Public Util. Comm'n of Ohio v. United Fuel Gas Co.

1943-01-11

Headline: Ohio barred from setting prices for an interstate gas supplier as the Court upheld an injunction enforcing federal control, limiting state rate-setting power and protecting the company from state rate orders.

Holding: The Court upheld an injunction preventing the Ohio utility commission from enforcing orders to set rates for gas transported across state lines, holding the federal Natural Gas Act gives rate-setting authority to the federal agency.

Real World Impact:

Prevents states from imposing rates on interstate natural gas suppliers.
Protects interstate gas companies from state rate-making orders.
Allows states to request evidence but not to set interstate gas rates.

Topics: natural gas regulation, federal control over gas rates, state utility rates, interstate commerce

Summary

Background

A local utility, Portsmouth Gas Company, sells gas to residents of Portsmouth, Ohio, buying its entire supply from United Fuel Gas Company, a West Virginia corporation that moves gas through pipelines from other States. In 1935 the Ohio Public Utilities Commission ordered United to produce evidence and asserted power to set the rates United charged Portsmouth Gas. United sued in federal court in 1935 to block enforcement of those orders.

Reasoning

After the federal Natural Gas Act became law in 1938, the District Court entered an injunction in 1942. The Supreme Court considered whether the Ohio Commission could set rates for gas that moved across state lines. The Court held that the 1938 federal law gives the Federal Power Commission exclusive authority over rates for interstate natural gas. The state order, read in light of Ohio law, could not be allowed to reach into that federally controlled field. The Court therefore affirmed the federal injunction that blocks the Ohio commission from asserting rate-making power over United.

Real world impact

As a practical matter, the decision prevents a state agency from forcing an interstate gas company to accept state-set rates for gas it ships across state lines. The ruling leaves room for the state to seek evidence from the company about local retail rates, but it prevents the state from substituting its own rate orders for the federally regulated system. The case resolved who regulates interstate gas prices and protected the supplier from state-ordered rate proceedings.

Dissents or concurrances

Justice Black (joined by two colleagues) dissented. He warned the injunction stalled state efforts to set fair local rates and argued the federal courts improperly blocked a state agency, harming local consumers who waited years for relief.