State v. The Kansas Natural Gas Company

• Decision Date: 08 July 1922
• Docket Number: 24,307
• Citation: 111 Kan. 809,208 P. 622
• Parties: THE STATE OF KANSAS, ex rel. A. E. HELM, as Attorney for the Public Utilities Commission, Plaintiff, v. THE KANSAS NATURAL GAS COMPANY, Defendant, THE WYANDOTTE COUNTY GAS COMPANY, Intervenor
• Court: Kansas Supreme Court

208 P. 622

111 Kan. 809

THE STATE OF KANSAS, ex rel. A. E. HELM, as Attorney for the Public Utilities Commission, Plaintiff, v. THE KANSAS NATURAL GAS COMPANY, Defendant, THE WYANDOTTE COUNTY GAS COMPANY, Intervenor

No. 24,307

Supreme Court of Kansas

July 8, 1922

Decided July, 1922.

Original proceeding in mandamus.

SYLLABUS

SYLLABUS BY THE COURT.

JURISDICTION--Public Utilities Commission--Power to Regulate Sale of Gas Transported from Another State. The state through the public utilities commission has the power to regulate the sale of natural gas in this state by fixing a reasonable price therefor where the gas is produced in Oklahoma, transported through pipe lines into this state, and here sold to distributing companies that in turn sell the gas to the consumers thereof in a large number of cities in this state.

A. E Helm, of Topeka, for the plaintiff.

H. O. Caster, and Robert D. Garver, both of Bartlesville, Okla., for the defendant.

J. W. Dana, of Kansas City, Mo., for the intervenor.

OPINION

MARSHALL, J.:

Plaintiff seeks to compel the defendant to reestablish and maintain a rate of thirty-five cents a thousand for gas delivered by it to distributing companies operating in a number of cities in the eastern part of the state. The defendant has filed its return and answer to the petition of the plaintiff. To that return and answer the plaintiff has filed a combined reply and demurrer. The cause is presented on the demurrer to the answer.

The facts disclosed by the pleadings, so far as necessary to state them for the consideration of the matters presented, are as follows: The defendant is producing gas in Oklahoma and Kansas and transmitting it from Oklahoma through Kansas and into Missouri and is supplying towns and cities in Oklahoma, Kansas, and Missouri with natural gas. The defendant does not furnish gas to the consumers; it sells gas to the distributing companies in various cities, and these companies deliver the gas to the consumers. The pipe lines conveying the gas are continuous from the wells to the place of consumption. The rate, fixed by order of the federal court and approved by the public utilities commission, has been thirty-five cents per thousand cubic feet of gas to companies distributing and selling gas in various cities in this state. That was the legal rate. On April 1, 1922, defendant notified the various distributing companies that after the April 1, 1922, meter reading the rate charged would be forty cents per thousand cubic feet. Upon that notice being given, this action was commenced to compel the defendant to deliver gas to the distributing companies for thirty-five cents per thousand cubic feet.

The plaintiff argues--

"1. That the defendant is a public utility under the laws of Kansas, and that its business of selling natural gas, transported in interstate commerce, is subject to regulation by the Public Utilities Commission of the state of Kansas.

"2. That the business of selling natural gas by the defendant to the distributing companies at the gates of the cities served by said distributing companies is local and not national in character.

"3. That until congress asserts its jurisdiction over the subject and provides for the regulation of the sale of natural gas in interstate commerce, the states may enact laws providing for the reasonable regulation of the business."

The defendant contends that--

"The business of The Kansas Natural Gas Company is national in character and not subject to direct regulation by the state."

The controversy revolves around this question: Does the state of Kansas have power to regulate the price at which gas shall be sold by the defendant to the distributing companies? It is admitted by all the parties that the business of the defendant in transporting natural gas is interstate commerce. In The State, ex rel., v. Flannelly, 96 Kan. 372, 152 P. 22, it was said:

"Assuming that the sale of natural gas produced in Oklahoma, from there transported into this state through pipe lines and here sold to consumers throughout the state is interstate commerce, it is not national in its nature, it does not admit of one uniform system of regulation, it is not that kind of interstate commerce which required exclusive legislation by congress, and until congress acts it is under the control of this state." (Syl. P 5.)

That decision was adhered to by this court in The State, ex rel., v. Gas Co., 100 Kan. 593, 165 P. 1111.

Congress has not attempted to regulate the production, transportation, or sale of natural gas. Many of the states have passed laws governing these matters. The legislation by the states demonstrates that the sale of natural gas should be regulated. The regulations made are not uniform; they cannot be uniform. Regulation is necessary; congress has not regulated; the states must regulate. Under these circumstances regulation by the states does not violate the commerce clause of the constitution. Some other provision of the constitution may be violated, but that is an altogether different question.

In Public Utilities Comm. v. Landon, 249 U.S. 236, 245, 63 L.Ed. 577, 39 S.Ct. 268, the supreme court of the United States said:

"That the transportation of gas through pipe lines from one state to another is interstate commerce may not be doubted. Also, it is clear that as part of such commerce the receivers might sell and deliver gas so transported to local distributing companies free from unreasonable interference by the state. American Express Co. v. Iowa, 196 U.S. 133, 143, 49 L.Ed. 417, 25 S.Ct. 182; Oklahoma v. Kansas Natural Gas Co., 221 U.S. 229, 55 L.Ed. 716, 31 S.Ct. 564; Haskell v. Kansas Natural Gas Co., 224 U.S. 217, 56 L.Ed. 738, 32 S.Ct. 442. But in no proper...