Natural Gas Act

“ Our conclusion that the Natural Gas Act does not empower natural gas companies unilaterally to change their contracts fully promotes the purposes of the Act. By preserving the integrity of contracts, it permits the stability of supply arrangements which all agree is essential to the health of the natural gas industry. ”

“ Jurisdiction to regulate a natural-gas company without jurisdiction to regulate its gas reserves would be like granting jurisdiction to regulate railroads without power to regulate the tracks, routes, rights-of-way, etc. And we have held that the Commission has jurisdiction under the Natural Gas Act to consider the gas producing properties in fixing rates. ”

“ If the standard of 'just and reasonable' is to sanction the maintenance of high rates by a natural gas company because they restrict the use of natural gas for certain purposes, the Act must be further amended. ”

“ There is much to be said from the national point of view for regulating sales at both ends of these interstate pipelines. The power of Congress to do so is unquestioned. Whether it did so by the Natural Gas Act of 1938 is a political and legal controversy that has reged in the Commission and in the Congress for some years. The question is not free from doubts. ”

“ There is a broader principle here which also stands in opposition to respondents' contentions. When Congress enacted the Natural Gas Act, it was motivated by a desire 'to protect consumers against exploitation at the hands of natural gas companies.' Sunray Mid-Continent Oil Co. v. Federal Power Commission, 364 U.S. 137, 147, 80 S.Ct. 1392, 1398, 4 L.Ed.2d 1623. To that end, Congress 'meant to create a comprehensive and effective regulatory scheme.' Panhandle Eastern Pipe Line Co. v. Public Service Commission, 332 U.S. 507, 520, 68 S.Ct. 190, 197, 92 L.Ed. ”

“ Thus, the estimate of the undeveloped gas territory must be ever changing; for new discovery may open territory theretogore unknown, and the sinking of test wells may establish the act that territory previously deemed valuable will be wholly unproductive. In no other field of public service regulation is the controlling body confronted with factors so baffling as in the natural gas industry, and in none is continuous supervision and control required in so high a degree. ”

“ It hardly can be maintained that the creation and control of rights respecting the ownership, extraction and marketing of natural gas are less broadly subject to state control than those relating to waters for irrigation and other uses or to the extraction of precious metals in the regions where those matters have called into play the states' authority to act in the manner best suited to local conditions and the needs of their inhabitants. ”

“ No law declares such use necessarily wasteful. Nor has the State purported to confer upon the Commissioner power to refuse a permit to new concerns and to restrict the use to the persons already engaged in the manufacture of carbon black. On the contrary, the use is expressly sanctioned in section 1 of Act 91 of 1922, which declares, 'that natural gas may be used in the manufacture of carbon black under the conditions as fixed and imposed by the provisions of' that act. ”

“ Prices for new natural gas are being decontrolled under the Natural Gas Policy Act--and natural gas production is now at an all time high; the supply shortages of several years ago have been eliminated ”

“ In the course of the opinion the court recognized the right of the state by proper legislation to regulate the removal from the earth of natural gas by the owner thereof, so as to prevent its undue waste, but maintained the decree of the court below, declaring this particular act unconstitutional, upon the grounds of its prohibitory character in attempting to prevent the transmission from the state through the pipe lines of the complainants of a legitimate subject of interstate commerce. ”

“ As we have said, this court in its decision affirmed the right of the complainants, in the conduct of interstate commerce, to take natural gas out of the state, and declared that a state could not prohibit the transportation of such product beyond its borders, and that the legislative act in question was an act the main purpose and effect of which were to prohibit the exercise of lawful rights secured by the Federal Constitution.
Construing the decree as we do, we think there is no occasion to modify its terms. ”

“ The similarities of the situations and the problems, for purposes of constitutionality in the exercise of those powers, are so obvious they do not need to be specified.
Historically, the states' freedom to exercise broad powers in defining and regulating rights of ownership and production of natural gas has been recognized almost as long and quite as completely as their similar freedoms to act in relation to water rights and mining rights. ”

“ No one disputes that natural gas is a wasting resource and that the necessity for conserving it is paramount. [3] As we see it, the question in this case is whether the Commission, through its certification power, may prevent the waste of gas committed to its jurisdiction. One apparent method of preventing waste of gas is to limit the uses to which it may be put, uses for which another, more abundant fuel may serve equally well. ”

“ To help Virginia clean your air and keep your coal, Congress needs to get the Clear Skills bill to my desk this year.
Improving our electricity supply also means making better use of natural gas. It's an important power source for our farmers and manufacturers and homeowners. We need to increase environmentally responsible production of natural gas from federal lands. To further increase our natural gas supply, Congress needs to make clear federal authority to choose sites for new receiving terminals for liquified natural gas. ”

“ The question should be raised as to whether the proposed use of natural gas would not result in displacing a less valuable fuel and create hardships in the industry already supplying the market, while at the same time rapidly depleting the country's natural-gas reserves. ”

“ When Pennsylvania challenged a West Virginia statute designed to keep natural gas within its borders, there was no question but that the issue presented rose to a level suitable to our original jurisdiction:
"The question is an important one; for what one State may do others may, and there are ten States from which natural gas is exported for consumption in other States. Besides, what may be done with one natural product may be done with others, and there are several States in which the earth yields products of great value which are carried into other States and there used." ”

“ Likewise, for the purpose of regulating and adjusting coexisting rights of surface owners to underlying oil and gas, it is within the power of a State to prohibit the operators of wells from allowing natural gas, not conveniently necessary for other purposes, to come to the surface without its lifting power having been utilized to produce the greatest quantity of oil in proportion. ”

“ But the wealth of Midas and the wit of man cannot produce or reproduce a natural gas field. We cannot even reproduce the gas, for our manufactured product has only about half the heating value per unit of nature's own. [38]
Natural gas in some quantity is produced in twenty-four states. It is consumed in only thirty-five states, and is available only to about 7,600,000 consumers. [39] Its availability has been more localized than that of any other utility service because it has depended more on the caprice of nature. ”

“ The ratable take orders here were intended as conservation measures [20] -to protect the correlative rights of producers taking gas from a common source of supply by preventing drainage from underproduced wells to overproduced wells. [21] It has always been recognized that the States possess the power to conserve scarce resources such as natural gas and to prevent unfair and discriminatory production of this resource by some wells at the expense of others. ”

“ This conclusive view also applies to the special provision concerning natural gas. We say this because, as obviously the prior sections of the statute embraced only manufactured gas, the provision as to natural gas was rendered necessary in order to give the same power to deal with that subject as was conferred concerning manufactured gas. ”

“ If that ground is to be taken, the battle should be won in Congress, not here. Regulation of the business of producing and gathering natural gas involves considerations of which we know little and with which we are not competent to deal. ”

“ Whether the facilities for the production of natural gas should be regulated and, if so, whether the regulation should be left to the states, as we think Congress has left it, are matters for Congress to determine. If it be thought that petitioner's profits from production of gas are too great because they are unregulated, and if it be thought to be important that they be reduced it is immensely more important that that be not accomplished by lawless action. ”

“ As a regular source of heating power, however, natural gas is employed only in some parts of the United States, especially in Pennsylvania, Kansas, Ohio and West Virginia, where it always occurs in the neighbourhood of coal and petroleum fields. ”

“ These rates met opposition from industrial sources, of course, and since diminished revenues from industrial sources tended to increase the domestic price, they met little popular or commission favor. The fact is that neither the gas companies nor the consumers nor local regulatory bodies can be depended upon to conserve gas. Unless federal regulation will take account of conservation, its efforts seem, as in this case, actually to constitute a new threat to the life of the Appalachian supply. ”

“ Until last year but one state—Indiana—had an effective law preventing the waste of natural gas by oil companies. This law says in substance that a man can not take the oil from the ground where nature has safely stored it, unless he also provide a market for the gas which accompanies it. It also says that neither the producer nor the consumer shall be allowed to waste this valuable fuel, as such waste is against public policy. ”