376 U.S. 205 (1964), 71, Federal Power Commission v. Southern California Edison Co.

Docket Nº:No. 71
Citation:376 U.S. 205, 84 S.Ct. 644, 11 L.Ed.2d 638
Party Name:Federal Power Commission v. Southern California Edison Co.
Case Date:March 02, 1964
Court:United States Supreme Court
 
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Page 205

376 U.S. 205 (1964)

84 S.Ct. 644, 11 L.Ed.2d 638

Federal Power Commission

v.

Southern California Edison Co.

No. 71

United States Supreme Court

March 2, 1964

Argued January 14, 1964

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

Petitioner, a California municipality, purchased electric energy, part of which was from out-of-state, from respondent public utility company, using some for itself but reselling the bulk to others. The respondent Public Utilities Commission of California had previously exercised jurisdiction over the rates charged the city by the public utility company, but, on the city's petition, the petitioner Federal Power Commission (FPC) asserted jurisdiction under § 201(b) of the Federal Power Act, which extends federal regulatory power to the "sale of electric energy at wholesale in interstate commerce." The Court of Appeals set aside the FPC order, however, in view of the declaration in § 201(a) of the Act that federal regulation is to "extend only to those matters which are not subject to regulation by the States." Since the initial out-of-state sales, at Hoover and Davis Dams, to the public utility company were subject to regulation by the Secretary of the Interior, and the energy subsequently sold was consumed wholly within California, the court concluded that the rates were subject to state regulation.

Held:

1. The FPC's jurisdiction under § 201(b) is plenary, and extends to all wholesale sales of power in interstate commerce not expressly exempted by the Act itself. The scope of FPC's jurisdiction is not to be determined by a case-by-case analysis of the impact of state regulation upon the national interest, nor can the general policy declaration in § 201(a) nullify the specific grant of jurisdiction in § 201(b). Pp. 206-216.

2. All sales of energy generated at the Hoover Dam are not exempted from FPC regulation by virtue of § 6 of the Boulder Canyon Project Act granting the Secretary of the Interior "control of rates and service in the absence of State regulation or interstate agreement," that provision having been superseded by Part II of the Federal Power Act, which includes § 201(b). Pp. 216-220.

310 F.2d 784, reversed.

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BRENNAN, J., lead opinion

MR. JUSTICE BRENNAN delivered the opinion of the Court.

Petitioner City of Colton, California (Colton), purchases its entire requirements of electric power from respondent Southern California Edison Company (Edison), a California electric utility company which operates in central and southern California and sells energy only to customers located there. Colton applies some of the power purchased to municipal uses, but resells the bulk of it to thousands of residential, commercial, and industrial customers in Colton and its environs. Respondent Public Utilities Commission of California (PUC) had for some years exercised jurisdiction over the Edison-Colton sale, but petitioner Federal Power Commission

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(FPC), on Colton's petition filed in 1958, asserted jurisdiction1 under § 201(b) of the Federal Power Act, which extends federal regulatory power to the "sale of electric energy [84 S.Ct. 647] at wholesale in interstate commerce." 49 Stat. 838, 847, 16 U.S.C. §§ 791a, 824-824h.2 The

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Court of Appeals for the Ninth Circuit set aside the FPC order. 310 F.2d 784.

Some of the energy which Edison markets in California originates in Nevada and Arizona. Edison has a contract with the Secretary of the Interior under which, as agent for the United States, it generates energy at the Hoover power plants located in Nevada. This contract allocates to Edison 7% of the total firm generating capacity of Hoover Dam.3 Edison is also a party to a 1945 contract with the United States and the Metropolitan Water District of Southern California under which it is entitled to a portion of the unused firm energy allocated to the Water District from Hoover Dam. Payment for this energy is made to the United States for the credit of the Water District. Also, Hoover Dam, Davis Dam in Arizona, and Parker Dam in California are interconnected by a transmission line from which Edison has drawn energy by agreement with the Water District.

The FPC found, on the extensive record made before a Hearing Examiner, that out-of-state energy from Hoover Dam was included in the energy delivered by Edison to Colton, and ruled that the

sale to Colton is a sale of electric energy at wholesale in interstate commerce subject to Sections 201, 205 and 206 of the Federal Power Act.

26 F.P.C. 223, 231.4

The Court of Appeals did not pass upon the question whether the finding that out-of-state energy reached Colton

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has support in the record.5 The court assumed that the finding [84 S.Ct. 648] had such support, but held nevertheless that § 201(b) did not grant jurisdiction over the rates to the FPC. It ruled that the concluding words of § 201(a) -- "such Federal regulation, however, [is] to extend only to those matters which are not subject to regulation by the States" -- confined FPC jurisdiction to those interstate wholesales constitutionally beyond the power of state regulation by force of the Commerce Clause, Art. I, § 8, of the Constitution. Accordingly, it held that the

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FPC had no jurisdiction because PUC regulation of the Edison-Colton sale was permissible under the Commerce Clause. Because of the importance of the question in the administration of the Federal Power Act, we granted the separate petitions for certiorari of the FPC and Colton. 372 U.S. 958. We reverse. We hold that § 201(b) grants the FPC jurisdiction of all sales of electric energy at wholesale in interstate commerce not expressly exempted by the Act itself,6 and that the FPC properly asserted jurisdiction of the Edison-Colton sale.

The view of the Court of Appeals was that the limiting language of § 201(a), read together with the jurisdictional [84 S.Ct. 649] grant in § 201(b), meant that the FPC could not assert its jurisdiction over a sale which the Commerce Clause allowed a State to regulate. Such a determination of the permissibility of state regulation would require, the Court of Appeals said, an analysis of the impact

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of state regulation of the sale upon the national interest in commerce. The court held that such an analysis here compelled the conclusion that the FPC lacked jurisdiction, because state regulation of the Edison-Colton sale would not prejudice the interests of any other State. This conclusion was rested upon the view that the interests of Arizona and Nevada, the only States other than California which might claim to be concerned with the Edison-Colton sale, were already given federal protection by the Secretary of the Interior's control of the initial sales of Hoover and Davis energy. Since the first sale was subject to federal regulation, and since the energy subsequently sold by Edison to Colton for resale was to be consumed wholly within California, there was said to be a "complete lack of interest on the part of any other state," and the sale was therefore held to be subject to state regulation and exempt from FPC regulation. 310 F.2d at 789.

The Court of Appeals expressly rejected the argument that § 201(b) incorporated a congressional decision against determining the FPC's jurisdiction by such a case-by-case analysis, and in favor of employing a more mechanical test which would bring under federal regulation all sales of electric energy in interstate commerce at wholesale except those specifically exempted, and would exclude all retail sales. In reviewing the court's ruling on this question, we do not write on a clean slate. In decisions over the past quarter century, we have held that Congress, in enacting the Federal Power Act and the Natural Gas Act, apportioned regulatory power between state and federal governments according to a test which this Court had developed in a series of cases under the Commerce Clause. The Natural Gas Act grew out of the same judicial history as did the part of the Federal Power Act, with which we are here concerned; and § 201(b) of the Power Act has its counterpart in § 1(b)

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of the Gas Act, 15 U.S.C. § 717(b), which became law three years later, in 1938.7

The test adopted by Congress was developed in a line of decisions beginning with Public Utilities Comm'n v. Landon, 249 U.S. 236, and Pennsylvania Gas Co. v. Public Service Comm'n, 252 U.S. 23. In those cases, this Court held that the Commerce Clause does not prohibit a State from regulating the sale of gas directly to consumers, even though the gas be drawn from interstate mains. Missouri v. Kansas Gas Co., 265 U.S. 298, 309, sketched in the other side of the picture by holding that a State is prohibited from regulating the rate at which gas from out-of-state is sold to independent distributing companies for resale to local consumers. The last decision in this line, and the one which directly led to congressional intervention, was Public Utilities Comm'n v. Attleboro Steam & Elec. Co., 273 U.S. 83. There the Public Utilities Commission of Rhode Island asserted jurisdiction over the rates at which a Rhode Island company sold energy generated at its Rhode Island plant to a Massachusetts [84 S.Ct. 650] company, which took delivery at the state line for resale to the City of Attleboro. The Court held that Kansas Gas, supra, controlled, that the case did not involve "a regulation of the rates charged to local consumers," and that, since the sale was of concern to both Rhode Island and Massachusetts, it was "national in character." Consequently, "if such regulation is required,

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it can only be attained by the exercise of the power vested in Congress." 273 U.S. at 89-90.

Congress undertook federal regulation through the Federal Power Act in 1935 and the Natural Gas Act in 1938. The premise was that constitutional limitations upon...

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