Washington Gas Light Co. v. Byrnes

• Decision Date: 26 July 1943
• Docket Number: No. 8501-8504.,8501-8504.
• Citation: 137 F.2d 547,78 US App. DC 107
• Parties: WASHINGTON GAS LIGHT CO. v. BYRNES, Director of Economic Stabilization. PUBLIC UTILITIES COMMISSION OF THE DISTRICT OF COLUMBIA v. SAME. WASHINGTON GAS LIGHT CO. v. BROWN, Adm'r, Office of Price Administration. PUBLIC UTILITIES COMMISSION OF THE DISTRICT OF COLUMBIA v. SAME.
• Court: U.S. Court of Appeals — District of Columbia Circuit

78 US App. DC 107, 137 F.2d 547 (1943)

WASHINGTON GAS LIGHT CO. v. BYRNES, Director of Economic Stabilization. PUBLIC UTILITIES COMMISSION OF THE DISTRICT OF COLUMBIA v. SAME. WASHINGTON GAS LIGHT CO. v. BROWN, Adm'r, Office of Price Administration. PUBLIC UTILITIES COMMISSION OF THE DISTRICT OF COLUMBIA v. SAME.

Nos. 8501-8504.

United States Court of Appeals for the District of Columbia.

Reargued June 4, 1943.

Decided July 26, 1943.

Mr. E. Barrett Prettyman, of Washington, D.C., with whom Messrs. F. G. Awalt, Raymond Sparks, and C. Oscar Berry, all of Washington, D. C., were on the brief, for appellant in Nos. 8501 and 8503. Mr. Stoddard M. Stevens, Jr., of the Bar of the State of New York, of New York City, who was allowed to appear for appellant in Nos. 8501 and 8503, pro hac vice, by special leave of Court, was also on the brief.

Mr. Lloyd B. Harrison, Special Assistant Corporation Counsel, D. C., of Washington, D. C., with whom Messrs. Richmond B. Keech, Corporation Counsel, D. C., and Vernon E. West, Principal Assistant Corporation Counsel, D. C., both of Washington, D. C., were on the brief, for appellant in Nos. 8502 and 8504.

Messrs. Harry R. Booth, Utilities Counsel, Office of Price Administration, and David F. Cavers, Assistant General Counsel, both of Washington, D. C., with whom Messrs. George J. Burke, General Counsel, W. Russell Gorman, and Howard S. Gutman, all of Washington, D. C., were on the brief for the appellee in each case, and appeared by authority of the Price Administrator.^*

Before GRONER, Chief Justice, SOPER, Circuit Judge sitting by designation, and MILLER, Associate Justice.

SOPER, Circuit Judge.

These appeals are brought to test the validity of an increase in gas rates in the District of Columbia authorized by the Public Utilities Commission of the District but objected to by the Director of Economic Stabilization and his representative in this matter, the Administrator of the Office of Price Administration.

On October 13, 1942 the Public Utilities Commission, one Commissioner dissenting, issued an order whereby an increase of the rates and charges of Washington Gas Light Company for the twelve month period beginning September 1, 1942 was authorized. The order was passed in a proceeding instituted by the Commission on March 20, 1942 for the purpose of adjusting the rate of the company in conformity with a sliding scale arrangement established by the order of the Commission on December 13, 1935 under the Public Utilities Act of the District of Columbia, Section 43 — 317, D.C.Code, 1940. The Commission then found the rate base as of June 30, 1935, exclusive of working capital, to be $21,000,000 and the fair rate of return to be 6½ per cent. Under the sliding scale plan the accounts of the company have been audited by the Commission annually since 1935 and the rate base has been kept up to date by adding new property at cost and by deducting retired property; and the earnings of the company for each twelve month period ending June 30th have been ascertained so as to fix the rates for the ensuing year beginning on September 1st according to the formula that if the return for the preceding year was greater or less than 6½ per cent, the rates for the ensuing year would be decreased or increased in certain proportions. For example, if the return for the preceding year was between 5½ and 6 per cent, an increase would be made to raise the rate three-quarters of the way up to 6½ per cent.

In operation such a sliding scale plan gradually works towards a rate base valued at cost since additions to the property are recorded at cost; and in periods of continuously rising prices, such as have prevailed since 1935, the plan results in a rate base in each year of less than actual value at that time. In such a period the plan also produces less than the original rate of return fixed by the Commission because estimated expenses for the ensuing year are placed at the level of the year that has just past. In actual experience in the District of Columbia the plan has resulted in reductions in rates for each year in the intervening period, except in 1937 and in 1941 when no changes were made. The calculations made in August, 1942 showed that in the preceding test year the company had earned 4.87 per cent on the rate base. The Commission's accountants reported that under the sliding scale arrangement, disallowing all excess profits taxes, the company was entitled to an increase in rates of $326,000 while the figures presented by the company showed that it was entitled to an increase of $383,000. The order of the Commission authorized an increase of $201,424.74. In other words, the increase allowed was approximately $123,000 less than that indicated by the sliding scale. It is estimated that this increase will permit the company to make a net return of 5.58 per cent on the rate base.

The interest of the Director of Economic Stabilization and of the Administrator of the Office of Price Administration, referred to herein interchangeably as the Price Administrator, grows out of the possible inflationary effect of an increase of gas rates upon an increase of prices generally which Congress sought to check by the passage of the Emergency Price Control Act of 1942 approved January 30, 1942, 56 Stat. 23, 50 U.S.C.A. Appendix § 901 et seq. and the amendment thereof by the Inflation Control Act of October 2, 1942, 56 Stat. 765, 50 U.S.C.A. Appendix § 961 et seq. That the interest of the Price Administrator in this rate proceeding is legitimate was recognized by the Commission from the beginning, although § 302(c) (2) of the Price Control Act contains the express provision that "nothing in this Act shall be construed to authorize the regulation of * * * rates charged by any common carrier or other public utility". Counsel for the Price Administrator was present at the pre-trial conference on August 18, 1942 and throughout the subsequent hearings in August and September, and was given full opportunity to participate within the scope of the proceedings fixed by the Commission. The hearings came to a close on September 30, 1942 and, as we have seen, the Commission's decision and order were filed on October 13, 1942. In this order the Commission directed the attention of the company to the following provision contained in the Amendatory Act of October 2, 1942, which had been passed in the meantime: "The President may, except as otherwise provided in this Act, thereafter provide for making adjustments with respect to prices, wages, and salaries, to the extent that he finds necessary to aid in the effective prosecution of the war or to correct gross inequities: Provided, That no common carrier or other public utility shall make any general increase in its rates or charges which were in effect on September 15, 1942, unless it first gives thirty days notice to the President, or such agency as he may designate, and consents to the timely intervention by such agency before the Federal, State, or municipal authority having jurisdiction to consider such increase." 50 U.S.C.A. Appendix § 961.

By executive order promulgated on October 3, 1942, No. 9250, 50 U.S.C.A. Appendix § 901 note, under this quoted provision of the amendatory Act, 7 Fed. Reg. 7871, the President established the Director of Economic Stabilization and designated him as the agency to receive notice of any increase in public utility rates; and on October 14, 1942, the Director designated the Price Administrator as his representative in proceedings affecting utility rates. On October 14 the company gave the required thirty days notice of the proposed increase to the Price Administrator and he promptly made application that he be allowed to intervene in the proceeding and that the order of the Commission of October 13, 1942 increasing the rate be vacated. The Commission, by order of October 23, 1942, reopened the case for the purpose of receiving from the Price Administrator additional evidence relating to the inflationary effect, if any, of the increase in rate previously authorized, and granted intervention for this purpose; and the formal consent of the company to the intervention was filed on October 30, 1942. Additional hearings were held on two days at which little change was made in the evidence, and on November 9, 1942 the Commission refused to vacate its order of October 13, 1942. Subsequently, petitions for reconsideration were filed on behalf of the Price Administrator and the Director, and these petitions were denied by the Commission on November 16, 1942. The result was that effect was then given to the order of October 13, 1942, increasing the rates for the twelve month period beginning September 1, 1942, which had been under reconsideration during the reopening of the proceedings. Both the Director and the Price Administrator appealed to the District Court under the provisions of Section 43 — 705 of the District Code, from the order of October 13, 1942, allowing the increase, and also from the order of October 23, 1942 reopening the proceedings for the limited purpose indicated. The District Court, after hearing, decreed that the order of the Commission be vacated but stayed its judgment pending appeal to this court, upon agreement of the Company to make proper refund to consumers if the decision should be affirmed. Subsequently it appeared that the certified copy of the proceedings before the Commission was not actually before the District Court at the time of its hearing and decision, as contemplated by Section 43 — 705 of the District Code, and thereupon a motion was filed by the Commission and the Company for a reconsideration of the court's decision, but this petition was denied. The appeals of the Director of Economic Stabilization and of the Price Administrator from both of the orders of the Commission constitute the subject matter now before this court.

Two contentions advanced by the opposing parties to this appeal will...