Task: sc_issuearea

What follows is an opinion from the Supreme Court of the United States. Your task is to determine the issue area of the Court's decision. Determine the issue area on the basis of the Court's own statements as to what the case is about. Focus on the subject matter of the controversy rather than its legal basis. In specifying the issue in a legacy case, choose the one that best accords with what today's Court would consider it to be. Choose among the following issue areas: "Criminal Procedure" encompasses the rights of persons accused of crime, except for the due process rights of prisoners. "Civil rights" includes non-First Amendment freedom cases which pertain to classifications based on race (including American Indians), age, indigency, voting, residency, military or handicapped status, gender, and alienage. "First Amendment encompasses the scope of this constitutional provision, but do note that it need not involve the interpretation and application of a provision of the First Amendment. For example, if the case only construe a precedent, or the reviewability of a claim based on the First Amendment, or the scope of an administrative rule or regulation that impacts the exercise of First Amendment freedoms. "Due process" is limited to non-criminal guarantees. "Privacy" concerns libel, comity, abortion, contraceptives, right to die, and Freedom of Information Act and related federal or state statutes or regulations. "Attorneys" includes attorneys' compensation and licenses, along with trhose of governmental officials and employees. "Unions" encompass those issues involving labor union activity. "Economic activity" is largely commercial and business related; it includes tort actions and employee actions vis-a-vis employers. "Judicial power" concerns the exercise of the judiciary's own power. "Federalism" pertains to conflicts and other relationships between the federal government and the states, except for those between the federal and state courts. "Federal taxation" concerns the Internal Revenue Code and related statutes. "Private law" relates to disputes between private persons involving real and personal property, contracts, evidence, civil procedure, torts, wills and trusts, and commercial transactions. Prior to the passage of the Judges' Bill of 1925 much of the Court's cases concerned such issues. Use "Miscellaneous" for legislative veto and executive authority vis-a-vis congress or the states.

Justice White
delivered the opinion of the Court.
In this original action, several States, joined by the United States and a number of pipeline companies, challenge the constitutionality of Louisiana’s “First-Use Tax” imposed on certain uses of natural gas brought into Louisiana, principally from the Outer Continental Shelf (OCS), as violative of the Supremacy Clause and the Commerce Clause of the United States Constitution.
I
The lands beneath the Gulf of Mexico have large reserves of oil and natural gas. Initially, these reserves could not be developed due to technological difficulties associated with offshore drilling. In 1938, the first drilling rig was constructed off the coast of Louisiana, and with the advent of new technologies, offshore drilling has become commonplace. Exploration and development of the OCS in the Gulf of Mexico have become large industries providing a substantial percentage of the natural gas used in this country. Most of the gas being extracted from the lands underlying the Gulf is piped to refining plants located in coastal portions of Louisiana where the gas is “dried” — the liquefiable hydrocarbons gathered and removed- — on its way to ultimate distribution to consumers in over 30 States. It is estimated that 98% of the OCS gas processed in Louisiana is eventually sold to out-of-state consumers with the 2% remainder consumed within Louisiana. The, contractual arrangements between a producer of gas and the pipeline companies vary. Most often, the producer sells the gas to the pipeline companies at the wellhead, although the producer may retain an interest in any extractable components. Some producers, however, retain full ownership rights and simply pay a flat fee for the use of the pipeline companies’ facilities.
The ownership and control of these large reserves of natural gas have been much disputed. In United States v. Louisiana, 339 U. S. 699 (1950), the Court applied the principle of its holding in United States v. California, 332 U. S. 19 (1947)—that the United States possesses paramount rights to lands beneath the Pacific Ocean seaward of California’s low-water mark — to the offshore areas adjacent to Louisiana. In 1953, Congress passed the Submerged Lands Act, 43 U. S. C. §§ 1301-1315, ceding any federal interest in the lands within three miles of the coast, while confirming the Federal Government’s interest in the area seaward of the 3-mile limit. See United States v. Louisiana, 363 U. S. 1 (1960); United States v. Maine, 420 U. S. 515, 524-526 (1975). In the same year, Congress passed the Outer Continental Shelf Lands Act, 43 U. S. C. §§ 1331-1343 (OCS Act), which declared that the “subsoil and seabed of the outer Continental Shelf appertain to the United States and are subject to its jurisdiction, control, and power of disposition....” § 1322. The OCS Act also established procedures for federal leasing of OCS land to develop mineral resources. While the passage of these Acts established the respective legal interests of the parties, there has been extensive litigation to establish the legal boundaries of the.federal OCS domain. See generally United States v. Louisiana, 446 U. S. 253, 254-260 (1980) (detailing the history of the “long-continuing and sometimes strained controversy” between the United States and Louisiana concerning the OCS lands).
In 1978, the Louisiana Legislature enacted a tax of seven cents per thousand cubic feet of natural gas on the “first use” of any gas imported into Louisiana which was not previously subjected to taxation by another State or the United States. La. Rev. Stat. Ann. §§ 47:1301-47:1307 (West Supp. 1981) (Act). The Tax imposed is precisely equal to the severance tax the State imposes on Louisiana gas producers. The Tax is owed by the owner of the gas at the time the first taxable “use” occurs within Louisiana. § 1305B. About 85% of the OCS gas brought ashore is owned by the pipeline companies, the rest by the producers. Since most States impose their own severance tax, it is acknowledged that the primary effect of the First-Use Tax will be on gas produced in the federal OCS area and then piped to processing plants located within Louisiana. It has been estimated that Louisiana would receive at least $150 million in annual receipts from the First-Use Tax.
The stated purpose of the First-Use Tax was to reimburse the people of Louisiana for damages to the State’s waterbot-toms, barrier islands, and coastal areas resulting from the introduction of natural gas into Louisiana from areas not subject to state taxes as well as to compensate for the costs incurred by the State in protecting those resources. § 1301C. Moreover, the Tax was designed to equalize competition between gas produced in Louisiana and subject to the state severance tax of seven cents per thousand cubic feet, and gas produced elsewhere not subject to a severance tax such as OCS gas. § 1301A. The Act specified a number of different uses justifying imposition of the First-Use Tax including sale, processing, transportation, use in manufacturing, treatment, or “other ascertainable action at a point within the state.” § 1302 (8).
The Act itself, as well as provisions found elsewhere in the state statutes, provided a number of exemptions from and credits for the First-Use Tax. The Severance Tax Credit provided that any taxpayer subject to the First-Use Tax was entitled to a direct tax credit on any Louisiana severance tax owed in connection with the extraction of natural resources within the State. La. Rev. Stat. Ann. § 47:647 (West Supp. 1981). Second, municipal or state-regulated electric generating plants and natural gas distributing services located within Louisiana, as well as any direct purchaser of gas used for consumption directly by that purchaser, were provided tax credits on other Louisiana taxes upon a showing that “fuel costs for electricity generation or natural gas distribution or consumption have increased as a direct result of increases in transportation and marketing costs of natural gas delivered from the federal domain of the outer continental shelf...,” which implicitly includes any increases resulting from the First-Use Tax. La. Rev. Stat. Ann. § 47:11B (West Supp. 1981). Furthermore, imported natural gas used for drilling oil or gas within the State was exempted from the First-Use Tax. La. Rev. Stat. Ann. §47:1303A (West Supp. 1981). Thus, Louisiana consumers of OCS gas for the most part are not burdened by the Tax, but it does uniformly apply to gas moving out of the State. The Act also purported to establish the legal effect of the Tax in terms of defining the proper allocation of the Tax among potentially liable parties. Specifically, the Act declared that the “tax shall be deemed a cost associated with uses made by the owner in preparation of marketing of the natural gas.” § 1303C. Any contract which attempted to allocate the cost of the Tax to any party except the ultimate consumer was declared to be “against public policy and unenforceable to that extent.” Ibid.
On March 29, 1979, eight States filed a motion for leave to file a complaint under this Court’s original jurisdiction pursuant to Art. Ill, § 2, of the Constitution. The complaint sought a declaratory judgment that the First-Use Tax was unconstitutional under: (1) the Commerce Clause, Art. I, § 8, cl. 3; (2) the Supremacy Clause, Art. VI, cl. 2; (3) the Import-Export Clause, Art. I, § 10, cl. 2; (4) the Impairment of Contracts Clause, Art. I, § 10, cl. 1; and (5) the Equal Protection Clause of the Fourteenth Amendment. The plaintiff States also sought injunctive relief against Louisiana or its agents collecting the Tax with respect to any gas in interstate commerce as well as a refund of taxes already collected. We granted plaintiffs’ motion for leave to file on June 18, 1979. 442 U. S. 937. Subsequently, as. is usual, we appointed a Special Master to facilitate handling of the suit. 445 U. S. 913 (1980). To date, the Special Master has issued two reports. In the first report, dated May 14, 1980, the Special Master recommended that the Court approve the motions of New Jersey, the United States, the Federal Energy Regulatory Commission (FERG), and 17 pipeline companies to intervene as plaintiffs. The Master’s second report was issued on September 15, 1980, and essentially made two recommendations. First, the Master recommended that we deny Louisiana’s motion to dismiss and reject the submissions that the plaintiff States had no standing to bring the action and that the case was not an appropriate one for the exercise of our original jurisdiction. Second, on the plaintiff States’ motion for judgment on the pleadings on the grounds that the Tax was unconstitutional on its face, the Special Master, while recognizing that the statute was constitutionally suspect in certain respects, recommended that the motion be denied and that further evidentiary hearings be conducted. We heard oral argument on the exceptions filed to the reports.
II
Initially, we must resolve Louisiana’s contention, rejected by the Special Master, that the case should be dismissed. In support of its motion, Louisiana presents two principal arguments. First, Louisiana contends that the plaintiff States lack standing to bring the suit under the Court’s original jurisdiction. Second, Louisiana argues that even if the bare requirements for exercise of our original jurisdiction have been met, this case is not an appropriate one to entertain here because of certain pending state-court actions in Louisiana in which the constitutional issues sought to be presented may be addressed. See Arizona v. New Mexico, 425 U. S. 794, 797 (1976). See also Ohio v. Wyandotte Chemicals Corp., 401 U. S. 493, 501 (1971). We agree with the Special Master that both contentions should be rejected.
A
1
The Constitution provides for this Court’s original jurisdiction over cases in which a “State shall be a Party.” Art. Ill, § 2, cl. 2. Congress has in turn provided that the Supreme Court shall have “original and exclusive jurisdiction of all controversies between two or more States.” 28 U. S. C. § 1251 (a) (1976 ed., Supp. III). In order to constitute a proper “controversy” under our original jurisdiction, “it must appear that the complaining State has suffered a wrong through the action of the other State, furnishing ground for judicial redress, or is asserting a right against the other State which is susceptible of judicial enforcement according to the accepted principles of the common law or equity systems of jurisprudence.” Massachusetts v. Missouri, 308 U. S. 1, 15 (1939). See New York v. Illinois, 274 U. S. 488, 490 (1927) ; Texas v. Florida, 306 U. S. 398, 405 (1939).
Louisiana asserts that this case should be dismissed for want of standing because the Tax is imposed on the pipeline companies and not directly on the ultimate consumers. Under its view, the alleged interests of the plaintiff States do not fall within the type of "sovereignty” concerns justifying exercise of our original jurisdiction. Standing to sue, however, exists for constitutional purposes if the injury alleged “fairly can be traced to the challenged action of the defendant, and not injury that results from the independent action of some third party not before the court.” Simon v. Eastern Kentucky Welfare Rights Organization, 426 U. S. 26, 41-42 (1976). See Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U. S. 59, 72-81 (1978). This is clearly the case here. The plaintiff States are substantial consumers of natural gas. The First-Use Tax, while imposed on the pipeline companies, is clearly intended to be passed on to the ultimate consumer. Indeed, the statute forbids the Tax from being passed on or back to any third party other than the purchaser of the gas and explicitly directs that it should be considered as a cost of preparing the gas for market. La. Rev. Stat. Ann. §47:1303C (West Supp. 1981). In fact, the pipeline companies, with the approval of the FERC, have passed on the cost of the First-Use Tax to their customers. See Louisiana First-Use Tax in Pipeline Rate Cases, Docket No. RM78-23, Order No. 10, 43 Fed. Reg. 45553 (1978). Thus, the Special Master properly determined that “although the tax is collected from the pipelines, it is really a burden on consumers.” Second Report, at 12. It is clear that the plaintiff States, as major purchasers of natural gas whose cost has increased as a direct result of Louisiana’s imposition of the First-Use Tax, are directly affected in a “substantial and real” way so as to justify their exercise of this Court’s original jurisdiction.
2
Jurisdiction is also supported by the States’ interest as parens patriae. A State is not permitted to enter a controversy as a nominal party in order to forward the claims of individual citizens. See Oklahoma ex rel. Johnson v. Cook, 304 U. S. 387 (1938); New Hampshire v. Louisiana, 108 U. S. 76 (1883). But it may act as the representative of its citizens in original actions where the injury alleged affects the general population of a State in a substantial way. See, e. g,, Missouri v. Illinois, 180 U. S. 208 (1901); Kansas v. Colorado, 185 U. S. 125 (1902); Georgia v. Tennessee Copper Co., 206 U. S. 230 (1907). See generally Note, The Original Jurisdiction of the United States Supreme Court, 11 Stan. L. Rev. 665, 671-678 (1959). Cf. Hawaii v. Standard Oil Co., 405 U. S. 251, 257-259 (1972) (the Court has recognized the right of a State to sue as parens patriae “to prevent or repair harm to its 'quasi-sovereign' interests” in original jurisdiction suits).
In this respect, this case is functionally indistinguishable from Pennsylvania v. West Virginia, 262 U. S. 553 (1923), in which the Court entertained a suit brought by one State against another. In that case, West Virginia, then the leading producer of natural gas, required gas producers in the State to meet the needs of all local customers before shipping any gas interstate. Ohio and Pennsylvania moved for leave to file a complaint under the Court’s original jurisdiction claiming that the statute violated the Commerce Clause in that the statute would have the effect of cutting off supplies of natural gas to those States. Both States claimed to be protecting a twofold interest — “one as the proprietor of various public institutions and schools whose supply of gas will be largely curtailed or cut off by the threatened interference with the interstate current, and the other as the representative of the consuming public whose supply will be similarly affected.” The Court granted leave to file, finding both interests to be substantial. With respect to representing the interests of its citizens the Court stated:
“The private consumers in each State not only include most of the inhabitants of many urban communities but constitute a substantial portion of the State’s population. Their health, comfort and welfare are seriously jeopardized by the threatened withdrawal of the gas from the interstate stream. This is a matter of grave public concern in which the State, as the representative of the public, has an interest apart from that of the individuals affected. It is not merely a remote or ethical interest but one which is immediate and recognized by law.” Id., at 592.
Pennsylvania v. West Virginia counsels that we should not dismiss this action. Plaintiff States have alleged substantial and serious injury to their proprietary interests as consumers of natural gas as a direct result of the allegedly unconstitutional actions of Louisiana. This direct injury is also supported by the States’ interest in protecting its citizens from substantial economic injury presented by imposition of the First-Use Tax. Nor does the incidence of the Tax fall on a small group of citizens who are likely to challenge the Tax directly. Rather, a great many citizens in each of the plaintiff States are themselves consumers of natural gas and are faced with increased costs aggregating millions of dollars per year. As the Special Master observed, individual consumers cannot be expected to litigate the validity of the First-Use Tax given that the amounts paid by each consumer are likely to be relatively small. Moreover, because the consumers are not directly responsible to Louisiana for payment of the taxes, they of course are foreclosed from suing for a refund in Louisiana’s courts. In such circumstances, exercise of our original jurisdiction is proper.
B
With respect to Louisiana’s second argument, it is true that we have construed the congressional grant of exclusive jurisdiction under § 1251 (a) as requiring resort to our obligatory jurisdiction only in “appropriate cases.” Illinois v. City of Milwaukee, 406 U. S. 91, 93 (1972); Arizona v. New Mexico, 425 U. S., at 796-797. This view is consistent with the general observation that the Court’s original jurisdiction should be exercised “sparingly.” United States v. Nevada, 412 U. S. 534, 538 (1973). See Ohio v. Wyandotte Chemicals Corp., 401 U. S., at 501; Massachusetts v. Missouri, 308 U. S., at 18-20. In City of Milwaukee, we noted that what is “appropriate” involves not only “the seriousness and dignity of the claim,” but also “the availability of another forum where there is jurisdiction over the named parties, where the issues tendered may be litigated, and where appropriate relief may be had.” 406 U. S., at 93. Louisiana urges that presently pending state lawsuits raising the identical constitutional issues presented here constitute sufficient reason to forgo the exercise of our original jurisdiction.
There have been filed in various lower courts several suits challenging the constitutionality of the First-Use Tax. The first suit was brought by Louisiana in state court seeking a declaratory judgment that the First-Use Tax is constitutional. Edwards v. Transcontinental Gas Pipe Line Corp., No. 216,867 (19th Judicial Disk, East Baton Rouge Parish). Among the named defendants were all of the pipeline companies doing business in the State. The pipeline companies sought to have the Tax declared unconstitutional. Other lawsuits were filed in state court seeking a refund of taxes paid under protest. Southern Natural Gas Co. v. McNamara, No. 225,533 (19th Judicial District, East Baton Rouge Parish). These refund actions were filed after this Court granted plaintiff States’ motion for leave to file their complaint. Since under Louisiana law there is no provision for interim injunctive relief, the pipeline companies were required to pay the Tax. The receipts have been put in an escrow account subject to refund with interest paid on the account at the rate of 6%. Neither the plaintiff States, the United States, nor the FERC is a named party in any of the state actions nor have they filed leave to intervene, although Louisiana represented at oral argument that such a motion would not be opposed. The final suit was commenced by the FERC against various state officials, seeking to enjoin enforcement of the First-Use Tax on constitutional grounds. FERC v. McNamara, No. C. A. 78-384 (MD La.). That action is presently stayed.
In City of Milwaukee, on which Louisiana relies, the proposed suit by Illinois against four municipalities did not fall within our exclusive grant of original jurisdiction because political subdivisions of the State could not be considered as a State for purposes of 28 U. S. C. § 1251 (a) (1976 ed., Supp. III). 406 U. S., at 94-98. Similarly, the decision in Wyan-dotte Chemicals did not involve § 1251 (a), since it was a suit between a State and citizens of another State and so did not fall under our exclusive jurisdiction. Louisiana also relies, however, on Arizona v. New Mexico for an example of a case where we determined not to exercise our exclusive jurisdiction in a case between States because the matter was “inappropriate” for determination.
In that case, we denied Arizona’s motion for leave to file a complaint against New Mexico. Arizona was suing to challenge New Mexico’s electrical energy tax which imposed a net kilowatt hour tax on any electric utility generating electricity in New Mexico. Arizona sought a declaratory judgment that the tax constituted, inter alia, an unconstitutional discrimination against interstate commerce. Arizona brought the suit in its proprietary capacity as a consumer of electricity generated in New Mexico and as parens patriae for its citizens. Arizona further alleged that it had no other forum in which to vindicate its interests. New Mexico asserted that the three Arizona utilities affected by the statute had chosen not to pay the tax and instead had jointly filed suit in state court seeking a declaratory judgment that the tax was unconstitutional. This Court held that “[i]n the circumstances of this case, we are persuaded that the pending state-court action provides an appropriate forum in which the issues tendered here may be litigated.” 425 U. S., at 797 (emphasis in original).
Of course, the issue of appropriateness in an original action between States must be determined on a case-by-case basis. Despite the facial similarity with Arizona v. New Mexico, there are significant differences from the present case that compel an opposite result. First, one of the three electric companies involved in the state-court action in New Mexico was a political subdivision of the State of Arizona. Arizona’s interests were thus actually being represented by one of the named parties to the suit. In this case, none of the plaintiff States is directly represented in the tax refund case. It is also important to note that Arizona had itself not suffered any direct harm as of the time that it moved for leave to file a complaint since none of the utilities had yet paid the tax. Unlike the present case, it was highly uncertain whether Arizona’s interest as a purchaser of electricity had been adversely affected. New Mexico’s procedure did not limit the utility companies to seeking a refund of taxes already paid, but rather permitted the companies to refuse to pay the tax pending a declaration of the statute’s constitutionality. In contrast, Louisiana requires the Tax to be paid pending the refund action with interest accruing at the rate of 6%. As recognized by the Special Master, the effect of the limited interest rate is to permit Louisiana to benefit from any delay attendant to the state-court proceedings even if the Tax is ultimately found unconstitutional.
The tax at issue in the Arizona case did not sufficiently implicate the unique concerns of federalism forming the basis of our original jurisdiction. At most, the New Mexico tax affected only some residents in one State. In the present case, the magnitude and effect of the First-Use Tax is far greater. The anticipated $150-million yearly tax is intended to be and is being passed on to millions of consumers in over 30 States. Unlike the day-to-day taxing measures which spurred the Court’s observations in Wyandotte, it is not at all a “waste” of this Court’s time to consider the validity of a tax with the structure and effect of Louisiana’s First-Use Tax. Indeed, there is nothing ordinary about the Tax. Given the underlying claim that Louisiana is attempting, in effect, to levy the Tax as a substitute for a severance tax on gas extracted from areas that belong to the people at large to the relative detriment of the other States in the Union, it is clear that the First-Use Tax implicates serious and important concerns of federalism fully in accord with the purposes and reach of our original jurisdiction.
The exercise of our original jurisdiction is also supported by the fact that the First-Use Tax affects the United States’ interests in the administration of the OCS — a factor totally absent in Arizona v. New Mexico. While we do not have exclusive jurisdiction in suits brought by the United States against a State, see 28 U. S. C. §1251 (b)(2) (1976 ed., Supp. III), we may entertain such suits as original actions in appropriate circumstances. See, e. g., United States v. California, 332 U. S. 19 (1947). See also United States v. Alaska, 422 U. S. 184, 186, n. 2 (1975). To be sure, we “seek to exercise our original jurisdiction sparingly and are particularly reluctant to take jurisdiction of a suit where the plaintiff has another adequate forum in which to settle his claim.” United States v. Nevada, 412 U. S., at 538. In this case, however, it is clear that a district court action brought by the United States, which necessarily would not include the plaintiff States, would be an inadequate forum in light of the present posture of this case. In addition, because of the interest of the United States in protecting its rights in the OCS area, with ramifications for all coastal States, as well as its interests under the regulatory mechanism that supervises the production and development of natural gas resources, we believe that this case is an appropriate one for the exercise of our original jurisdiction under § 1251 (b)(2).
For the reasons stated above, we reject Louisiana’s exceptions to the report of the Special Master, and accept the recommendation that we deny Louisiana’s motion to dismiss.
Ill
On the merits, plaintiffs argue that the First-Use Tax violates the Supremacy Clause because it interferes with federal regulation of the transportation and sale of natural gas in interstate commerce. The Supremacy Clause provides that “[t]his Constitution, and the Laws of the United States which shall be made in Pursuance thereof... shall be the supreme Law of the Land... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Art. VI, cl. 2. It is basic to this constitutional command that all conflicting state provisions be without effect. See McCulloch v. Maryland, 4 Wheat. 316, 427 (1819). See also Hines v. Davidowitz, 312 U. S. 52 (1941). Consideration under the Supremacy Clause starts with the basic assumption that Congress did not intend to displace state law. See Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). But as the Court stated in Rice:
“Such a purpose [to displace state law] may be evidenced in several ways. The scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it. Pennsylvania R. Co. v. Public Service Comm’n, 250 U. S. 566, 569; Cloverleaf Butter Co. v. Patterson, 315 U. S. 148. Or the Act of Congress may touch a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject. Hines v. Davidowitz, 312 U. S. 52. Likewise, the object sought to be obtained by the federal law and the character of obligations imposed by it may reveal the same purpose. Southern R. Co. v. Railroad Commission, 236 U. S. 439; Charleston & W. C. R. Co. v. Varnville Co., 237 U. S. 597; New York Central R. Co. v. Winfield, 244 U S. 147; Napier v. Atlantic Coast Line R. Co., [272 U. S. 605]. Or the state policy may produce a result inconsistent with the objective of the federal statute. Hill v. Florida, 325 U. S. 538.” Ibid.
Of course, a state statute is void to the extent it conflicts with a federal statute — if, for example, “compliance with both federal and state regulations is a physical impossibility,” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 142-143 (1963), or where the law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, supra, at 67. See generally Ray v. Atlantic Richfield Co., 435 U. S. 151, 157-158 (1978); City of Burbank v. Lockheed Air Terminal, Inc., 411 U. S. 624, 633 (1973).
Plaintiffs argue that § 1303C of the Act violates the Natural Gas Act, 15 U. S. C. §§ 717-717w (1976 ed. and Supp. Ill) (Gas Act), as amended by the Natural Gas Policy Act of 1978. In 1938, Congress enacted the Gas Act to assure that consumers of natural gas receive a fair price and also to protect against the economic power of the interstate pipelines. See FPC v. Hope Natural Gas Co., 320 U. S. 591, 610, 612 (1944); Atlantic Refining Co. v. Public Service Comm’n of New York, 360 U. S. 378, 388-389 (1959). The Gas Act was intended to provide the Federal Power Commission, now the FERC, with authority to regulate the wholesale pricing of natural gas in the flow of interstate commerce from wellhead to delivery to consumers. Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672, 682 (1954).
Under the present law, natural gas owners are entitled to recover from their customers all legitimate costs associated with the production, processing, and transportation of natural gas. See FPC v. United Gas Pipe Line Co., 386 U. S. 237, 243 (1967) (cost of service normally includes proper allowance for taxes and this allowance is “obviously within the jurisdiction of the Commission”). As part of the First-Use Tax, Louisiana has directed that the amount of the Tax should be “deemed a cost associated with uses made by the owner in preparation of marketing of the natural gas.” § 1303C. The Act further provides that an owner shall not have an enforceable right to seek reimbursement for payment of the Tax from any third party other than a purchaser of the gas, ibid., even though the third party may be the owner of marketable hydrocarbons that are extracted from the gas in the course of processing.
The effect of § 1303C is to interfere with the FERC’s authority to regulate the determination of the proper allocation of costs associated with the sale of natural gas to consumers. The unprocessed gas obtained at the wellhead contains extractable hydrocarbons which are most often owned and sold separately from the “dried” gas. The FERC normally allocates part of the processing costs between these related products, and insists that the owners of the liquefiable hydrocarbons bear a fair share of the expense associated with processing. See generally FPC v. United Gas Pipe Line Co., supra, at 243 (“income and expense of unregulated and regulated activities should be segregated”). By specifying that the First-Use Tax is a processing cost to be either borne by the pipeline or other owner without compensation, an unlikely event in light of the large sums involved, or passed on to purchasers, Louisiana has attempted a substantial usurpation of the authority of the FERC by dictating to the pipelines the allocation of processing costs for the interstate shipment of natural gas. Owners of natural gas are foreclosed by the operation of § 1303C from entering into valid contracts requiring the owners of the extracted hydrocarbons to reimburse the pipelines for costs associated with transporting and processing these products. The effect of § 1303C is to shift the incidence of certain expenses, which the FERC insists are incurred substantially for the benefit of the owners of extractable hydrocarbons, to the ultimate consumer of the processed gas without the prior approval of the FERC.
The effect of § 1303C is akin to the state regulation overturned in Northern Natural Gas Co. v. State Corporation Comm’n of Kansas, 372 U. S. 84, 92 (1963). In Northern Natural Gas, a state administrative agency’s rule required an interstate pipeline company to purchase natural gas ratably from all the wells in a particular field. The Court held that the rule violated the superior interests of the Federal Government under the Gas Act. The state Commission’s order shifted the burden of performing the “complex task of balancing the output of thousands of natural gas wells within the State” to the pipeline company. This requirement “could seriously impair the Federal Commission’s authority to regulate the intricate relationship between the purchasers’ cost structures and eventual costs to wholesale customers who sell to consumers in other States. This relationship is a matter with respect to which Congress has given the Federal Power Commission paramount and exclusive authority.” Ibid.
While the Special Master noted that the FERC was of the opinion that the First-Use Tax was impermissible, the Special Master refused to recommend that the Court grant plaintiffs’ motion for judgment on the Supremacy Clause issue respecting § 1303C because he discerned a factual issue concerning the nature of the gas-drying process. Under the Special Master’s view, if the facts demonstrated that processing was done for the profit of the owners of the extractable hydrocarbons, then the position of the FERC that such costs should not be passed on to the consumers was correct. If, however, the processing was done as a means of standardizing the heat content of the gas for sale to consumers, then it would be reasonable to pass the Tax forward, and thus § 1303C would be consistent with Gas Act policy. The Special Master concluded that this question was best resolved after suitable factual development, and that in any event, it may be that “in the end FERC’s orders can be adjusted so that the laws will mesh without conflict.”
It is our view, however, that the issue is ripe for decision without further evidentiary hearings. Under the Gas Act, determining pipeline and producer costs is the task of the FERC in the first instance, subject to judicial review. Hence, the further hearings contemplated by the Special Master to determine whether and how processing costs are to be allocated are as inappropriate as Louisiana’s effort to pre-empt those decisions by a statute directing that processing costs be passed on to the consumer. Even if the FERC ultimately determined that such expenses should be passed on in toto, this kind of decisionmaking is within the jurisdiction of the FERC; and the Louisiana statute, like the state Commission’s order in Northern Natural Gas, supra, is inconsistent with the federal scheme and must give way. At the very least, there is an “imminent possibility of collision,” ibid. The FERC need not adjust its ruling to accommodate the Louisiana statute. To the contrary, the State may not trespass on the authority of the federal agency. As we see it, plaintiffs are entitled to judgment on the pleadings that § 1303C is invalid under the Supremacy Clause. To that extent, therefore, we sustain plaintiffs’ exceptions to the Special Master’s second report.
IV
Plaintiffs also argue that the First-Use Tax violates the Commerce Clause of the United States Constitution which provides that “[t]he Congress shall have Power... [t]o regulate Commerce... among the several States... Art. I, § 8, cl. 3. Prior case law has established that a state tax is not per se invalid because it burdens interstate commerce since interstate commerce may constitutionally be made to pay its way. Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977). See Western Live Stock v. Bureau of Revenue, 303 U. S. 250 (1938). The State’s right to tax interstate commerce is limited, however, and no state tax may be sustained unless the tax

Question: What is the issue area of the decision?
A. Criminal Procedure
B. Civil Rights
C. First Amendment
D. Due Process
E. Privacy
F. Attorneys
G. Unions
H. Economic Activity
I. Judicial Power
J. Federalism
K. Interstate Relations
L. Federal Taxation
M. Miscellaneous
N. Private Action
Answer:

Answer: H