338 U.S. 464 (1950), 71, Federal Power Commission v. East Ohio Gas Co.

Docket Nº:No. 71
Citation:338 U.S. 464, 70 S.Ct. 266, 94 L.Ed. 268
Party Name:Federal Power Commission v. East Ohio Gas Co.
Case Date:January 09, 1950
Court:United States Supreme Court
 
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Page 464

338 U.S. 464 (1950)

70 S.Ct. 266, 94 L.Ed. 268

Federal Power Commission

v.

East Ohio Gas Co.

No. 71

United States Supreme Court

Jan. 9, 1950

Argued November 10, 1949

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Syllabus

Respondent owns and operates a natural gas business wholly within Ohio, selling gas only to Ohio consumers. Most of this gas is transported into Ohio from other states through interstate pipelines, owned by other companies, which connect inside Ohio with respondent's large high pressure lines in which the gas, propelled mainly by its own pressure, flows continuously more than 100 miles to respondent's local distribution systems.

Held:

1. Respondent is a "natural gas company" subject to the jurisdiction of the Federal Power Commission under the Natural Gas Act. Pp. 467-474.

(a) The continuous flow of gas from other states to and through respondent's high pressure lines constitutes interstate transportation. Pp. 467-468.

(b) The word "transportation" in § 1(b) of the Act is not limited to companies which both transport natural gas in interstate commerce and sell it for resale; it applies to the movement of interstate gas in respondent's high pressure pipelines, even though respondent sells gas direct to consumers, rather than for resale. Pp. 468-469, 471-474.

(c) Respondent is not exempt from the Act on the ground that all its facilities come within the proviso in § 1(b) making the Act inapplicable "to the local distribution of natural gas or to the facilities used for such distribution," since this was not intended to exempt high pressure pipelines transporting interstate gas to local mains. Pp. 469-471.

(d) Neither the language of the Act nor its legislative history indicates that Congress meant to create an exception for every company that transports interstate gas in only one state, even when the company is fully subject to state regulation and sells gas direct to consumers, rather than for resale. Pp. 471-474.

2. The order of the Federal Power Commission requiring respondent to keep accounts and submit reports as required under the Act is not so burdensome as to exceed constitutional or statutory limitations. Pp. 474-475.

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3. The Commission's order did not violate any rights reserved to the states under the Tenth Amendment. P. 476.

84 U.S.App.D.C. 312, 173 F.2d 429, reversed.

The Federal Power Commission found that respondent was a natural gas company subject to its jurisdiction, and ordered respondent to keep accounts and submit reports as required by the Natural Gas Act, 15 U.S.C. §§ 717 et seq. 74 P.U.R.(N.S.) 256. The Court of Appeals reversed on the ground that respondent was not "engaged in the transportation of gas in interstate commerce within the meaning of the Act." 84 U.S.App.D.C. 312, 173 F.2d 429. This Court granted certiorari. 337 U.S. 937. Reversed, p. 476.

Page 466

BLACK, J., lead opinion

MR. JUSTICE BLACK delivered the opinion of the Court.

Section 1(b) of the Natural Gas Act1 provides that the 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 . . . 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. . . .

Section 2(6) defines "natural gas company" as "a person engaged in the transportation of natural gas in interstate commerce. . . ." The Federal Power Commission, after hearings, found as facts that respondent East Ohio Gas Company was a natural gas company, and subject to the Commission's [70 S.Ct. 268] jurisdiction.2 On these and subsidiary findings, the Company was ordered to keep accounts and submit reports as required by the Act.3 The Commission rejected the Company's contentions4 that its operations were not covered by the Act and that the expense of supplying the required information was so great as to transgress statutory and constitutional limits.5 The Court of Appeals for the District of Columbia, without reaching other contentions, reversed the Commission's orders on the ground that the Company was not "engaged in the transportation of natural gas in

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interstate commerce within the meaning of the Act."6 Importance of the questions to administration of the Act prompted us to grant certiorari. 337 U.S. 937.

I

East Ohio owns and operates a natural gas business solely in Ohio, selling gas to more than half a million Ohio consumers through local distribution systems. Most of this natural gas is transported into Ohio from Kansas, Texas, Oklahoma, and West Virginia through pipelines of Panhandle Eastern Pipe Line Company and of Hope Natural Gas Company, an affiliate of East Ohio. Inside the Ohio boundary, these interstate lines connect with East Ohio's large high pressure lines in which the imported gas, propelled mainly by its own pressure, flows continuously more than 100 miles to East Ohio's local distribution systems. The combined length of these high pressure trunk lines is at least 650 miles.

That this continuous flow of gas from other states to and through East Ohio's high pressure lines constitutes interstate transportation has been established by numerous previous decisions of this Court. The gas does not cease its interstate journey the instant it crosses the Ohio boundary or enters East Ohio's pipes, even though that Company operates completely within the state where the gas is finally consumed. Respondents do not and cannot claim that their gas is not in interstate commerce.7 As we held in Interstate Natural Gas Co. v. Federal Power Comm'n, 331 U.S. 682, 688, the meaning of "interstate commerce" in this Act is no more restricted than that

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which theretofore had been given to it in the opinions of this Court.

Respondents contend, however, that the word "transportation" in § 1(b) must be construed as applying only to companies engaged in the business of transporting gas in interstate commerce for hire or for sales to be followed by resales, whereas East Ohio does neither. The short answer is that the Act's language did not express any such limitation. Despite the unqualified language of § 1(b) making the Act apply to "transportation of natural gas in interstate commerce," respondents ask us to qualify that language by applying it only to businesses which both transport and sell natural gas for resale. They rely on a sentence in the declaration of policy, § 1(a), referring to "the business of transporting and selling natural [70 S.Ct. 269] gas." But their contention that the word "and" in the policy provision creates an unseverable bond is completely refuted by the clearly disjunctive phrasing of § 1(b) itself. As we pointed out in Panhandle Eastern Pipe Line Co. v. Public Service Comm'n, 332 U.S. 507, 516, § 1(b) made the Natural Gas Act applicable to three separate things:

(1) the transportation of natural gas in interstate commerce; (2) its sale in interstate commerce for resale, and (3) natural gas companies engaged in such transportation or sale.

And, throughout the Act, "transportation" and "sale" are viewed as separate subjects of regulation. They have independent and equally important places in the Act. Thus, to adopt respondents' construction would unduly restrict the Commission's power to carry out one of the major policies of the Act. Moreover, the initial interest of Congress in regulation of transportation facilities was reemphasized in 1942 by passage of an amendment to § 7(c) of the Act broadening the Commission's powers over the construction or extension of pipelines. 56 Stat. 83. This amendment followed a report of the Commission to Congress

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pointing out that without amendment the Act vested the Commission with inadequate power to make

any serious effort to control the unplanned construction of natural gas pipelines with a view to conserving one of the country's valuable but exhaustible energy resources.8

We hold that the word "transportation," like the phrase "interstate commerce," aptly describes the movements of gas in East Ohio's High-pressure pipelines.9

Respondents also contend that East Ohio is exempt from the Act because all its facilities come within the proviso in § 1(b) making the Act inapplicable "to the local distribution of natural gas or to the facilities used for such distribution." But what Congress must have meant by facilities for "local distribution" was equipment for distributing gas among consumers within a particular

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local community, not the high pressure pipelines transporting the gas to the local mains. For, in decisions prior to enactment of the statute, this Court had sharply distinguished between the two: it had made it clear that the national commerce power alone covered the high pressure trunk lines to the point where pressure was reduced and the gas entered local mains, while the state alone could regulate the gas after it entered those mains.10 The legislative history shows that the attention [70 S.Ct. 270] of Congress was directly focused on the cases drawing this distinction. It was because these cases had barred federal regulation of community supply systems that the Committee Report could correctly describe the "local distribution"

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proviso as surplusage which was "not actually necessary."11 We are wholly unpersuaded that Congress intended to treat trunk lines like East Ohio's as though they were mere integrated facilities of the numerous community supply systems which they service. Indeed, as respondents admitted upon oral argument here, the...

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