Arcadia, Ohio v. Ohio Power Company
| Citation | 111 S.Ct. 415,112 L.Ed.2d 374,498 U.S. 73 |
| Decision Date | 27 November 1990 |
| Docket Number | No. 89-1283,89-1283 |
| Parties | ARCADIA, OHIO, et al., Petitioners v. OHIO POWER COMPANY et al |
| Court | United States Supreme Court |
Respondent Ohio Power Co. is subject to the overlapping regulatory jurisdiction of the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act (PUHCA) and the Federal Energy Regulatory Commission (FERC) under the Federal Power Act (FPA). In a series of orders authorizing Ohio Power to establish and capitalize an affiliate to secure and develop a reliable source of coal, the SEC specified that the price Ohio Power paid for such coal could be no greater than (and, in one order, equal to) the affiliate's actual costs. Subsequently, FERC declared coal charges complying with this specification unreasonable and thus unrecoverable in Ohio Power's rates to its wholesale customers, including petitioner municipalities, rejecting Ohio Power's argument that the SEC, by the above-mentioned orders, had "approved" the affiliate's charges, and that § 318 of the FPA ousts FERC of jurisdiction. The Court of Appeals reversed, holding FERC's disallowance of the charges to be precluded by § 318, which is captioned "Conflict of jurisdiction," and which provides that "[i]f, with respect to the issue, sale, or guaranty of a security, or assumption of obligation or liability in respect of a security, the method of keeping accounts, the filing of reports, or the acquisition or disposition of any security, capital assets, facilities, or any other subject matter, any person is subject both to a requirement of [PUHCA] and to a requirement of [the FPA], the [PUHCA] requirement . . . shall apply . . ., and such person shall not be subject to the [FPA] requirement . . . with respect to the same subject matter . . . ." (Emphasis added.)
Held:
1. Section 318 has no application to this case. The phrase "or any other subject matter" does not, as the lower court assumed, parallel the other listed subjects "with respect to [which]" duplicative agency requirements will trigger the pre-emption rule. Rather, it is part of the phrase that reads "the acquisition or disposition of any security, capital assets, facilities, or any other subject matter." Besides being more faithful to the precise words of the text, this reading allows § 318 to take on a shape that gives meaning to what otherwise seems a random listing of specific subject matters (with "any other subject matter" tagged on at the end). The section addresses conflicts of jurisdiction within four areas of plainly parallel authority granted both to the SEC and FERC by particular sets of PUHCA and FPA sections. This is confirmed by expert commentary and by the practice of FERC and its predecessor, which have never decided a § 318 issue except in connection with orders promulgated under one of the four enumerated categories. Thus, § 318 applies only if the "same subject matter" as to which the duplicative requirements exist is one of those specifically enumerated, and not some different, more general "other subject matter," as the lower court believed. Even assuming that FERC's rate order affecting the sale of electric power qualifies as a requirement "with respect to . . . the . . . disposition of . . . any other subject matter," it is still a requirement with respect to a different subject matter from Ohio Power's acquisition of its affiliate, which was the subject of the SEC orders. Pp. 77-85.
2. This Court expresses no view on, but leaves to the lower court to resolve, the arguments that FERC's decision violates its own regulation providing that the price of fuel purchased from an affiliate shall be deemed to be reasonable where subject to the jurisdiction of a regulatory body, and that the FERC-prescribed rate is not "just and reasonable" because it "traps" costs which the SEC has implicitly approved. P. 85.
279 U.S.App.D.C. 327, 880 F.2d 1400 (1989), reversed and remanded.
SCALIA, J., delivered the opinion of the Court, in which all other Members joined, except SOUTER, J., who took no part in the consideration or decision of the case. STEVENS, J., filed a concurring opinion, in which MARSHALL, J., joined, post, p. ----.
Carter G. Phillips, Washington, D.C., for petitioners.
Lawrence G. Wallace, Washington, D.C., for the federal respondent in support of petitioners, by special leave of Court.
Edward Berlin, Washington, D.C., for private respondents.
This case concerns the interpretation of § 318 of the Federal Power Act, as added, 49 Stat. 863, 16 U.S.C. § 825q, entitled "Conflict of jurisdiction," which governs certain overlapping responsibilities of the Federal Energy Regulatory Commission (FERC) and the Securities and Exchange Commission (SEC) in the regulation of power companies under the Public Utility Act of 1935, 49 Stat. 803.
The Public Utility Act subjects some companies that transmit and distribute electric power to overlapping regulatory jurisdiction of the SEC and FERC, successor to the Federal Power Commission (FPC). Title I, known as the Public Utility Holding Company Act (PUHCA), 49 Stat. 803, gives the SEC jurisdiction over certain transactions among registered public utility holding companies and their subsidiaries and affiliates. Title II, the Federal Power Act (FPA), 49 Stat. 838, gives FERC jurisdiction over the transmission and sale at wholesale of electric power in interstate commerce. FERC-regulated electric power companies that are subsidiaries or affiliates of registered public utility holding companies are therefore subject to SEC regulation as well. Respondent Ohio Power Company, part of the American Electric Power system (AEP), is one such company; petitioners are 15 small Ohio villages and cities that are AEP's wholesale customers.
The dispute in this case begins in a series of orders issued by the SEC in the 1970's, authorizing Ohio Power to establish and capitalize an affiliate, Southern Ohio Coal Company (SOCCO), to secure and develop a reliable source of coal for the whole AEP system. The first order, in 1971, approved the sale and purchase of SOCCO's stock, and in the course of outlining the conditions of that approval, stated that SOCCO's charges for coal would be "based on" actual costs. Ohio Power Co., SEC Holding Company Act Release (HCAR) No. 17383 (Dec. 2, 1971). In 1978, the SEC authorized further investment by Ohio Power, and this time its order indicated that the price of coal "will not exceed the cost thereof to the seller." Ohio Power Co., HCAR No. 20515 (Apr. 24, 1978), 14 S.E.C. Docket 928, 929. In 1979, in the course of another financing approval order, the SEC noted that Ohio Power would pay SOCCO less than the actual cost of coal if Ohio Power's after-tax capital costs exceeded a certain level. Southern Ohio Coal Co., HCAR No. 21008 (Apr. 17, 1979). The final order in 1980, approving further SOCCO financing, indicated that "[t]he price at which SOC[C]O's coal will be sold to AEP system companies will not exceed the cost thereof to the seller." Southern Ohio Coal Co., HCAR No. 21537 (Apr. 25, 1980).
In 1982, Ohio Power filed rate increases for its wholesale service. FERC initiated a rate proceeding under §§ 205 and 206 of the FPA, 16 U.S.C. §§ 824d, 824e, and quickly settled all issues save the reasonableness of Ohio Power's SOCCO coal costs. Pursuant to § 206 of the FPA, FERC disallowed that portion of Ohio Power's coal costs that did not satisfy FERC's "comparable market" test. Under this test, utilities that purchase coal from affiliates may recover only the price that they would have incurred had they purchased coal under a comparable coal supply contract with a nonaffiliated supplier. In Ohio Power's case, FERC found that Ohio Power had paid approximately 50% more than that market price in 1980, approximately 94% more in 1981, and between 24% and 33% more during the period 1982 through 1986. Accordingly, FERC ordered Ohio Power to establish rates calculated to recover from its customers no more than the comparable market price for coal, and to refund prior overcharges. The agency rejected Ohio Power's argument that the SEC, by the above-mentioned orders, had "approved" the coal charges by SOCCO, and that § 318 of the FPA ousts FERC of jurisdiction to regulate the same "subject matter" by declaring those charges unreasonable and thus unrecoverable in Ohio Power's wholesale rates. Ohio Power Co., 39 FERC ¶ 61,098 (1987).
The United States Court of Appeals for the District of Columbia Circuit reversed, holding FERC's disallowance of the charges to be precluded by § 318. Ohio Power Co. v. FERC, 279 U.S.App.D.C. 327, 880 F.2d 1400 (1989). We granted certiorari. 494 U.S. 1055, 110 S.Ct. 1522, 108 L.Ed.2d 762 (1990).
As decided by the Court of Appeals, and as argued here, two questions were presented in this case: (1) whether § 318 bars all FERC regulation of a subject matter regulated by the SEC, or only such regulation as actually imposes a conflicting requirement; and (2) if an actual conflict is prerequisite, whether it exists here. In our view, however, there is another question antecedent to these and ultimately dispositive of the present dispute: whether the SEC and FERC orders before us impose requirements with respect to a subject matter that is within the scope of § 318. We believe they do not.
Section 318 provides as follows:
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