California v. Lo-Vaca Gathering Co., 379 U.S. 366 (1965)

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

An interstate pipeline company which supplies natural gas at the California border entered into contracts to buy gas in Texas for delivery to its pipeline system. Although the gas was to be commingled with other purchases, the contracts provided for "restricted use" of the gas for internal company use, either intrastate or, if interstate, not for resale. It was conceded that some of the gas input would be resold outside of Texas. The Federal Power Commission asserted jurisdiction over these sales as sales in interstate commerce for resale under §1(b) of the Natural Gas Act. The Court of Appeals reversed.

Held:

1. The actuality of the interstate transportation and resale of a substantial portion of the gas invokes federal jurisdiction over the transactions, the form of the contracts notwithstanding. Pp. 369-370.

2. The jurisdictional boundaries of the Federal Power Commission may be established by adjudication, rather than by rulemaking. P. 371.

323 F.2d 190 reversed.