United States v. Public Utilities Commission of California Mineral County, Nevada v. Public Utilities Commission of California

• Decision Date: 06 April 1953
• Docket Number: Nos. 205,206,s. 205
• Parties: UNITED STATES v. PUBLIC UTILITIES COMMISSION OF CALIFORNIA et al. MINERAL COUNTY, NEVADA v. PUBLIC UTILITIES COMMISSION OF CALIFORNIA et al
• Court: U.S. Supreme Court

345 U.S. 295

73 S.Ct. 706

97 L.Ed. 1020

UNITED STATES

v PUBLIC UTILITIES COMMISSION OF CALIFORNIA et al.

MINERAL COUNTY, NEVADA

v. PUBLIC UTILITIES COMMISSION OF CALIFORNIA et al.

Nos. 205, 206.

Argued Jan. 14, 1953.

Decided April 6, 1953.

Rehearing Denied May 18, 1953.

See 345 U.S. 961, 73 S.Ct. 935.

[Syllabus from pages 295-296 intentionally omitted] No. 205:

Walter J. Cummings, Jr., Sol. Gen., Washington, D.C., for petitioner.

Mr. Boris H. LaKusta, San Francisco, Cal., for respondents.

No. 206:

Mr. L. E. Blaisdell, Hawthorne, Nev., for petitioner.

Mr. Henry W. Coil, Riverside, Cal., for respondents.

Mr. Justice REED delivered the opinion of the Court.

Respondent California Electric Power Company produces electricity in California, partially by hydroelectric projects licensed under Part I of the Federal Power Act, 41 Stat. 1063, as amended by Title II of the Public Utility Act of 1935, 49 Stat. 838, 16 U.S.C. § 791a et seq., 16 U.S.C.A. § 791a et seq., and markets the greater portion of it, subject to respondent Public Utilities Commission's authority, in that state. The jurisdictional dispute which is our present concern relates only to certain power sales by the Company to the Navy Department and to Mineral County, Nevada, for consumption there. This power, following production, is transmitted at 55,000 volts to the Company's Mill Creek substation in California, about 25 miles from the border, on its own lines. There it is figuratively taken over by the Navy and by the County, and delivered on their lines at the same high voltage to Hawthorne, Nevada, where it is stepped down for local distribution and consumption. The Navy's power is used at its ammunition depot, largely in official industrial operations; between 15% and 29%, however, is distributed for consumption in the private households and enterprises of tenants at the Navy's low-cost housing project nearby. These sales are metered individually and each purchaser is billed according to his own use. The power purchased by the County is all resold to local consumers, with the exception of minor line losses and official use.

The Navy's contract for purchase of the power was negotiated in 1943, and provided for termination on 60-day notice; the County's was entered into in 1945 for a stated period of three years. In 1947 the Power Company applied to the State Commission for a general rate increase which, after hearings at which the Navy was represented, was granted. Thereafter, the Company terminated its Navy contract and failed to renew that with the County, giving notice of its intention to apply the new schedule to these sales. Both purchasers demurred, and the Company reapplied to the State Commission for a ruling as to the applicability of the general schedule to these particular operations. After some early state exploratory hearings, the Federal Power Commission, on February 15, 1950, issued an order to the Company to show cause as to why the rates were not subject to exclusive federal jurisdiction. Thus joined, the issues were heard by both agencies at a joint proceeding on March 20 and 21, 1950. Both eventually decided in favor of their own asserted authority.¹ The State Commission's supporting opinion was denied review by the California Supreme Court on January 21, 1952, thus affirming its holding, while that of the Federal Power Commission was likewise approved by the Federal Court of Appeals for the Ninth Circuit, California Electric Power Co v. Federal Power Commission, 199 F.2d 206. As a federal question concerning the applicability of Part II of the Act was raised, certiorari was granted, 344 U.S. 810, 73 S.Ct. 37, to bring the record here from the state proceedings under 28 U.S.C. § 1257(3), 28 U.S.C.A. § 1257(3).

I.

Federal authority, which we think obtains, is asserted under Part II of the Federal Power Act. This applies 'to the transmission of electric energy in interstate commerce and to the sale of electric energy at wholesale in interstate commerce'. § 201(b). Regulation of the rates of such sales—other types of authority in connection with such interstate transmission operations are granted in other sections—rests on §§ 205(a)² and 206(a).³ The preliminary issue as to whether the operations in question fall within the concept of interstate commerce, on which the federal power initially depends, can be shortly disposed of, for Powell v. United States Cartridge Co., 339 U.S. 497, 509—515, 70 S.Ct. 755, 761—765, 94 L.Ed. 1017, firmly established that commerce includes the transportation of public property, while the irrelevance of the fact that this electricity is transmitted across the state boundary over lines owned by the Navy and by the County, as purchasers, may be seen from Jersey Central Power & Light Co. v. Federal Power Commission, 319 U.S. 61, 69, 71, 63 S.Ct. 953, 957, 958, 87 L.Ed. 1258, and Illinois Natural Gas Co. v. Central Illinois Public Service Co., 314 U.S. 498, 62 S.Ct. 384, 86 L.Ed. 371.

The most serious contentions pressed in opposition to application of Part II, arise from the self-limiting statement therein that the Act is 'to extend only to those matters which are not subject to regulation by the States.'⁴ So respondents contend that Power Commis- sion jurisdiction only begins where the local regulatory power ends, and point to Part I, § 20, as supporting their contention that the limitation applies to the facts of this case. Section 20 provides that when power from projects licensed under Part I, which that energy sold to the Navy and the County includes,

'shall enter into interstate or foreign commerce the rates * * * and the service * * * by any * * * licensee * * * or by any person, corporation, or association purchasing power from such licensee for sale and distribution or use in public service shall be reasonable * * * to the customer * * *; and whenever any of the States directly concerned has not provided a commission or other authority to enforce the requirements of this section within such State * * * or such States are unable to agree through their properly constituted authorities on the services * * * or on the rates * * * jurisdiction is hereby conferred upon the commission * * * to regulate * * * so much of the services * * * and of the rates * * * therefor as constitute interstate or foreign commerce.'

Both Nevada and California have regulatory agencies with certain rate powers. And we may assume, though the Government asserts otherwise, that both agencies can enforce reasonable rate orders and have not dis- agreed.⁵ Respondents point to this as satisfying § 20, and thus ousting any Part II regulation. In short, they contend—what at first blush may appear anomalous—that federal rate jurisdiction under Part II may be prohibited by the fact that some portion of the power sold originated in hydroelectric projects federally licensed under Part I. We do not agree.

Admittedly, § 20 contemplated state regulation. And it may well be, as indicated by the congressional hearings,⁶ that Congress quite frankly chose the local authorities to regulate the bulk of interstate sales of electricity from licensed projects. In fact, a contrary view would have been almost astonishing as an historical proposition, for neither the large interstate operations of electric utilities that have developed during the last thirty years, nor the concomitant desirability of federal regulation, could have been foreseen in 1920. Long-range transmission was not then adequately developed, nor had the various local utilities by then undergone the integration into large centralized systems which later came about.⁷ So we may assume that Congress, as a policy judgment, accepted and adapted the substantial tradition of local utility regulation to power production licensed under the federal Act.

But there is no evidence that this was done with any firm intent to settled with the states a power essentially national. For whatever views of the draftsmen of § 20 as to the efficacy of state regulation, the jurisdictional lines between local and national authority were not finally determined until this Court's opinion in Public Utilities Commission v. Attleboro Steam & Electric Co., 273 U.S. 83, 47 S.Ct. 294, 71 L.Ed. 549. This decision followed the Federal Water Power Act by some seven years. In short, that case established what has unquestionably become a fixed premise of our constitutional law but what was not at all clear in 1920, that the Commerce Clause forbade state regulation of some utility rates. State power was held not to extend to an interstate sale 'in wholesale quantities, not to consumers, but to distributing companies for resale to consumers'. 273 U.A. at page 89, 47 S.Ct. at page 296. Attleboro reiterated and accepted the holding of Pennsylvania Gas Co. v. Public Service Commission, 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434, that sales across the state line direct to consumers is a local matter within the authority of the agency of the importing state. But it prohibited regulation of wholesale sales for resale by either interested commission.

Respondents seek to escape that doctrine, however, by pointing to the fact that there was not there involved sales of electricity produced at a project licensed under Part I. They admit that absent § 20 of that Part, the later Part II authority would apply exclusively and determine the result. But, they say, § 20 creates an exception, which the language of Attleboro did not reach, for hydroelectric energy transmitted across state lines under the aegis of coordinated state regulation. In short, it is alleged that § 20 'conferred jurisdiction' on the states.

We do not agree. Attleboro declared state regulation of interstate transmission of power for resale forbidden as a direct burden on commerce. The states may act as to such a subject only when Congress has specifically granted permission for the exercise of this state power over articles moving interstate which...