Federal Power Commission v. Southern California Edison Company City of Colton, California v. Southern California Edison Company

Decision Date02 March 1964
Docket NumberNos. 71,73,s. 71
Citation376 U.S. 205,84 S.Ct. 644,11 L.Ed.2d 638
CourtU.S. Supreme Court

See 377 U.S. 913, 84 S.Ct. 1161.

Ralph S. Spritzer and John W. Cragun, Washington, D.C., for petitioners.

Boris H. Lakusta, San Francisco, Cal., John R. Bury, Los Angeles, Cal., and Mrs. Mary Moran Pajalich, San Francisco, Cal., for respondents.

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 Com- mission (FPC), on Colton's petition filed in 1958, asserted jurisdiction1 under § 201(b) of the Fed ral Power Act which extends federal regulatory power to the 'sale of electric energy at wholesale in interstate commerce.' 49 Stat. 838, 847, 16 U.S.C. §§ 791a, 824—824h.2 The 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 § 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 has support in the record.5The court assumed that the finding 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 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, 83 S.Ct. 1014, 10 L.Ed.2d 11. 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 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 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) 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 for State of Kansas v. Landon, 249 U.S. 236 39 S.Ct. 268, 63 L.Ed. 577, and Pennsylvania Gas Co. v. Public Service Comm'n, 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434. 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 ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 309, 44 S.Ct. 544, 546, 68 L.Ed. 1027, 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 of Rhode Island v. Attleboro Steam & Elec. Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549. 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 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 it can only be attained by the exercise of the power vested in Congress.' 273 U.S., at 89—90, 47 S.Ct., at 296, 71 L.Ed. 549.

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 state regulatory power made federal regulation essential if major aspects of interstate transmission and sale were not to go unregulated. Attleboro, with the other cases cited, figured prominently in the debates and congressional reports.8 In Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 62 S.Ct. 384, 86 L.Ed. 371, we were first required to determine the scope of the federal power which Congress had asserted to meet the problem revealed by Attleboro and the other cases. The specific question in that case was whether a company selling interstate gas at wholesale to distributors for resale in a single State could be required by that State's regulatory commission to extend its facilities and connect them with those of a local distributor, or whether such extensions were exclusively a matter for the FPC. The Court noted that prior to the Natural Gas Act there had been another line of cases which adopted a more flexible approach to state power under the Commerce Clause; these cases had been 'less concerned to find a point in time and space where the interstate commerce in gas ends and intrastate commerce begins, and (have) looked to the nature of the state regulation involved, the objective of the state, and the effect of the regulation upon the national interest in the commerce.' 314 U.S., at 505, 62 S.Ct., at 387, 86 L.Ed. 371. But the Court held that Congress, rather than adopting this flexible approach, which was applied by the Court of Appeals in the instant case, 'undertook to regulate * * * without the necessity, where Congress has not acted, of drawing the precise line between state and federal power by the litigation of...

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