Federal Power Commission v. Transcontinental Gas Pipe Line Corp.

Background

A pipeline company sought permission to transport gas it would carry for a large New York utility that had bought gas directly from Texas producers. The utility wanted the gas to fire boilers at a riverside plant to ease local air pollution. The Federal Power Commission denied the pipeline’s application after staff and coal-industry groups warned the sale would waste a scarce resource, pre-empt pipeline capacity, and push up field prices. A hearing examiner recommended approval, the full Commission denied certification, and a court of appeals sided with the applicants.

Reasoning

The Court considered whether the Commission exceeded its statutory power in denying the certificate. The Justices held the Commission may weigh the gas’s end use, likely effects on field prices, and the danger that large direct purchases would pre-empt pipeline space. The Court found the 1942 amendment and prior cases support agency consideration of these broad public-interest factors. The Court also said the Commission may rely on expert forecasting and need not confine itself to evidence strictly in the record. The Supreme Court reversed the court of appeals.

Real world impact

The ruling lets the federal agency block interstate transport when the agency reasonably forecasts waste, higher prices, or capacity problems. Direct industrial purchases of out-of-state gas may be harder to carry out. The decision preserves case-by-case review; it does not declare an absolute ban on direct sales.

Dissents or concurrances

One Justice agreed on end-use authority but dissented in part, saying the Commission’s findings about prices and capacity lacked adequate factual support and should be reconsidered.