Peoples Natural Gas Co. v. Public Service Commission

Background

A Pennsylvania utility, Peoples Natural Gas Company, bought much of its gas from a West Virginia producer and also produced gas inside Pennsylvania. The company sold gas directly in many towns but supplied Johnstown through an independent local distributor. After the company ended a long-standing contract, the Pennsylvania Public Service Commission ordered the company to continue supplying that local distributor so Johnstown consumers would keep getting gas. The company challenged the order in state courts, arguing it unlawfully regulated interstate commerce; the state courts rejected that claim and the company appealed here on that single issue.

Reasoning

The central question was whether the Commission’s order unlawfully interfered with interstate commerce in natural gas. The Court first concluded that the West Virginia gas, moving continuously from production across the state line to Pennsylvania consumers, remained interstate commerce. Gas produced and added into the lines inside Pennsylvania, however, was intrastate commerce. Although the two sources became commingled in the pipes, the Court agreed with the state court that the proportions were known and separable. The state court also found there was enough Pennsylvania-produced gas to meet the Commission’s order. Because the order could be satisfied without using the interstate gas, the Court held the order did not affect interstate commerce and therefore did not unlawfully regulate it.

Real world impact

As a result, the local distributor in Johnstown continues to receive gas and consumers keep service. The decision lets state regulators require continued local supply when in-state gas can meet the need. The Court did not decide whether a similar order would be valid if it actually applied to interstate gas shipments.