United States v. Georgia Public Service Commission

• Citation: 197 F. Supp. 793
• Decision Date: 02 October 1961
• Docket Number: Civ. A. No. 7528.
• Parties: UNITED STATES of America, Plaintiff, v. GEORGIA PUBLIC SERVICE COMMISSION, Defendant.
• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia

197 F. Supp. 793

UNITED STATES of America, Plaintiff, v. GEORGIA PUBLIC SERVICE COMMISSION, Defendant.

Civ. A. No. 7528.

United States District Court N. D. Georgia, Atlanta Division.

October 2, 1961.

Charles L. Goodson, U. S. Atty., Atlanta, Ga., W. Wallace Kirkpatrick, Acting Asst. Atty. Gen., Baddia J. Rashid, E. Riggs McConnell, Attys., Dept. of Justice, Washington, D. C., for plaintiff.

Eugene Cook, Atty. Gen., of Georgia, Ariel V. Conlin, Asst. Atty. Gen., for defendant.

Before TUTTLE, Circuit Judge, HOOPER, Chief Judge, and SLOAN, District Judge.

PER CURIAM.

The United States sues to prevent the Georgia Public Service Commission from regulating tariffs charged by carriers within the state of Georgia for the intrastate shipment of household goods of government employees under contracts made with the carriers by government agencies.

The state Commission is under the duty to prevent discriminatory rates for intrastate shipments.¹ It conceives it to be its duty to prevent carriers from contracting with military or other federal government agencies to carry household goods of individual employees of the United States, when such shipments are wholly within the state of Georgia, at less than the published tariffs.

No issue is presented touching on the right of the Commission to regulate the rates charged by Georgia carriers for the carriage of strictly governmental property. The Commission concedes that this issue has been foreclosed in favor of the United States by Public Utilities Commission of California v. United States, 355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470.

The United States contends that since the carriage of the household goods of its employees, where authorized by law at government expense, is a proper exercise of the constitutional power of the government to engage in the enterprise, it makes no difference whether the carriage is of government property or is of personal property for the moving of which the government is liable. The policy of the federal government to arrange for carriage services, whether by bid or negotiation, at the cheapest responsible price, the government says, is the same in either case.

The Georgia Commission seeks to distinguish the facts here from those which resulted in the Supreme Court's adverse decision in the California case, saying that the Court is here dealing with a fact situation that calls for application of the principles laid down by the Supreme Court in the case of Penn Dairies, Inc. et al. v. Milk Control Commission of Pennsylvania, 318 U.S. 261, 63 S.Ct. 617, 87 L.Ed. 748.

The case is not a simple one to resolve. All parties agree that under the supremacy clause of the Federal Constitution the federal government has the power, if it elects to exercise it, to prevent any interference by way of state regulatory schemes upon the proper exercise of activities constitutionally engaged in by the federal government.

"It is of the very essence of supremacy to remove all obstacles to its action within its own sphere, and so to modify every power vested in subordinate governments, as to exempt its own operations from its own influence." M'Culloch v. State of Maryland, 4 Wheat. 316, 427, 4 L.Ed. 579.

It is also clear that short of state taxation of the national government or state regulation of the performance of federal officials and agencies of governmental functions, State of Ohio v. Thomas, 173 U.S. 276, 19 S.Ct. 453, 43 L.Ed. 699; Johnson v. State of Maryland, 254 U.S. 51, 41 S.Ct. 16, 65 L.Ed. 126; Hunt v. United States, 278 U.S. 96, 49 S.Ct. 38, 73 L.Ed. 200; State of Arizona v. State of California, 283 U.S. 423, 51 S.Ct. 522, 75 L.Ed. 1154, the states may, in the absence of congressional enactment, adopt non-discriminatory taxing statutes, and non-discriminatory regulations under the state's police power that may to some degree affect either the cost of the government's operation within the state or increase difficulties touching on such operation, State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; United States v. Baltimore & Annapolis R. R. Co., 308 U.S. 525, 60 S. Ct. 297, 84 L.Ed. 444; Penn Dairies, Inc. et al. v. Milk Control Commission, supra.

The question we have here to decide, therefore, is whether the Georgia laws place a direct prohibition on the agencies of the federal government, or, if not, whether the federal laws authorizing the transportation in question impliedly prohibit inconsistent regulations.

The state's main reliance is on the Penn Dairies case, supra. There, notwithstanding an existing federal statute authorizing the military services to purchase by bid or negotiated contract the articles of food and other supplies needed for the armed services, the Supreme Court held that a contract made by a Pennsylvania dairyman for supplying the military forces in Pennsylvania at prices less than the established price of the Pennsylvania Milk Control Commission, could validly be treated by the Pennsylvania Commission as a basis for revoking the license of the dairy. The Court dealt with the matter in terms of the legality of the regulatory scheme of the Milk Control Commission when in conflict with the federal scheme of authorizing purchases at the lowest available price. The Court said 318 U.S. 261, 63 S.Ct. 620:

"The dairy's answer to the citation challenged the constitutional authority of the State to regulate prices charged to the United States."

The Court answered this question by saying:

"Here the state regulation imposes no prohibition on the national government or its officers. They may purchase milk from whom and at what price they will, without incurring any penalty. See the opinion below Penn Dairies, Inc. v. Milk Control Commission, 148 Pa. Super. 270-271 24 A.2d 717. As in the case of state taxation of the seller, the government is affected only as the state's regulation may increase the price which the government must pay for milk. By the exercise of control over the seller, the regulation imposes or may impose an increased economic burden on the government, for it may be assumed that the regulation if enforcible and enforced will increase the price of the milk purchased for consumption in Pennsylvania, unless the government is able to procure a supply from without the state, see Baldwin v. G. A. F. Seelig, 294 U.S. 511 55 S.Ct. 497, 79 L.Ed. 1032. But in this burden, if Congress has not acted to forbid it, we can find no different or greater impairment of federal authority than in the tax on sales to a government contractor sustained in State of Alabama v. King & Boozer, supra; or the state regulation of the operations of a trucking company in performing its contract with the government to transport workers employed on a Public Works Administration project, upheld in Baltimore & Annapolis R. Co. v. Lichtenberg, supra 176 Md. 383, 4 A.2d 734; or the local building regulations applied to a contractor engaged in constructing a postoffice building for the government, sustained in James Stewart & Co. v. Sadrakula, 309 U.S. 94 60 S.Ct. 431, 84 L.Ed. 596." 318 U.S. 261, 270, 63 S.Ct. 617, 621, 87 L.Ed. 748.

The record discloses that many state Public Service Commissions assumed from the language and decision of the Penn Dairies case that they were thus free to regulate the rates to be charged the government uniformly with those to be charged with other shippers for intrastate shipments of government property. This attitude on the part of the California Public Service Commission produced Public Utilities Commission of State of California v. United States, 355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470. The California statute, in effect, provided that its Commission should make uniform rates and see to their application without discrimination. It had a special provision, however, favorable to the United States. It provided that upon application by the United States the Commission had the power to authorize variations from the approved tariffs. Objecting to the necessity of applying in each case for the privilege of negotiating a freight rate for the carriage of the many military shipments within the state, the United States brought a suit before a statutory three-judge court in California to enjoin the interference by the Commission with the government's negotiation of rates with carriers as might be agreed upon. All of the evidence dealt with in that case touched upon the transportation of government property. Much of the evidence demonstrated the need for unfettered handling of many of the important and some secret cargoes needed by the military forces.

The federal statutes which established the policy of the United States (10 U.S. C.A. §§ 2301-2314) as implemented by regulations were stated by the Supreme Court to "sanction the policy of negotiating rates for shipment of federal property and entrust the procurement officers with the discretion to determine when existing rates will be accepted and when negotiation for lower rates will be undertaken." 355 U.S. 534, 543, 78 S.Ct. 446, 452. The Court then said:

"It also seems clear that under Section 530 of the California Public Utilities Code this discretion of the federal officers may be exercised and reduced rates used only if the Commission approves. The question is whether California may impose this restraint or control on federal transportation procurement."

The Court answered this question in the negative, and distinguished Penn Dairies on the ground that:

"There the question, much mooted, was whether the federal policy conflicted with the state policy fixing the price of milk which the United States purchased. The Court concluded that the state regulation `imposes no prohibition on the national government or its officers.' Id. 318 U.S. at page 270 63 S.Ct. at page 621. Here, however, the State places a prohibition on the Federal government. Here the conflict between the federal policy of negotiated rates and the state policy of regulation of

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