Interstate Natural Gas Co v. Federal Power Commission
| Decision Date | 16 June 1947 |
| Docket Number | No. 733,733 |
| Citation | 331 U.S. 682,91 L.Ed. 1742,67 S.Ct. 1482 |
| Parties | INTERSTATE NATURAL GAS CO., Inc., v. FEDERAL POWER COMMISSION et al |
| Court | U.S. Supreme Court |
Rehearing Denied Oct. 13, 1947. See 68 S.Ct. 30.
Mr. William A. Dougherty, of New York City, for petitioner.
Mr. James D. Smullen, of Austin, Tex., for State of Texas et al., amici curiae, by Special leave of Court.
Mr. Charles E. McGee, of Washington, D.C., for respondent Federal Power Commission.
This case originated in proceedings before the Federal Power Commission initiated pursuant to § 5(a) of the Natural Gas Act of 1938.1 After overruling objections to its jurisdiction, the Commission entered an order requiring the petitioner to effect substantial rate reductions in certain of its sales of natural gas and to file new schedules of rates and charges.2 Petitioner in seeking review of the order in the Circuit Court of Appeals, denied the jurisdiction of the Commission to set rates for the sales in issue in this case and asserted that the rates so established were confiscatory. That Court, one judge dissenting, denied the petition for review.3 We granted certiorari limited to the question of the Commission's jurisdiction. 300 U.S. 852, 67 S.Ct. 674.
Petitioner owns and operates 110 natural gas wells and owns or controls over 56,000 acres in the Monroe field of northern Louisiana. Petitioner's main pipe line transports gas southward from the Monroe field through a part of Mississippi and back into Louisiana where at Baton Rouge sales are made to various distributing companies and industrial consumers. Petitioner concedes that with respect to these operations it is a natural gas company within the meaning of § 2(6)4 of the Act and that the Commission has jurisdiction to regulate the rates of sales connected therewith.
The issue of this case involves the jurisdiction of the Federal Power Commission to regulate sales made in the field by petitioner to three pipe-line companies each of which transports the gas so purchased to markets in States other than Louisiana.5 Gas produced from petitioner's wells flows into petitioner's system of field pipe lines, moving first into branch lines, then into trunk lines, and finally, into the main trunk lines from which delivery is made to the three purchasing companies. During the course of this movement petitioner purchases gas from other producers in the field which gas is introduced into petitioner's system at designated points and is there commingled with the gas moving from petitioner's own wells. By far the larger part of the gas o purchase d by petitioner has been gathered from various wells of the selling companies before delivery to petitioner is made.6 The gas moves through petitioner's system at well pressure. Shortly after the sales in question are completed, the gas is directed through the compressor stations of the purchasing companies and is there subjected to increased pressure in order that it may be moved to markets as far distant as Illinois. The entire movement of the gas from the wells to the purchasing companies through the compressor pumps and across the state lines is a continuous process without interruption for storage, processing or for any other purpose.7 All the gas sold in these transactions is destined for ultimate public consumption in States other than Louisiana.
It appears that petitioner supplies only a part of the gas purchased by the three pipeline companies in the Monroe field.8 Counsel for petitioner conceded before the Commission that the prices charged the three pipe-line companies were, by agreement, identical with those being charged by other producers in the field. The Commission found that petitioner was an affiliate of one of the three purchasing companies. It was the conclusion of the Commission that the rates charged by petitioner in these sales were 'unjust, unreasonable and unlawful' and ordered rate reductions amounting to $596,320 per year as applied to the volume of gas sold in the test year of 1941.
Petitioner has at no time contended that regulation of its sales to the three purchasing companies is beyond the constitutional powers of Congress. Petitioner has vigorously asserted, however, that Congress did not exercise its full powers in the National Gas Act and that in § 1(b) of the Act the jurisdiction of the Federal Power Commission is so limited as to preclude valid regulation of the sales by that agency. Section 1(b) provides:
'The provisions of this Act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.'
It is not denied that the transactions in question were sales of natural gas for resale for ultimate public consumption.
Petitioner has raised two issues: First, it is contended, the sales are not 'in interstate commerce.' Second, the sales are a part of 'production or gathering' and hence not within the Commission's power of regulation.
We have no doubt that the sales are in interstate commerce. Ideed, peti tioner did not contest that position before the Commission, but, so far as the record reveals, raised the issue for the first time in its petition for rehearing in the Circuit Court of Appeals.9 The Federal Power Commission found that the gas sold to the three pipe line companies moves '* * * in a constant flow from the mouths of the wells from which it is produced through pipe lines belonging to Interstate to the compressor station of the respective purchaser, and thence through said compressor stations into the pipe line of said respective purchaser and thus into and through states other than Louisiana * * *, all without interruption, and said gas is so destined from the moment of its production.' The Commission further found that 'The gas transported and sold by Interstate to these three pipe line Companies continues its flow in interstate commerce and, as an established course of business well known to Interstate, is destined for resale for ultimate public consumption in * * * markets outside Louisiana.'
Under the circumstances described by the Commission, it is clear that the sales in question were quite as much in interstate commerce as they would have been had the pipes of the petitioner crossed the state line before reaching the points of sale.10 Thus in Public Utilities Commission of Rhode Island v. Attleboro Steam & Electric Co., 1927, 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549, a sale of electrical energy at the state line was held to be in interstate commerce. Commenting on that case, this Court in Jersey Central Power & Light Co. v. Federal Power Commission, 1943, 319 U.S. 61, 69, 63 S.Ct. 953, 957, 87 L.Ed. 1258 stated: 'We see no distinction between a sale at or before reaching the state line.' There is nothing in the terms of the Act or in its legislative history to indicate that Congress intended that a more restricted meaning be attributed to the phrase 'in interstate commerce' than that which theretofore had been given to it in the opinions of this Court.11 Section 2(7) of the Act defines 'interstate commerce' as '* * * commerce between any point in a State and any point outside thereof, or between points within the same State but through any place outside thereof, * * *.' Clearly the sales in question were a part of commerce being carried on between points in Louisiana and points in other States. There is nothing in that language to suggest that Congress intended that sales consummated before the gas crosses a state line should not be regarded as being 'in' such commerce.
Nor are we impressed with the suggestion that the interstate movement of the gas should be regarded as beginning when the gas, theretofore moving through petitioner's pipe line system at well pressure, is subjected to increased pressure in the compressor stations of the purchasing companies in order that the gas may be moved to the distant markets. Long before the gas reaches the compressor pumps it has been committed to its interstate journey which follows without interruption or deviation. Under such circumstances, the increase of pressure in the compressor stations must be regarded as merely an incident in the interstate commerce rather than as its origin.12
The Company contends, however, that regardless of whether the sales in question are in interstate commerce, those transactions fall within the clause of § 1(b) specifically excepting from the Commission's jurisdiction regulation of '* * * the production or gathering of natural gas.' In evaluating that contention we should not lose sight of the objectives sought to be accomplished by Congress in passing the Natural Gas Act.
In a series of decisions announced prior to the passage of the Act, this Court had held that although Congress had not acted, the regulation of wholesale rates of gas and electrical energy moving in interstate commerce is beyond the constitutional powers of the States.13 Petitioner, relying in part upon the principles established by those cases, has successfully avoided regulation by the Louisiana Public Service Commission.14 As was stated in the House Committee report, the 'basic purpose' of Congress in passing the Natural Gas Act was 'to occupy this field in which the Supreme Court has held that the States may not act.'15 In denying the Federal Power Commission jurisdiction to regulate the production or gathering of natural gas, it was not the purpose of Congress to free companies such as petitioner from effective public control. The purpose of that restriction...
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