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FPC V. INTERSTATE NAT. GAS CO., 336 U. S. 577 (1949)

U.S. Supreme Court

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

Federal Power Commission v. Interstate Natural Gas Co.

No. 109

Argued January 11, 1949

Decided April 18, 1949*

336 U.S. 577


An order issued by the Federal Power Commission under the Natural Gas Act directed a natural gas company to reduce its rates on interstate sales of natural gas for resale. Pending judicial review, the Court of Appeals issued a stay order pursuant to which the company paid into the registry of the court the monthly difference between the existing rates and the lower rates prescribed by the Commission. The rate order was finally sustained, and the Court of Appeals ordered the fund distributed to the pipeline companies which were the immediate purchasers.


1. Apart from the case of a pipeline company claiming that its rates have been so low that it is entitled as a matter of law to share in the refund and the case of a pipeline company which has passed on to its customers the rate reductions from the date of the Commission's order, it is the duty of the court to look beyond the pipeline companies for the rightful claimants of the fund. Pp. 336 U. S. 580-583.

(a) Since the pipeline companies themselves are engaged in the transportation or sale at wholesale of natural gas in interstate commerce, and are thus subject to the jurisdiction of the Federal Power Commission, their claims to the fund are determinable solely with reference to federal law. Central States Co. v. Muscatine, 324 U. S. 138, distinguished. Pp. 336 U. S. 580-581.

(b) The fact that the fund consisted of payments made by the pipeline companies does not entitle them to the fund as of right. P. 336 U. S. 581.

(c) The aim of the Natural Gas Act was to protect ultimate consumers of natural gas from excessive charges. P. 336 U. S. 581.

Page 336 U. S. 578

(d) The responsibility of the court to correct what has been wrongfully done by virtue of its process cannot be discharged by payment of the fund to those who show no loss by reason of the court's action. P. 336 U. S. 582.

(e) The fund having been created by the court through exercise of equity powers, its disposition should be made in accord with equitable principles. Pp. 336 U. S. 582-583.

2. If distribution of the fund is to be made to claimants other than the pipeline companies, and if 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 such local law. P. 336 U. S. 583.

3. 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. P. 336 U. S. 583.

4. 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. P. 336 U. S. 584.

5. 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. P. 336 U. S. 584.

6. Distribution of the fund 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. P. 336 U. S. 584.

166 F.2d 796 reversed.

Pending review of an order of the Federal Power Commission directing a natural gas company to reduce its interstate wholesale rates, the Court of Appeals issued a stay order under which a fund representing the difference between the rates charged and the lower rates ordered accumulated in the registry of the court. The order of the Commission having been finally sustained, 156 F.2d 949, 331 U. S. 682, the Court of Appeals ordered distribution of the fund to the pipeline companies which were the immediate purchasers from the natural gas company. 166 F.2d 796. Petitioners here had intervened in opposition

Page 336 U. S. 579

to distribution to the pipeline companies. This Court granted certiorari. 335 U.S. 808. Reversed, p. 336 U. S. 584.

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