Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-12-02
NATURAL GAS LAW
TEST IS ADVANCED
Power OF States Over Indus
try to Be Defined by
Supreme Court.
BY GEORGE E. DOYING.

The legal aspect of the power of the
states over the natural gas industry
has been further complicated. but at
the same time advanced q step toward
nnal determination by two actions Of
the supreme Court of the United States.
Inc complication came through the
decision of the court that Mississippi
law enacted in 1880 for the taxation Of
natural gas pipe lines is invalid. The
other action was the decision to hear a
case from Kansas involving the reason
ableness of the Accent rate charged
local gas distributing companies In that
State by the Cities Service Gas Co.
the opinion by Justice Holmes in the
mississippi case seems in some degree
TO be at variance with that Of Justice
Butler IN the East Ohio gas case, de-
clded last May. The latter held that
the State Of Ohio could levy tax on
the sale Of natural gas brought from
al state by one company and sold
10 another for distribution. 1t was held
That the change from high pressure In
the interstate pipe line to low pressure
IN the distribution mains was In effect
a broken package by which the product
lost Its interstate character.
Would Tax Pipe Line.
The Mississippi law, however. under
TOOK to tax the pipe line itself. The
line in the case before the court starts
In Louisiana and ends in that State, but
passes through section of Mississippi.
The pipe line company at two points in
Mississippi sells gas to local distributing
companies. Before the gas is delivered
10 the distributors its pressure is re-
duced, The price paid by the distrib-
utors Is not determined until after the
gas mas been used by the consumers,
there being different rates applicable to
domestic and industrial consumers.
The State of Mississippi commended
that the transporting company was en-
gagged in tntrastate business, because
after bringing the gas into the State It
was transformed and furnished to cou-
Sumers as they might demand It, Jus
tlce Holmes, however, apparently did
not consider this of much importance.
THE work done by the plaintiff"
his opinion said, lis done upon the
flowing gas TO help the delivery, and
seems to us plainly to be incident to
the interstate commerce between
LOUISIANA and Mississippi. The plain
tlH simply transports the gas and de-
hvers it wholesale not otherwise worked
over than to make it ready for deliv-
cry to the independent parties that
dispose of it by retail"
But, said Justice Butler in the
ONO case last May, when the gas
passes from the distribution lines into
the supply mains it necessarily Is re-
neVed OF nearly all the pressure put
upon 1t at the stations of the produc-
ing companies, it's volume thereby is
expanded to many times what it was
while in the high-pressure interstate
transmission lines, and 1t Is divided
INTO the many thousand relatively tiny
streams that enter the small service
lines connecting such mains with the
pipes on the consumers premises. So
segregated, the gas in such service
lines and pipes remains in readiness or
moves forward to serve as needed, The
treatment and division of the large
compressed volume of gas is like the
breaking OF an original package, after
SHIPMENT In Interstate commerce, In
prepared for sale and sold at retail"
Iowa Law.
The decision in the Mississippi case
also will affect a 1881 law
in the State of Iowa, where about $50
miles of natural gas pipe line were
made subject to mileage tax. All of
these lines originate outside the State,
The Kansas case which the Supreme
CourG mas agreed to hear Is an appeal
oy the Western Distributing Co. VS..
Public Service Commission, wherein the
commission refused to permit increased
rates because the company did not
prove the reasonableness of the Accent
city gate" rate it pays the transport
ing company for gas shipped in inter-
state commerce.
=, The State of Kansas is relying upon
the supreme Courts decision In the
llllnoS Bell Telephone case to the
effect that a State commission NAV
inquire into the reasonableness OF
prices paid to a holding or affiliated
company.
Upon the outcome Of this case NAV
depend the necessity of Federal legis-
lat1on for control Of natural gas pipe
lines.
(Ctopyriqht 1921 \