TRI-STATE GEN. & TRANSM. ASS'N v. PUBLIC SERV. COM'N OF WYO.

Decision Date06 June 1969
Docket NumberNo. 9252.,9252.
Citation412 F.2d 115
PartiesTRI-STATE GENERATION & TRANSMISSION ASSOCIATION, Inc., Appellant, v. The PUBLIC SERVICE COMMISSION OF WYOMING, and Richard J. Luman, Walter W. Hudson, Francis Hillard, Zan Lewis and Rudolph Anselmi, as members thereof, and Alex J. Eliopulos, as its Secretary, Appellees, and Cheyenne Light, Fuel & Power Company, Black Hills Power & Light Company, Lincoln Service Corporation, Pacific Power & Light Company, and Utah Power & Light Company, Intervenors.
CourtU.S. Court of Appeals — Tenth Circuit

Raphael J. Moses, Boulder, Colo. (John J. Conway, Denver, Colo., and George P. Sawyer, Torrington, Wyo., were with him on the brief), for appellant.

Don M. Empfield (Dean W. Borthwick, Atty. Gen., Lawrence E. Johnson, Chief Sp. Asst. Atty. Gen., and William D. Norman, Sp. Asst. Atty. Gen., Cheyenne, Wyo., were on the brief), for appellee Public Service Commission of Wyoming.

Houston G. Williams, Casper, Wyo., Paul B. Godfrey, Cheyenne, Wyo., and Bryce E. Roe, Salt Lake City, Utah (Edgar J. Herschler, Kemmerer, Wyo., was with them on the brief), for intervenors.

Before MURRAH, Chief Judge, and LEWIS, BREITENSTEIN, HILL, SETH, HICKEY and HOLLOWAY, Circuit Judges.

PER CURIAM.

In this Wyoming federal question suit, Tri-State Generation and Transmission Association, Inc., sought unsuccessfully to enjoin the Wyoming Public Service Commission from interfering with increased contract charges for electrical power which it purchases from the Bureau of Reclamation and transmits over Bureau lines to Wyoming, where it is sold to its REA member cooperatives for retail distribution. The district court denied the application for the convention of a three-judge court on grounds that the suit was not an attack upon the constitutionality of a state statute, but rather that the statutes were being unconstitutionally applied to Tri-State, Bartlett & Co. Grain v. State Corp. Commission of Kansas, 223 F.Supp. 975, aff'd 338 F.2d 495, cert. denied 380 U.S. 964, 85 S.Ct. 1109, 14 L.Ed.2d 154, and on the further grounds that the Commission had not exercised any jurisdiction over Tri-State.

Upon trial of the injunction issue, the court finally denied relief on somewhat the same grounds as for the rejection of three-judge jurisdiction; and upon the further ground that, in any event, the laws of Wyoming provided a plain, speedy and efficient administrative and judicial remedy for the adjudication of the matter in controversy. The court also found that Tri-State was not engaged in interstate commerce.

The operative facts are not materially in dispute. Tri-State is a nonprofit cooperative corporation with twenty-eight REA cooperative members in Colorado, Wyoming and Nebraska. It is governed by a board selected or elected from its members. Twelve of these members are located in Wyoming and are admittedly subject to the jurisdiction of the Wyoming Commission. Tri-State owns no electrical generating facilities and performs no physical functions. Its function is to purchase power wholesale from the Bureau of Reclamation, transport it over Bureau lines to Colorado, Wyoming and Nebraska for sale to its cooperative members for retail sale. The Bureau bills Tri-State for the wholesale price, and Tri-State in turn bills the members and pays the Bureau. Title to the power from the Bureau to Tri-State passes to members at the point of delivery in Wyoming, where the members' facilities are connected with the Bureau's transmission lines. Title passes immediately from Tri-State to the members for distribution to their customers. The members purchase all of their power needs from Tri-State by contract and Tri-State pays the Bureau for the use of the Bureau's facilities in Wyoming. There is no contractual relationship between the member cooperatives and the Bureau.

In order to firm up its power pool, Tri-State secured an REA loan to build transmission lines in Nebraska and Colorado. The increased price was assessed against the members to amortize the REA loan.

When the new contracts and increased contract schedules were tendered to the Wyoming Commission for filing, the Commission declined to accept them and notified the members that they would have no effect until the Commission had evaluated and passed upon their propriety. A short time later the Commission enlarged upon the reasons for its action in a directive to all of the Wyoming members, in which it characterized Tri-State as the wholesale power contracting agent for the Wyoming members, and noted that no formal application had been made concerning the proffered contract and no information or data had been provided on which the Commission could make a ruling. It was careful to note that the directive was not intended in any way to foreclose further consideration of the matter but indicated quite clearly that it would look with disfavor upon the increase, observing that if one entity should be permitted to rationalize or determine a utility rate by considering and depending upon facilities owned and operated by another entity, the legal and proper bases for rate making as now applied by the utility industry are all rendered worthless. The Commission directive, although leaving consideration of the matter open, left little doubt of its intent to assume jurisdiction over the contracts.

As a result of this action, the Wyoming members have not paid the increased contract rate and Tri-State has been greatly hampered in the performance of its functions, and particularly in the amortization of its REA loan. Its case is based upon the proposition that the services it performs are in interstate commerce and the charges made are for transactions in commerce over which the Wyoming Commission has no jurisdiction.

The threshold question is whether the court erred in refusing to convene a three-judge court. The question is, of course, controlled by 28 U.S.C. § 2281, which provides in substance that no injunction restraining the enforcement, operation or execution of any state statute by restraining the action of any officer of such state in the enforcement or execution of such statute; or of an order made by an administrative board or commission acting under state statute, shall be granted by any district court or judge thereof upon the ground of the unconstitutionality of such statute unless the application therefor is heard and determined by a district court of three judges.

We hold that the district court properly refused to request the convention of a three-judge court. Swift & Co. v. Wickham, 382 U.S. 111, 124, 86 S.Ct. 258, 15 L.Ed.2d 194, points out that the purpose of § 2281 is to expedite important litigation and not to delay it while the proper composition of the tribunal is litigated. This principle was applied in Green v. Board of Elections of the City of New York, 2 Cir., 380 F.2d 445, 449, cert. denied 389 U.S. 1048, 88 S.Ct. 768, 19 L.Ed.2d 840, and within this circuit in Bartlett & Co. Grain, supra. As in the latter case, the real question here presented is not whether the Wyoming Commission has acted under unconstitutional statutes but whether its action has interfered with interstate commerce to such an extent as to justify favorable injunctive relief for Tri-State. On this issue our starting point is the trial court's finding that Tri-State is not engaged in interstate commerce and the jurisdictional limits imposed by 28 U.S.C. § 1342, which provides that the district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a state administrative agency or a rate-making body of a state political subdivision, where:

"(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and
(2) The order does not interfere with interstate commerce; and,
(3) The order has been made after reasonable notice and hearing; and (4) A plain, speedy and efficient remedy may be had in the courts of such State."

We think it clear that the trial court erred in determining that Tri-State was not engaged in interstate commerce. The electrical energy involved in these transactions undoubtedly moves across state lines, and to that extent, interstate commerce is involved, but it remains the property of the transmitter until it is delivered to the facilities of the members in Wyoming. Title passes in Wyoming. The trial court ruled that since the title to the electricity passed at point of delivery without any additional transmission by Tri-State, the transaction does not involve interstate commerce. And the subsequent transaction between Tri-State and its members at point of delivery in Wyoming is entirely intrastate, and Tri-State is therefore not engaged in interstate commerce. The court thus seems to say that the Wyoming arrangement between Tri-State and its members is merely a paper transaction, or in any event, it is the contracting agent of its members. But it does not seem permissible to say that all of this corporate arrangement is a mere paper mechanism. Surely Tri-State performs a useful service, so recognized by the REA, which closely supervises the whole REA program. And the services and functions of Tri-State, as those services and functions probe the question of interstate commerce, are indistinguishable from the factual background considered by the Supreme Court in Public Utilities Commission of Rhode Island v. Attleboro Steam & Electric Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549, the rationale of which was restated by the high court in Federal Power Commission v. Southern California Edison Co., 376 U.S. 205, 84 S.Ct. 644, 11 L.Ed.2d 638. The dictates of those cases clearly require a finding that Tri-State is engaged in interstate commerce and we must pass to the question of whether the orders and directives of the Wyoming Commission interfere with that commerce, and, if...

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