United Gas Pipe Line Company v. Mobile Gas Service Corporation

PETITIONER: United Gas Pipe Line Company
RESPONDENT: Mobile Gas Service Corporation
LOCATION: Pittsburgh Party Headquarters

DECIDED BY: Warren Court (1955-1956)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 350 US 332 (1956)
ARGUED: Nov 07, 1955 / Nov 08, 1955
DECIDED: Feb 27, 1956

Facts of the case


Media for United Gas Pipe Line Company v. Mobile Gas Service Corporation

Audio Transcription for Oral Argument - November 08, 1955 in United Gas Pipe Line Company v. Mobile Gas Service Corporation

Audio Transcription for Oral Argument - November 07, 1955 in United Gas Pipe Line Company v. Mobile Gas Service Corporation

Earl Warren:

Number 17, United Gas Pipe Line Company, Petitioner versus Mobile Gas Service Corporation and Federal Power Commission.

Howard E. Wahrenbrock:

May it please the Court.

Earl Warren:

Mr. Wahrenbrock.

Howard E. Wahrenbrock:

This case brings before the Court a controversy as to the effect of an increase in a utilities filed rate on its contract to sell at a previous lower rate.

United Gas Pipe Line Company, which is the petitioner in Number 17, is an interstate natural gas company within the meaning of that term as used in the Natural Gas Act, meaning a company that is generally subject to regulation under that Act.

And that company has on file with the Federal Power Commission under the regulations of that Commission relating to the filing of rates in accordance with the filed rate procedure of the Natural Gas Act, its rates for the sales which are here involved.

The Mobile Gas Service Corporation, which is the respondent in both of these cases is a local distributor of gas in Mobile, Alabama, of gas which it purchases from the United Gas Pipe Line Company.

The specific question here presented is whether under the rate filing provisions of the Natural Gas Act, the Federal Power Commission properly accepted a utilities filing of an increase in its filed rate, pending a hearing on the increased rate where the utility had a contract to sell at a previous rate and the customer objected to the increase.

Now, the previous filings which are here involved began with the filing of the basic contract which had been entered into in 1936 and which was to continue until 1950.

That contract was filed with the Federal Power Commission in 1938, following the enactment of the Natural Gas Act and the promulgation of the Commission's rules requiring the filing of rate schedules and designated as that company's rate Schedule number 20.

It was filed in a sort of hybrid way which is in accordance with the practice of the Commission, whereby the contract serves two purposes.

The definition in the contract of the rate and the service constitute the rate, the schedule of the rate.

The contract is also filed as a contract relating to that rate.

In 1941, an amendment was filed designated as Supplement number 7 to that rate schedule number 20, which change the contract term by extending it until 1962 and provided for a price of 80% to 90% of the buyer's owned price for industrial gas with a minimum of 16 cents per Mcf to United Gas Pipe Line Company.

In 1946, a further amendment was filed which altered the 80% to 90% ratios for a particular industrial resale to a -- to the Ideal Cement Company for a period of 10 years and waived the 16 cent minimum.

The resale price to the Ideal Cement Company which Mobile would charge would be 12 cents per Mcf and United would take its 80% to 90% of that.

Now, in 1952, pursuant to new regulations of the Federal Power Commission, United filed what were called conversion terms, converting all of its prior filings into a new compact and general tariff with separate sheets for separate types of services.

The effect of that tariff was to substitute a rate of 10.7 cents per Mcf for the old revenue sharing rate of 80 to 90, a flat-cent rate.

And to redefine the service, the practices with respect to measurement and billing and the provisions with respect to the BTU content of the gas to eliminate the tax adjustment clause so that the rate would be definite, not only in cents, but would not be subject to adjustment because of tax changes.

To prescribe a new form of service agreement within individual customers, which would be the only form of contract thereafter to be entered into with any individual customer.

And in lieu of a presently effective service contract to carry forward, stipulated provisions of the old contract which are designated in that filing and which were not superseded by the new rate and service provisions of the new tariff.

On August the 1st of 1952, the Federal Power Commission allowed that conversion tariff to take effect in part.

It set a hearing on the other part and suspended the other part, the other part consisting of United's rates governing its services and sales to other pipelines.

Those were increased at the same time and the Commission suspended those increases and set a hearing on them, but on the -- on the changes which affected this rate to Mobile which were changes in form leaving a 10.7 cent rate in effect which was the equivalent of what the average payment under the old rate had been and therefore involved no substantial change as of that date.

That was allowed to go into effect.

Now, the controverted filing which is involved here occurred on June the 24th, 1953 when United filed two new sheets increasing this 10.7 cent per Mcf rate to 14.5 cents.

The same time it requested waiver of the 30-day notice requirement of the statute and asked that the new increase rate go into effect in 20 days on July the 15th.

There's no issue here about that waiver.

I might just explain that the statute does permit the Commission for good cause shown to permit a rate to go into effect without the 30-day notice.

And the Commission in that instance refused to do that and by an order that was issued on July the 10th ordered that the rate should not go into effect in advance of 30 days, leaving it to go into effect at the end of the 30 days provided by the statute.