Panhandle Eastern Pipe Line Co v. Public Service Commission of Indiana v. 14 8212 17, 1947, No. 69

CourtUnited States Supreme Court
Writing for the CourtRUTLEDGE
Citation92 L.Ed. 128,332 U.S. 507,68 S.Ct. 190
PartiesPANHANDLE EASTERN PIPE LINE CO. v. PUBLIC SERVICE COMMISSION OF INDIANA et al. Argued Nov. 14—17, 1947
Docket NumberNo. 69
Decision Date15 December 1947

332 U.S. 507
68 S.Ct. 190
92 L.Ed. 128
PANHANDLE EASTERN PIPE LINE CO.

v.

PUBLIC SERVICE COMMISSION OF INDIANA et al.

No. 69.
Argued Nov. 14—17, 1947.
Decided Dec. 15, 1947.

Appeal from the Supreme Court of the State of Indiana.

Page 508

Mr. John S. L. Yost, of New York City, for appellant.

Mr. Karl J. Stipher, of Indianapolis, Ind., for appellee, Public Service Commission of Indiana.

Mr. William P. Evans, of Indianapolis, Ind., for appellees, Indiana Gas & Water Co. et al.

Mr. Justice RUTLEDGE, delivered the opinion of the Court.

Broadly the question is whether Indiana has power to regulate sales of natural gas made by an interstate

Page 509

pipe-line carrier direct to industrial consumers in Indiana. More narrowly we are asked to decide whether the commerce clause, Const. Art. I, § 8, by its own force forbids the appellee, Public Service Commission, to require appellant to file tariffs, rules and regulations, annual reports, etc., as steps in a comprehensive plan of regulation preliminary to possible exercise of jurisdiction over rates and service in such sales.1

Panhandle Eastern transports natural gas from Texas and Kansas fields into and across intervening states, including Indiana, to Ohio and Michigan. In Indiana it furnishes gas to local public utility distributing companies and municipalities. These in turn supply the needs of over 112,000 residential, commercial and industrial consumers.

Since 1942 appellant also has sold gas in large amounts direct to Anchor-Hocking Glass Corporation for industrial consumption.2 Shortly before beginning this service appellant had informed a number of its customers, local distributing companies in Indiana, that it intended to render service directly to large industrial consumers wherever possible.3 Pursuant to that policy, since these pro-

Page 510

ceedings began direct service has been extended to another big industrial user.4

In 1944 the Commission initiated hearings relative to direct service by Panhandle Eastern to Indiana consumers. It concluded that 'the distribution in Indiana by Panhandle of natural gas direct to consumers is subject to regulation by this Commission under the laws of this state,' notwithstanding any alleged contrary effect of the commerce clause upon appellant's direct sales to industrial sers. Accordingly it issued its order of November 21, 1945, for the filing of tariffs, etc., as has been stated.

Early in 1946 Panhandle Eastern brought this suit in a state court to set aside and enjoin enforcement of the order. While the cause was pending the Commission issued a supplemental order declining appellant's offer to submit the specified tariffs, reports, etc., 'as information only,' and reasserting its full regulatory power as conferred by the Indiana statutes.5 63 P.U.R., N.S., 309.

The trial court vacated the orders and enjoined the Commission from enforcing them. It accepted appellant's view of the effect of the commerce clause on its

Page 511

operations. The Supreme Court of Indiana reversed that judgment and denied the relief appellant sought. 71 N.E.2d 117. It held first that the Commission's orders amounted to an unequivocal assertion of power to regulate rates and service on appellant's direct industrial sales and thus presented squarely the question of the Commission's jurisdiction over such sales as affected by the commerce clause. The court did not flatly hold that the sales are in interstate rather than intrastate commerce. But, taking them to be of the former kind, it held them nevertheless subject to the state's power of regulation under the doctrine of Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996. The court further held that appellant, in making these sales, is a public utility within the meaning and application of the state's regulatory statutes, Burns Ind.Stat.Ann. § 54-105 and Ind. Acts 1945, c. 53, p. 110. It is this decision we have to review pursuant to § 237 of the Judicial Code, 28 U.S.C. 344(a), 28 U.S.C.A. § 344(a).6

The effect of the state statutes, whether permitting the filing of the tariffs, etc., as information unrelated to further regulation or requiring the filing as initial and integral steps in the regulatory scheme, and thus as presenting at the threshold of the scheme's application the question of the state's power to go further with it, is primarily a question of construction for the state courts to determine. In view of the Commission's position, as construed by the state supreme court, we cannot say that the only thing presently involved is the state's power to require the filing of information without reference to its further use for controlling these sales. Cf. Arkansas Louisiana Gas Co. v. Department of Public Utilities, 304 U.S. 61, 58 S.Ct. 770, 82 L.Ed. 1149. Here

Page 512

the orders constituted 'an unequivocal assertion of power' to regulate rates and service. Indeed they involve something more than a mere threat to apply the regulatory plan in its later phases. They represent the actual application of that plan in its initial stage. In such a situation appellant was not required to await a further regulatory order before contesting the Commission's jurisdiction. Cf. Public Utilities Comm. of Ohio v. United Fuel Gas Co., 317 U.S. 456, 63 S.Ct. 369, 87 L.Ed. 396.

This does not mean that we now express opinion concerning the validity of any further order which the Commission may enter. No such order is before us. It does mean that we are required to decide whether the sales in question lie within the scope of the state's power to regulate rates and service, so that some further order in those respects may or may not be entered.

Nor do we question that these sales are interstate transactions. The contrary suggestion left open in the state supreme court's treatment rests upon the view that gas transported interstate takes on the character of a commodity which has come to rest or broken bulk when it leaves the main transmission line and, under reduced pressure, enters branch lines or laterals irrevocably on its way to final distribution or consumption. Those merely mechanical considerations are no longer effective, if ever they were exclusively, to determine for regulatory purposes the interstate or intrastate character of the continuous movement and resulting sales we have here.7

Page 513

Thus gas furnished to local utilities for resale is supplied unquestionably, both as to transportation and as to sale, in interstate commerce. Yet it is subjected to practically identical changes in pressure with the gas sold by appellant directly for industrial use.8 Neither Practical common sense nor constitutional sense would tolerate holding that reduction in pressure makes the industrial sales to Anchor-Hocking wholly intrastate for purposes of local regulation while deliveries at similar pressures to utility companies remain exclusively interstate. Variations in main pressure are not the criterion of the states' regulatory powers under the commerce clause. Cf. Interstate Natural Gas Co. v. Federal Power Comm., 331 U.S. 682, 689, 67 S.Ct. 1482, 1486. The sales here were clearly in interstate commerce.

The controlling issues therefore are two: (1) Has Congress, by enacting the Natural Gas Act, 52 Stat. 821, 15 U.S.C. § 717, 15 U.S.C.A. § 717 et seq., in effect forbidden the states to regulate such sales as tho e appellant makes directly to industrial

Page 514

consumers; (2) if not, are those sales of such a nature, as related to the Cooley formula, that the commerce clause of its own force forbids the states to act.

We think there can be no doubt of the answer to be given to each of these questions, namely, that the states are competent to regulate the sales. The two questions may best be considered in the background of the legislative history of the Natural Gas Act and of the judicial history leading to its enactment in 1938.

Prior to that time this Court in a series of decisions had dealt with various situations arising from state efforts to regulate the sale of imported natural gas. The story has been adequately told9 and we do not stop to review it again or attempt reconciliation of all the decisions or their groundings. Suffice it to say that by 1938 the Court had delineated broadly between the area of permissible state control and that in which the states could not intrude. The former included interstate direct sales to local consumers, as exemplified in Pennsylvania Gas Co. v. Public Service Comm., 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434; the latter, service interstate to local distributing companies for resale, as held in State of Missouri v. Kansas Natural Gas Co., 265 U.S. 298, 44 S.Ct. 544, 68 L.Ed. 1027, reinforced by Public Utilities Comm. of Rhode Island v. Attleboro Steam and Electric Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549.

Shortly then, as the decisions stood in 1938, the states could regulate sales direct to consumers, even though made by an interstate pipe-line carrier. This was true of sales not only for domestic and commercial uses but also for industrial consumption, at any rate whenever the interstate carrier engaged in distribution for all of these

Page 515

uses.10 On the other hand, sales for resale, usually to local distributing companies, were beyond the reach of state power, regardless of the character of ultimate use. This fact not only prevented the states from regulating those sales but also seriously handicapped them in making effective regulation of sales within their authority.11

Page 516

This impotence of the states to act in relation to sales for resale by interstate carriers brought about the demand for federal regulation and Congress' response in the Natural Gas Act. To reach those sales and prevent the hiatus in regulation their immunity caused, the Act declared in § 1(b): 'The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the...

To continue reading

Request your trial
180 practice notes
  • Public Service Commission of State of N. Y. v. Federal Power Commission, Nos. 24716
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 27, 1975
    ...United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., supra note 256. 305 Quoting Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n,, 332 U.S. 507, 520, 68 S.Ct. 190, 92 L.Ed. 128 306 Quoting United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., supra note 256, 350 U.S. at 341, 76 S.Ct. 37......
  • Midland Cogeneration Venture Ltd. Partnership v. Public Service Com'n, Docket Nos. 124705
    • United States
    • Court of Appeal of Michigan (US)
    • April 19, 1993
    ...regulate, and constitutes an improper assertion of PSC jurisdiction. Panhandle Eastern Pipe Line Co. v. Public Service Comm. of Indiana, 332 U.S. 507, 511-512, 68 S.Ct. 190, 92 L.Ed. 128 I disagree with the majority's analysis of the PSC's requirement that Consumers must set its initial on-......
  • Prudhoe Bay, Alaska Natural Gas, Matter of
    • United States
    • California Court of Appeals
    • July 11, 1978
    ...commerce for resale; and (3) natural gas companies engaged in such transportation or sale. (Panhandle Pipe Line Co. v. Comm'n. (1947) 332 U.S. 507, 516, 68 S.Ct. 190, 92 L.Ed. 128.) Congress did not exercise its authority to constitutional limits. Instead, Congress envisioned a comprehensiv......
  • Air Transport v. City and County of San Francisco, No. 97-1763 CW.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • April 10, 1998
    ...of California, 451 U.S. 648, 653, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981) (same); Panhandle E. Pipe Line Co. v. Public Serv. Comm'n, 332 U.S. 507, 520-21, 68 S.Ct. 190, 92 L.Ed. 128 (1947) (same). Defendants argue that by enacting the proprietary powers exception to ADA preemption, Congress h......
  • Request a trial to view additional results
179 cases
  • Public Service Commission of State of N. Y. v. Federal Power Commission, Nos. 24716
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 27, 1975
    ...United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., supra note 256. 305 Quoting Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n,, 332 U.S. 507, 520, 68 S.Ct. 190, 92 L.Ed. 128 306 Quoting United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., supra note 256, 350 U.S. at 341, 76 S.Ct. 37......
  • Midland Cogeneration Venture Ltd. Partnership v. Public Service Com'n, Docket Nos. 124705
    • United States
    • Court of Appeal of Michigan (US)
    • April 19, 1993
    ...regulate, and constitutes an improper assertion of PSC jurisdiction. Panhandle Eastern Pipe Line Co. v. Public Service Comm. of Indiana, 332 U.S. 507, 511-512, 68 S.Ct. 190, 92 L.Ed. 128 I disagree with the majority's analysis of the PSC's requirement that Consumers must set its initial on-......
  • Prudhoe Bay, Alaska Natural Gas, Matter of
    • United States
    • California Court of Appeals
    • July 11, 1978
    ...commerce for resale; and (3) natural gas companies engaged in such transportation or sale. (Panhandle Pipe Line Co. v. Comm'n. (1947) 332 U.S. 507, 516, 68 S.Ct. 190, 92 L.Ed. 128.) Congress did not exercise its authority to constitutional limits. Instead, Congress envisioned a comprehensiv......
  • Air Transport v. City and County of San Francisco, No. 97-1763 CW.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • April 10, 1998
    ...of California, 451 U.S. 648, 653, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981) (same); Panhandle E. Pipe Line Co. v. Public Serv. Comm'n, 332 U.S. 507, 520-21, 68 S.Ct. 190, 92 L.Ed. 128 (1947) (same). Defendants argue that by enacting the proprietary powers exception to ADA preemption, Congress h......
  • Request a trial to view additional results
1 books & journal articles
  • Grid Reliability Through Clean Energy.
    • United States
    • Stanford Law Review Vol. 74 Nbr. 5, May 2022
    • May 1, 2022
    ...v. Transcon. Gas Pipe Line Corp., 365 U.S. 1,19(1961))). (219.) See id. at 767. (220.) Panhandle E. Pipe Line Co. v. Pub. Serv. Comm'n, 332 U.S. 507, 517-18 (221.) Nat'l Acads. of Seis., Eng'g, & Med., The Future of Electric Power in the United States 14(2021). (222.) Rob Gramlich &......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT