Ottinger v. Brooklyn Union Gas Co.

Background

Separate lawsuits were brought by gas companies against New York’s Public Service Commission and the State Attorney General after the Legislature passed a 1923 law saying gas of 650 British thermal units must be sold at not more than one dollar per thousand feet. Before the law, the Brooklyn Union Gas Company charged one dollar fifteen cents and the Kings County Lighting Company charged one dollar thirty cents per thousand feet for lower-quality gas. Masters took evidence and reported on the financial effects, and the District Court issued injunctions blocking enforcement of the statute.

Reasoning

The Court focused on whether the statutory price would leave the companies a reasonable return on the value of their property used to serve the public. The masters reported the law would yield less than five per cent upon the fair value of the complainants’ property devoted to public use. The District Court concluded the statute was confiscatory in effect and also unreasonable because of the six hundred and fifty BTU standard. The Attorney General filed broad appeals, but the Court found no reason shown to reverse the District Court’s confiscation finding under the Fourteenth Amendment and therefore limited its review to that issue.

Real world impact

The Supreme Court modified the lower decrees by removing parts that invalidated the statute for reasons other than conflict with the Fourteenth Amendment because confiscatory in effect, and then affirmed the decrees as modified. As a practical result, the one-dollar-per-thousand-feet price limit for 650 BTU gas cannot be enforced as written because it was found confiscatory. The Public Service Commission did not seek an appeal, and appeal costs were taxed against the appellant.

Dissents or concurrances

Justice Brandeis concurred in the result; no other opinions are described in this opinion.