Utah Power Light Co v. Pfost
| Decision Date | 16 May 1932 |
| Docket Number | No. 722,722 |
| Parties | UTAH POWER & LIGHT CO. v. PFOST, Commissioner of Law Enforcement of State of Idaho, et al |
| Court | U.S. Supreme Court |
[Syllabus from pages 165-167 intentionally omitted] Mr. John F. MacLane, of New York City, for appellant.
[Argument of Counsel from pages 167-171 intentionally omitted] Mr. Sidman I. Barber, of Boise, Idaho, for appellees.
[Argument of Counsel from pages 171-175 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the court.
The Utah Power & Light Company is a Maine corporation doing business in the states of Idaho, Utah, and Wyoming, under the laws of those states. The corporation is a public utility engaged in generating, transmitting, and distributing electric power and energy for barter, sale, and exchange to consumers in each of these three states, and in interstate commerce among them. The present suit was brought to enjoin the enforcement of an act of the Idaho Legislature, levying a license tax on the manufacture, generation, or production, within the state, for barter, sale, or exchange, or electricity and electrical energy. Laws of Idaho 1931 (Extraordinary session), c. 3.
Section 1 of the act provides that any individual, corporation, etc., engaged in the generation, manufacture, or production of electricity and electrical energy, by any means, for barter, sale, or exchange, shall, at a specified time, render a statement to the commissioner of law enforcement of all electricity and electrical energy generated, manufactured, or produced by him or it in the state during the preceding month, and pay thereon a license tax of one-half mill per kilowatt hour, 'measured at the place of production.' Sections 2, 3, and 4 provide for the time and method of payment of the tax, and the furnishing of appropriate information. Section 4 further requires the producer to maintain, at the point or points of production, suitable instruments for measuring the electricity or electrical energy produced. Section 5, which is the subject of a distinct attack, provides:
Section 8 imposes a penalty for any violation of the act, or failure to pay the license tax provided for therein when due, in the sum of three times the amount of the unpaid or delinquent tax, to be recovered by civil action. Section 11 provides that if any section or provision of the act be adjudged unconstitutional or invalid, such adjudication shall not affect the validity of the act as a whole, or of any section or provision thereof not specifically so adjudged unconstitutional or invalid.
After the filing of the complaint, an interlocutory injunction was granted ((D. C.) 52 F.(2d) 226); and, thereafter, appellees answered. Upon the evidence reported by a master, to whom the case had been referred, the court below (composed of three judges as required by law) made findings of fact and conclusions of law and entered a final decree dissolving the interlocutory injunction and requiring appellant to pay the tax in question with interest, but without any penalties which might have accrued during the pendency of the suit. (C. C. A.) 54 F.(2d) 803. This appeal followed.
The validity of the act under the Federal and State Constitutions is assailed upon four grounds: (1) That it imposes a direct burden on interstate commerce in violation of clause 3, § 8, art. 1 of the Federal Constitution; (2) that it denies appellant the equal protection of the laws and deprives it of property without due process of law in violation of the Fourteenth Amendment and of a corresponding provision of the State Constitution (article 1, § 13), in that section 5 of the act compels the appropriation and payment of money by appellant for the benefit of private individuals, and that, section 5 being unconstitutional, the act as a whole must fall; (3) that the act violates section 16, art. 3 of the State Constitution, which provides that every act shall embrace but one subject and matters properly connected therewith, which subject shall be expressed in the title; (4) that the act is so uncertain and ambiguous in specified particulars that its enforcement is left to arbitrary administrative action without a legislative standard, and thus violates the due process of law clause of the Fourteenth Amendment.
First. Appellant contends that the tax is not one on manufacture or production or on the extraction of a product of nature, but on the transfer or conveyance of energy in nature from its source to its place of use; that in part appellant's system consists of generating stations in Idaho and transmission lines across the boundary into Utah, and thence to various consumers, the combined action to which constitutes an operation in interstate commerce; that the energy is brought to the consumers in Utah directly from its source in the water fall; that thus the generator is an instrumentality of interstate commerce; that the process of generation is simultaneous and interdependent with that of transmission and use, and, because of their inseparability, the whole is interstate commerce; that since the intent of the act is to tax the whole business and no provision is made for the separate determination of interstate and intrastate business, the act, in burdening interstate commerce, is void in its entirety.
On the other hand, appellees say that the tax is laid upon the generation of electrical energy as a distinct act of production, and without regard to its subsequent transmission; that the process of generation is one of converting mechanical energy into electrical form; that the resulting change is substantial and is a change in the physical charactistics of the energy in respect to voltage, current, and character as alternating or direct current, according to the design of the mechanical generating devices; that the process of conversion is completed before the pulses of energy leave the generator in their flow to the transformer; that the tax is measured by the amount of electrical energy generated, without regard to its subsequent transmission; that such transmission is subsequent to, and separable from, generation, and, in effect, corresponds to the transportation of goods after their manufacture; that the generation of the electrical energy is local, and only its transmission is in interstate commerce; that since the tax is imposed in respect of generation, it is not invalidated by reason of any intent on the part of the producer to transport across state lines.
In the light of what follows, we find it unnecessary to state or consider the claims of the parties as to the effect of the interposition of the transformer between the generator and the places of consumption.
From the foregoing greatly abbreviated but, for present purposes, we think sufficient statement of the views of the respective parties, it is apparent that in the last analysis the question we are called upon to solve is this: Upon the facts of the present case, is the generation of electrical energy, like manufacture or production gener- ally, a process essentially local in character and complete in itself; or is it so linked with the transmission as to make it an inseparable part of a transaction in interstate commerce? From the strictly scientific point of view, the subject is highly technical; but in considering the case, we must not lose sight of the fact that taxation is a practical matter, and that what constitutes commerce, manufacture, or production is to be determined upon practical considerations.
Electrical energy has characteristrics clearly differentiating it from the various other forms of energy, such as chemical energy, heat energy, and the energy of falling water. Appellant here, by means of what are called generators, converts the mechanical energy of falling water into electrical energy. Thus, by the application of human skill, a distinct product is brought into being and transmitted to the places of use. The result is not merely transmission; nor is it transmission of the mechanical energy of falling water to the places of consumption; but it is, first, conversion of that form of energy into something else, and, second, the transmission of that something else to the consumers. While conversion and transmission are substantially instantaneous, they are, we are convinced, essentially separable and distinct operations. The fact that to ordinary observation there is no appreciable lapse of time between the generation of the product and its transmission does not forbid the conclusion that they are, nevertheless, successive and not simultaneous acts.
The point is stressed that in appellant's system electricity...
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