355 U.S. 534 (1958), 23, Public Utilities Commission of California v. United States

Docket Nº:No. 23
Citation:355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470
Party Name:Public Utilities Commission of California v. United States
Case Date:March 03, 1958
Court:United States Supreme Court
 
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Page 534

355 U.S. 534 (1958)

78 S.Ct. 446, 2 L.Ed.2d 470

Public Utilities Commission of California

v.

United States

No. 23

United States Supreme Court

March 3, 1958

Argued January 7, 1958

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

Syllabus

California enacted, and its Public Utilities Commission plainly indicated an intent to enforce, a statute which would have made contingent upon the Commission's prior approval continuation of the Federal Government's long established practice, sanctioned by federal law and regulations, of negotiating with common carriers special rates for the shipment of government property within the State. The United States sued in a federal court for a declaratory judgment declaring the state statute unconstitutional insofar as it prohibits carriers from transporting government property at rates other than those approved by the Commission.

Held:

1. The federal court had jurisdiction of the case and power to grant the relief sought. Pp. 536-540.

(a) There was an "actual controversy" between the United States and the Commission within the meaning of the Declaratory Judgment Act, 28 U.S.C. § 2201. Pp. 536-539.

(b) In the circumstances of this case, the Government's complaint was not barred by its failure to exhaust administrative remedies. Pp. 539-540.

(c) Injunctive relief in this case was not barred by 28 U.S.C. § 1342. P. 540.

2. When Congress authorizes its procurement agents to negotiate rates, a State may not require that those rates be approved by it. The United States cannot be subjected to discretionary authority of a state agency for the terms on which, by grace, it can make arrangements for services to be rendered it. Pp. 540-546.

141 F.Supp. 168 affirmed.

Page 535

DOUGLAS, J., lead opinion

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

Section 530 of the California Public Utilities Code, Cal.Stat.1955, c. 1966, provides in part:

Every common carrier subject to the provisions of this part may transport, free or at reduced rates:

(a) Persons for the United States. . . .

* * * *

The commission may permit common carriers to transport property at reduced rates for the United States, state, county, or municipal governments, to such extent and subject to such conditions as it may consider just and reasonable. Nothing herein shall prevent any common carrier subject to the provisions of this part from transporting property for the United States, state, county, or municipal governments at reduced rates no lower than rates which lawfully may be assessed and charged by any other such common carrier or by highway permit carriers as defined in the Highway Carriers' Act.

(Italics added.)

Page 536

There is a large volume of military traffic between points in California. For many years, the United States has negotiated special agreements with carriers as to the rates governing the transportation of government property. Property for the armed services has usually [78 S.Ct. 449] been transported at negotiated rates substantially equal to or lower than those applicable to regular commercial shipments.

The United States filed this suit for declaratory relief, 28 U.S.C. § 2201, in a three-judge District Court, asking that § 530 be declared unconstitutional insofar as it prohibits carriers from transporting government property at rates other than those approved by the Commission, and requesting relief by injunction.

The District Court rendered judgment for the United States, 141 F.Supp. 168. The case is here by appeal, 28 U.S.C. §§ 1253, 2101(b). We noted probable jurisdiction. 352 U.S. 924.

We are met at the outset with a contention that there is no "actual controversy" between the United States and the Commission within the meaning of 28 U.S.C. § 2201. If so, there is a fatal constitutional, as well as statutory, defect because of the manner in which the judicial power is defined by Art. III, § 2, cl. 1, of the Constitution. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227. The argument is that there is no allegation that the Commission had done or had threatened to do anything adverse to the United States or its agent.

Prior to 1955, § 530 provided that every common carrier "may transport, free or at reduced rates: . . . property for the United States. . . ."1 In 1955, § 530 was amended to eliminate that provision and substitute the provision already noted that the Commission "may permit"

Page 537

common carriers to transport property of the United States at reduced rates "to such extent and subject to such conditions as it may consider just and reasonable." As also noted above, this amendment further provided that no common carrier shall be prevented from transporting property of the United States

at reduced rates no lower than rates which lawfully may be assessed and charged by any other such common carrier or by highway permit carriers. . . .2

Prior to this amendment, the Commission had authorized highway permit carriers to deviate from the prescribed minimum rates in connection with the transportation of property for the armed forces of the United States. To prevent the continuation of this exemption, the Commission, on August 16, 1955, canceled the deviation authorization for permit carriers as of September 7, 1955, the effective date of the amendment to § 530. On request of the Department of Defense, the Commission postponed the effectiveness of that cancellation until December 5, 1955. On November 29, 1955, the Commission denied a further extension, stating:

The provision of Item No. 20 of Minimum Rate Tariff No. 2 which permits carriers to deviate from the minimum rates in connection with the transportation of property for the Armed Forces of the United States constitutes an exception which was established prior to the amendment of Section 530. So long as this provision remains in effect, not only the permitted carriers, but also the common carriers, are without the rate regulation which clearly was contemplated under the recent legislative enactment. . . .

Page 538

The intent of the legislature should be carried out without further delay. Accordingly, the petition for further postponement will be denied. This action will in no way preclude carriers from filing applications for such rate exceptions [78 S.Ct. 450] as they may consider to be just and reasonable.

As a result of this denial, common carriers could no longer transport any United States property at lower negotiated rates without Commission approval. For § 486 requires common carriers to file their rates with the Commission. Section 493 provides that no common carrier shall engage in transportation until its schedules of rates have been filed. Section 494 provides that no common carrier

shall charge, demand, collect, or receive a different compensation for the transportation of persons or property . . . than the applicable rates . . . specified in its schedules filed. . . .

(A like provision is contained in Art. XII, § 22 of the California Constitution.) Moreover, the Public Utilities Code provides penalties for violations of its provisions and orders issued thereunder. §§ 2107, 2112. These penalties are applicable not only to the carrier, but to shippers as well. California Public Utilities Code, § 2112. As stated by the District Court,

If a United States officer were to negotiate with a carrier for "reduced rates" without permitting the defendant to determine whether it "considered" the conditions of the contract "just and reasonable", he could be thrown into the county jail.

141 F.Supp. at 186.

The Commission has plainly indicated an intent to enforce the Act, and prohibition of the statute is so broad as to deny the United States the right to ship at reduced rates unless the Commission first gives its approval. The case is therefore quite different from Public Service Commission v. Wycoff Co., 344 U.S. 237, where a carrier sought relief in a federal court against a state commission

Page 539

in order "to guard against the possibility," id. at 244, that the Commission would assume jurisdiction. Here, the statute limits transportation at reduced rates unless the Commission first gives approval. The controversy is present and concrete -- whether the United States has the right to obtain transportation service at such rates as it may negotiate, or whether it can do so only with state approval.

There is a large group of cases involving the doctrine of primary jurisdiction which requires the complainant first to seek relief in the administrative proceeding before a remedy will be supplied by the courts. See Far East Conference v. United States, 342 U.S. 570; United States v. Western Pacific R. Co., 352 U.S. 59. In related situations, we have insisted that an aggrieved party pursue his administrative remedy before the state agency and the state court prior to bringing his complaint to the federal court, so that the true interpretation of the state law may be known, and its actual, as opposed to its theoretical, impact on the litigant authoritatively determined before the federal court undertakes to sit in judgment. See Alabama State Federation of Labor v. McAdory, 325 U.S. 450; Leiter Minerals, Inc. v. United States, 352 U.S. 220.

These cases are inapposite. We know the statute applies to shipments of the United States. We know that it is unlawful to ship at reduced rates unless the Commission approves those rates. The question is whether the United States can be subjected to the discretionary authority of a state agency for the terms on which, by grace, it can make arrangements for services to be rendered it. That issue is a constitutional one that the Commission can hardly be expected to entertain. If, as in Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, and Allen v. Grand Central Aircraft Co., 347 U.S. 535, an administrative proceeding might leave no

Page 540

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