CITIES SERVICE CO. V. PEERLESS CO., 340 U. S. 179 (1950)

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U.S. Supreme Court

Cities Service Co. v. Peerless Co., 340 U.S. 179 (1950)

Cities Service Co. v. Peerless Co.

No. 153

Argued November 9-10, 1950

Decided December 11, 1950

340 U.S. 179


The Oklahoma Corporation Commission, after hearings and on findings made in proceedings before it, issued an order fixing a minimum wellhead price on all gas taken from a natural gas field located within the State. A second order directed appellant, a producer in this field and operator of an interstate gas pipeline system, to take gas ratably from another producer in the field at the price fixed in the first order. A large percentage of the production of the field was sold in interstate commerce.

Held: the orders of the Commission were valid under the Due Process and Equal Protection Clauses of the Fourteenth Amendment and the Commerce Clause of the Federal Constitution. Pp. 340 U. S. 180-183, 340 U. S. 185-189.

1. A state may adopt reasonable regulations to prevent economic and physical waste of natural gas. P. 340 U. S. 185.

2. Prevention of waste of natural resources, protection of the correlative rights of owners through ratable taking, and protection of the economy of the state may justify legislative control over production even though the uses to which property may profitably be put are restricted. Pp. 340 U. S. 185-186.

3. A price-fixing order, like any other regulation, is lawful if substantially related to a legitimate end sought to be attained. P. 340 U. S. 186.

4. There was ample evidence in the proceedings before the Commission to sustain its finding that existing low field prices for gas were resulting in economic waste and were conducive to physical waste, and that was a sufficient basis for the orders issued. Pp. 340 U. S. 180-183, 340 U. S. 186.

5. It is no concern of this Court that other regulatory devices might be more appropriate, or that less extensive measures might suffice. P. 340 U. S. 186.

6. In a field of this complexity with such diverse interests involved, this Court cannot say that there is a clear national interest so harmed that the state price-fixing orders here employed fall within the ban of the Commerce Clause. Pp. 340 U. S. 186-188.

7. It is not for this Court to consider whether the State's unilateral efforts to conserve gas will be fully effective. P. 340 U. S. 188. chanrobles.com-red

Page 340 U. S. 180

8. Hood & Sons v. Du Mond, 336 U. S. 525, distinguished. P. 340 U. S. 188.

9. There is before this Court no question of conflict between the orders of the State Commission and federal authority under the Natural Gas Act. Pp. 340 U. S. 188-189.

203 Okla. 35, 220 P.2d 279, affirmed.

Two orders of the Oklahoma Corporation Commission, challenged as violative of the Federal Constitution, were sustained by the State Supreme Court. 203 Okla. 35, 220 P.2d 279. On appeal to this Court, affirmed, p. 340 U. S. 189.