In the case of Natural Gas Pipeline Co. v. Panoma Corporation et al., 1954, the U.S Supreme Court was tasked with determining whether or not a natural gas company could deduct from its federal income tax payments made to producers for gas purchased under long-term contracts. The court ruled in favor of the Natural Gas Pipeline Company, stating that these payments were ordinary and necessary business expenses and therefore deductible under Section 23(a) (1) (A) of the Internal Revenue Code. This decision clarified that such costs are part of regular operations for companies like Natural Gas Pipeline Co., rather than capital investments as argued by Panoma Corporation and others involved in this case.

In the dissenting opinion for Natural Gas Pipeline Co. v. Panoma Corporation, it was argued that the majority's decision to allow a natural gas company to unilaterally change its contract with producers of natural gas without approval from Federal Power Commission (FPC) undermines the FPC’s authority and violates provisions of Natural Gas Act. The dissenting justices believed that allowing such changes would lead to instability in contracts between pipeline companies and producers, which could potentially harm public interest by disrupting supply or causing price fluctuations. They also pointed out that while there may be instances where unilateral changes are necessary, these should be exceptions rather than norms and must always have regulatory oversight.