Federal Power Commission v. East Ohio Gas Co.

1950-01-16

Headline: Upheld federal regulator’s authority to oversee in‑state gas companies that move out‑of‑state gas through high‑pressure trunk lines, enforcing federal accounting and reporting requirements on companies serving local consumers.

Holding: The Court held that an in‑state gas company whose high‑pressure lines carry gas from other states is covered by the Natural Gas Act, so the federal commission may require the company to keep accounts and file reports.

Real World Impact:

Requires in‑state gas firms with interstate trunk lines to comply with federal accounting orders.
Expands federal regulator’s reach over high‑pressure transmission lines inside a state.
May force companies to adopt federal accounting despite differing state rules.

Topics: energy regulation, interstate pipelines, state vs federal authority, utility accounting

Summary

Background

A federal regulator, the Federal Power Commission, ordered an Ohio gas company that serves more than half a million consumers to keep detailed accounts and file reports. The company buys gas brought in from other states and moves it through long, high‑pressure trunk lines inside Ohio before delivering it to local distribution systems. A federal appeals court said the company was not covered by the federal law and blocked the orders, which led the Commission to ask the Supreme Court to decide the issue.

Reasoning

The Court asked whether a company that moves gas from other states through large high‑pressure lines inside a single state falls under the Natural Gas Act. It focused on the Act’s language saying it applies to the “transportation of natural gas in interstate commerce” and to companies engaged in that transportation. The Court held that the high‑pressure trunk lines plainly involve interstate transportation and are not part of “local distribution.” It also concluded the Commission’s accounting and reporting orders were reasonably related to the Commission’s statutory duties. As a result, the federal regulator’s orders were upheld and the appeals court’s decision reversed.

Real world impact

The ruling means in‑state gas companies that receive and move out‑of‑state gas through long high‑pressure lines can be regulated by the federal agency and must comply with its accounting and reporting rules. State regulators may still have some role, but federal authority applies where a company is found to be transporting interstate gas.

Dissents or concurrances

A dissent warned that the decision lets the federal agency expand into areas traditionally regulated by states, could force duplicative accounting, and risks supplanting state control rather than merely supplementing it.