Natural Gas Pipeline Co. v. Slattery

Background

The case involves a Delaware corporation that sells natural gas transported into Illinois and an Illinois gas distributor that buys and resells that gas. The Illinois Commerce Commission opened a rate case challenging the distributor’s rates and ordered the Delaware seller to open its books and provide cost and statistical reports because the companies were found to be affiliated under state law. The seller sued in federal court seeking to block the commission’s order, arguing the statute and the order violated the commerce clause, equal protection, and due process.

Reasoning

The Court considered whether the commission’s investigatory order unlawfully burdened interstate commerce or violated constitutional protections. It rejected the broader constitutional attack. The opinion explains that even a foreign company doing interstate business can be required to give information to a state tribunal, and that inquiries into affiliate transactions are appropriate when a utility’s resale rates are under review. The Court also said affiliation can be shown by shared directors, officers, or substantial stock ownership short of a majority, so the statute’s reach was not unconstitutional. Finally, the Court noted the seller had not sought the administrative remedies the statute provides, such as asking the commission to modify or postpone its order.

Real world impact

The decision affirms a state regulator’s power to get books and cost data from affiliated companies during rate investigations and makes courts less likely to block such orders before the agency acts. Affected parties include utilities, their corporate affiliates, and consumers interested in fair rates. The ruling emphasizes using the agency’s appeal and modification procedures first before asking federal courts for emergency relief.