Mississippi River Fuel Corp. v. Federal Power Com'n

• Decision Date: 30 June 1960
• Docket Number: No. 15167.,15167.
• Citation: 108 US App. DC 284,281 F.2d 919
• Parties: MISSISSIPPI RIVER FUEL CORPORATION, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, Illinois Power Company, Laclede Gas Company, MidSouth Gas Company, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

108 US App. DC 284, 281 F.2d 919 (1960)

MISSISSIPPI RIVER FUEL CORPORATION, Petitioner, v. FEDERAL POWER COMMISSION, Respondent Illinois Power Company, Laclede Gas Company, MidSouth Gas Company, Intervenors.

No. 15167.

United States Court of Appeals District of Columbia Circuit.

Argued February 2, 1960.

Decided June 30, 1960.

Petition for Rehearing Denied September 19, 1960.

Mr. Richmond C. Coburn, St. Louis, Mo., of the bar of the Supreme Court of Missouri, pro hac vice, by special leave of court, for petitioner. Mr. Spencer W. Reeder, Washington, D. C., was on the brief.

Mr. W. Russell Gorman, Asst. Gen. Counsel, F. P. C., with whom Messrs. Willard W. Gatchell, Gen. Counsel, F. P. C., and Cyril S. Wofsy, Atty., F. P. C., were on the brief, for respondent. Mr. Howard E. Wahrenbrock, Sol., F. P. C., also entered an appearance for respondent.

Mr. Richard D. Shewmaker, St. Louis, Mo., of the bar of the Supreme Court of Missouri, pro hac vice, by special leave of court, with whom Mr. J. David Mann, Jr., Washington, D. C., was on the brief, for intervenor Laclede Gas Co., argued for all intervenors. Mr. William W. Ross, Washington, D. C., also entered an appearance for intervenor Laclede Gas Co.

Messrs. Robert S. Hunt, Chicago, Ill., and G. Duane Vieth, Washington, D. C., were on the brief for intevenor Illinois Power Co.

Messrs. Harry A. Poth, Jr., and Richard M. Merriman, Washington, D. C., were on the brief for intervenor Mid-South Gas Co.

Before PRETTYMAN, Chief Judge, and BAZELON and BURGER, Circuit Judges.

Petition for Rehearing En Banc Denied September 19, 1960.

BURGER, Circuit Judge.

This is an appeal by Mississippi River Fuel Corp. (Mississippi), a natural gas pipeline company, from an order of the Federal Power Commission (Commission) directing Mississippi to make certain rate reductions, and pay certain refunds, to the intervenors, Illinois Power Co., Laclede Gas Co., and MidSouth Gas Co.

The controversy arises out of Mississippi's position as middleman in the sale of gas. Mississippi purchases gas from United Gas Pipe Line Co. (United) and in turn sells gas to utility customers, among them the intervenors. It is obvious, of course, that the cost of gas supplied by United to Mississippi has a direct impact on the price of that gas to the intervenors. The present problem emerges from the fact that Mississippi was engaged in rate disputes during approximately the same period both as to the cost of its gas from United, and as to the price which it sought to charge intervenors on resale. These proceedings were carried on independently. A narration of their history is necessary.

Mississippi v. Intervenors

During the years 1951 and 1952 Mississippi filed two proposed rate increases for gas sold to intervenors.¹ Both increases were eventually disallowed by the Commission.² However, disallowance of the second increase, which envisioned a tariff of $2.00/mcf demand and .18/mcf commodity charge, was reversed by the Third Circuit,³ and the cause remanded. Mississippi was permitted to move that the increase be made effective at once, subject to refund, and subject also to the Commission's right to hold hearings on the new schedule.

Mississippi then requested a settlement conference and a settlement was ultimately negotiated (Mississippi-Intervenor settlement) which set an applicable rate, effective April 10, 1953, of $1.80 demand and a .17 commodity charge.⁴ (Schedule F-1). One of the difficulties met in gaining this agreement was that Mississippi was even then embroiled in a rate dispute with United, its principal supplier. United was seeking a higher rate schedule (Dockets G-2019 and G-1142) for gas sold to Mississippi and, in fact, the higher rates were being collected subject to refund. Since the possibility existed that this higher tariff might be reduced after the extensive hearings being held in those dockets, two provisions were inserted in the Mississippi-Intervenor settlement decree which in substance provided:

(a) If United was required by the Commission in Docket G-2019 to refund to Mississippi any part of the charges then being paid to United by Mississippi, Mississippi would refund to its utility customers that portion of the refund attributable to gas purchased from United by Mississippi and resold to Mississippi\'s customers. (Paragraph VI.)⁵

(b) If United was required to reduce its rates charged to Mississippi as a result of the proceedings in Dockets G-2019 and G-1142, Mississippi would then file proportionately reduced schedule F-1 rates so as to pass the proper amount of United\'s reduction on to the intervenors. (Paragraph VII.)⁶

This settlement was approved by the Commission on June 3, 1953,⁷ and from April 10, 1953, onward Mississippi charged intervenors on the basis of the F-1 schedule. No increase in that rate was sought by Mississipi until May 1, 1958, which increase went into effect on November 1, 1958. (Docket No. G-15174).

Mississippi v. United

The Dockets mentioned in the Mississippi-Intervenor settlement evolved out of disputes between United and Mississippi regarding the propriety of United's gas charges. Docket G-1142 was an investigation of United's rate schedule begun by the Commission in 1948. One of the rates there under scrutiny was Schedule PL-2, which called for payment by Mississippi of $1.30/mcf demand charge per month and .12½/mcf commodity charge. In addition, due to peculiarities not here pertinent, Mississippi was also being billed for a portion of the United gas it received under another schedule, PL-3. This rate was the result of a filing made by United in Docket G-2019 seeking a tariff of .65/mcf demand and .09/mcf commodity charge.⁸ Though hearings regarding the propriety of both the PL-2 and PL-3 rates were in progress, both rates were in force at the time the Mississippi-Intervenor settlement was being negotiated. It was the possibility of their reduction that led to the inclusion in that settlement of the provisions whereby reduction in United's PL-2 and PL-3 rates would obligate Mississippi to reduce its own F-1 Schedule to the intervenors.

The hearings regarding rates PL-2 and PL-3 culminated in a Commission order of November 8, 1955, which (1) replaced the two United-Mississippi rates with one uniform tariff; and (2) ordered this uniform tariff to be .75/mcf demand and .10/mcf commodity charge.⁹ (Schedule PL-C). Though this rate represented a substantial reduction of the old PL-2 rate, Mississippi nevertheless petitioned this court for review.¹⁰ We vacated the November 8 order, and remanded the cause to the Commission.¹¹

During the subsequent proceedings a settlement was finally reached between United and Mississippi in which Mississippi agreed to accept the PL-C rate as embodied in the Commission's November 8 order. That rate retroactively replaced United's PL-2 and PL-3 rates as of November 8, 1955, and Dockets G-1142 and G-2019 were finally terminated by the Commission's United-Mississippi settlement order of September 11, 1958.¹²

The Present Controversy

The retroactive tariff reduction embodied in Mississippi's acceptance of schedule PL-C (.75/mcf and .10/mcf) meant that United was obligated to refund certain amounts to Mississippi, those amounts being the difference between the PL-C rate and the charges collected under the superseded PL-2 and PL-3 rates after the effective date of the PL-C schedule. (November 8, 1955). Similarly, the termination of Dockets G-1142 and G-2019 triggered Mississippi's obligation under the Mississippi-Intervenor settlement to reduce its F-1 schedule and credit Intervenors with the proper proportion of that reduction.

Here, however, the time factor becomes highly important. Though the United-Mississippi accord did not become final until September 11, 1958, the PL-C charges therein adopted were made retroactive to November 8, 1955. In the interval between the retroactive date of the PL-C schedule vis-a-vis United and Mississippi (November 8, 1955), and the date upon which that schedule was actually promulgated (September 11, 1958), United had already moved for another increase as against Mississippi which would bring its charges above the superseded PL-2 and PL-3 rates, thus ending whatever benefits Mississippi gained by virtue of the United-Mississippi settlement. This new rate went into effect, subject to refund, on April 1, 1956 (Docket G-9547) and the Commission has not yet passed on its propriety. Thus, the only period in which the United-Mississippi PL-C rate was actually operative was the months between the effective date of that rate (November 8, 1955) and the date upon which the new United rate in Docket G-9547 went into effect (April 1, 1956). We have, then, this question: Is Mississippi obligated to reduce its tariff to intervenors, and refund the proper amounts under that reduced schedule, only from the period November 8, 1955 to March 31, 1956? Or is it obligated to reduce that tariff, and make the full refunds under it, from the period November 8, 1955 to November 1, 1958, the date when the Commission allowed Mississippi provisionally to increase its charges to intervenors pursuant to Mississippi's request?

Contentions of the Parties

Shortly after the Commission's settlement order promulgating the United-Mississippi PL-C rate, Mississippi notified the Commission by letter of its intention to comply with the terms of the Mississippi-Intervenor settlement by making the necessary refunds. It agreed to refund to intervenors the total of $105,750.98, which represents the proper amount due them for the period November 8, 1955 through December 31, 1955. This amount is not in dispute. Similarly, it proposed to reduce its F-1 schedule to Intervenors for the closed end period January 1, 1956 through March 31, 1956, and make the resulting refund for that period. However, it maintained that under the Mississippi-Intervenor settlement it was not obligated to reduce the F-1 schedule beyond April...