United Gas Pipe Line Company v. Memphis Light, Gas & Water Division

PETITIONER: United Gas Pipe Line Company
RESPONDENT: Memphis Light, Gas & Water Division
LOCATION: Union Station

DOCKET NO.: 23
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 358 US 103 (1958)
ARGUED: Oct 20, 1958 / Oct 21, 1958
DECIDED: Dec 08, 1958

Facts of the case

Question

Media for United Gas Pipe Line Company v. Memphis Light, Gas & Water Division

Audio Transcription for Oral Argument - October 20, 1958 in United Gas Pipe Line Company v. Memphis Light, Gas & Water Division

Audio Transcription for Oral Argument - October 21, 1958 in United Gas Pipe Line Company v. Memphis Light, Gas & Water Division

Earl Warren:

Numbers 23, 25 and 26.

Mr. Morrow, you may continue your argument.

George E. Morrow:

Mr. Chief Justice and may it please the Court.

Yesterday there was a question from the bench to the effect can Natural Gas Companies change their rates by any means to their customers without the customer's consent under our theory of this matter.

And the answer of which I gave was “No,” in solely in the reference of Section 4 of the Act.

Now, it is of course quite clear that Natural Gas Companies can change their rights -- their rates without their customer's consent even their contract rates anytime that they can convince the Commission that they deserve an increase in proceedings under Section 5 (a) of the Act.

That is the remedy which this Court said in the Mobile case was always available to a Natural Gas Company, whose rates were too low to enable it, to carry on its public service functions properly.

Now, the answer to that question leads me into maybe putting my last chapter first as it were so that I can explain to the Court just what we are driving at, just what the system of regulation under Section 4 and 5 of the Act was intended to be by Congress as we see it.

I think it becomes clear from what I've already said just now, that the only issue in this case is whether United should have filed under or should have applied for a rate increase under Section 5 of the Act instead of as it did under Section 4 of the Act.

There's no question that if United had a need for a rate increase that it could get it.

The only question is whether it could get it under Section 5 or under Section 4.

Now, what's the difference?

What's the practical difference between these two procedures?

Well, Section 5 of the Act is an administrative procedure whereby the Federal Power Commission in its role as the protector of the consumer interest, the public interest investigates the rate of a Natural Gas Company to determine whether that rate conforms to the public interest.

And if the rate does not conform to the public interest, then the Federal Power Commission issues an order at the conclusion of the proceedings which modifies the rate to make it conform.

And the new rate thus modified goes into effect from and after the date of the final order in the proceedings.

Now, the principal difference under Section 4 has to do with the refund procedure.

Under Section 4 of the Act the Commission also exercises the same rate review power which it exercised under Section 5, but it -- and -- and it's reviewing the existing rates of Natural Gas Companies.

The only difference --

Potter Stewart:

No, you're talk about the factual difference, it does not matter (Inaudible) what is the difference if any in time making (Inaudible) for proceeding exercises.

George E. Morrow:

That's exactly what I'm getting to Your Honor, right now.

The difference is the time when the rate goes into effect.

Under a Section 4 proceeding, if the Commission suspends the rate, then it goes into effect five months later.

At least it goes into provisional effect.

It's a sort of a pendente lite effect because at the end of the proceedings, the Commission again, after having fully considered the rate, again issues its order might find the rate to conform to the public interest.

But there, its order had made retroactive by this refund procedure, because if the rate which is filed is higher than it ought to be according to the Commission's final order, then the excess has to be scrapped off and refunded to the customer.

So, that the effect is that you've only had one rate in effect all the time.

So, the difference between -- practical difference between Section 5 and Section 4, is that the rate goes into effect earlier in a Section 4 proceeding.

It's what you might call a quicker proceeding and Section 5 the slower proceeding.

Potter Stewart:

How long does the effect (Inaudible)?