Southern California Edison Co. v. FEDERAL POWER COM'N

• Decision Date: 15 November 1962
• Docket Number: No. 17608.,17608.
• Citation: 310 F.2d 784
• Parties: SOUTHERN CALIFORNIA EDISON COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent. PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

310 F.2d 784 (1962)

SOUTHERN CALIFORNIA EDISON COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.

No. 17608.

United States Court of Appeals Ninth Circuit.

November 15, 1962.

Rollin E. Woodbury, Harry W. Sturges, Jr., and John R. Bury, Los Angeles, Cal., Graham, James & Rolph, Boris H. Lakusta, and Alexander D. Calhoun, Jr., San Francisco, Cal., for petitioner Southern Cal., Edison Co.

William M. Bennett and Mary Moran Pajalich, San Francisco, Cal., for petitioner Public Utilities Commission of State of Cal.

Ralph S. Spritzer, Gen. Counsel, Howard E. Wahrenbrock, Solicitor, Leonard D. Eesley, Asst. Gen. Counsel, Peter H. Schiff, Milton J. Grossman, Attys., and John S. Everett, Jr., Staff Counsel, Federal Power Commission, Washington, D. C., for respondent.

Wilkinson, Cragun & Barker, John W. Cragun and Reuben Goldberg, Washington, D. C., for intervenor City of Colton, Cal.

Before CHAMBERS, MERRILL and BROWNING, Circuit Judges.

MERRILL, Circuit Judge.

This case concerns the right of the Federal Power Commission to regulate the rates at which Southern California Edison Company sells power at wholesale to the City of Colton, California. The commission asserts its right under § 201 of the Federal Power Act, 16 U.S.C. § 824, the pertinent portions of which are set forth in the margin.¹

The City of Colton is a community of approximately eighteen thousand persons located near San Bernardino in Southern California. Colton's municipal electric utility system purchases all of its energy from Edison under a contract dated October 1, 1945. The contract was filed with the California Public Utilities Commission and the state commission has exercised jurisdiction over all of Edison's sales to Colton since that time. In the exercise of its jurisdiction, the state commission has, over the protest of Colton, authorized increases in Edison's charges.

On May 9, 1958, Colton filed a petition requesting the Federal Power Commission to assert jurisdiction over the rates charged by Edison. The basis of the petition was that interstate energy was sold to Colton at wholesale and that the rates were therefore subject to Federal Power Commission control under § 201(b) of the Federal Power Act. The petition was opposed by Edison and by the California Public Utilities Commission.

Following hearings before the Federal Power Commission, that commission concluded that it had jurisdiction to regulate the rates in question and entered its order requiring Edison, among other matters, to file its rate schedules and to account for all moneys collected in excess of its July, 1954, rates. Edison has petitioned this court to review and set aside the commission's order. The California commission has joined in that petition.

Edison markets electric energy in central and southern California. It markets no energy outside of the state. It owns and operates a number of steam and hydroelectric generating stations within the state.

Edison also purchases energy generated out-of-state at Hoover, Davis and Parker Dams on the Colorado River. Part of this energy was allocated to Edison by the United States Bureau of Reclamation from Hoover Dam generators in Arizona. In 1958 this source accounted for six per cent of the total electric energy handled by Edison, but none of it was traced to the City of Colton. The remainder of Edison's out-of-state energy supply comes from the Metropolitan Water District of California pursuant to a contract entered into in 1945 to which the United States, acting through the Secretary of the Interior, was a party. Under that contract Edison agreed to take a portion of the district's unused firm energy at specified rates to be paid to the United States for the credit of the district. A collateral contract to which the United States was not a party provided, among other things, for the transmission of this energy over the district's lines to the district's Camino switching station in California and thence by connection to Edison's 220 kv transmission system at Hayfield in California. It is some of this energy that the commission determined reaches the City of Colton, passing from Hayfield to Edison's Highgrove substation to Colton.²

It is apparent that authority over the initial sale to Edison in Nevada is not in issue, for the United States controls the allocation of the supply and, as a party to the resale contract, can oversee the rates. The controversy is confined to the conflicting claims of authority to regulate the wholesale rate to Colton asserted by California and the Federal Power Commission.

Federal Power Commission contends that under § 201(b) it has exclusive authority to regulate rates of all wholesale sales of interstate power. Edison contends that the extension of federal regulation to the rate to Colton would encroach upon subject matter specifically left to regulation by the states under § 201(a) and (b) as read together in the light of Public Utilities Commission v. Attleboro Steam & Electric Co., 1927, 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549. These opposing contentions present the issue before us.

Legislative and judicial histories seem to us to make clear the intent and purpose of § 201(a) and (b). It was intended that states should continue to regulate where such regulation is constitutionally permissible under the commerce clause.

Passage of § 201(a) and (b) was necessitated by the decision in the Attleboro case in 1927. A regulatory void was created by that decision which it was necessary that Congress fill. That case concerned the attempt of the Rhode Island Commission to regulate the rate at which a local producing company sold power at the Rhode Island border to the Attleboro Company for resale in Massachusetts. The court recognized that, although both Rhode Island and Massachusetts had an interest in the rate charged, their interests were essentially in conflict. In this situation the court held that neither Rhode Island nor Massachusetts could regulate the rate in question without violating the commerce clause; that regulation could only be attained through congressional action. Since Congress had not acted, a regulatory void or gap resulted.

That § 201(a) and (b) was intended to go no further than to fill the "Attleboro gap" is clear from legislative history. Senate Report No. 621, 74th Congress, First Session, p. 48, states in part:

"Subsection (a) * * * declares the policy of Congress to extend that regulation to those matters which cannot be regulated by the States and to assist the States in the exercise of their regulatory powers, but not to impair or diminish the powers of any State commission."

That report also provides at page 48:

"The revision has also removed every encroachment upon the authority of the states. The revised bill would impower federal regulation only over those matters which cannot effectively be controlled by the states. The limitation on the Federal Power Commission\'s jurisdiction in this regard has been inserted in each section in an effort to prevent the expansion of federal authority over state matters.

* * * * *

"The rate-making powers of the Commission are confined to those wholesale transactions which the Supreme Court held in Public Utilities Commission v. Attleboro Steam & Electric Co. (273 U.S. 83 47 S.Ct. 294, 71 L.Ed. 549) to be beyond the reach of the states."

The Supreme Court also has recognized that § 201(a) and (b) has such limited application. In Connecticut Light and Power Company v. Federal Power Commission, 1945, 324 U.S. 515, at 524, 65 S.Ct. 749, at 753, 89 L.Ed. 1150, the court refers to its earlier decision in Jersey Central Power and Light Company v. Federal Power Commission, 1943, 319 U.S. 61, 63 S.Ct. 953, 87 L.Ed. 1258, in this language:

"We held that the `primary purpose\' of the 1935 amendments to the Power Act was to give the Power Commission control of sales of energy across state lines which had been held to be beyond the control of the state of export in Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U.S. 83 47 S.Ct. 294, 71 L.Ed. 549."

In determining the extent of the regulatory void created by Attleboro, however, (and the consequent scope of federal authority) we must take the holding as Congress would have understood it as of that date. In Phillips Petroleum Company v. Wisconsin, 1954, 347 U.S. 672, 684, 74 S.Ct. 794, 800, 98 L.Ed. 1035, the Supreme Court stated, dealing with a similar problem under the Natural Gas Act:

"But it is well settled that the gap referred to is that thought to exist at the time the Natural Gas Act was passed, and the jurisdiction of the Commission is not affected by subsequent decisions of this Court which have somewhat loosened the constitutional restrictions on state activities affecting interstate commerce, in the absence of conflicting federal regulation."³

Federal Power Commission contends that the Attleboro holding was founded upon the distinction between wholesale and retail sales of interstate power; that under that holding any state regulation of interstate power at wholesale must fall as in violation of the commerce clause.

While the court did lay emphasis upon this distinction, the issue is not so simple in its solution. The question may be posed thus: Under Attleboro can it be said that in absence of federal regulation this sale to Colton would have to go unregulated by California merely because it was wholesale; and in the face of the fact that California is the only state having any concern with it? Or it may be asked: Under Attleboro can a determination be attributed to Congress, through its failure to regulate this sale, that such sale should go unregulated?

The references to wholesale and retail in Attleboro must be read in context. In that case, one side relied upon Pennsylvania Gas Company v. Public Service Commission, 252 U.S. 23...