United States v. PUBLIC SERVICE COM'N, Civ. No. B-74-1264.

• Court: United States District Courts. 4th Circuit. United States District Court (Maryland)
• Citation: 422 F. Supp. 676
• Docket Number: Civ. No. B-74-1264.
• Parties: UNITED STATES of America and Arthur F. Sampson, Administrator of General Services, v. The PUBLIC SERVICE COMMISSION OF the STATE OF MARYLAND et al.
• Decision Date: 23 August 1976

422 F. Supp. 676

UNITED STATES of America and Arthur F. Sampson, Administrator of General Services,
v.
The PUBLIC SERVICE COMMISSION OF the STATE OF MARYLAND et al.

Civ. No. B-74-1264.

United States District Court, D. Maryland.

August 23, 1976.

422 F. Supp. 677

Jervis S. Finney, U. S. Atty. for the District of Maryland, and William McC. Schildt, Asst. U. S. Atty., Baltimore, Md., for plaintiffs.

William F. Mosner, Baltimore, Md., for defendants.

Before WINTER, Circuit Judge, and YOUNG and BLAIR, District Judges.

PER CURIAM:

Plaintiffs in this action, the United States and the Administrator of the General Services Administration (GSA), seek a declaratory judgment that Rule IV-A of the Maryland Public Service Commission (Commission)¹ restricting witness examination by certain intervenors in proceedings before the Commission violates the federal constitution and the law of Maryland.² Plaintiffs further seek a permanent injunction against the rule's application.

Defendants moved to dismiss and both sides filed cross motions for summary judgment. After a consolidated hearing, the court is satisfied that the case may properly be finally decided on the present record.

In their motion to dismiss, defendants contend that plaintiffs are not entitled to relief because (1) the suit is barred by the Johnson Act (28 U.S.C. § 1342 (1962)), (2) plaintiffs have failed to exhaust their available state remedies, and (3) the court should abstain from asserting jurisdiction since plaintiffs have a right to judicial review of the rule in the state court. We deal with these defenses seriatim:

I

The Johnson Act

Defendants' argument that the Johnson Act³ prohibits the type of declaratory

422 F. Supp. 678

and injunctive relief sought in this case clearly lacks merit. By its unambiguous language, the Johnson Act proscribes federal court injunctions of orders affecting public utility rates. The contested rule relates only to procedural incidents to be afforded intervenors in rate cases before the Commission and falls outside the perimeters of the Johnson Act proscription. See Public Util. Comm'n v. United States, 355 U.S. 534, 540, 78 S.Ct. 446, 2 L.Ed.2d 470 (1958) (requiring submission of rates for approval not a rate order); Island Airlines, Inc. v. CAB, 352 F.2d 735, 744 (9 Cir. 1965) (order identifying permissible route not a rate order). See generally Tennyson v. Gas Serv. Co., 367 F.Supp. 102, 104-05 (D.Kan.1973), aff'd, 506 F.2d 1135 (10 Cir. 1974) (Johnson Act not broad limitation of federal jurisdiction)

Moreover, jurisdiction in this suit is not predicated solely on diversity of citizenship or repugnance to the federal Constitution as required for operation of the proscription of the Johnson Act. 28 U.S.C. § 1342(1). Jurisdiction is predicated in part upon 28 U.S.C. § 1345 providing federal jurisdiction where the United States is a party plaintiff.⁴ The Johnson Act, then, is not applicable. See Island Airlines, Inc. v. CAB, supra. Cf. Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976); Department of Employment v. United States, 385 U.S. 355, 357-58 & nn. 6-7, 87 S.Ct. 464, 17 L.Ed.2d 414 (1966).⁵

Exhaustion

We see no merit in defendants' contention that plaintiffs did not exhaust their available state remedies.

On September 19, 1974, GSA petitioned the Commission to reconsider its new rule. On October 3, 1974, that petition was denied. The Public Service Commission has thus had the opportunity to consider plaintiffs' claims with respect to Rule IV-A prior to the initiation of this suit in federal court. Defendants do not point to any other administrative remedies available to plaintiffs. Thus, even if we assume that exhaustion of administrative remedies is required, they have been exhausted.

Exhaustion of state judicial remedies is not required where the claim is based on the denial of federal constitutional rights. See Timmons v. Andrews, 538 F.2d 584 (4 Cir., 1976), and authorities collected therein.

Abstention

Defendants' contention that we should abstain from exercising jurisdiction in this case is predicated on Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), and its progeny. We think that this line of authority does not require abstention.

The decision in Pullman, a case arising under federal question jurisdiction, was based not only upon the desirability of avoiding needless constitutional adjudication, but also upon a recognition of the appropriate roles of the federal and state courts, respectively, in our scheme of constitutional federalism. It was a case where a private litigant asserted a federal right against a state agency. Thus, its precise holding is that, where a private litigant is a party, "scrupulous regard for the rightful independence of the state governments," as well as for the smooth working of the federal judiciary, requires that at times the federal courts abstain rather than pass upon difficult issues of state law which may moot constitutional claims.

422 F. Supp. 679

In the case at bar, the United States is the plaintiff, and jurisdiction is based, inter alia on 28 U.S.C. § 1345. The problems of federalism inherent in this case are thus different from a case brought by a private litigant. Except in some suits for money damages or for collection of moneys due, the United States sues to redress or to prevent alleged injury to a national interest; and to anticipate our view of the merits, such is this case. We think it unseemly to hold either that a sovereign may not enforce its rights in its own courts, or that in enacting § 1345 Congress was not stating a sufficiently strong policy that the United States should be heard in its own courts that the judicially created Pullman doctrine should be applied. Thus, the presence of the United States as a plaintiff and the nature of the suit militate strongly against the applicability of abstention. United States v. Akin, 504 F.2d 115 (10 Cir. 1974), reversed on other grounds sub nom. Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).

Here, the factors which favor abstention are insufficient to overcome the interest of the United States in being allowed to sue in its own courts. Admittedly, the state law issues are not without difficulty; however, this alone is insufficient to justify abstention. Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9 (1943). Further, an incorrect construction of state law will not disrupt any delicately wrought scheme of substantive regulation; this case involves only the procedural rights of intervenors before the Public Service Commission, not the scope of the Commission's power to regulate. Compare Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). We therefore hold that this is not an appropriate case for the application of the Pullman doctrine of abstention.

II

Since we find no merit in defendants' procedural and jurisdictional defenses, we turn to the merits of plaintiffs' grounds for relief. GSA claims entitlement to relief on the grounds of both state law and the federal constitution. Despite our decision on abstention, we of course recognize the desirability of avoiding unnecessary adjudication of constitutional questions, and so we consider first plaintiffs' state law claims. See Siler v. Louisville & Nashville R.R. Co., 213 U.S. 175, 193, 29 S.Ct. 451, 53 L.Ed. 753 (1909).

State Law Claims

Plaintiffs argue that under Hyson v. Montgomery County Council, 242 Md. 55, 217 A.2d 578 (1966), the half-hour limitation on cross-examination is invalid. Hyson held that where an agency is required to hold a public hearing, and to decide disputed adjudicative facts based upon evidence produced and a record made, a reviewing court could examine the record to insure that an adequate opportunity for cross-examination had been allowed. By its terms, Hyson applies only to agencies operating in a "quasi-judicial" rather than a "quasi-legislative" role. See also Albert v. Public Service Commission, 209 Md. 27, 120 A.2d 346, 350-51 (1956) (no right to hearing in quasi-legislative proceeding). Under Maryland law, it is unclear whether rate-making is a quasi-judicial or a quasi-legislative function and, hence, whether Hyson has any application. Compare Bosley v. Dorsey, 191 Md. 229, 60 A.2d 691 (1948) (rate-making "purely a legislative function"), and Spintman v. Chesapeake and Potomac Telephone Co., 254 Md. 423, 255 A.2d 304, 308 (1969) (rate-making "involves the legislative process of making a rule for the future") with Public Service Commission v. Hahn Transportation, Inc., 253 Md. 571, 253 A.2d 845, 848 (1969) (suggesting that rate-making hearing is quasi-judicial).

But even if Hyson applies, we do not believe that the Maryland courts would hold this rule facially invalid. In Hyson, the court was faced with a situation in which the parties to a zoning hearing were each restricted to one hour's cross-examination per witness. Nonetheless, the court declared that "we have no intention of attempting to promulgate a comprehensive

422 F. Supp. 680

rule respecting the type or the amount of cross-examination that the agency must provide at hearings . . ." 217 A.2d at 586. Rather, the court undertook a detailed analysis of the case before it in order to determine whether insufficient cross-examination had been allowed under the circumstances of that particular hearing

We believe that under Maryland law, Rule IV-A would similarly not be held invalid on its face; instead, it is more probable that the state courts would examine each rate-making procedure to insure that there had been no unreasonable, prejudicial denial of the right to cross-examine in that case. In the present State of Maryland law, we thus think that GSA is not presently entitled to relief. We must therefore consider plaintiffs' claims of invalidity under the...