Pennsylvania v. West Virginia, 262 U.S. 553 (1923)

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Author: Justice Holmes

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Pennsylvania v. West Virginia, 262 U.S. 553 (1923)

MR. JUSTICE HOLMES, dissenting.

The statute seeks to reach natural gas before it has begun to move in commerce of any kind. It addresses itself to gas hereafter to be collected and states to what uses it first must be applied. The gas is collected under and subject to the law, if valid, and at that moment it is not yet matter of commerce among the states. I think that the products of a state, until they are actually started to a point outside it, may be regulated by the state notwithstanding the commerce clause. In Oliver Iron Mining Co. v. Lord, 262 U.S. 172, it was held that the state might levy an occupation tax upon the mining of iron ore equal to six percent of the value of the ore produced during the previous year, although substantially all the ore left the state and was put upon cars for that purpose by the same single movement by which it was severed from its bed. There could not be a case of a state’s product more certainly destined to interstate commerce. It was put upon the cars by the same act by which it was produced. But, as it was not yet in interstate commerce, the tax was sustained. I know of no relevant distinction between taxing and regulating in other ways. McCulloch v. Maryland, 4 Wheat. 316, 431.

But the states have been held authorized to regulate in other ways more closely resembling the present. In Sligh v. Kirkwood, 237 U.S. 52, a state law was sustained that made it criminal to sell or offer for shipment citrus fruits that were immature or otherwise unfit for consumption. That, upon grounds of local policy, intercepted before it got into the stream what would have been an object of interstate commerce. The local interest in the present case is greater and more obvious than in that of green oranges. Again, the power of the state to preserve a food supply for its people by game laws notwithstanding an indirect interference with interstate commerce is established. Geer v. Connecticut, 161 U.S. 519, 534; Silz v. Hesterberg, 211 U.S. 31. If there is any difference between the property rights of the state in game and in gas still in the ground, it does not concern the plaintiffs, and it is plain from the decisions cited that they do not depend upon a speculative view as to title. See Missouri v. Holland, 252 U.S. 416, 434. The right of the state so to regulate the use of natural gas as to prevent waste was sustained as against the Fourteenth Amendment in Walls v. Midland Carbon Co., 254 U.S. 300, and I do not suppose that the plaintiffs would have fared any better had they invoked the commerce clause. I need do no more than refer to prohibition of manufacture of articles intended for export, such as colored oleomargarine, Capital City Dairy Co. v. Ohio, 183 U.S. 238, 245, or spirits. The result of that and other cases has been expressed by this Court more than once in the form of a general recognition of the right of a state to make "reasonable provision for local needs," Minnesota Rate Cases, 230 U.S. 352, 402, 410-411, and the right has been recognized even when the interference with interstate commerce is direct, as when an interstate train is required to stop to accommodate passengers who do not leave the state, Lake Shore Michigan Southern Ry. Co. v. Ohio, 173 U.S. 285; Gulf, Colorado & Santa Fe Ry. Co. v. Texas, 246 U.S. 58.

I see nothing in the commerce clause to prevent a state from giving a preference to its inhabitants in the enjoyment of its natural advantages. If the gas were used only by private persons for their own purposes, I know of no power in Congress to require them to devote it to public use or to transport it across state lines. It is the law of West Virginia and of West Virginia alone that makes the West Virginian gas what is called a public utility, and how far it shall be such is a matter the that law alone decides. I am aware that there is some general language in Oklahoma v. Kansas Natural Gas Co., 221 U.S. 229, 255, a decision that I though wrong, implying that Pennsylvania might not keep its coal, or the northwest its timber, etc. But I confess I do not see what is to hinder. Certainly if the owners of the mines or the forests saw fit not to export their products, the Constitution would not make them do it. I see nothing in that instrument that would produce a different result if the state gave the owners motives for their conduct, as by offering a bonus. However far the decision in the case referred to goes, it cannot outweigh the consensus of the other decisions to which I have referred, and that seem to me to confirm what I should think plain without them -- that the Constitution does not prohibit a state from securing a reasonable preference for its own inhabitants in the enjoyment of its products, even when the effect of its law is to keep property within its boundaries that otherwise would have passed outside. Hudson County Water Co. v. McCarter, 209 U.S. 349, 357.

I agree substantially with my brothers McREYNOLDS and BRANDEIS, but think that there is jurisdiction in such sense as to justify a statement of my opinion upon the merits of the case. I think that the bill should be dismissed.

1.

The words "public service corporation" used in this act shall include all persons, associations of persons, firms, corporations, municipalities, and agencies engaged or employed in any business herein enumerated, or in any other public service business, whether above enumerated or not, whether incorporated or not.

Acts 1913, c. 9, § 3; Acts 1915, c. 8, § 3; Acts 1921, c. 150, § 3. See Acts 1919, c. 71, § 3.

2. A large part of the gas produced is not available for distribution to the public. Much is consumed within the state for field purposes such as drilling and cleaning out wells or the operation of compressor or pump stations to transport the gas. The producer must also, under reservations in the leases, ordinarily deliver to the landowner free gas service.

3. The temptation to discriminate may have been great. For Pennsylvania and Ohio Communities formerly supplied from local production of natural gas could, if this is no longer possible, afford to pay a very high price for gas rather than to discard existing gas appliances and to install new ones which would be required if oil or coal were to be substituted as fuel. In 1921, the average price per M cubic feet for domestic consumption was 26 cents in West Virginia, 44 cents in Pennsylvania, and 42 cents in Ohio. For industrial consumption it was 16 cents in West Virginia, 32 cents in Pennsylvania, and 34 cents in Ohio. United States Geological Survey, "Natural Gas in 1919-1921," published May 22, 1923.

4. The state has a property interest in running water naturally flowing into it and in the public waters and air within its boundaries. Georgia v. Tennessee Copper Co., 206 U.S. 230, 237. If the running water is withheld, its property is taken. If the public waters or the air is polluted, its territorial integrity is invaded. But the alleged right to purchase in interstate commerce and to import a natural resource is in no sense a right of the state. It would be described appropriately as a privilege of citizens of the United States. Compare Louisiana v. Texas, 176 U.S. 1, 24-25. Such privileges the state is not charged by the federal Constitution with the duty to enforce, and the fact that the institution of these suits was specially authorized by the Legislatures of Pennsylvania and of Ohio can be of no legal significance.

5. The Attorney General of Ohio states in his brief:

The supply of gas was adequate both for consumption inside the State of West Virginia and for transportation to other states until during the time of the World War in 1917 and 1918. Record, pp. 331 and 334. By reason of the vast demand for gas for industrial consumption which occurred as a result of the war and which drew upon the lines of the gas companies during the summer as heavily as or more heavily than during the winter, the gas companies had no opportunity to rest their wells or to accumulate a surplus of gas, as they had been under normal conditions. The federal government, through the Fuel Administration, gave orders to the gas companies to supply essential industrial plants with all the gas possible. Wells were drilled and turned into lines which, under normal conditions, would have been held in reserve, to assure a future supply. Record, pp. 333, 334. The supply of gas has never been adequate for all purposes, during periods of maximum demand, since that time.

It may be that production will increase. The war has closed. The excessive post-war activities of 1919 and early 1920 ceased, and were followed by a period of industrial depression. There may again be opportunity for periodic rest which gas wells, as well as human beings, appear to need, and thus seemingly exhausted wells may be restored. Furthermore, hitherto undeveloped gas areas may be worked, or more wells may be drilled in areas already developed, or new areas may be opened. For of the 2,725,798 acres of the gas territory held by the 67 public service corporations of the state in 1919, a large part are still undeveloped.

Moreover, the demand may lessen. Except in times of emergency, use of natural gas by the industries will be determined largely by its relative cost as compared with coal or oil. The demands of economy in manufacture may alone compel a reduction of its use in industry, and thus, for some time, leave the supply ample for domestic purposes. In 1920, Pennsylvania used for manufacturing purposes three times as much natural gas as it imported from West Virginia in 1921. U.S. Geological Survey, "Natural Gas, 1919-1921," published May 22, 1923, pp. 347, 355. Domestic consumption amounts to only 30 or 40 percent of the total consumption. U.S. Geological Survey, "Natural Gas, 1919-1921," supra, p. 352. Moreover, the present large waste may be stopped. The waste in Ohio in 1919 was 12 percent; in 1920, it was 18 percent; in 1921, it was 19 percent. On the other hand, in West Virginia, the waste in 1919 was only one percent; in 1920 and 1921, only two percent. "Natural Gas," supra, p. 352.

6. The situation is wholly unlike that presented in Savage v. Jones, 225 U.S. 501, 520-521, which is relied upon by plaintiffs. There, the suit was against the state chemist, the executive official vested with power to act, and he had

threatened the complainant that in default of such compliance he would cause the arrest and prosecution of every person dealing in the article within the state and had distributed broadcast throughout the state warning circulars.

Moreover, even if the West Virginia statute were construed as imposing penalties for disobedience so severe and menacing as to require the interposition of a federal court, it would be the public service corporations of West Virginia, not the states of Pennsylvania and Ohio, which would thereby be denied due process of law under the doctrine of Ex parte Young. And it is those corporations which would have to sue, as in Oklahoma Operating Co. v. Love, 252 U.S. 331, here relied upon by plaintiff.

7.

It is not sufficient to say that the Attorney General, or the Governor, or even the legislature of the state can be conclusively deemed to represent the public interests in such a controversy as that presented by the bill. Even a state, when it voluntarily becomes a complainant in a court of equity, cannot claim to represent both sides of the controversy.

Minnesota v. Northern Securities Co., 184 U.S. 199, 246.

8. In 1920, the production in Pennsylvania was 125,787,000 M cubic feet, and the consumption 161,397,000 M. In 1920, Ohio production was 58,938,000 M cubic feet and the consumption 136,872,000 M. U.S. Geological Survey, "Natural Gas 1919-1921," p. 345, published May 22, 1923.

9. The 1920 production in Kentucky was 3,345,000 M cubic feet; the consumption 15,297,000 M. The Indiana production 1,779,000 M; the consumption 4,435,000 M. The Maryland production is negligible. U.S. Geological Survey Bulletin, "Natural Gas in 1919-1921," supra, p. 345.

10. Some idea may be formed of the scope of this inquiry by examining the data concerning the natural gas operations collected by the United States Geological Survey.

11. For instance: if it should appear that the potential supply in Pennsylvania is ample for all present needs, but that its concerns prefer to husband their resources for the remoter future, would it be unjust discrimination on the part of the West Virginia companies to deny to their customers within the state an adequate supply while supplying to Pennsylvania distributing companies an amount of gas which these might have produced from reserves within Pennsylvania? Or if Kentucky had ample supplies and undeveloped fields, but sought gas from West Virginia because the Kentucky companies did not have the funds or the inclination to make at the time a large investment required to secure a supply within that state, would, under those circumstances, West Virginia companies be justified in supplying the Kentucky demand while leaving that of its West Virginia customers unsatisfied? Should distributing companies in Pennsylvania, Ohio, Kentucky, and Indiana be permitted to extend their mains or add new customers after West Virginia had recognized the insufficiency of the supply to satisfy the needs of consumers within the state? And what shall be deemed the existing demand of a state? Is existing demand to be limited to customers already connected? And does it mean the amount theretofore taken by such customers, or that which they may wish to take through existing appliances?

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Chicago: Holmes, "Holmes, J., Dissenting," Pennsylvania v. West Virginia, 262 U.S. 553 (1923) in 262 U.S. 553 262 U.S. 601–262 U.S. 603. Original Sources, accessed September 21, 2018, http://www.originalsources.com/Document.aspx?DocID=CQTDCE36172R19B.

MLA: Holmes. "Holmes, J., Dissenting." Pennsylvania v. West Virginia, 262 U.S. 553 (1923), in 262 U.S. 553, pp. 262 U.S. 601–262 U.S. 603. Original Sources. 21 Sep. 2018. www.originalsources.com/Document.aspx?DocID=CQTDCE36172R19B.

Harvard: Holmes, 'Holmes, J., Dissenting' in Pennsylvania v. West Virginia, 262 U.S. 553 (1923). cited in 1923, 262 U.S. 553, pp.262 U.S. 601–262 U.S. 603. Original Sources, retrieved 21 September 2018, from http://www.originalsources.com/Document.aspx?DocID=CQTDCE36172R19B.