This case originated in proceedings before the Federal Power Commission initiated pursuant to § 5(a) of the Natural Gas Act of 1938. After overruling objections to its jurisdiction, the Commission entered an order requiring the petitioner to effect substantial rate reductions in certain of its sales of natural gas and to file new schedules of rates and charges. Petitioner in seeking review of the order in the Circuit Court of Appeals, denied the jurisdiction of the Commission to set rates for the sales in issue in this case and asserted that the rates so established were confiscatory. That Court, one judge dissenting, denied the petition for review. We granted certiorari limited to the question of the Commission's jurisdiction. 300 U.S. 852, 67 S.Ct. 674.
Petitioner owns and operates 110 natural gas wells and owns or controls over 56,000 acres in the Monroe field of northern Louisiana. Petitioner's main pipe line transports gas southward from the Monroe field through a part of Mississippi and back into Louisiana where at Baton Rouge sales are made to various distributing companies and industrial consumers. Petitioner concedes that with respect to these operations it is a natural gas company within the meaning of § 2(6) of the Act and that the Commission has jurisdiction to regulate the rates of sales connected therewith.
The issue of this case involves the jurisdiction of the Federal Power Commission to regulate sales made in the field by petitioner to three pipe-line companies each of which transports the gas so purchased to markets in States other than Louisiana. Gas produced from petitioner's wells flows into petitioner's system of field pipe lines, moving first into branch lines, then into trunk lines, and finally, into the main trunk lines from which delivery is made to the three purchasing companies. During the course of this movement petitioner purchases gas from other producers in the field which gas is introduced into petitioner's system at designated points and is there commingled with the gas moving from petitioner's own wells. By far the larger part of the gas o purchase d by petitioner has been gathered from various wells of the selling companies before delivery to petitioner is made. The gas moves through petitioner's system at well pressure. Shortly after the sales in question are completed, the gas is directed through the compressor stations of the purchasing companies and is there subjected to increased pressure in order that it may be moved to markets as far distant as Illinois. The entire movement of the gas from the wells to the purchasing companies through the compressor pumps and across the state lines is a continuous process without interruption for storage, processing or for any other purpose. All the gas sold in these transactions is destined for ultimate public consumption in States other than Louisiana.
It appears that petitioner supplies only a part of the gas purchased by the three pipeline companies in the Monroe field. Counsel for petitioner conceded before the Commission that the prices charged the three pipe-line companies were, by agreement, identical with those being charged by other producers in the field. The Commission found that petitioner was an affiliate of one of the three purchasing companies. It was the conclusion of the Commission that the rates charged by petitioner in these sales were 'unjust, unreasonable and unlawful' and ordered rate reductions amounting to $596,320 per year as applied to the volume of gas sold in the test year of 1941.
Petitioner has at no time contended that regulation of its sales to the three purchasing companies is beyond the constitutional powers of Congress. Petitioner has vigorously asserted, however, that Congress did not exercise its full powers in the National Gas Act and that in § 1(b) of the Act the jurisdiction of the Federal Power Commission is so limited as to preclude valid regulation of the sales by that agency. Section 1(b) provides:
'The provisions of this Act shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use, and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas.'
It is not denied that the transactions in question were sales of natural gas for resale for ultimate public consumption.