Northern Nat. Gas Co. v. Kansas Corp. Comm’n, 372 U.S. 84 (1963)

Northern Natural Gas Co. v. State

Corporation Commission of Kansas
No. 62

Argued December 13, 1962
Decided February 18, 1963
372 U.S. 84

APPEAL FROM THE SUPREME COURT OF KANSAS

Syllabus

Orders of the Kansas State Corporation Commission which require appellant, an interstate pipeline company, to purchase natural gas ratably from all wells connecting with its pipeline system in each gas field in the State held invalid, because they invade the exclusive jurisdiction which the Natural Gas Act has conferred upon the Federal Power Commission over the sale and transportation of natural gas in interstate commerce for resale. Pp. 85-98.

(a) Since appellant is not a producer of gas, but a purchaser of gas from producers, it cannot be said that the orders here involved constitute only state regulation of the "production or gathering" of natural gas, which is exempted from the federal regulatory domain by § 1(b) of the Natural Gas Act. Pp. 89-90.

(b) Since these orders are directed at wholesale purchasers of natural gas in Kansas and, subject to criminal sanctions for noncompliance, require them to balance the output of all wells within the State from which they take, they necessarily threaten the ability of the Federal Power Commission to regulate comprehensively and uniformly the intricate relationship between the purchasers’ cost structures and eventual costs to wholesale customers in other States. Pp. 90-93.

(c) These orders cannot be sustained on the ground that they merely conserve scarce natural resources. Although conservation is a legitimate objective of state regulation, it cannot be effectuated by means such as these which encroach upon a federally preempted regulatory domain. Pp. 93-96.

(d) This Court rejects a suggestion that the case should be remanded to the Kansas Supreme Court in order that that Court might construe the orders as relieving the appellant of a contractual obligation which caused it to purchase unratably, since, among other reasons, no such accommodation on remand could avoid or postpone the federal question presented by this appeal. Pp. 96-98.

188 Kan. 351, 355, 362 P. 2d 599, 609, reversed.