Case Name: FEDERAL POWER COMMISSION et al. v. INTERSTATE NATURAL GAS CO. et al.
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1949-04-18
Citations: 336 U.S. 577
Docket Number: NO. 109
Parties: FEDERAL POWER COMMISSION et al. v. INTERSTATE NATURAL GAS CO. et al.
Judges: Mr. Justice Murphy and Mr. Justice Rutledge join in this opinion.
Reporter: United States Reports
Volume: 336
Pages: 577–600

Head Matter:
FEDERAL POWER COMMISSION et al. v. INTERSTATE NATURAL GAS CO. et al.
NO. 109.
Argued January 11, 1949.
Decided April 18, 1949.
Bradford Ross argued the cause for petitioner in No. 109. With him on the brief were Solicitor General Perl-man, Assistant Attorney General Morison, Stanley M. Silverberg, Paul A. Sweeney, Melvin Richter and Howard E. Wahrenbrock.
John P. Randolph argued the cause and filed a brief for petitioner in No. 188.
William C. Wines argued the cause for the Illinois Commerce Commission, petitioner in No. 212. George F. Barrett, Attorney General of Illinois, and Albert E. Hallett, Assistant Attorney General, were on the brief.
Charles C. Crabtree submitted on brief for petitioner in No. 209.
William A. Dougherty argued the cause for the Interstate Natural Gas Co. et al., respondents. With him on the brief for the Interstate Natural Gas Co. were Henry P. Dart, Jr. and James Lawrence White. Mr. Dougherty and Mr. White also filed a brief for the Mississippi River Fuel Corp., respondent.
John T. Cahill argued the cause for the Memphis Natural Gas Co., respondent. With him on the brief were Edward P. Russell, Thurlow M. Gordon and Harold F. Reindel.
Forney Johnston argued the cause for the Southern Natural Gas Co., respondent. With him on the brief was Jos. F. Johnston.

Opinion:
Mr. Justice Douglas
delivered the opinion of the Court.
This case, here on certiorari, involves the proper disposition of a fund accumulated under a stay order issued by the Court of Appeals pending review of a rate order issued by petitioner. That order reduced the rates for natural gas on sales by Interstate Natural Gas Co. to Mississippi River Fuel Corp., Southern Natural Gas Co., and United Gas Pipe Line Co. for resale to Memphis Natural Gas Co., and on sales by Interstate to Memphis. The Court of Appeals sustained the order, 156 F. 2d 949, and we affirmed its judgment, 331 U. S. 682.
Interstate deposited in the registry of the court pending review the monthly difference between payments under existing rates and those required under the order of the commission. Interstate has now moved in the Court of Appeals for a distribution of the fund. The pipe-line companies — Mississippi, Southern, United, and Memphis — claimed the fund and asked that it be distributed to them. Petitioner and certain state and municipal agencies also intervened, opposing distribution to the pipe-line companies and claiming that it should be made to the ultimate consumers of the gas or to such others as may be equitably entitled to it. The Court of Appeals, relying on Central States Co. v. Muscatine, 324 U. S. 138, ordered the fund to be paid to those from whom Interstate wrongfully exacted the payments, viz., the pipe-line companies, without prejudice to such rights as others may have to hold those companies accountable for the amounts involved. 166 F. 2d 796.
First. Here, unlike Central States Co. v. Muscatine, supra, the distributing companies that seek return of the fund created from their payments of the excessive rates are subject to the jurisdiction of the Federal Power Commission, since they are natural gas companies engaged in the transportation or sale at wholesale of natural gas in interstate commerce. See Illinois Gas Co. v. Public Service Co., 314 U. S. 498. The claims of these pipe line companies to the fund are therefore determinable solely with reference to federal law, since the Natural Gas Act, 52 Stat. 821, 15 U. S. C. § 717, is designed to regulate the segment of the industry occupied by such distributors. See Interstate Natural Gas Co. v. Federal Power Commission, 331 U. S. 682, 689-690; Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591, 610. We may not therefore sustain the action of the Court of Appeals unless it is clear as a matter of federal law that the pipe-line companies are entitled to the fund.
The basis of the claim stated in their petitions for intervention is that they are entitled to the fund as of right, since it was created by their payments. But we would be unmindful of the purpose of the Act and the responsibility of the federal courts under it, if we so ruled. The aim of the Act was to protect ultimate consumers of natural gas from excessive charges. See Federal Power Commission v. Hope Natural Gas Co., supra, at 610, 612. They were the intended beneficiaries of rate reductions ordered by the federal commission, though state machinery might have to be invoked to obtain lower rates at the consumer level. The rates charged a wholesaler are part of its costs, reflected in its rate base. Reduction of those costs normally will lead in due course to reduction in its resale rates, unless we are to assume that the passage of the Natural Gas Act was an exercise in futility. It is of course conceivable that a wholesaler might be warranted in keeping all or a part of the rate reduction under the standards of reasonableness prescribed by the Act. But a court would not be warranted in assuming that the rates which have been charged are so low as to be unreasonable. No such presumption attends rates which have been fixed pursuant to rate orders of the commission. Nor can we make any such presumption as respects rates fixed by the utilities themselves without the compulsion of a rate order. For experience does not indicate that utilities are wont to charge themselves out of business.
The pipe-line companies in their petitions for intervention make no claim that their rates have been so low that they are entitled to these refunds as a matter of law. Were that issue tendered, the court would need to resolve it and could call upon the Federal Power Commission for information relevant to it. Moreover, if the pipeline companies passed on to their customers the rate reductions from the date of the commission's order (as Mississippi alleges it did), they would be entitled to a return of the payments they made into the fund. They would then have done all that was in their power to effectuate the policy of the Act in this regard. But apart from those exceptions, it is the duty of the court to look beyond those companies for the rightful claimants of the fund. It is the responsibility of the court which distributes the fund accumulated under its stay order "to correct that which has been wrongfully done by virtue of its process." United States v. Morgan, 307 U. S. 183, 197. That responsibility plainly cannot be discharged by payment of the fund to those who show no loss by reason of the court's action.
It is said that the federal court could not by-pass the pipe-line companies without undertaking to pass on the reasonableness of the rates which they have charged— a matter beyond its competence except on review of orders of the commission. But it is not rate-making to determine the equity of the claim of the pipe-line companies to the fund. The federal court, through exercise of its power under § 19 of the Act, issued the stay order under which the fund was accumulated. When a federal court of equity grants relief by way of injunction it has a responsibility to protect all the interests whom its injunction may affect. Inland Steel Co. v. United States, 306 U. S. 153. It assumes the duty to make disposition of the fund in accord with equitable principles. United States v. Morgan, supra, at 191. If in a particular case the court reaches the question of reasonableness of rates, it does so only for purposes of distributing the fund for whose creation it alone was responsible. It does not fix or prescribe rates for the past or the future. The reasonableness of rates charged by the companies who claim the fund is wholly ancillary to the problem of determining what claimants are equitably entitled to share in it. See Atlantic Coast Line R. Co. v. Florida, 295 U. S. 301; United States v. Morgan, supra.
Second. The problem is somewhat more complicated if distribution of the fund is to be made to claimants other than the pipe-line companies. The latter sell gas to at least two types of customers — industrial users over whose rates the Federal Power Commission has no jurisdiction and over which state regulatory bodies may or may not, depending on local law; and numerous distributing companies selling to customers in eight states. If the pipe-line companies had passed the rate reductions on to the distributing companies, those reductions may or may not have reached the ultimate consumers. We likewise do not know whether the reductions would have reached the industrial users either by terms of the contracts or by virtue of the assertion of regulatory authority.
If in this situation local law provides a standard for determining which of two or more claimants would have been entitled to the benefits of the rate reduction, the federal court should apply it. If clear and speedy state remedies are available, the federal court might hold the fund until those having the final say on the state law questions have spoken. Cf. Thompson v. Magnolia Petroleum Co., 309 U. S. 478, 483; Spector Motor Co. v. McLaughlin, 323 U. S. 101. But in absence of such a showing the federal court in the interest of dispatch should proceed to determine the questions, relying on such sources of local law as may be available, including information from state regulatory agencies. The federal court may in its discretion disburse the funds directly to either the local distributing companies or the ultimate consumers or work out an administrative scheme whereby the distribution is made pursuant to directives of state agencies.
In conclusion, the task of the federal court in distributing the fund accumulated by virtue of its stay order is to undo the wrong which its process caused. The basic problem, therefore, is not to fix rates but to determine who suffered a loss as a result of the court's action in granting the stay. What in fact would have happened as a consequence of federal or state law if the stay had not been issued, no one can know for a certainty. But the federal court must make its prognostication, whether an excursion into federal or state law questions is entailed. Distribution of the fund should not involve prolonged litigation. It is an administrative matter involving the exercise of an informed judgment by the federal court and should have the flexibility and dispatch which characterize the administrative process.
Reversed.
United claimed an allocable share on behalf of Memphis to which it had resold the gas which it had purchased from Interstate.
§ 1 (b).