Fpc v. Interstate Nat. Gas Co., 336 U.S. 577 (1949)

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Author: Justice Jackson

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Fpc v. Interstate Nat. Gas Co., 336 U.S. 577 (1949)

By MR. JUSTICE JACKSON.

MR. JUSTICE BURTON and I view this case in a different light than do any of our brethren, but we have joined in the judgment and the opinion of MR. JUSTICE DOUGLAS because we deem it important that instructions to the court below carry the concurrence of a majority of this Court. We agree with much, but not all, of that opinion, and, where our views differ, we are closer to that opinion than to other views expressed here. We repeat our concurrence so that there may be no misunderstanding, but wish also to express for the record our individual views.

The way this case appears to us is this:

1. The three pipeline companies whose excessive payments made up this fund may not, under the terms of the impounding order, have an absolute right to recover it. However, since this Court found that the money was illegally exacted from them, it would seem to make at least a prima facie case for returning it to their possession. The minimum to which they are entitled is a chance to be heard as to whatever claim they may have to it. As these companies are subject to the Federal Natural Gas Act, a federal court might properly weigh their claims under federal law.

2. Assuming, however, what is not improbable, that none of the pipeline companies establishes a claim to the fund, the next in right to receive it would be their customers, the local distributing companies. The latter are under protection of federal law as to the rates which may be exacted from them by the pipeline companies, but are in no respect under federal law as to the rates they may charge customers. If all of the federal power exerted in the Natural Gas Act had been exercised by the Federal Power Commission, it could not reach or control their customer relations. We do not see, therefore, how a federal court in this litigation can derive from the Act any greater power to enter the local field with refunds than the Power Commission had to enter it for ratemaking. There are many legal and practical reasons why the court’s function should not be expanded beyond the point where Congress ended the functions of the Power Commission.

3. The manner and amount by which any repayments to distributing companies would be reflected in reduced rates to consumers, and therefore in rebates, is exclusively for state law. Twenty-one of these distributing companies are involved, and they operate in eight states, each with its own principles to govern local ratemaking and separate authorities to apply them. We solve no problem by saying that computation of this refund is not ratemaking. Of course, it is not, but it is so like unto it that no one suggests that any body of law except that of ratemaking is applicable. Disguise it with what sophistry we will, the disposition of refunds as between operating companies and customers must be generally based on the local law of ratemaking, or on no law at all. Some of these companies and their customers are located within the territorial jurisdiction of the Court of Appeals for the Fifth Circuit; others are in the Sixth, Seventh, and Eighth Circuits. I know of no legal or practical justification for requiring the Fifth Circuit Court of Appeals to undertake interpretation and application, as an original matter, of the laws of eight states, several of them beyond its jurisdiction.

4. The application of these funds, if they are held to go to the local distributing companies, present difficult questions of policy which it is the responsibility of the states to resolve in their own ways. The federal court should not undertake to resolve them, even if they were less complex. These problems are not solved or evaded by saying that refunds shall go to consumers, rather than to the companies. It oversimplifies these problems to treat consumers in the abstract as a class all alike. And it does not dispose of the problems to declare that refunds should be on "equitable principles," as if there were a defined and accepted body of principles of equity on this subject. Equity in the historical sense -- equity jurisprudence -- has no guidance to give beyond maxims, such, for example, as "equality is equity." But here, what is equality? Of course, what no doubt is meant is that the court should apply a sort of natural justice based on popular notions of right dealing. But this does not answer some of the concrete questions which someone must face in final disposition of these funds. I shall mention but few.

At the very outset, one is faced with the question as to what is an "equitable" basis of refund as between industrial and domestic consumers. Direct sales to industrial consumers by the three pipeline companies amounted to 63% of the total for Mississippi River Fuel Company, 18% in the case of Southern Natural Gas Company, and 11% for United Gas Pipe Line Company. In addition to this, other industrial consumers may be served by local distributing companies. The Federal Power Commission proposal, which this Court seems to think should prevail, is that refunds both to industrial and domestic consumers be calculated by dividing the money in proportion to feet of gas sold to each one. On this basis, the Power Commission’s exhibit proposes a refund to direct industrial consumers alone of over a million dollars from this fund. The Commission does not tell us the prices paid by various classes of consumers. But it is common knowledge that, for a variety of reasons, industries get a much lower price per m.c.f. than domestic users. If we assume it is 50%, then the refund would repay industrials twice as large a proportion of what they have paid for gas per m.c.f. as it would household users. Is this "equity"? In my dissent in Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, I pointed out the uneconomic use of gas in industry and the waste, and exhaustion of irreplaceable natural resources that it causes, and the great differential that exists between their low contract price and the price paid by domestic users. I have great doubt whether the industrial users have any just basis for participating in this refund; but, if they could, and they certainly are entitled to try, their share should not be greater than their proportion of the revenues contributed, rather than of their proportion of the consumption. The latter measures only the benefits they already have derived from exhausting the Nation’s supplies, not at all what they have contributed to the fund. This Court refused to consider these equities, as did also the Power Commission, in the Hope case. Why not then leave the states free to solve the issue? Some of the states may have an intelligent policy with reference to the rapid depletion of our gas reserves, vis a vis domestic and industrial consumption, and the relation of price to uneconomic uses. The Federal Government has none.

The Power Commission has furnished a tabulation showing the share of each local distributing company under its theory. But it has not provided any of the data which would disclose the magnitude and complexity of the task it is asking us to visit upon the Court of Appeals by directing it to go beyond this and distribute each company’s share among its consumers. By reference to Moody’s Manual, however, we can learn the approximate number of customers served by each company. Then, by applying the Power Commission’s tabulation of the share of refunds, it would appear that refunds for some companies would be so trivial that a state supervising authority might conclude that to cover this refund into the current revenues of the operating company, for whatever effect it might have on its present or future rates, would be a more sensible procedure than to spend it in expense of special proceedings to refund to consumers. For instance, Arkansas-Louisiana Gas Co. serves 142,481 customers in 109 communities. The Power Commission allocates it $20,911, or an average 15¢ per consumer. The Illinois Power serves 116,000 customers in 56 communities and is allocated $50,065, or about 43¢ per consumer. Birmingham Gas serves 61,000 consumers in 9 communities and is allocated $30,133, making an average refund of about 49¢.

The foregoing estimate of consumer refunds assumes an equal amount to each consumer. Another permissible basis, and, I should think, a fairer one where substantial amounts were involved, would be a refund in ratio to the bills paid for gas. The Power Commission, however, if consistent, would use another method, and refund in proportion to the feet of gas purchased by the consumer. Different local conditions precipitate some nice questions in applying any fair method as between consumers. From Moody’s Manual, for example, we learn that one of the largest of the distributing companies, the Atlanta Gaslight Co., which serves approximately 133,000 consumers in 28 communities, has a graduated scale of rates, so that consumers pay different rates for gas consumed in different quantity brackets. I should think the practical effect of its schedule would be that a very large consumer would make an average payment much less per thousand feet than would a moderate household consumer. Equality of refund may not be equality of treatment. It will take more than equalitarian generalities to get this cash into consumers’ hands. Is not the manner of refund under such local conditions one to be worked out by local authorities, rather than the federal court of a distant circuit?

The problems do not end here. Consumers during what period are entitled to refund? Certainly the rate reduction which caused this fund to accumulate could not, in normal course, have reached local retail consumers until sometime after reduction in wholesale rates, and the period would differ according to local conditions. The individuals who are entitled to refund, for whatever period may be adopted, must be identified and questions settled as who is entitled to the refund of a deceased consumer, what becomes of the share of one who has removed or is unknown. Disputes between landlord and tenant, husband and wife, and many other questions will arise, all of which are for local authorities.

For these reasons, it seems to us that the functions of the federal court end when it has granted these refunds to the last purchaser whose purchase price the federal authority can lawfully reduce. This would be the distributing companies. From there on, it is a local problem with which neither the Power Commission nor the court has any legitimate concern. The machinery of some of the states may be somewhat inadequate for dealing with the problem, but that does not, in our view, warrant usurpation of their functions.

However, for reasons stated at the beginning of this opinion, MR. JUSTICE BURTON and I have joined the judgment and opinion of the Court.

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Chicago: Jackson, "Jackson, J., Separate Opinion," Fpc v. Interstate Nat. Gas Co., 336 U.S. 577 (1949) in 336 U.S. 577 336 U.S. 591–336 U.S. 595. Original Sources, accessed January 20, 2019, http://www.originalsources.com/Document.aspx?DocID=PBSC2LKDD5UHCHJ.

MLA: Jackson. "Jackson, J., Separate Opinion." Fpc v. Interstate Nat. Gas Co., 336 U.S. 577 (1949), in 336 U.S. 577, pp. 336 U.S. 591–336 U.S. 595. Original Sources. 20 Jan. 2019. www.originalsources.com/Document.aspx?DocID=PBSC2LKDD5UHCHJ.

Harvard: Jackson, 'Jackson, J., Separate Opinion' in Fpc v. Interstate Nat. Gas Co., 336 U.S. 577 (1949). cited in 1949, 336 U.S. 577, pp.336 U.S. 591–336 U.S. 595. Original Sources, retrieved 20 January 2019, from http://www.originalsources.com/Document.aspx?DocID=PBSC2LKDD5UHCHJ.