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U.S. Supreme Court

Henderson Company v. Thompson, 300 U.S. 258 (1937)

Henderson Company v. Thompson

No. 397

Argued February 2, 3, 1937

Decided March 1, 1937

300 U.S. 258


Under a Texas statute regulating production and use of natural gas, "sweet" gas -- i.e., gas containing not more than 1 1/2 grains of hydrogen sulphide per 100 cubic feet, and therefore suitable for heating and lighting -- may not be used for the manufacture of carbon black; but that substance may be manufactured from "sour" gas -- i.e., gas containing a greater percent of hydrogen sulphide, not suitable in its natural state for heating and lighting. As applied to a company producing or otherwise acquiring "sweet" gas in the Panhandle field for which it had no market other than to sell for manufacture of carbon black, held:

1. The evidence does not sustain the contention that the prohibition will not operate to conserve "sweet" gas, as intended, but will serve only to deprive the complainant of the gas to which it is entitled, such contention being based on the hypothesis that the gas, if not extracted by the company, will wander subterraneously to a "sour" gas area of the field, and become "sour" gas. P. 300 U. S. 264.

2. There is no basis in the evidence for holding the classification of "sweet" and "sour" gas arbitrary upon the hypothesis that the hydrogen sulphide may be removed from the latter at trifling expense. P. 300 U. S. 264.

Page 300 U. S. 259

3. There is no basis in the evidence for the contention that the statute discriminates unreasonably by preventing the plaintiff and others in like position from extracting "sweet" gas and selling it for the only purpose available, and by suffering it to drain away meanwhile only to augment the supplies of "sour" gas producers. P. 300 U. S. 265.

4. The evidence does not support the objection that the statute discriminates illegally by prohibiting the use of sweet gas in carbon black manufacture, while permitting its use as fuel by manufacturers of other articles. P. 300 U. S. 266.

5. The effect of the statute upon the contracts of the company for taking "sweet" gas from producers and delivery to a carbon black manufacturer is merely incidental, and does not violate the Texas Constitution. Travelers' Insurance Co. v. Marshall, 124 Tex. 45; 76 S.W.2d 1007, distinguished. P. 300 U. S. 266.

6. In case of doubt, and in the absence of definitive construction by the state courts, this Court defers to the lower federal court's understanding of the state constitution. P. 300 U. S. 266.

7. The needs of conserving gas in a natural gas field are to be determined by the legislature; the prohibition of the use of "sweet" gas in the manufacture of carbon black is not shown in this case to be an arbitrary exercise of legislative power. Walls v. Midland Carbon Co., 254 U. S. 300. Pp. 300 U. S. 264, 300 U. S. 267.

14 F.Supp. 328 affirmed.

Appeal from a decree of the District Court of three judges denying a permanent injunction in a suit to restrain enforcement of a Texas statute, c. 120, Acts of 1935, and orders of the Railroad Commission thereunder, relative to the use of natural gas in the manufacture of carbon black. The lower court's opinion on an application for a preliminary injunction is reported in 12 F.Supp. 519. See also Thompson v. Gas Utilities Corp., ante p. 300 U. S. 55.

Page 300 U. S. 260

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