Source: https://www.law.cornell.edu/supremecourt/text/317/456
Timestamp: 2019-04-18 12:35:07+00:00

Document:
See 318 U.S. 798, 63 S.Ct. 557, 87 L.Ed. -.
The bill was still pending at the time of the enactment of the Natural Gas Act of June 21, 1938, 52 Stat. 821, 15 U.S.C. 717 et seq., 15 U.S.C.A. § 717 et seq., and the relevance of that statute to the present controversy was duly set forth in an amended bill filed March 8, 1939. The suit did not come to issue for more than two years thereafter. The death of one of the members of the District Court, necessitating reargument and reconsideration of the case, may explain, at least in part, why a case of such public importance should have proceeded at such a leaden-footed pace. 2 It was not until January 16, 1942, that the decree now under review was entered. The District Court held that, regardless of what the situation might have been in the absence of the Natural Gas Act, that statute deprived the Ohio Commission of power to regulate the rates to be charged for gas transported and sold in interstate commerce. And so the court enjoined the enforcement of the Commission's orders against United.
But whether the Commission has similar power with respect to rates for gas sold by United to the Portsmouth Gas Companyand that is the controlling inquiry hereis an entirely separate question. Section 614-46 is inapplicable because the rates to be established would not be in lieu of rates fixed by ordinance. The Commission's authority to inquire into the reasonableness of the rates charged by United for gas sold to the Portsmouth Gas Company is to be found in §§ 614-21 and 614-23, which provide as follows: 'Upon complaint in writing, against any public utility, by any person, firm or corporation, or upon the initiative or complaint of the commission that any rate * * * is in any respect unjust, unreasonable, unjustly discriminatory, or unjustly preferential or in violation of law, * * * the commission shall notify the public utility' and hold a hearing. If, after such hearing, the Commission finds that the rate or charge is unjust, unreasonable, or otherwise unlawful, it must 'fix and determine the just and reasonable rate, fare, charge, toll, rental or service to be thereafter rendered, charged, demanded, exacted or collected for the performance or rendition of the service, and order the same substituted therefor'. § 614-23 (italics added). The statute in terms thus gives the Commission power to prescribe such rates prospectively only. If, after notice and hearing, the Commission finds rates to be unlawful, it can then fix the just and reasonable rates 'to be thereafter' charged. The establishment of new rates must be preceded by a finding that the old rates are unjust and unreasonable, and the new rates are prospective as of the date they are fixed. There is no basis in the statute for concluding that the Commission's orders can be retroactive to the date when the Commission's inquiry into the rates was begun; on the contrary, the explicit language of the statute precludes such a construction.
It is clear, as the legislative history of the Act amply demonstrates, that Congress meant to create a comprehensive scheme of regulation which would be complementary in its operation to that of the states, without any confusion of functions. The Federal Power Commission would exercise jurisdiction over matters in interstate and foreign commerce, to the extent defined in the Act, and local matters would be left to the state regulatory bodies. Congress contemplated a harmonious, dual system of regulation of the natural gas industryfederal and state regulatory bodies operating side by side, each active in its own sphere. See H.Rep. No. 2651, 74th Cong., 2d Sess., pp. 1-3; H.Rep. No. 709, 75th Cong., 1st Sess., pp. 1-4; Sen.Rep. No. 1162, 75th Cong., 1st Sess.
Two minor objections to the jurisdiction of the court below need not detain us long. The Johnson Act of May 14, 1934, 48 Stat. 775, 28 U.S.C. 41(1), 28 U.S.C.A. § 41(1), is inapplicable here because the orders of the state commission 'interfere with interstate commerce' to the extent that they constitute an attempt to regulate matters in interstate commerce which Congress has lodged exclusively with the Federal Power Commission. And, unlike the appellant in Natural Gas Pipeline Co. v. Slattery, 302 U.S. 300, 310, 311, 58 S.Ct. 199, 204, 82 L.Ed. 276, United Exhausted all administrative remedies available to it before bringing this suit. In its petition for rehearing United requested the state Commission to modify its original order of April 19, 1935, so as to strike out those portions which we now hold to be in conflict with the federal Act. Only after the denial of this petition did United seek relief in the courts.
As a result of this decision, delays incident to obtaining a federal injunction have made wholly futile the diligent efforts of the State of Ohio to fix reasonable gas rates for the people of Portsmouth, Ohio. 1 I cannot agree with the suggestion implied here that this results from any cause other than the unwarranted interposition by courts into the business of rate making. Cf. McCart v. Indianapolis Water Co., 302 U.S. 419, 435, 58 S.Ct. 324, 331, 82 L.Ed. 336. Here eight years after the Ohio Public Utilities Commission made United a party defendant in order to fix rates 'to be charged' by it, Ohio is told that United may keep any sum collected, no matter how unjust or unreasonable the rates charged may have been; and Ohio's citizens are denied the right to recoup possible losses because the Commission 'has not made the inquiry and the findings which must precede the establishment of new rates.' There is one reason, and only one reason, why the Commission has not made such inquiry and findings before any step could be taken toward establishing a final rate order, and even before a single witness could be heard, this federal injunction stopped the State Commission in its tracks. Had the Commission proceeded to make inquiry and findings in the face of the injunction it would have risked the possibility that its members, agents, and attorneys could have been seized and fined or imprisoned for contempt of court. Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A.,N.S., 932, 14 Ann.Cas. 764. If it be true, which I think dubious, that under Ohio law rates can never be fixed as of the date a proceeding begins even though delays are the consequence of improvident federal injunctions, such a legal situation makes it all the more essential that the court below should have abstained as a matter of 'equitable fitness or propriety', Prentis v. Atlantic Coast Line, 211 U.S. 210, 229, 29 S.Ct. 67, 71, 53 L.Ed. 150, from tying the Commission's hands and barring it from making the final order here held to be vital. To stop these proceedings at the threshold and thus bar all possible relief for the years during which the litigation crawled along its interminable course seems to me far less justifiable than the action condemned by this Court in Petroleum Exploration v. Public Service Commission, 304 U.S. 209, 58 S.Ct. 834, 82 L.Ed. 1294.
The federal action halting the Ohio rate making process since 1935 is justified wholly on the ground that the Natural Gas Act passed in 1938 bars regulation by Ohio of United's rates since 1938 while Ohio law is said to bar any regulation prior to 1938 because no final order has yet been made by the Public Utilities Commission. The Court refuses to hold categorically that Ohio law nullifies this order, asserting instead that Ohio law requires us to interpret the Commission's order as not attempting to lead to rate making for the period 1935-1938. This will doubtless prove some surprise to the Commission which made the order in question in 1935 and which has argued both here and below that the Natural Gas Act is irrelevant because it took effect subsequent to the period in which the Commission is now interested. Whether the Court considers that Ohio law bars the Commission from making a valid order, or whether it uses its knowledge of Ohio law to tell the Commission what the Commission has attempted, is immaterialin either case we press our conception of Ohio law on the Ohioans. But the local law question has never been squarely decided in Ohio. That question is whether United can successfully, by taking full advantage of the delays of the federal judicial system, jockey the City of Portsmouth and the State of Ohio into such a position that no one can now determine what were reasonable rates for the period prior to 1938.
Under these circumstances our opinion as to the local law 'cannot escape being a forecast rather than a determination.' Railroad Commission v. Pullman Co., 312 U.S. 496, 499, 61 S.Ct. 643, 645, 85 L.Ed. 971. What was said by the Court there is equally applicable here: 'The last word on the meaning of Article 6445 of the Texas Civil Statutes, and therefore the last word on statutory authority of the Railroad Commission in this case, belongs neither to us nor to the district court but to the supreme court of Texas. * * * The reign of law is hardly promoted if an unnecessary ruling of a federal court is thus supplanted by a controlling decision of a state court.' 2 Here as there 'If there was no warrant in state law for the Commission's assumption of authority there is an end of the litigation; the constitutional issue does not arise.' Id., 312 U.S. 500, 501, 61 S.Ct. 645, 85 L.Ed. 971.
I am not as sure as the majority of the Court that refusal of United to comply with the Commission's order will in fact subject it to heavy penalties. 3 But assuming that this order is backed by the penalty clause, the case should be governed by what we said recently in Petroleum Exploration v. Public Service Commission, supra, 304 U.S. 220, 58 S.Ct. 840, 82 L.Ed. 1294: 'No order has been entered fixing rates or regulating conduct. The necessity to expend for the investigation or to take the risk for noncompliance does not justify the injunction. It is not the sort of irreparable injury against which equity protects.' Cf. Dalton Adding Mach. Co. v. State Corporation Commission of Commonwealth of Virginia, 236 U.S. 699, 35 S.Ct. 480, 59 L.Ed. 797.
The penalty provisions of the Ohio statute, Secs. 61464 and 65, are applicable where a rate or refund order is disobeyed, State ex rel. Ohio Bell Telephone Co. v. Court of Common Pleas, 128 Ohio St. 553, 555, 192 N.E. 787, but it may be that orders of the sort here involved are covered by Secs. 614-6 and 7, providing for the examination of records and the production of witnesses. If this is so, review may be obtained under Ohio practice without fear of penalty prior to a final judicial determination. See, e.g., Mouser v. Public Utilities Commission, 124 Ohio St. 425, 179 N.E. 133. We are cited to no cases which indicate which of these procedures governs this order.
PROPPER v. CLARK, Attorney General.
FEDERAL POWER COMMISSION v. PANHANDLE EASTERN PIPE LINE CO. et al.
FEDERAL POWER COMMISSION, v. TRANSCONTINENTAL GAS PIPE LINE CORP. NATIONAL COAL ASSOCIATION et al. v. TRANSCONTINENTAL GAS PIPE LINE CORP.
CENTRAL STATES ELECTRIC CO. v. CITY OF MUSCATINE, IOWA, et al.

References: § 717
 § 614
 § 41
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