State Corporation Comm'n of Kan. v. Wichita Gas Co., 290 U.S. 561 (1933)
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U.S. Supreme Court STATE CORPORATION COMMISSION OF KANSAS v. WICHITA GAS CO., 290 U.S. 561 (1934)
[Page 290 U.S. 561, 562]
Messrs. E. H. Hatcher, of Topeka, Kan., Charles D. Welch, of Coffeyville, Kan., Louis R. Gates, of Kansas City, Kan., and Charles W. Steiger, of Topeka, Kan., for appellants.
Mr. Robert D. Garver, of Kansas City, Mo., for appellees Wichita Gas Co. and others.
Mr. James W. Finley, of Bartlesville, Okl., for appellee Cities Service Gas Co.
Mr. Justice BUTLER delivered the opinion of the Court.
Ten suits were consolidated for trial. [Footnote 1] The appellee in each of the first nine is a local public service corporation,
[Page 290 U.S. 561, 563]
for convenience called a distributing company, engaged in the business of furnishing natural gas to consumers, domestic and industrial, in Kansas, and together they operate in 128 cities and towns. The other appellee, Cities Service Gas Company, is a pipe line company, engaged in transporting gas from Texas and Oklahoma fields into Kansas and other states. The stock of each of the distributing companies is owned by the Gas Service Company, and its stock is owned by the Cities Service Company; the common stock of the Cities Service Gas Company is owned by the Empire Gas & Fuel Company, the voting stock of which is owned by the Cities Service Company. Henry L. Doherty, doing business as Henry L. Doherty & Co ., owns 35 per cent. of the voting stock of the Cities Service Company. The policies of the distributing companies and the pipe line company are subject to control by the Cities Service Company, and Doherty controls its policies. These corporations and he constitute 'affiliated interests' as defined by a Kansas statute effective March 9, 1931,2 the substance of which is later to be stated.
The Kansas statutes empower its Public Service Commission to regulate the service and to fix rates to be charged by public utilities, including the distributing companies. [Footnote 3] They prescribe heavy penalties for failure to comply with commission-made orders. [Footnote 4] But the sale, transportation, and delivery of natural gas by the pipe line company to the distributing companies constitutes interstate commerce, and therefore the state is without power to prescribe rates or prices to be charged therefor. State of Mis-
[Page 290 U.S. 561, 566]
unreasonable to the extent that they exceeded 29.5 cents per thousand cubic feet. [Footnote 5] Re Cities Service Co., P.U.R. 1933A, pp. 113-202. It granted the companies' application for rehearing, and August 31, 1932, put aside the order filed with its report and in its place promulgated two orders:
The first directed the distributing companies to cease setting up as an expense item payment of the 1 3/4 per cent. charge and payment to the pipe line company for gas in excess of 30 cents per thousand cubic feet and to give no consideration to the payments so disapproved in fixing rates to domestic consumers. And it directed that, on October 17, 1932, the distributing companies show cause why the prescribed reduction should not be passed on to the consumers. [Footnote 6]
[Page 290 U.S. 561, 568]
to charge rates reduced as directed by the second order. [Footnote 7]
[Page 290 U.S. 561, 570]
enjoining the appellants from enforcing the first order for, as insisted by appellants in oral argument in this court, the challenged provisions are merely preliminary steps in aid of investigations for the ascertainment of the reasonableness of appellees' rates, and they have no binding force in respect of payments to the pipe line company or rates to be charged consumers and cannot be res adjudicata. The decree in so far as it enjoins enforcement of the provisions of that order will be vacated.
The commission, its members, and Attorney General having in their answer and here admitted that the commission's second order is invalid, the decree in so far as it enjoins the enforcement of its provisions will be affirmed.
Decree modified, and, as modified, affirmed. Footnotes
Footnote 1 The appellees are: The Wichita Gas Company, the Hutchinson Gas Company, the Newton Gas Company, the Pittsburg Gas Company, the Capital Gas & Electric Company, the Wyandotte County Gas Company, the Girard Gas Company, Union Public Service Company, the Western Distributing Company, and Cities Service Gas Company.
Footnote 2 Kansas Laws, 1931, c. 239; Kan. Rev. St. Supp. 1931, 74-602a to 74- 602c.
Footnote 3 Kan. R.S. 66-107, 66-110, 66-111, 66-113.
Footnote 4 Kan. R.S. 66-138.
Footnote 5 Throughout the record the city gate rate is referred to as the '40- cent rate.' That is the usual charge per thousand cubic feet of gas delivered by the pipe line company to the mains of the distributing companies. But, as in some instances the city gate rate was lower, the average was 39.5 cents.
Footnote 6 The text is as follows:'1. That on and after the 1st day of September, 1932, the distributing companies, respondents above named, shall cease to set up on their books as an expense item any payments made to Henry L. Doherty & Company under the contract above mentioned, because of the one and three- fourths per cent charge and also any payments made to Cities Service Gas Company for main line town border gas in excess of 30 cents per M.C.F., and should give no consideration to any such payments in fixing a rate for the domestic consumer.'2. That on the 17th day of October, 1932, the distributing companies, respondents above named, appear before the Public Service Commission, at 10:00 o'clock A.M., and show cause to the Commission why the reduction in expenses as above set forth should not be passed on to the consumers with such other reductions as may be found reasonable.'
Footnote 7 Paragraph (3) of the decree:'That the defendants, the Public Service Commission of the State of Kansas, and the members thereof, and Roland Boynton, Attorney General of the State of Kansas, and each of them, their agents, servants, and employees, and all other persons acting under or through their authority, be and they are hereby permanently enjoined and restrained in the enforcement and execution of the provisions of two certain orders of said Public Service Commission dated August 31, 1932, insofar as the said orders require that the distributing companies, plaintiffs in the above named cases, should cease to set up on their books any payments made to Cities Service Gas Company for main line town border gas in excess of 30 cents per M.C.F., and should give no consideration to any such payments in fixing a rate for the domestic consumer; and, insofar as they and/or either of them require that effective September 1, 1932, and until a hearing is held and an order issued, the said distributing companies should charge rates to the consumers as follows:'All distributing companies paying a gate rate in excess of 30 cents per M.C.F. should deduct the difference between what the distributing companies were then paying at the city gate and 30 cents per M.C.F., and should pass this difference on to the consumer.'
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