Source: https://www.legalcrystal.com/case/99111/united-gas-pipe-line-co-vs-mobile-svc-corp
Timestamp: 2016-12-10 10:55:33
Document Index: 483492842

Matched Legal Cases: ['§ 4', '§ 717', '§ 4', '§ 4', '§ 5', '§ 4', '§ 4', '§ 4', '§ 4', '§ 4', '§ 4', '§ 4', '§ 5', '§ 4', '§ 4', '§ 4', '§ 5', '§ 4', '§ 5', '§ 16', '§ 14']

United Gas Pipe Line Co Vs Mobile Gas Svc Corp - Citation 99111 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize United Gas Pipe Line Co. Vs. Mobile Gas Svc. Corp. - Court Judgment	LegalCrystal Citationlegalcrystal.com/99111CourtUS Supreme CourtDecided OnFeb-27-1956Case Number350 U.S. 332AppellantUnited Gas Pipe Line Co.RespondentMobile Gas Svc. Corp.Excerpt:
under the natural gas act, a regulated natural gas company furnishing gas to a distributing company under a long-term contract filed with the federal power commission may not, without the consent of the distributing company, change the rate specified in the contract simply by filing a new rate schedule with the commission under § 4(d) of the act. pp.
350 u...... Judgment:
350 U. S. 333
(a) Unlike the Interstate Commerce Act, which requires uniform rates, the Natural Gas Act expressly recognizes that rates to particular customers may be set initially by individual contracts filed with the Commission. Pp.
given by filing new schedules showing the changes and the time they are to go into effect. Pp.
(c) The Act neither grants nor defines the initial rate-setting powers of natural gas companies; it merely defines the review powers of the Commission and imposes such duties on natural gas companies as are necessary to effectuate those powers. Pp.
(d) There is nothing in the structure or purpose of the Act from which can be inferred any right, not otherwise possessed and nowhere expressly given by the Act, of natural gas companies unilaterally to change their contracts. Pp.
(e) The conclusion here reached fully promotes the purposes of the Act. Pp.
, distinguished. Pp. 345-
350 U. S. 346
(g) The new schedule filed by the natural gas company in this case was a nullity insofar as it purported to change the rate set by its contract, and the contract rate remained the only lawful rate. P.
350 U. S. 347
(h) Under its general power to issue order "necessary or appropriate to carry out the provisions of this Act," the Commission had authority to reject the unauthorized filing of a new schedule of rates by the natural gas company, and the Commission's failure to do so and its order "permitting" the new rates to become effective were in error. P.
(i) Any amounts paid by the distributing company in excess of the contract rates were unlawfully collected, and the natural gas company is obligated to make restitution of the excess payments. P.
The question presented in this case is whether under the Natural Gas Act, 52 Stat. 821, 15 U.S.C. § 717
a regulated natural gas company furnishing gas
to a distributing company under a long-term contract, may, without the consent of the distributing company, change the rate specified in the contract simply by filing a new rate schedule with the Federal Power Commission. The pertinent provisions of the Act are set forth in the margin. [
under § 4(e), determine the new rate to be unlawful. Mobile paid the new rate until April 15, 1955, when United, with Commission approval, accepted an assignment to it of Mobile's contract with Ideal. [
] This assignment made the pending investigation into the lawfulness of the new rate moot, since, in the Commission's view, its determination on that matter would have no retroactive effect. Thus, the only question before us is whether United property collected from Mobile the difference between the old 10.7-cent rate and the new 14.5-cent rate during the period from July 25, 1953 (when the new rate purportedly went into effect), to April 15, 1955 (when United took over the Ideal contract) -- a sum aggregating approximately $240,000. On Mobile's petition for review, the Court of Appeals for the Third Circuit (Hastie, J., dissenting) reversed the Commission's order, directed it to reject United's filing of the new schedule insofar as it purported to increase the rate in question, and held Mobile entitled to a return of the amounts paid in excess of the contract rate. 215 F.2d 883. Both the Commission and United, which had intervened in the Court of Appeals, petitioned for certiorari, which we granted because of the importance of this question in the administration of the Natural Gas Act. 348 U.S. 950. For the reasons discussed below, we hold that the Natural Gas Act does not give natural gas companies the right to change their rate contracts by their own unilateral action.
Cf. Midland Realty Co. v. Kansas City P. & L. Co.,
. The Act [
] requires natural gas companies to file all rates and contracts with the Commission, § 4(c), and authorizes the Commission to modify any rate or contract which it determines to be "unjust, unreasonable, unduly discriminatory, or preferential," § 5(a). Changes in previously filed rates or contracts must be filed with the Commission at least 30 days before they are to go into effect, § 4(d), and, except in the case of industrial rates, the Commission may suspend the operation of the new rate pending a determination of its reasonableness, § 4(e). If a decision has not been reached before the period of suspension expires, a maximum of five months, the filed rate must be allowed to go into effect, but the Commission's order may be made retroactive to that date.
In construing the Act, we should bear in mind that it evinces no purpose to abrogate private rate contracts as such. To the contrary, by requiring contracts to be filed with the Commission, the Act expressly recognizes that rates to particular customers may be set by individual contracts. In this respect, the Act is in marked contrast to the Interstate Commerce Act, which in effect precludes private rate agreements by its requirement that the rates to all shippers be uniform, a requirement which made unnecessary any provision for filing contracts.
See Armour Packing Co. v. United States,
. The Commission, in its brief, recognizes this basic difference between the two Acts, and notes the differing natures of the industries which gave rise to it. The vast number of retail transactions of railroads made policing of individual transactions administratively impossible; effective regulation could be accomplished only by requiring compliance with a single schedule of rates applicable to all
which notice is to be given by filing new schedules showing the changes and the time they are to go into effect. It is argued that this provision authorizes a natural gas company to change its rate contracts simply by filing a new schedule of rates, to go into effect in no less than thirty days. On its face, however, § 4(d) is simply a prohibition, not a grant of power. It does not purport to say what is effective to change a contract, any more than § 4(c) purports to define what constitutes a "contract" that may be filed with the Commission. The section says only that a change
be made without the proper notice to the Commission; it does not say under what circumstances a change
be made. Absent the Act, a unilateral announcement of a change to a contract would, of course, be a nullity, and we find no basis in the language of § 4(d) for inferring that the mere imposition of a "filing and notice" requirement was intended to make effective action which would otherwise be of no effect at all. In short, § 4(d), on its face, indicates no more than that otherwise valid changes cannot be put into effect
The powers of the Commission are defined by §§ 4(e) and 5(a). The basic power of the Commission is that given it by § 5(a) to set aside and modify any rate or contract which it determines, after hearing, to be "unjust, unreasonable, unduly discriminatory, or preferential." This is neither a "rate-making" nor a "rate-changing" procedure. It is simply the power to review rates and contracts made in the first instance by natural gas companies and, if they are determined to be unlawful, to remedy them. Section 5(a) would, of its own force, apply to all the rates of a natural gas company, whether long established or newly changed, but, in the latter case, the power is further implemented by § 4(e). All that § 4(e) does, however, is to add to this basic power, in the case of a newly changed rate or contract (except "industrial" rates), the further powers (1) to preserve the
pending review of the new rate by suspending its operation for a limited period, and (2) thereafter to make its order retroactive, by means of the refund procedure, to the date the change became effective. The scope and purpose of the Commission's review remain the same -- to determine whether the rate fixed by the natural gas company is lawful.
The only difference is the interim suspension power given by § 4(e), but that in no way affects the character of the proceeding, which remains, like a § 5(a) proceeding, simply a review by the Commission of a rate established by the natural gas company. In short, the Act provides no "procedure" either for making or changing rates; it provides only for
to the Commission of the rates established by natural gas companies and for review by the Commission of those rates. The initial rate-making and rate-changing powers of natural gas companies remain undefined, and unaffected by the Act.
All of the relevant provisions of the Act can thus be fully explained as simply defining and implementing the powers of the Commission to review rates set initially by natural gas companies, and there is nothing to indicate that they were intended to do more. Admittedly, the Act presumes a capacity in natural gas companies to make rates and contracts and to change them from time to time, but nowhere in the Act is either power defined. The obvious implication is that, except as specifically limited by the Act, the rate-making powers of natural gas companies were to be no different from those they would possess in the absence of the Act: to establish
and change at will, the rates offered to prospective customers, or to fix by contract, and change only by mutual agreement, the rate agreed upon with a particular customer. No more is necessary to give full meaning to all the provisions of the Act: consistent with this, § 4(d) means simply that no change -- neither a unilateral change to an
rate nor an agreed-upon change to a contract -- can be made by a natural gas company without the proper notice to the Commission. Hence, there is nothing in the structure or purpose of the Act from which we can infer the right, not otherwise possessed and nowhere expressly given by the Act,
as are those who represent the public interest or those who might be discriminated against, there is nothing to prevent them from furnishing to the Commission any relevant information and requesting it to initiate an investigation on its own motion. [
] And if the Commission, after hearing, determines the contract rate to be so low as to conflict with the public interest, it may under § 5(a) authorize the natural gas company to file a schedule increasing the rate.
The prior decisions of this Court cited by petitioners as requiring an opposite result are readily distinguishable. In
, a rate contract between a railroad and a shipper at the filed rates in effect at the time the contract was made was held not to justify payment at the contract rate for shipments made after the filed rates for shipments of that character had been increased by the railroad. The very basis for that decision, however, was the requirement of the Interstate Commerce Act that rates to all shippers be uniform and comply with the single tariff filed with the Commission, there being no provision under that Act for the filing of individual contracts. That is, the Interstate Commerce Act, by its own force, precluded contracts for rates different from those applicable to other shippers. The Natural Gas Act, on the other hand, recognizes the need for private contracts of varying terms, and expressly provides for the filing of such contracts as a part of the rate schedules. No contention is made here that the fact that the Mobile contract was at a rate different from that to other customers in itself made the contract illegal, or that -- as held in
-- United could not lawfully have complied with the contract had it wanted to. In
Realty Co. v. Kansas City Power & Light Co.,
, the Court held only that a statute interpreted by the state court as authorizing unilateral contract changes by a public utility was not unconstitutional. On the other hand, in
, this Court interpreted a Kansas statute, not yet fully construed by the state court, as not giving such a power to a public utility, and, to the extent that that decision rested upon an original interpretation of similar statutory language, it affords strong support for our interpretation of the Natural Gas Act.
The only two Courts of Appeals that have squarely ruled on this question, those for the District of Columbia and Third Circuits, have concluded that neither the Natural Gas Act [
] nor the virtually identical provisions of the Federal Power Act [
] authorize unilateral contract changes. [
] The Court of Appeals for the Fifth Circuit, however, although distinguishing its decision on a procedural ground, has indicated a contrary conclusion. [
] The parties have also referred us to numerous state court decisions construing state statutes of varying degrees of similarity to the Natural Gas Act, some holding that unilateral contract changes were authorized [
] and others
holding that they were not. [
] Taken as a whole, the state decisions prove little more than that the question is an open one, and afford little guidance to the proper interpretation of the Federal Act.
From our conclusion that the Natural Gas Act gives a natural gas company no power to change its contracts unilaterally, it follows that the new schedule filed by United was a nullity insofar as it purported to change the rate set by its contract with Mobile, and that the contract rate remained the only lawful rate. There can be no doubt of the unauthorized filing under its the unauthorized filing under its general powers to issue orders "necessary or appropriate to carry out the provisions of this Act," § 16, and its failure to do so and its order "permitting" the new rates to become effective were in error. Any amounts paid by Mobile in excess of the contract rates on the basis of the erroneous order of the Commission were therefore unlawfully collected, and United is obligated to make restitution of the excess payments.
Cf. Baltimore & Ohio R. Co. v. United States,
Federal Power Commission v. Mobile Gas Service Corp.,
"(e) Whenever any such new schedule is filed, the Commission shall have authority, either upon complaint of any State, municipality, or State commission, or upon its own initiative without complaint at once, and if it so orders, without answer or formal pleading by the natural gas company, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service, and, pending such hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the natural gas company affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect:
"SEC. 5. (a) Whenever the Commission, after a hearing had upon its own motion or upon complaint of any State, municipality, State commission, or gas distributing company, shall find that any rate, charge, or classification demanded, observed, charged, or collected by any natural gas company in connection with any transportation or sale of natural gas, subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order:
pp. 334-336,
§ 14(a) of the Act, providing in part:
Mobile Gas Service Corp. v. FPC,
215 F.2d 883, the decision below.
Sierra Pacific Power Co. v. FPC,
96 U.S.App.D.C. 140, 223 F.2d 605,
U.S. 348.
See also Colorado Interstate Gas Co. v. FPC,
142 F.2d 943, 954,
U.S. 581.
Tyler Gas Service Co. v. United Gas Pipe Line Co.,
217 F.2d 73.
E.g., City of Lamar v. Town of Wiley,
80 Colo. 18, 248 P. 1009;
Kansas City Light & Power Co. v. Midland Realty Co.,
338 Mo. 1141, 93 S.W.2d 954,
U.S. 109;
Suburban Water Co. v. Oakmont Borough,
268 Pa. 243, 110 A. 778;
North Coast Power Co. v. Public Service Comm'n,
114 Wash. 102, 194 P. 587.
E.g., Rutland Ry. Light & Power Co. v. Burditt Bros.,
94 Vt. 421, 111 A. 582;
Commonwealth ex rel. Page Milling Co. v. Shenandoah River L. & P. Corp.,
135 Va. 47, 68-73, 115 S.E. 695, 701-703;
In re Searsport Water Co.,
118 Me. 382, 392-393, 108 A. 452, 457-458;
see also Attleboro Steam & Elec. Co. v. Narragansett Elec. Lighting Co.,
295 F. 895.