Cent. Illinois Pub. Serv. Co. v. Illinois Natural Gas Co.

• Citation: 32 N.E.2d 157,375 Ill. 634
• Decision Date: 18 February 1941
• Docket Number: No. 25992.,25992.
• Parties: CENTRAL ILLINOIS PUBLIC SERVICE CO. et al. v. ILLINOIS NATURAL GAS CO.
• Court: Illinois Supreme Court

375 Ill. 634

32 N.E.2d 157

CENTRAL ILLINOIS PUBLIC SERVICE CO. et al.

v.ILLINOIS NATURAL GAS CO.

No. 25992.

Supreme Court of Illinois.

Feb. 18, 1941.

Appeal from Circuit Court, Coles County; Victor Hemphill, judge.

Petition by the Central Illinois Public Service Company for an order requiring the Illinois Natural Gas Company to furnish natural gas to it at wholesale. From a judgment affirming an order of the Illinois Commerce Commission granting the prayer of the petition, the Illinois Natural Gas Company appeals.

Affirmed.Glenn W. Clark, of Kansas City, Mo., and Brown, Hay & Stephens, of Springfield, for appellant.

John E. Cassidy, Atty. Gen., and Stevens & Herndon, of Springfield (Harry R. Booth, and George H. O'Brien, both of Chicago, of counsel), for appellees.

FARTHING, Justice.

The Central Illinois Public Service Company filed with the Illinois Commerce Commission a petition for an order requiring the Illinois Natural Gas Company to furnish natural gas to it at wholesale. The gas company's defense was that it was engaged in interstate commerce and was under the exclusive jurisdiction of the Federal Power Commission and, therefore, the Illinois Commerce Commission lacked jurisdiction. The commission held against the gas company and granted the prayer of the petition. On appeal, the circuit court of Coles county affirmed this order and appellant has perfected a further appeal to this court.

The main question is whether the Illinois Natural Gas Company is engaged in interstate or intrastate commerce. The facts are not disputed. The Illinois Natural Gas Company is a wholly-owned subsidiary of the Panhandle Eastern Pipe Line Company, a Delaware corporation, hereafter called the Panhandle company. That company gathers natural gas in Texas and Kansas and transmits it through its high pressure mains through several States, including Illinois. Its main runs in a general east and west direction through Illinois. The Illinois Natural Gas Company, hereafter called the Illinois Natural, owns certain lateral transmission lines and incidental equipment all of which are located in Illinois. Gas is delivered to it at the points where its lateral transmission lines intersect the high pressure main of the Panhandle company. Gas is furnished to the Illinois Natural pursuant to a contract between it and the Panhandle company approved by the Illinois Commerce Commission. When the gas enters the lateral transmission lines of Illinois Natural pressure is reduced for economical transportation and delivery. This company delivers the gas from its lateral lines to local public utility companies, which, in turn, distribute it to the general public. Before delivery to these local utilities the pressure is further reduced.

Appellant argues that although all the property owned by it is located entirely in Illinois and although it seels natural gas only to Illinois utilities, it nevertheless is engaged in interstate commerce and is not subject to the regulations of the Illinois Commerce Commission. In support of this position, it points out that in packing the high pressure transmission line from day to day with natural gas from the sources of supply, Panhandle estimates the quantities of natural gas that will be used by Illinois Natural and other companies purchasing from Panhandle, in Illinois and other States, and each day continuously transports sufficient gas to satisfy the requirements of all of these customers.

Several cases claimed by both sides to be more or less analogous to the one before us have been cited and discussed in the briefs. In East Ohio Gas Co. v. Tax Commission, 283 U.S. 465, 51 S.Ct. 499, 500, 75 L.Ed. 1171, the East Ohio Gas Company was an Ohio corporation which furnished natural gas to consumers in more than fifty municipalities in that State. It bought part of its gas from outside the State. At the State line the gas went into this company's high pressure transmission lines and these connected with distribution lines where less pressure was maintained. An Ohio statute taxed the gross receipts of corporations engaged in the business of supplying natural gas to consumers within the State. It was held the proceeds from the sale of gas bought outside the State were taxable under the statute and the contention that this was interstate commerce was overruled. The Supreme Court of the United States said: ‘The transportation of gas from wells outside Ohio by the lines of the producing companies to the state line and thence by means of appellant's high pressure transmission lines to their connection with its local systems is essentially national-not local-in character and is interstate commerce within as well as without that state. The mere fact that the title or the custody of the gas passes while it is en route from state to state is not determinative of the question where interstate commerce ends.’ This statement is relied on by appellant. However, the court went on to hold in that case: ‘But when the gas passes from...