Court Opinion

ID: 9419595
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:50:21.528289+00
Date Added: 2024-06-11T17:22:19.217850
License: Public Domain

Mr. Justice Black,
dissenting.
The primary purpose of Congress in passing the Natural Gas Act was to protect ultimate consumers of gas from excessive prices. Federal Power Commission v. Hope Natural Gas Co., 320 U. S. 591, 610, 612. The Court’s decision today defeats that Congressional purpose, for under its interpretation of the Act the petitioner, a retail gas distributor, is awarded a windfall,1 at the expense of the very consumers the Act was designed to protect.
On September 23, 1938, a petition praying for reduction of the wholesale gas rates of the Natural Gas Pipeline Company was filed with the Federal Power Commission. July 23, 1940, the Commission ordered the Company to make reductions in its future rates. The Circuit Court of Appeals, upon the Company’s petition, then granted a stay pending litigation. Later, it stayed enforcement of the order. 120 F. 2d 625. As a condition of its stay, the Circuit Court of Appeals required the Company to execute a million dollar bond running to the Federal Power *147Commission and the Illinois Commerce Commission. On March 16, 1942, this Court reversed the cause and sustained the Commission’s order. 315 U. S. 575.
Subsequently, $6,377,913.57 was paid into the court by the Pipeline Company, this being the amount it had collected, pending the litigation, from Illinois, Nebraska, and Iowa gas distributing companies, in excess of the rates fixed by the Commission.
The Pipeline Company, and all of the distributing, companies except petitioner here and one small company in Nebraska,2 acquiesced in the holding of the court below that the funds thus impounded properly belonged to the ultimate consumers, and should be refunded to them. All of this amount, $6,377,913.57, except for the $25,708.54 now ordered by this Court to be paid to the petitioner, has been distributed to the ultimate consumers.3
The Court holds that the disposition of such funds must be made in accordance with state law and that the Circuit Court of Appeals was without jurisdiction to dispose of *148them-as it did. Until today, this Court seems never to have doubted that “it is a power 'inherent in every court of justice so long as it retains control of the subject matter and of the parties, to correct that which has been wrongfully done by virtue of its process'.” United States v. Morgan, 307 U. S. 183, 197. Here, consumers of gas have been injured by a federal court order staying the Federal Power Commission’s 1940 rate cut. In 1942, this Court sustained the Commission’s order. 315 U. S. 575. At that time, the Pipeline Company contended before this Court that if the Commission’s rate order should be sustained, the fund accumulated as a result of the stay should be retained by it, and should not be turned over to the distributing companies because “the purpose of the rate regulation is the protection of consumers and . . . will not be effectuated by refunds to wholesalers” of their “profits for past business.” Upon our remand of the cause for further proceedings, the Pipeline Company petitioned the court below to take jurisdiction of the excess funds. That court held, in impounding the fund here involved, that since it was authorized by §§ 19 (b) and (c) of the Act to issue a stay pending review of the Commission’s rate order, it had a mandatory obligation as a court of equity “to determine to whom and in what amounts the distribution shall be made.” This holding was in accord with “the governing principle that it is the duty of a court of equity granting injunctive relief to do so upon conditions that will protect all — including the public — whose-interests the injunction may affect.” Inland Steel Co. v. United States, 306 U. S. 153, 157.
The injury to the consumers here did not stem from state law or the action of a state court; it was the direct result of stay orders made by a federal court. • These orders, which permitted the Pipeline Company to continue to charge rates which the Commission had determined to-be excessive, to the detriment of ultimate consumers, were *149issued under the provisions of the Natural Gas Act. The injuries here were therefore occasioned by the application of federal law in a federal court, and raised federal, and not state law questions. For a federal court to remedy this injury by affording that protection to consumers which the act contemplated, cannot, in my judgment, be said to amount to a regulation of local gas rates.
The Natural Gas Act contemplates that federal reduction of wholesale gas rates to distributors will be reflected in reduction of retail rates to the ultimate consumers. Information before the Congress when it passed the Natural Gas Act showed that a large percentage of the retail cost of gas was attributable to the wholesale cost.4 Thus the wholesale cost is a critical element in a state proceeding to regulate retail cost. An effective order of the Federal Power Commission reducing wholesale costs affords local consumers a basis for a corresponding retail reduction. But a federal rate reduction order cannot be utilized before state regulatory agencies where the federal reduction order has been stayed by a federal court. Thus, during the three years that the Power Commission’s rate reduction was held in abeyance pursuant to the stay orders, the Iowa consumers were deprived of the opportunity to obtain a reduction of their rates from the local regulatory agencies. The City of Muscatine, Iowa, promptly passed an ordinance reducing local gas rates after vacation of the orders staying enforcement of the Power Commission’s rate reduction.
Ultimate consumers can secure benefits from a federal rate reduction in two ways: (1) by using the order to get *150reduced rates before their local regulatory bodies; (2) by the impounding of funds for their benefit if a judicial stay of the federal reduction order is granted. The stay deprived these local consumers of a chance to use the Commission’s order to1 obtain a local rate reduction. The holding of this Court partially, if not completely, deprives them of the benefits of the impounded funds. Cf. First National Bank v. Flershem, 290 U. S. 504, 520.
To deny petitioner distributing company a refund of the impounded monies would impose no deprivation upon it. Petitioner’s local rates were fixed by a Muscatine city ordinance, to which rates the petitioner alleges it voluntarily agreed. That schedule of rates, petitioner argues, was “presumptively reasonable.”5 Petitioner admits that Iowa law requires the wholesale cost of gas to be one of the factors considered in determining the reasonableness of rates.6 The petitioner’s rates must therefore be considered reasonable on the basis of the old wholesale price of gas, and any increment above those rates is a “windfall.”
Furthermore, the petitioner says it was free under Iowa law to attack the rates at any time as too low. This it never did. Instead, it refrained from doing so until this Court had sustained the Commission’s order reducing wholesale rates, and until the Circuit Court of Appeals had adjudged that the monies belonged to the consumers. Not until then did it file its intervention claim for the impounded funds. The reason for this delay is not difficult to .find. Petitioner, in arguing here that it should get *151this impounded fund, asserts that under Iowa law “municipalities may only fix rates prospectively.” Iowa cases cited by the petitioner7 seem to give some support to this contention, especially when considered with decisions of this Court dealing with analogous statutory situations.8 I am therefore unable to see much likelihood of these consumers obtaining relief in the Iowa state courts for the injury they have suffered as a result of the federal court’s action in granting a stay of the Federal Power Commission’s order.
If my previous analysis is correct, the rule announced by the Court today means simply this: So long as litigation can be kept pending in the courts as to the validity of a Federal Power Commission rate reduction order, the benefits of the Natural Gas Act will be suspended as to ultimate consumers, and will be largely, if not exclusively, restricted to retail distributors.9 Thus, by a strange quirk of statutory construction, the effort of Congress to protect consumers from excessive rates is transformed, where litigation is pending, into an Act which exploits consumers and unjustly enriches distributing companies. This Company has already received a reasonable compensation for *152its services. It is entitled to no more under Iowa or federal law.
Mr. Justice Murphy and Mr. Justice Rutledge concur in this dissent.

 The court below refused to construe the Natural Gas Act so as to make this petitioner “the beneficiary of a windfall, to which it intends to hold on, once it can get possession of it.”

 This company subsequently settled with its consumers by turning over to them approximately 70% of the funds allocable to its purchases.

 June 30, 1942, after a notice had been issued to petitioner Central, the Court held that all refunds “belong to the consumers, for whose benefit these proceedings were instituted.” Central did not actually intervene until fourteen months later. With reference to this delay of Central’s the court below said in its June 30, 1942 order that “Nebraska City and all other utilities stood by and accepted the situation as it was tendered by the pleadings and the parties. Now one or two of these utilities located where no State Supervisory Commission exists, are endeavoring to seize the fruits of the litigation brought for the consumers and retain the money for their own individual gain. It would be a gross travesty upon the proceedings, the outcome, if they were to succeed. With their efforts in this respect, we have no sympathy.” Without going into a narration of what later occurred, I am of opinion that the court rightfully denied Central’s intervention on the ground that it had long since decided the question. The importance of the rule announced by the court, however, prompts me to discuss it.

 See Final Report of the Federal Trade Commission to the Senate, Sen. Doc. 92, Part 84-A, 70th Cong., 1st Sess., pp. 611, 612; Cong. Record, 75th Cong., 1st Sess., vol. 81, pp. 6723, 6725, 6728; Hearings Before the House Committee on Interstate & Foreign Commerce, 75th Cong., 1st Sess., on H. R. 4008, pp. 27, 38-39, 56-57; Hearing on H. R. 11662, House Subcommittee on Interstate & Foreign Commerce, 74th Cong., 2d Sess., pp. 25, 34-35, 81.

 Petitioner cites in support of its argument, Iowa Railway & Light Co. v. Jones Auto Co., 182 Iowa 982, 164 N. W. 780; Town of Williams v. Iowa Falls Electric Co., 185 Iowa 493, 170 N. W. 815; Knotts v. Nollen, 206 Iowa 261, 218 N. W. 563; Mapleton v. Iowa Public Service Co., 209 Iowa 400, 223 N. W. 476.

 See Cedar Rapids Gas Co. v. Cedar Rapids, 144 Iowa 426, 120 N. W. 966, aff’d 223 U. S. 655.

 See note 5, supra.

 Cf. Public Utilities Commission v. United Fuel Gas Co., 317 U. S. 456; Arizona Grocery Co. v. Atchison, T. & S. F. R. Co., 284 U. S. 370, 389.

 When a rate schedule embodying a proposed increase in wholesale rates becomes effective, pending a determination by the Commission of the reasonableness of such increase, the Commission is authorized to require appropriate guarantees by §4 (e) of the Act. The Commission may require the natural gas companies “. . . to furnish a bond, to be approved by the Commission, to refund any amounts ordered by the Commission, to keep accurate accounts in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf such amounts were paid . . .” This would appear to be broad enough to protect consumers where the amounts were paid in their behalf. Surely the Act gives no less power to a court.

 The City of Muscatine did in fact reduce the rates after the stay order had been vacated.