Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-23
UTILITIES PROFITS
HINGE ON VERDICT
Court Decision in East Ohio
Case Involves Right
of Taxation.
BY J. c, RoYLE.

Profits of two great utility fields are
dependent to no small degree upon a
decision which will be handed down
by the Supreme Court of the United
2 sS. IN the term beginning October g.
taxes approximating 81 000, 900 are now
nelo up pending the settlement Of the
s sSle' ano tnis Is only small part Of
the sum which will be involved once
the court has delivered its opinion
Both the natural gas producers ana
tranSporters and the distributors ~
eiectrlc power are affected, utility men
uisclosed today. The case is entitled
the East Ohio Gas Co. VS.. the Tax
Commission OF Ohio. It involves the
right OF that State to collect a tax on
receipts from natural gas produced IN
WeSG virginia and piped thence across
the State line to about so Communities
While this suit involves only one state
the. courts decision will, of course
Apply TO gas piped across State lines
In any section.
Applies to Electricity.
1t also will apply to electric current
the attorney general of Ohio contends.
1t would establish a dangerous prece-
oent TO hold such sales exempt from
taxation, ne argues, since It would
make 1t possible for big gas and cleo
trio utility concerns to transport gas
and electricity across the Continent.
making sales in all the States traversed,
but paying. tax only in the State
In which the gas and electricity were
produced originally. This, he contends.
in this day of big utility hook-ups,
renders the case Of Nationwide i'm
portance
The Federal District Court, from
winch appeal was taken, held that the
Constitution prohibits any State from
interfering with the commerce between
various States and the only question
involved in the suit is whether or not
the Ohio tax constitutes such an in
reference. In other words was the gas
piped from West Virginia In Interstate
commerce when it was sold In Ohio?
The Supreme Court has held that goods
from foreign countries cease to be inn
ports when the original package is
broken, and the District Court SAYS the
same principle applied in regard to gas.
Bulk must be considered to be
broken" the court recites, when the
gas passed from the great transportation
lines into the network of smaller dis
trlputing lines. The interstate journey
must be considered as ended when the
gas Is placed in proper containers. be
these tanks or low-pressure distribution
systems, Tor delivery to local trade The
gas must be considered processed and
modified In an essential characteristic
when Its pressure is reduced SO as TO
make 1t available for consumers use.
So far as the relationship between the
company and the consumer is concerned.
It makes no difference whatever to the
latter whence comes the gas. The trade
was essentially local. The transportation
OF gas from West Virginia was but a
preparation for It,"
Gas Sales Increase.
The East Ohio Gas Co. appealed from
this decision to the Supreme Court. with
$SS9,OOO in taxes held In allegiance. The
company serves Cleveland, Akron. Cam
ton and other centers- of industry and
population.
The transportation and sale OF nat.
ural gas has grown by leaps and bounds
IN the last year. 1t has sufficed TO Keen
the steel producers occupied with az
heavy orders for tubular goods. TO an
extent. the petroleum Industry Is de-
pendent on gas to exc out its profits.
The electric companies also are ex-
banding to . tremendous degree. as
SHOWN by the heavy purchases Of copper
ana aluminium transmission cables in
the last month. -