1. The Circuit Court of Appeals, which, upon review of a valid
rate order of the Federal Power Commission under the Natural Gas
Act, had impounded
pendente lite amounts paid to the
natural gas company by the petitioner (a local distributor) in
excess of lawful rates, was without jurisdiction to adjudicate the
rights of consumers in the fund or to order payment of the fund to
officers of municipalities for the benefit of those ultimately
found entitled. P.
324 U. S.
145.
2. In this situation, the most that the court below should do,
in view of the apparent controversy as to the consumers' right to a
refund of rates paid to the petitioner, is to order that the fund
be held for a reasonable time to permit interested persons to
litigate the issue in a tribunal having jurisdiction, the order to
be conditioned that, if such litigation is not instituted within a
reasonable time and prosecuted to final adjudication, the fund
shall be paid over to the petitioner, and that, if it be adjudged
as a result of such litigation that the petitioner is indebted to
its consumers because of the reduction of wholesale rates in this
proceeding, further application may be made to the court as to
disposition of the fund. P.
324 U. S.
145.
3.
United States v. Morgan, 307 U.
S. 183, and
Inland Steel Co. v. United States,
306 U. S. 153,
distinguished. P.
324 U. S.
145.
Reversed.
Certiorari, 322 U.S. 724, to review orders of the court below
which directed payment to certain municipal officers of impounded
funds claimed by the petitioner.
Page 324 U. S. 139
MR. JUSTICE ROBERTS delivered the opinion of the Court.
We are concerned in this case with the nature and extent of the
powers of a federal court sitting to review an order of the Federal
Power Commission.
The decision of the court below denied the petitioner's
application for payment to it of a fund of some $25,000 deposited
in court, and directed its payment to persons not privies to the
transaction which created the fund. A detailed recitation of events
is required to show how the question arises.
The Federal Power Commission (hereinafter called Commission),
proceeding under the Natural Gas Act, [
Footnote 1] entered an order against the Natural Gas
Pipeline Company of America (hereinafter called Pipeline) requiring
it to cut its rates on natural gas to effect an annual reduction in
revenue of not less that $3,750,000, effective September 1,
1940.
The petitioner, Central States Electric Company (hereinafter
sometimes called Central), an Iowa corporation doing a public
utility business in that State and elsewhere, purchased gas at
wholesale from Pipeline and distributed it in Iowa.
Pipeline sought a review of the Commission's action by the
Circuit Court of Appeals. The court set aside the order, but, on
certiorari, we reversed and sustained it. [
Footnote 2] At the inception of the case, Pipeline had
petitioned for a
Page 324 U. S. 140
temporary stay and the court below had granted a stay on
condition that a bond be filed to secure the refund to purchasers
at wholesale of the amounts respectively due them if the court
should sustain the reduction of rates ordered by the Commission. On
the dissolution of the temporary stay, another was entered to
continue until the further order of the court, conditioned that
Pipeline should enter a second bond in the same terms. This was
done.
When this court rendered its judgment sustaining the rate order,
Pipeline became liable to make refunds in accordance with the bond.
The court below, prior to the payment of the amount due under the
bond, filed an opinion holding that it was its duty to take
exclusive control over the refund when made, and to determine the
rights of all claimants in the fund, and made an order enjoining
claimants to the fund from further proceeding in any other court.
This action was pursuant to a petition of Pipeline showing that
suits were being filed against it in other courts by the ultimate
consumers of the gas sold by Pipeline to the local distributing
companies and alleging that, unless the court retained jurisdiction
of the fund, Pipeline would be subjected to numerous similar suits.
Illinois Commerce Commission, in an answer, stated that the rates
charged by distributing companies in Illinois were fixed by it and
reflected the prices paid by distributors to Pipeline, and that the
refund, representing excessive rates paid by distributors, had been
collected from the ultimate consumers and was equitably due them.
The Illinois local distributors then before the court agreed that
the refund should be ratably paid to the ultimate consumers.
Central was not a party to the proceeding in the Circuit Court
of Appeals, but, on June 29, 1942, it sent a letter to the Clerk,
in response to one from him, asserting that the portion of the
refund representing excessive rates paid by Central during the
refund period should be repaid to
Page 324 U. S. 141
it, and not to the ultimate consumers. June 30, 1942, the court
rendered an opinion in which it discussed the relative rights and
interests of local distributors and ultimate consumers. The court
found that, since the rates charged to local consumers included the
excess charges paid by distributors to Pipeline, the ultimate
consumers were, in equity, entitled to receive the refund. July 1,
1942, Pipeline paid into court a sum representing that portion of
the rates paid to it in excess of the rate permitted by the
Commission's order. The court thereupon entered an order to show
cause which specified the refund period, determined that the amount
paid into court was the property of the ultimate consumers, and
allocated the fund to the customers of the local distributors,
including Central's customers (to whom there was allocated
$25,708.54), reserved jurisdiction of the fund for the protection
of all persons having rights therein, and directed all claimants to
the fund to show cause why the order should not be binding on them.
Later, the court entered an order in which it found that Central
had raised an issue concerning the relative rights of itself and
its customers to the amount in question. Central, which, as we have
said, had not become a party to the proceedings, then filed a
petition in intervention paying that the sum be paid to it, and
leave to intervene was granted. Central's petition set forth that
it purchased natural gas from Pipeline during the refund period,
pursuant to a contract; that the sum in question represented
amounts paid by Central during the refund period in excess of the
rates fixed by the Commission's order; that Central sold more than
81% of the gas in question without profit to Iowa Electric Company,
which resold the same to some 2400 consumers in Muscatine, Iowa,
and that Central sold the balance directly to some 320 consumers in
Greenfield, Iowa, 597 in Knoxville, Iowa, and 366 in Pella, Iowa;
that less then 12 1/2% of the gas sold in Knoxville and Pella was
natural
Page 324 U. S. 142
gas; that Iowa Electric Company had transferred all its rights
in and to the fund to Central for the purpose of these proceedings;
that, by the law of Iowa, the power to fix rates for gas service is
vested in its municipalities, and the utility rates in that State
are not regulated by any State agency or commission; that rates to
consumers had been voluntarily reduced to meet competitive
conditions and that such rates had been approved by resolution of
the Council of Muscatine, and that, due to conditions in the
communities serviced, the rates charged consumers were insufficient
to produce a fair return.
Thereafter, the court entered an order directing that the
Attorney General of Iowa and the purchasers of gas from Central,
and their respective municipal representatives in Muscatine and
Greenfield, be notified of Central's claim to the fund, and that
they show cause why the relief sought by Central should not be
granted. No such order was made with respect to consumers in
Knoxville and Pella, nor to any officials of those cities. The City
of Muscatine and the Mayor of Greenfield, purporting to represent
the consumers in those cities, filed separate pleadings in which
they asserted that the fund in question belonged to the
consumers.
The court, without hearing evidence, denied the relief prayed by
Central by an order which was stated to be "without prejudice" to
Central's
"making claim of adjustment with the cities of Muscatine,
Greenfield, Knoxville and Pella . . . or with the consumers of gas
furnished by it in said cities."
The reason stated for making the order was that the court was
without jurisdiction to hear Central's claim, since it involved a
determination of "the reasonableness of petitioner's rates," and,
further, since the court had previously ruled that the refund
belonged to the ultimate consumers. In a separate order entered the
same day, the court directed payment of the sum in question to the
treasurers of the several cities in specified
Page 324 U. S. 143
amounts. It fixed the amount allocated to Muscatine at 81% of
the fund, apparently relying upon the allegation of the petition
that more than 81% of the gas purchased from Pipeline was delivered
to consumers in that city. It apparently failed to give
consideration to the allegation that less that 12 1/2% of the gas
sold in Knoxville and Pella was natural gas. The order recited that
the fund belonged to the ultimate consumers, and that the court
desired to pay it at the earliest possible time to "such parties as
are entitled to the same, and to permit of a determination of said
rights by a court or body having jurisdiction thereof." Thereafter,
Central filed a supplemental petition setting forth that, except
for the stay order, Central would have retained the sum in
question; that Central was the only party in privity with Pipeline,
and was therefore entitled to the benefit of the rate reduction,
and that the bond filed pursuant to the court's order called for
payment of the refund to purchasers at wholesale, one of whom was
Central. It further attacked the jurisdiction of the court to award
the sum to Central's ultimate consumers, since such an award
amounted to a retroactive reduction of local rates to which the
Natural Gas Act, by express terms, did not apply, and, finally,
asserted that the court ought not to make the award based on a
conclusion of fact unsupported by any evidence that the burden of
the excessive rates had been passed on to the consumers, whereas
the court, at the same time, disclaimed jurisdiction to determine
the reasonableness of local rates, and therefore refused to hear
evidence of Central's equitable right to the fund. Muscatine and
the Mayor of Greenfield responded. The court denied the petition
without hearing or argument.
The court below was right in its view that, as a federal court,
it had no power -- at least in the absence of federal legislation
purporting to confer such power upon it -- to fix or adjust
Central's rates, that being a legislative function
Page 324 U. S. 144
of the State of Iowa. This would be so where the fund in dispute
came into its possession in a proceeding to enjoin the operation of
an order affecting state rates, [
Footnote 3] and must be equally true where the proceeding
was one to enjoin collection of a rate for interstate service. This
because the court below had no power as a court of equity to fix
rates, and, as a federal court, had no power to adjudicate a matter
within the legislative competence of Iowa. The court below so held
in this case, and has dealt with the matter more fully and to the
same effect in another. [
Footnote
4]
The Natural Gas Act clearly discloses that, though its purpose
may have been to protect the ultimate consumer at retail, the means
adopted was limited to the regulation of sales in interstate
commerce at wholesale, leaving to the states the function of
regulating the intrastate distribution and sale of the commodity.
That Congress intended to leave intrastate transactions to state
regulation is clear not only from the language of the Act,
[
Footnote 5] but from the
exceptionally explicit legislative record [
Footnote 6] and from this court's decisions. [
Footnote 7]
The showing made by the petitioner's pleadings, and not denied,
is that, in Iowa, rates are set by municipal ordinance; that the
rates collected from consumers during the refund period were the
lawful rates, so fixed, and that the sums impounded were deducted
from the payments to Pipeline by Central out of its own funds. The
only reply
Page 324 U. S. 145
made by the municipal authorities is that the fund belongs to
the ultimate consumers. Whether this is so, whether, under Iowa
law, reparation may be demanded for sums paid by consumers under a
standing rate, we do not know. Nor do we know who are proper
parties under Iowa law to any proceeding to determine the relative
rights of petitioner and its customers. Certainly these are
questions of Iowa, not of federal, law.
We are of opinion that the court below lacked jurisdiction to
adjudicate the question of the consumers' rights in the fund in
dispute.
United States v. Morgan, 307 U.
S. 183, on which the respondents rely, is obviously
distinguishable. There, the fund impounded was part of the charges
paid to the stockyard merchants by persons who had been charged the
rates found by the Secretary of Agriculture to be excessive. Here,
since the fund represents a portion of sums paid by Central to
Pipeline out of Central's funds and pursuant to contract with
Pipeline, the
Morgan case would be authority for repayment
to Central. This is true also of
Inland Steel Co. v. United
States, 306 U. S. 153.
Moreover, if Central had paid Pipeline the excessive rates, the
latter could not have defended a suit by Central to recover the
excess on the ground that Central had passed on the burden to its
customers. [
Footnote 8]
The ultimate consumers' rights being such as the law of Iowa
affords, there is no reason for the payment of the fund to
municipalities or municipal officers under a
quasi trust
for those found ultimately entitled, thus placing the burden on
Central to pursue the cities or their officers for its recovery. An
order to this effect is certainly not within the court's
jurisdiction as a federal court of equity. The most the court below
should do, in view of the apparent controversy as to the consumers'
right to a refund of
Page 324 U. S. 146
rates heretofore paid to Central, is to order that the fund be
held for a reasonable time to permit interested persons to litigate
the issue in a tribunal having jurisdiction, the order to be
conditioned that, if such litigation is not instituted within a
reasonable time and prosecuted to final adjudication, the fund
shall be paid over to Central, and that, if it be adjudged as a
result of such litigation that Central is indebted to its consumers
because of the reduction of wholesale rates in this proceeding,
further application may be made to the court as to its
disposition.
The judgment is reversed, and the cause remanded for further
proceedings in conformity to this opinion.
So ordered.
[
Footnote 1]
52 Stat. 821, 15 U.S.C. § 717
et seq.
[
Footnote 2]
Federal Power Commission v. Natural Gas Pipeline Co.,
315 U. S. 575.
[
Footnote 3]
Central Kentucky Natural Gas Co. v. Railroad
Commission, 290 U. S. 264,
290 U. S. 271,
272.
[
Footnote 4]
National Gas Pipeline Co. v. Federal Power Commission,
141 F.2d 27.
[
Footnote 5]
See, e.g., Sec. 2(8), 15 U.S.C. § 717a(8); Sec. 5(a),
15 U.S.C. § 717d(a); Sec. 13, 15 U.S.C. § 717l; Sec. 14(a), 15
U.S.C. § 717m(a); Sec. 15(a), 15 U.S.C. § 71m(a); Sec. 17(a), 15
U.S.C. § 717p.
[
Footnote 6]
H.R. No. 709, 75th Cong., 1st Sess., pp. 1-3.
[
Footnote 7]
Public Utilities Comm'n v. United Fuel Gas Co.,
317 U. S. 456,
317 U. S. 467;
Federal Power Comm'n v. Hope Natural Gas Co., 320 U.
S. 591,
320 U. S.
609-610.
[
Footnote 8]
Southern Pacific Co. v. Darnell-Taenzer Lumber Co.,
245 U. S. 531.
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,
320 U. S.
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
[
Footnote 2/1] 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
Page 324 U. S. 147
Commission 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, [
Footnote 2/2] 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. [
Footnote
2/3]
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
Page 324 U. S. 148
them 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,
307 U. S. 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 the
refunds to wholesalers" of their "profits from 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 Sections 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,
306 U. S.
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
Page 324 U. S. 149
issued 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 costs of gas was attributable to the
wholesale cost. [
Footnote 2/4]
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 State of 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 on
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
Page 324 U. S. 150
reduced 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 to 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 Nat. Bank v. Flershem, 290 U.
S. 504,
290 U. S.
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."
[
Footnote 2/5] Petitioner admits
that Iowa law requires the wholesale cost of gas to be one of the
factors considered in determining the reasonableness of rates.
[
Footnote 2/6] 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 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
Page 324 U. S. 151
this impounded fund, asserts that, under Iowa law
"municipalities may only fix rates prospectively." Iowa cases cited
by the petitioner [
Footnote 2/7]
seem to give some support to this contention, especially when
considered with decision of this Court dealing with analogous
statutory situations. [
Footnote
2/8] I am therefore unable to see much likelihood of these
consumers' obtaining relief in the State of 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 deduction 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. [
Footnote 2/9] 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
Page 324 U. S. 152
its services. It is entitled to no more under Iowa or federal
law.
MR. JUSTICE MURPHY and MR. JUSTICE RUTLEDGE concur in this
dissent.
[
Footnote 2/1]
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."
[
Footnote 2/2]
This company subsequently settled with its consumers by turning
over to them approximately 70% of the funds allocable to its
purchases.
[
Footnote 2/3]
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.
[
Footnote 2/4]
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.
[
Footnote 2/5]
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.
[
Footnote 2/6]
See Cedar Rapids Gas Co. v. Cedar Rapids, 144 Iowa 426,
120 N.W. 966,
aff'd, 233 U. S.
655.
[
Footnote 2/7]
See 324
U.S. 138fn2/5|>note 5,
supra.
[
Footnote 2/8]
Cf. Public Utilities Commission v. United Fuel Gas Co.,
317 U. S. 456;
Arizona Grocery v. Atchison, T. & S.F. R. Co.,
284 U. S. 370,
284 U. S.
389.
[
Footnote 2/9]
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 Sec. 4(a) 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. . . ."
Section 4(e). 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.
MR. JUSTICE DOUGLAS, dissenting.
I think that the claims to the fund in possession of the court
below are to be determined by state law. The Federal Power
Commission has no authority to determine the rates which petitioner
may charge in these Iowa cities. Under the Natural Gas Act, that is
for Iowa, and Iowa alone, to determine.
Public Utilities
Commission v. United Fuel Gas Co., 317 U.
S. 456,
317 U. S. 467;
Federal Power Commission v. Hope Natural Gas Co.,
320 U. S. 591,
320 U. S. 610.
In that respect, this case differs markedly from
United States
v. Morgan, 307 U. S. 183. If
there had been no stay order entered and the interstate rate from
the Pipeline company to petitioner had been reduced when the
Federal Power Commission entered its order, it still would have
taken action by the local authorities to reduce the rates in these
Iowa cities.
But the federal court which has this fund has considerable
discretion in its management.
United States v. Morgan,
supra. I fail to see how it abused its discretion in handing
the fund over to the local officials. It is only fair to assume
that a reduction in the interstate rate would have been followed by
a reduction in local rates. [
Footnote
3/1] That, indeed, was the primary objective of the Natural Gas
Act.
Federal Power Commission v. Hope Natural Gas Co.,
supra. We are pointed to no provision of local law which
raises any substantial question concerning the power of the local
authorities to make a readjustment of rates
Page 324 U. S. 153
through the distribution of funds impounded under a stay order.
[
Footnote 3/2] And the claim of
petitioner that local law would prevent a reduction in its rates
for the period while the stay order was in effect is far too vague
to acquire the dignity of a substantial question. [
Footnote 3/3] He who maintains that position has
the distinct burden of overcoming the presumption that, as a matter
of local law, the consumers were entitled to the benefits of this
rate reduction. Petitioner fails to carry that burden. The record
is void of any credible evidence that a reduction in the interstate
rate would not have warranted a reduction in local rates.
Petitioner is adequately protected by the decree entered by the
court below. That court did not undertake finally to determine the
rights of the parties in the fund. It has turned the fund over to
respondents without prejudice to petitioner's rights in it. Those
rights are determinable under Iowa law. That procedure does not
preclude petitioner from its day in an Iowa court if its claim to
the fund turns out to be less frivolous and more substantial than
it appears to be. I think the court below selected the most
equitable and just method of rectifying the injury done by its stay
order.
Page 324 U. S. 154
[
Footnote 3/1]
The City of Muscatine did in fact reduce the rates after the
stay order had been vacated.
[
Footnote 3/2]
Petitioner asserts, and I assume, that, under the Iowa law,
rates can be made only prospectively. But it appears from
Town
of Williams v. Iowa Falls Electric Co., 185 Iowa 493, 500, 170
N.W. 815, that the Iowa courts, under their "balance of
convenience" rule, will impound alleged excessive amounts collected
by a utility company pending the outcome of rate litigation so as
to protect the rights both of the utility and the consumers. If the
rate increase is ultimately disallowed, the impounded funds will be
returned to the customers; otherwise, they will be turned over to
the company. We are pointed to no authority which suggests that
Iowa would not sanction the use of such a method of readjustment
under the circumstances of this case.
[
Footnote 3/3]
So far as appears, the rates which petitioner was charging
during the period of the stay order had been voluntarily proposed
by it.