 acres of land. A part of this area, the so-termed 'proven' territory, is at present being used in production; the remainder being held in reserve as either 'probable' or 'unfavorable' sources of future production. Its principal items of property consist of its interest in this acreage, working capital, buildings, machinery, mains, pipes, compressors, and other equipment used in the production and distribution of gas.


4
The value as claimed by appellant and as found by the commission and the court of the total property of appellant used in both its 'regulated' and 'unregulated' business, follows:


5
      Value claimed by appellant:
 
                                                          As of
                                                      Dec. 31, 1924
 
     Physical property (production,
      transmission, and distribution systems,
      etc.).......................................... $22,274,274 00
 
     Gas lands, leaseholds, and rights................ 36,449,176 00
 
     General overhead charges.......................... 6,357,046 00
 
     New property added during 1924.................... 2,044,778 00
 
     Working capital..................................... 990,000 00
 
     Going concern value (difference between
      reproduction cost new and same
      less deterioration).............................. 8,423,105 00
                                                        ____________
 
                                                      $76,538,379 00
 
 
     Value as found by the commission:
 
                                               As of             As of
                                           Dec. 31, 1923     Dec. 31, 1924
 
    Physical property..................... $25,000,000 00.   $25,648,457 72
 
    Working capital........................... 990,000 00.       990,000 00
 
    Going concern value..................... 3,000,000 00.     3,000,000 00
 
    Gas rights and leaseholds
     (book value)........................... 6,343,329 67.     6,361,511 42
                                            ______________    ______________
                                             35,333,329 67    $35,999,969 14
 
 
 
 
      Value as found or assumed by the court below:
 
                                                          As of
                                                      Dec. 31, 1923
 
     Physical property (production,
      transmission, and distribution systems,
      overhead, etc., less depreciation)............. $26,000,000 00
                                         
     Going concern value............................... 3,000,000 00

Page 325

6
     Working capital..................................... 990,000 00
 
     Assumed value of gas reserve presently
      used and useful in the public service
      ("proven" territory)............................ 10,317,311 39
                                                       _____________
                                                      $40,307,311 39


7
The court below made no finding as to the value of appellant's gas rights. It included in the rate base the 136,384 acres of land described by appellant's witnesses as proven territory (that is, areas which had been thoroughly tested and are now producing gas), and excluded 126,208 acres of land described as probable territory (that is, territory which had been partially tested or which appeared on the basis of geological evidence and its geographical relation to productive areas to be a probable source of natural gas). It was by this division of appellant's gas field and the inclusion of but a part in the rate base, at the full value claimed by appellant, that the court below reached its assumed valuation of the gas field of $10,317,311. The rest of the territory, consisting of 552,319 acres classified as improbable or unfavorable territory, was disregarded by the court below and appellant's own expert in estimating available gas supply.


8
By allocating the various items of appellant's property to the regulated business, on the basis of percentages agreed upon by the parties, the court reached the conclusion that the following was the value of the property used and useful in the regulated business.


9
     Tangible property.............................. $ 7,530,826 00
 
     Going concern value................................ 847,350 00
 
     Working capital.................................... 282,546 00
 
     Gas reserve (proven territory only).............. 2,590,677 00
                                                       ____________
                                                     $11,251,399 00


10
The court further found that a reasonable rate of return on the property on the rate base was 12.77 per cent. (8 per cent. plus 1.12 per cent. depreciation,1 plus 3.65 per cent. amortization). It found that the net earnings from the regulated business were $1,555,593 (before deduction for depreciation and amortization), and were sufficient to pay a return of 12.77 per cent. on more than the value as found, namely, on $12,377,124.


11
An order of a court of three judges denying an interlocutory injunction will not be disturbed on appeal unless plainly the result of an improvident exercise of judicial discretion. Chicago Great Western Ry. v. Kendall, 266 U. S. 94, 100, 45 S. Ct. 55 (69 L. Ed. 183); and see Meccano, Limited, v. Wanamaker, 253 U. S. 136, 141 40 S. Ct. 463 (64 L. Ed. 822). To support the burden resting upon it, appellant, while challenging generally the correctness of the court's valuation, places its chief reliance on the alleged erroneous valuation of its gas field. To support the claim to a much higher valuation, it relies upon the same theories and the same method of ascertaining the value of the gas field as were pressed upon us in No. 1. With respect to this item, after making the same assumptions as in that case, we reach the same conclusion, for reasons there stated at length, that there is no dependable evidence of value of appellant's gas field in excess of the value assumed on its books; that no ground is presented for assigning to it a value beyond the $6,343,329 so assumed on appellant's books, a smaller value than that used by the court in its calculations.


12
With respect to other conclusions of the court below there is no serious suggestion that the court abused its discretion. In 1923 the case was before the highest court of the state. The estimates now presented to this court are based on the business of that year, and we are without information as to appellant's business and return upon it in the intervening years. We think it clear that no case is presented which would warrant interference by this court with the order below denying interlocutory relief.


13
Affirmed.


14
Mr. Justice McREYNOLDS concurs in the result.



1
 The commission had allowed this percentage amounting to $404,333 as covering depreciation of plant. The court merely allowed the total amount so found as plant depreciation, and did not estimate depreciation at a percentage of its own rate base, which was higher than that of the commission, the principal item of its valuation differing from that of the commission, being its assumed value of appellant's gas rights.


