Public Service Commission v. Panhandle Eastern Pipeline Co.

Decision Date05 February 1947
Docket Number28225.
PartiesPUBLIC SERVICE COMMISSION et al. v. PANHANDLE EASTERN PIPELINE CO.
CourtIndiana Supreme Court

Appeal from Randolph Circuit Court; John W. Macy Judge.

James A. Emmert, Atty. Gen., Frank E. Coughlin, 1st Asst. Atty. Gen., Karl J. Stipher, Deputy Atty. Gen., and Urban C. Stover, Sp. Asst. to the Atty. Gen., for appellant Public Service Commission of Indiana.

Evans & Hebel, William P. Evans, and Edmond W. Hebel, all of Indianapolis, for appellant Indiana Gas & Water Co Inc.

Vanatta Batton & Harker, Robert R. Batton, of Marion, and Carl E Hartley, all of Muncie, for Central Indiana Gas Co.

John E. Fell, of Kokomo, for Kokomo Gas & Fuel Co.

Lawyer & Anderson, John C. Lawyer, and R. Stanley Anderson, all of Hammond, for Northern Indiana Public Service Co.

Ortmeyer, Bamberger & Ortmeyer and Edmond F. Ortmeyer, all of Evansville, for Southern Indiana Gas & Electric Co.

Wm. A. McClellan, of Greenfield, for Greenfield Gas Co., Inc.

Russell E. Wise, of Union City, and Owen S. Boling, of Indianapolis, of counsel for corporate appellants.

Frederick G. Hamley and John E. Benton, of Washington, D. C., for National Association of Railroad and Utilities Commissioners, amicus curiae.

John S. L. Yost, of New York City, Samuel H. Riggs, of Chicago, Ill., Bowen, Mendenhall & Hunter, and Wm. R. Hunter, all of Winchester, Crumpacker, May, Carlisle & Beamer, and Geo. N. Beamer, all of South Bend, Barnes, Hickam, Pantzer & Boyd, Alan W. Boyd, and Jerry P. Belknap, all of Indianapolis, for appellee Panhandle Eastern Pipeline Co.

YOUNG Judge.

In this case we have to do with the right of the State of Indiana to regulate service and fix rates upon deliveries of natural gas from an interstate pipe line direct to large industrial consumers within the State.

Appellee owns a large pipe line, through which it transports natural gas from Texas and Kansas into and across intervening states, including Indiana, to Ohio and Michigan. At different points along this line, gas is diverted into branch or lateral lines, smaller in size and at lower pressure, to be delivered to distribution systems owned and operated by various municipalities and public utility corporations and directly to selected, large industrial consumers of gas within practical distance of its through line.

When these proceedings started appellee furnished gas in Indiana to 10 utilities, including the corporate appellants, and four municipalities who, in turn, distributed such gas to 112,000 residential, industrial and commercial consumers in Indiana. One of these laterals takes off from the main line near Winchester, Indiana, and at the end of this lateral there are two branches, one leading to a meter house, through which deliveries are made to Indiana-Ohio Public Service Company, which owns a distribution system serving Winchester and nearby territory. The other branch leads to another meter house, through which gas is delivered direct to the Anchor-Hocking Glass Corporation for its own consumption. Service to Anchor-Hocking is, and service to other large industrial consumers will be, under special, privately negotiated contracts, each upon terms agreed upon for its particular case.

Appellee's gas enters Indiana at a pressure of about 250 pounds per square inch in 22 inch mains. After reaching Indiana the pressure is reduced to approximately 200 pounds per square inch in 16 inch mains. When the Winchester lateral leaves the main line, pressure is reduced to 80 or 100 pounds per square inch and there is no provision whereby it may ever be returned to the main line. Thereby it is segregated from the gas flowing interstate in the main line but the continuity of flow from the source to the meter houses is not interrupted. At the meter houses refered to pressure is again reduced and some deliveries are made to Anchor-Hocking at 40 pounds per square inch and some at 10 pounds per square inch. Deliveries are made to the Indiana-Ohio Public Service Company at 9 to 25 pounds per square inch. In both cases all facilities up to the pipe on the outlet side of the meter houses are owned and operated by appellee. The Winchester lateral is located in part on public highways in Randolph County pursuant to authority granted by the Board of Commissioners of that county to a predecessor of appellee which built the line. For what significance it may have, we know judicially that appellee's main line and other laterals could not cross the state and branch out into the areas served without at least crossing highways and probably otherwise using same pursuant to arrangement with local governmental units.

The quantity sold to Anchor-Hocking is many times the quantity sold to the Indiana-Ohio Company. Anchor-Hocking was the only industrial consumer in Indiana served direct by the appellee at the time of the commencement of these proceedings. Subsequently, however, service direct to a DuPont plant, near Fortville, Indiana, was undertaken under contract and appellee had adopted a policy of furnishing gas direct to selected large industrial consumers in Indiana, as it is doing in other states. Before appellee began serving Anchor-Hocking, Anchor-Hocking had been buying its gas from a local distributing utility which, in turn, had purchased it from appellee or its predecessor.

It appears that in like manner, as appellee begins service direct to other large industrial consumers, it will, in most, if not all, instances supplant service by local public utility companies. These local distribution utilitites have expressed alarm that taking away their large customers, thereby decimating the volume of their sales, will cripple their ability to serve domestic and small commercial and industrial consumers at fair rates.

In this situation, the Public Service Commission of Indiana instituted an investigation of the affairs of the appellee so far as same relate to sales of natural gas under contract direct to Anchor-Hocking Glass Corporation or any other industrial consumer or consumers of natural gas within the State of Indiana. § 54-112, Burns' 1933. The corporate appellants intervened. This investigation resulted in an order on November 21, 1945, by the Public Service Commission of Indiana, requiring appellee to file with the Commission its tariffs covering rates, rules and regulations pertaining to any and all sales of natural gas by appellee direct to ultimate consumers within the State of Indiana, and to file annual reports on forms prescribed by the Commission, so long as it continues to distribute gas direct to any consumer in Indiana, and to file certain other relevant reports and data. In the original order, the Commission concluded and said 'that the distribution in Indiana of natural gas direct to consumers is subject to regulation by this Commission under the laws of this state.' It was contended by appellee that the Commission's order constituted an assumption of jurisdiction to regulate appellee's rates and service direct to consumers in Indiana, and that such regulations could not be accomplished without violation of the Commerce Clause of the Federal Constitution. Accordingly appellee filed a statutory action to secure a judicial review of said order and to have said order set aside and its enforcement enjoined.

In the course of the hearing in the trial court, the appellant Commission contended that the action was premature because the order complained of merely required information which it was entitled to have, regardless of its power, or lack of power, to fix rates or otherwise regulate sales of gas by appellee directly to large industries for use by them in Indiana, and that no action will lie to test such power until the Commission attempts to exercise same. Acting upon this contention of counsel for the appellant Commission, appellee offered, in writing, to file with the Commission 'all papers and documents specified in the order dated November 21, 1945, provided the Commission desires the same for information purposes only and not as an assertion of the regulatory jurisdiction of respondent's business, and provided said order is so modified or such further order is entered by the Commission as to preclude the possibility of any contention hereafter that Respondent will be in any manner prejudiced in its right to contest the jurisdiction of the Commission to regulate its said business in the event the Commission shall hereafter assert the right, power, authority or jurisdiction to regulate the same.'

The commission declined to accept appellee's filing of the required papers upon the conditions named in the appellee's offer and, in doing so, the appellant Commission made a supplemental order in which it asserted categorically that the tariffs, rates, rules and regulations, the annual reports and the accounting information, required by the original order when filed, shall be deemed to be on file and be available, among other things, for use by the Commission 'in connection with the regulation of rates and service appertaining to the supplying of natural gas by Panhandle direct to consumers within the State of Indiana.' Notwithstanding the language of the original and supplemental orders, the Commission continues to take the position that its power to regulate appellee's sales and deliveries of gas direct to large consumers in Indiana is not involved in this proceeding. With this contention we cannot agree.

On authority of Public Utilities Commission of Ohio v United Fuel Gas Co., 1943, 317 U.S. 456, 459, 465, 468, 63 S.Ct. 369, 87 L.Ed. 396, 398, 401, 403, we hold that the orders of the Commission, in this case, constitute an unequivocal assertion of power and jurisdiction to regulate and fix rates upon sales of...

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