Ottinger v. Consolidated Gas Co. of NY

Background

A private gas company accepted a prior state commission order setting a rate up to $1.15 per thousand cubic feet for lower-quality gas and then challenged a new State law. The New York Legislature passed a law on June 2, 1923, c. 899, that capped gas at $1 per thousand for higher-quality gas in New York City. The company sued state officials, arguing the law would be confiscatory, interfere with its contract rights, and be impossible to meet safely.

Reasoning

A master took extensive evidence about the company’s property, costs, and the practical ability to supply the higher-quality gas. He concluded the $1 rate would not produce a fair return — noting it would not yield a six percent return — and therefore would take property without compensation. The District Court agreed and enjoined enforcement. The Supreme Court affirmed the judgment but narrowed it: the law is invalid because enforcement would be confiscatory under the Constitution’s protection against taking property without a fair return. The Court said it was unnecessary to decide the other objections.

Real world impact

The ruling prevents New York from enforcing the $1-per-thousand rate to the extent that doing so would confiscate the company’s property by denying a fair return. It leaves other claims — like whether a contract was impaired or whether the higher-quality gas can be supplied safely — undecided, so further proceedings could address those matters.

Dissents or concurrances

A Justice recorded agreement with the result, concurring only in the outcome rather than writing a separate full opinion, so no broad disagreement changed the decision.