Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-04
GAS TRADE AWAITS
!. TAX CASE DECISION
Supreme Court Verdict 10
Ohio Case Expected to
Set Precedent.
By GEORGE E. DOING.

4 forthcoming decision Of the SUI
preme Court Of the United States in the
Ohio case win have . far-reaching ef-
feet upon the natural gas industry
throughout the country.
The case is that of the East Ohio Gas
Co. VS.. the Ohio Tax Commission and
involves the question OF whether gas
brought from the West Virginia fields
for distribution to consumers in Ohio ~
subject to the States gross receipts tax
on the business of public utilities, or
whether It Is exempt from the tax be-
cause Of the interstate character Of the
transaction.
Nearly 81 ,0e0, 600 Involved.
The suit of the East Ohio Co. In
wolves nearly $1,000, 900 in taxes
and penalties for the years 1927, 1928
and 1929. The Federal Court for the
Southern District of Ohio held last
June that a State may impose q gross
receipts tax on gas piped from other
States and sold locally, as interstate
commerce ends when the gas passes
from transportation lines into the
smaller distribution lines. 1t Is this
decision which is now before the Su-
preme Court for review.
The gas in this instance comes prin-
cipally from the Hope Natural Gas
Co. Of West Virginia, although the East
Ohio Co. also receives a small quantity
from the Peoples Natural Gas Co. Of
Pennsylvania and about IS per cent Of
its supply from wells in Ohio. The
Hope Co. transports the gas to the
Ohio line, where it continues without
interruption into the pipes Of the East
Ohio Co and is carried directly to the
consumers. The Hope and East Ohio
| nd hot
United Fuel Gas Co West Virginia
taxes the gas when 1t Is produced. The
Ohio law excludes from the gross re-
ceipts tax the receipts from interstate
business" and the East Ohio Co. has
omitted from its reports to the Ohio
Tax Commission the receipts from all
gas received from outside the State.
Former Decision Recalled.
The Supreme Court has held that
where gas was brought into State by
an importing company and sold to In
dependent local distributing companies,
the interstate movement continued I'M
til delivery TO the distributing COM
panies and the State could not regulate
the rates. The court further held, how
ever, that with such delivery the inter-
state movement ended, since the dis
tributing companies were not in any
sense agents or representatives OF the
importing company, and that the State
had full power to regulate their rates
to consumers The East Ohio Co.. In
the case now before the court. con-
tends that its interests and those Of the
Hope Co. are the same and that there
fore the entire movement of the gas
from West Virginia to Ohio consumers
Is interstate commerce.
With the tremendous increase In the
use Of natural gas. most Of which origf-
mates in about half dozen States and
now is largely replacing manufactured
gas and other fuels in more than half
the States, the question Of whether the
business may be taxed by one Stats
when the source Of supply is In another
State is of great importance7as Is IN
dicated by the fact that the Ohio rate
Of 1.53 per cert amounts to approx
mately one-third of q million dollars
annual from one company alone, sery-
ing about so Ohio municipalities.
Severance Taxes"
All of the major producing States
levy taxes on the production Of natural
gas. As IN West Virginia, although
much Of the gas Is sent immediately
into interstate commerce, nevertheless
the State applies what is known as q
severance tax" and collects on pro-
duction ct the well.
Copyright, 1881