456 U.S. 742 (1982), 80-1749, FERC v. Mississippi

Docket Nº:No. 80-1749
Citation:456 U.S. 742, 102 S.Ct. 2126, 72 L.Ed.2d 532
Party Name:FERC v. Mississippi
Case Date:June 01, 1982
Court:United States Supreme Court
 
FREE EXCERPT

Page 742

456 U.S. 742 (1982)

102 S.Ct. 2126, 72 L.Ed.2d 532

FERC

v.

Mississippi

No. 80-1749

United States Supreme Court

June 1, 1982

Argued January 19, 1982

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF MISSISSIPPI

Syllabus

The Public Utility Regulatory Policies Act of 1978 (PURPA) was enacted as part [102 S.Ct. 2129] of a legislative package designed to combat the nationwide energy crisis. To further this effort, Titles I and III of PURPA direct state utility regulatory commissions and nonregulated utilities to "consider" the adoption and implementation of specific "rate design" and regulatory standards, and require state commissions to follow certain notice and comment procedures when acting on proposed federal standards. Section 210 of PURPA's Title II seeks to encourage the development of cogeneration and small power facilities, and directs the Federal Energy Regulatory Commission (FERC), in consultation with state regulatory authorities, to promulgate rules to carry out this goal. Section 210 then requires the state authorities, after notice and hearing, to implement such rules, and authorizes the FERC to exempt cogeneration and small power facilities from certain state and federal regulations. The State of Mississippi and the Mississippi Public Service Commission (appellees) brought an action in Federal District Court against the FERC and the Secretary of Energy (appellants), seeking a declaratory judgment that Titles I and III and § 210 are unconstitutional because they exceed congressional power under the Commerce Clause and constitute an invasion of state sovereignty in violation of the Tenth Amendment. The District Court so held and pronounced the challenged provisions void.

Held:

1. The challenged provisions are within Congress' power under the Commerce Clause. Pp. 753-758.

(a) To assert that PURPA is facially unconstitutional because it does not regulate "commerce," or because it does not have "a substantial effect" on such activity, disregards the specific congressional finding in § 2 of PURPA that the regulated activities do have an immediate effect on interstate commerce. Pp. 754-755.

(b) The legislative history amply supports the congressional conclusion that limited federal regulation of retail sales of electricity and natural gas, and of the relationships between cogenerators and electric utilities, was essential to protect interstate commerce and the Nation's economy. Pp. 756-758.

Page 743

2. The challenged provisions do not trench on state sovereignty in violation of the Tenth Amendment. Pp. 758-771.

(a) Insofar as § 210 authorizes the FERC to exempt qualified power facilities from state laws and regulations, it does nothing more than preempt conflicting state enactments in the traditional way. Because of the substantial interstate effect of such activity, Congress may preempt the States completely in the regulation of retail sales by electric and gas utilities and of transactions between such utilities and cogenerators. With respect to § 210's requirement that state authorities implement FERC's rules, the statute and its implementing regulations simply require state commissions to settle disputes arising under the statute, the very type of adjudicatory activity customarily engaged in by the Mississippi Public Service Commission. Testa v. Katt, 330 U.S. 386. Pp. 759-761.

(b) The "mandatory consideration" provisions of Titles I and III do not involve the compelled exercise of Mississippi's sovereign powers or set a mandatory agenda to be considered in all events by state legislative or administrative decisionmakers, but simply establish requirements for continued state activity in an otherwise preemptible field. Cf. Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264. Pp. 761-770.

(c) Similarly, the procedural requirements of Titles I and III do not compel the exercise of a State's sovereign power or purport to set standards to be followed in all areas of the state commission's endeavors. If Congress may require a state administrative body to consider proposed federal regulations as a condition to its continued [102 S.Ct. 2130] involvement in a preemptible field, it may require the use of certain procedural minima during that body's deliberations on the subject. Pp. 770-771.

Reversed.

BLACKMUN, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, and STEVENS, JJ., joined. POWELL, J., filed an opinion concurring in part and dissenting in part, post, p. 771. O'CONNOR, J., filed an opinion concurring in the judgment in part and dissenting in part, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 775.

Page 745

BLACKMUN, J., lead opinion

JUSTICE BLACKMUN delivered the opinion of the Court.

In this case, appellees successfully challenged the constitutionality of Titles I and III, and of § 210 of Title II, of the Public Utility Regulatory Policies Act of 1978, Pub.L. 95-617, 92 Stat. 3117 (PURPA or Act). We conclude that appellees' challenge lacks merit, and we reverse the judgment below.

I

On November 9, 1978, President Carter signed PURPA into law.1 The Act was part of a package of legislation,2 approved the same day, designed to combat the nationwide energy crisis.

At the time, it was said that the generation of electricity consumed more than 25% of all energy resources used in the United States. S.Rep. No. 95-442, p. 7 (1977). Approximately one-third of the electricity in this country was generated through use of oil and natural gas, and electricity generation was one of the fastest growing segments of the Nation's economy. S.Rep. No. 95-361, p. 32 (1977). In part because of their reliance on oil and gas, electricity utilities were plagued with increasing costs and decreasing efficiency in the use of their generating capacities; each of these

Page 746

factors had an adverse effect on rates to consumers and on the economy as a whole. S.Rep. No. 95-442 at 9. Congress accordingly determined that conservation by electricity utilities of oil and natural gas was essential to the success of any effort to lessen the country's dependence on foreign oil, to avoid a repetition of the shortage of natural gas that had been experienced in 1977, and to control consumer costs.

A

Titles I and III

PURPA's Titles I and III, which relate to regulatory policies for electricity and gas utilities, respectively, are administered (with minor exceptions) by the Secretary of Energy. These provisions are designed to encourage the adoption of certain retail regulatory practices. The Titles share three goals: (1) to encourage "conservation of energy supplied by . . . utilities"; (2) to encourage "the optimization of the efficiency of use of facilities and resources" by utilities; and (3) to encourage "equitable rates to . . . consumers." §§ 101 and 301, 92 Stat. 3120 and 3149, 16 U.S.C. § 2611 (1976 ed., Supp. IV), 15 U.S.C. § 3201 (1976 ed., Supp. IV).3 To achieve these goals, Titles I and III direct state utility regulatory commissions and nonregulated utilities to "consider" the adoption and implementation of specific "rate design" and regulatory standards.

Section 111(d) of the Act, 16 U.S.C. § 2621(d), requires each state regulatory authority and nonregulated utility to consider the use of six different approaches to [102 S.Ct. 2131] structuring rates: (1) promulgation, for each class of electricity consumers, of rates that, "to the maximum extent practicable," would "reflect the costs of . . . service to such class"; (2)

Page 747

elimination of declining block rates;4 (3) adoption of time-of-day rates;5 (4) promulgation of seasonal rates;6 (5) adoption of interruptible rates;7 and (6) use of load management techniques.8 The Act directed each state authority and nonregulated utility to consider these factors not later than two years after PURPA's enactment, that is, by November 8, 1980, and provided that the authority or utility, by November 8, 1981, was to have made a decision whether to adopt the standards. § 2622(b). The statute does not provide penalties for failure to meet these deadlines; the state authority or nonregulated utility is merely directed to consider the standards at the first rate proceeding initiated by the authority after November 9, 1980. § 2622(c).

Section 113 of PURPA, 16 U.S.C. § 2623, requires each state regulatory authority and nonregulated utility to consider the adoption of a second set of standards relating to the

Page 748

terms and conditions of electricity service: (1) prohibition of master metering in new buildings;9 (2) restrictions on the use of automatic adjustment clauses;10 (3) disclosure to consumers of information regarding rate schedules; (4) promulgation of procedural requirements relating to termination of service; and (5) prohibition of the recovery of advertising costs from consumers. Similarly, § 303, 15 U.S.C. § 3203, requires consideration of the last two standards -- procedures for termination of service and the nonrecovery of advertising costs -- for natural gas utilities. A decision as to the standards contained in §§ 113 and 303 was to have been made by November, 1980, although, again, no penalty was provided by the statute for failure to meet the deadline.

Finally, § 114 of the Act, 16 U.S.C. § 2624, directs each state authority and nonregulated utility to consider promulgation of "lifeline rates" -- that is, lower rates for service that meets the essential needs of residential consumers -- if such rates have not been adopted by November, 1980.

Titles I and III also prescribe certain procedures to be followed by the state regulatory authority and the nonregulated utility when considering the proposed standards...

To continue reading

FREE SIGN UP