Appellant is a customer-owned rural power cooperative
established with loan funds and technical assistance provided by
the federal Rural Electrification Administration (REA), but unlike
most such cooperatives, which provide power directly to consumers,
appellant's sole members and primary customers are 17 smaller
Arkansas rural power cooperatives which, in turn, serve the
ultimate consumer. Although tied into an interstate "grid"
arrangement with other producers, appellant obtains most of its
energy from powerplants located in Arkansas, which it wholly or
partially owns, and sells most of what it generates to its member
cooperatives. Appellee Arkansas Public Service Commission entered
an order asserting jurisdiction over the wholesale rates charged by
appellant to its member cooperatives, concluding that state
regulation was neither forbidden by
Public Utilities Comm'n of
R. I. v. Attleboro Steam & Electric Co., 273 U. S.
83 -- which held that, while consistent with the
Commerce Clause, the States could regulate retail sales of
electricity, they could not regulate wholesale sales -- nor
preempted by the Federal Power Act or the Rural Electrification Act
of 1936. On review, the Pulaski County Circuit Court set aside
appellee's order, but the Arkansas Supreme Court reversed.
Held:
1. Appellee's assertion of jurisdiction over the wholesale rates
charged by appellant to its members does not offend the Supremacy
Clause of the Constitution. Pp.
461 U. S.
383-389.
(a) Neither the Federal Power Act nor administrative actions
taken thereunder preempt state regulation. The Federal Power
Commission determined in 1967 that it did not have jurisdiction
under the Act over the wholesale rates charged by rural power
cooperatives under the supervision of the REA, and such decision
was based on the Commission's conclusion that the relevant statutes
gave the REA exclusive authority among federal agencies to regulate
rural power cooperatives, not on a conclusion that, as a matter of
policy, such cooperatives that are engaged in sales for resale
should be left unregulated. Pp.
461 U. S.
383-385.
(b) The Rural Electrification Act does not expressly preempt
state rate regulation of power cooperatives financed by the REA,
and the legislative history of the Act establishes that, although
the REA was expected to assist the fledgling rural power
cooperatives in setting their
Page 461 U. S. 376
rate structures, it would do so within the constraints of
existing state regulatory schemes. In addition, the REA's present
policy is wholly inconsistent with preemption of state regulatory
jurisdiction over wholesale rates. Pp.
461 U. S.
385-389.
2. Appellee's assertion of regulatory jurisdiction over
wholesale rates does not offend the Commerce Clause. Pp.
461 U. S.
389-395.
(a) If the mechanical wholesale/retail test articulated in
Attleboro, supra, were applied here, it would require
setting aside appellee's assertion of jurisdiction. However, the
general trend in this Court's modern Commerce Clause jurisprudence
is to look in every case to the nature of the state regulation
involved, the State's objective, and the effect of the regulation
upon the national interest in the commerce involved, and that
modern jurisprudence, rather than the mechanical line drawn in
Attleboro, must govern the decision here. Pp.
461 U. S.
389-393.
(b) "Where [a] statute regulates evenhandedly to effectuate a
legitimate local public interest, and its effects on interstate
commerce are only incidental, it will be upheld unless the burden
imposed on such commerce is clearly excessive in relation to the
putative local benefits,"
Pike v. Bruce Church, Inc.,
397 U. S. 137,
397 U. S. 142.
Economic protectionism is not implicated here, and state regulation
of the wholesale rates charged by appellant to its members is well
within the scope of "legitimate local public interests,"
particularly considering that, although appellant is tied into an
interstate grid, its basic operation consists of supplying power
from generating facilities located within the State to member
cooperatives, all of which are located within the State. Although
appellee's regulation of appellant's rates charged to its members
will have an incidental effect on interstate commerce, "the burden
imposed on such commerce is not clearly excessive in relation to
the putative local benefits." Pp.
461 U. S.
393-395.
273 Ark. 170, 618 S.W.2d 151, affirmed.
BRENNAN, J., delivered the opinion of the Court, in which
MARSHALL, BLACKMUN, POWELL, REHNQUIST, STEVENS, and O'CONNOR, JJ.,
joined. WHITE, J., filed a dissenting opinion, in which BURGER,
C.J., joined,
post, p.
461 U. S.
396.
Page 461 U. S. 377
JUSTICE BRENNAN delivered the opinion of the Court.
This appeal requires us to decide whether the Arkansas Public
Service Commission (PSC) acted contrary to the Commerce Clause or
the Supremacy Clause of the Constitution when it asserted
regulatory jurisdiction over the wholesale rates charged by the
Arkansas Electric Cooperative Corporation (AECC) to its member
retail distributors, all of whom are located within the State. The
Arkansas Supreme Court upheld the PSC's assertion of jurisdiction.
We affirm.
I
Maintaining the proper balance between federal and state
authority in the regulation of electric and other energy utilities
has long been a serious challenge to both judicial and
congressional wisdom. On the one hand, the regulation of utilities
is one of the most important of the functions traditionally
associated with the police power of the States.
See Munn v.
Illinois, 94 U. S. 113
(1877). On the other hand, the production and transmission of
energy is an activity particularly likely to affect more than one
State, and its effect on interstate commerce is often significant
enough that uncontrolled regulation by the States can patently
interfere with broader national interests.
See FERC v.
Mississippi, 456 U. S. 742,
456 U. S.
755-757 (1982);
New England Power Co. v. New
Hampshire, 455 U. S. 331,
455 U. S. 339
(1982).
This dilemma came into sharp focus for this Court early in this
century in a series of cases construing the restrictions imposed by
the Commerce Clause on state regulation of the sale of natural gas.
Our solution was to fashion a bright line dividing permissible from
impermissible state regulation.
See Missouri v. Kansas Gas
Co., 265 U. S. 298,
265 U. S. 309
(1924);
Public Utilities Comm'n for Kan. v. Landon,
249 U. S. 236
(1919);
cf. Pennsylvania Gas Co. v. Public Service Comm'n of
N.Y., 252 U. S. 23
(1920). Simply put, the doctrine of these cases was that the retail
sale of gas was subject to state regulation,
"even though the gas be brought from another State and drawn for
distribution directly from interstate mains; and this is so
Page 461 U. S. 378
whether the local distribution be made by the transporting
company or by independent distributing companies,"
Missouri v. Kansas Gas Co., supra, at
265 U. S. 309,
but that the wholesale sale of gas in interstate commerce was not
subject to state regulation even though some of the gas being sold
was produced within the State. Our rationale was that
"[t]ransportation of gas from one State to another is interstate
commerce; and the sale and delivery of it to the local distributing
companies is a part of such commerce,"
265 U.S. at
265 U. S. 307,
but that, "[w]ith the delivery of the gas to the distributing
companies . . . , the interstate movement ends," and the further
"effect on interstate commerce, if there be any, is indirect and
incidental,"
id. at
265 U. S. 308.
See also e.g., State Corporation Comm'n v. Wichita Gas
Co., 290 U. S. 561,
290 U. S.
563-564 (1934);
East Ohio Gas Co. v. Tax Comm'n of
Ohio, 283 U. S. 465,
283 U. S.
470-471 (1931).
The wholesale/retail line drawn in
Landon and
Kansas Gas was applied to electric utilities in
Public
Utilities Comm'n of R.I. v. Attleboro Steam & Electric
Co., 273 U. S. 83
(1927).
Attleboro involved an attempt by the Rhode Island
Public Utilities Commission to regulate the rates at which the
Narragansett Electric Lighting Co. -- a Rhode Island utility --
could sell electric current to a Massachusetts distributor. We
struck down the regulation, holding that, because it involved a
transaction at wholesale, it imposed a "direct," rather than an
"indirect," burden on interstate commerce. In doing so, we held
that it was immaterial "that the general business of the
Narragansett Company appears to be chiefly local,"
id. at
273 U. S. 90, or
that the State Commission grounded its assertion of jurisdiction on
the need to facilitate the regulation of the company's retail sales
to its Rhode Island customers.
As a direct result of
Attleboro and its predecessor
cases, Congress undertook to establish federal regulation over most
of the wholesale transactions of electric and gas utilities engaged
in interstate commerce, and created the Federal Power Commission
(FPC) (now the Federal Energy Regulatory Commission) (FERC) to
carry out that task.
See Federal
Page 461 U. S. 379
Power Act of 1935 (Title II of the Public Utility Act of 1935),
49 Stat. 838-863; Natural Gas Act of 1938, 52 Stat. 821. [
Footnote 1] Although the main purpose
of this legislation was to "
fill the gap'" created by
Attleboro and its predecessors, see New England Power
Co. v. New Hampshire, supra, at 455 U. S. 340;
United States v. Public Utilities Comm'n of California,
345 U. S. 295,
345 U. S. 311
(1953), it nevertheless shifted this Court's main focus -- in
determining the permissible scope of state regulation of utilities
-- from the constitutional issues that concerned us in
Attleboro to analyses of legislative intent. [Footnote 2] For example, in
Illinois Gas Co. v. Public Service Co., 314 U.
S. 498 (1942), we were required to determine whether the
sale of natural gas by an Illinois pipeline corporation to local
distributors in Illinois was subject to the jurisdiction of the
Federal Power Commission or the Illinois Commerce Commission. We
began our analysis by describing the wholesale/retail test drawn in
Landon, Kansas Gas, Attleboro, and other cases. We then
noted another line of cases -- relating to both utility regulation
and other Commerce Clause issues -- in which the Court was
"less concerned to find a point in time and space where the
interstate commerce . . . ends and intrastate commerce begins, and
. . . looked [instead] 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
314 U. S. 505.
We stated:
"In the absence of any controlling act of Congress, we should
now be faced with the question whether the interest of the state in
the present regulation of the sale and distribution of gas
transported into the state, balanced against the effect of such
control on the commerce in its
Page 461 U. S. 380
national aspect, is a more reliable touchstone for ascertaining
state power than the mechanical distinctions on which appellee
relies."
Id. at
314 U. S. 506.
We concluded, however, that we were "under no necessity of making
that choice here,"
ibid., for Congress, partly to avoid
"drawing the precise line between state and federal power by the
litigation of particular cases,"
id. at
314 U. S. 507,
had adopted the "mechanical" line established in
Kansas
Gas and
Attleboro as the statutory line dividing
federal and state jurisdiction. [
Footnote 3]
The analysis in
Illinois Gas was reaffirmed in
subsequent cases and extended to similar jurisdictional disputes
arising under the Federal Power Act.
See, e.g., Panhandle
Eastern Pipe Line Co. v. Public Service Comm'n of Ind.,
332 U. S. 507,
332 U. S. 517
(1947) ("The line of the statute was . . . clear and complete. It
cut sharply and cleanly between sales for resale and direct sales
for consumptive uses");
United States v. Public Utilities
Comm'n of California, supra, at
345 U. S. 308
("Congress interpreted [
Attleboro] as prohibiting state
control of wholesale rates in interstate commerce for resale, and
so armed the Federal Power Commission with precisely that power")
(footnote omitted);
FPC v. Southern California Edison Co.,
376 U. S. 205
(1964). The last of these cases is particularly noteworthy for our
purposes here, for it held, among other things, that, under the
Attleboro test, a California utility that received some of
its power from out of state was subject to federal, and not state,
regulation in its sales of electricity to a California municipality
that resold the bulk of the power to others.
See also FPC v.
Florida Power & Light Co., 404 U.
S. 453 (1972).
II
AECC is one of a large number of customer-owned rural power
cooperatives established with loan funds and technical assistance
provided by the federal Rural Electrification Administration
Page 461 U. S. 381
(REA) in order to bring electric power to parts of the country
not adequately served by commercial utility companies.
See
generally Rural Electrification Act of 1936, 49 Stat. 1363, 7
U.S.C. § 901
et seq. (1976 ed. and Supp. V). Unlike
most rural power cooperatives, however, AECC does not provide power
directly to individual consumers. Rather, its sole members and
primary customers are 17 smaller Arkansas rural power cooperatives
who, in turn, serve the ultimate consumer. AECC is governed by a
Board of Directors consisting of 34 persons, 2 designated by each
of the 17 member cooperatives. Among the duties of this Board is to
determine the rates charged the member cooperatives by AECC.
AECC obtains most of its energy from a number of powerplants
located in Arkansas; which it wholly or partially owns. Moreover,
it sells most of what it generates to its member cooperatives. Like
most electric utilities, however, AECC also participates in a
variety of sale and exchange arrangements with other producers,
buying power when its own need or the excess capacity of other
utilities is high, and selling it when the opposite is the case. By
virtue of these arrangements, AECC is ultimately tied into a
multicompany and multistate "grid," and, electricity being what it
is,
see FPC v. Florida Power & Light Co., supra, it is
difficult to say with any confidence that the power AECC provides
to its member cooperatives at any particular moment originated
entirely within the State.
The retail rates charged by AECC's member cooperatives are
regulated by the Arkansas PSC. If AECC were not a rural power
cooperative, the wholesale rates it charges to its members would,
under the scheme we described in
461 U. S.
supra, be subject exclusively to federal regulation.
See § 201(b) of the Federal Power Act, 49 Stat. 838,
847, as amended, 16 U.S.C. § 824(b) (1976 ed., Supp. V);
FPC v. Southern California Edison Co., supra; FPC v. Florida
Power & Light Co., supra. In 1967, however, the FPC
held
Page 461 U. S. 382
that it had no jurisdiction under the Federal Power Act to
regulate wholesale rates charged by rural power cooperatives under
the supervision of the REA.
Dairyland Power Cooperative,
37 F.P.C. 12, 67 P.U.R.3d 340. [
Footnote 4] Thus, until the proceedings that culminated in
this case, the rates charged by AECC to its member cooperatives
were not subject, at either the federal or the state level, to the
type of pervasive rate regulation almost universally associated
with electric utilities in this country. [
Footnote 5]
In 1979, after public hearings, the Arkansas PSC entered an
order asserting jurisdiction over the rates charged by AECC to its
member cooperatives. The PSC based its decision on the same
Arkansas statutes that authorize its regulation of rural power
cooperatives engaged in retail sales of electricity. App. 52-53;
see Ark.Stat.Ann. §§ 73-201(a), 73-202(a),
73-202.1 (1979). In response to objections raised by AECC, the PSC
held that state regulation was neither forbidden by
Attleboro or
FPC v. Southern California Edison Co.,
supra, nor preempted by the Federal Power Act or the Rural
Electrification Act. On review, the Pulaski County Circuit Court
set aside the PSC's order, but the Arkansas Supreme Court reversed
and upheld the jurisdiction of the PSC. 273 Ark. 170, 618 S.W.2d
151 (1981). We noted probable jurisdiction. 457 U.S. 1130
(1982).
In its brief on the merits, AECC presses both the Commerce
Clause and the preemption arguments rejected by the Arkansas PSC.
[
Footnote 6] We consider the
statutory argument first.
Page 461 U. S. 383
III
The basic principles governing the preemption of state
regulation by federal law are well known.
See Fidelity Federal
Savings & Loan Assn. v. De la Cuesta, 458 U.
S. 141 (1982);
Jones v. Rath Packing Co.,
430 U. S. 519,
430 U. S.
525-526 (1977). In this case, we are concerned with the
possible preemptive effects of two federal statutes and
administrative acts taken pursuant to them: the Federal Power Act
and the Rural Electrification Act.
A
As we discuss
supra at
461 U. S.
381-382, the FPC determined in 1967 that it did not have
jurisdiction under the Federal Power Act over the wholesale rates
charged by rural power cooperatives. [
Footnote 7] That does not dispose of the possibility
that
Page 461 U. S. 384
the Federal Power Act preempts state regulation, however,
because a federal decision to forgo regulation in a given area may
imply an authoritative federal determination that the area is best
left
unregulated, and, in that event, would have as much
preemptive force as a decision to regulate.
See NLRB v.
Nash-Finch Co., 404 U. S. 138,
404 U. S. 144
(1971);
cf. Fidelity Federal Savings & Loan Assn. v. De la
Cuesta, supra, at
458 U. S. 155.
In this case, however, nothing in the language, history, or policy
of the Federal Power Act suggests such a conclusion. Congress'
purpose in 1935 was to fill a regulatory gap, not to perpetuate
one. [
Footnote 8] Moreover, the
FPC's refusal in 1967 to assert jurisdiction over rural power
cooperatives does not suggest anything to the contrary. In that
decision, the FPC simply held that, purely as a jurisdictional
matter, the relevant statutes gave the REA exclusive authority
among federal agencies to regulate rural power cooperatives.
Dairyland Power Cooperative, 37 F.P.C. at 26, 67 P.U.R.3d
at 352-354. It did not determine that, as a matter of policy, rural
power cooperatives that are engaged in sales for resale should be
left unregulated. [
Footnote 9]
Indeed, the
Page 461 U. S. 385
FPC's published opinion concluded by specifically urging
Congress to amend the statute and grant it jurisdiction over at
least some of the activities of such utilities.
Id. at 28,
67 P.U.R.3d at 35a. We therefore find no bar to the PSC's assertion
of jurisdiction either in the Federal Power Act itself or in the
FPC's
Dairyland decision.
B
We turn then to the REA. Nothing in the Rural Electrification
Act expressly preempts state rate regulation of power cooperatives
financed by the REA. Nevertheless, AECC and certain of the
amici, including the United States, argue that the PSC's
assertion of jurisdiction interferes with the REA's pervasive
involvement in the management of the rural power cooperatives to
which it loans funds, and may frustrate important federal
interests. As the United States expresses this position in its
brief:
"The terms and conditions of a loan to a generation and
transmission association [such as AECC] require the borrower's
rates and rate structure to be approved by the REA, not just at its
inception, but throughout the term of the loan. And in passing on
rate questions, the REA considers, not only the security thus
afforded for payment of the loan, but also the suitability of the
rates and structure to the Act's underlying purpose of facilitating
the availability of cheap electric power in rural America."
* * * *
"The spectre of state regulation poses a threat to the REA loan
because of the possibility that the state may refuse to permit its
cooperatives to pay a generation and transmission association the
rates to which they agreed
Page 461 U. S. 386
and upon the security of which the loan was issued. Moreover,
the policy behind the Rural Electrification Act is at stake. . . .
[T]he REA has always encouraged its borrowers to establish
affordable rates for all of its subscribers. In this way, costs are
shared in a manner which, over the long run, benefits all by the
creation of a sound, extensive rural electric system. If the state
were to insist on a restructuring of the generation and
transmission association's rate structure, the policies of the Act
would be undermined."
Brief for United States as
Amicus Curiae 12-13. As the
United States and AECC admit, the REA is a lending agency, rather
than a classic public utility regulatory body in the mold of either
FERC or the Arkansas PSC. This case might therefore present the
interesting question of how we should in general define the proper
relationship between the requirements established by federal
lending agencies and the more direct regulatory activities of state
authorities. We need not examine the issue at that level of
abstraction, however, because we have quite specific indications of
congressional and administrative intent on precisely the question
before us.
Cf. Fidelity Federal Savings & Loan Assn. v. De
la Cuesta, 458 U.S. at
458 U. S. 159,
n. 14.
First, the legislative history of the Rural Electrification Act
makes abundantly clear that, although the REA was expected to play
a role in assisting the fledgling rural power cooperatives in
setting their rate structures, it would do so within the
constraints of existing state regulatory schemes. [
Footnote 10]
See, e.g., 80
Cong.Rec. 5316 (1936) (Rep. Lea); Hearing on S. 3483 before the
House Committee on Interstate and Foreign
Page 461 U. S. 387
Commerce, 74th Cong., 2d Sess., 30, 37, 51, 52 (1936).
Admittedly, the legislative record focuses on
retail rates
charged by rural power cooperatives, but with respect to the
particular concerns that AECC and
amici have pressed in
support of preemption, we can discern no relevant difference
between wholesale and retail rates: both types of rates implicate
the Government's interest in securing its loans, and, if anything,
retail rates more directly implicate the Government's interest in
assuring that individual rural households receive electricity at a
reasonable price. [
Footnote
11]
Second, the present published policy of the REA is wholly
inconsistent with preemption of state regulatory jurisdiction.
Although generating cooperatives dealing with the REA must obtain
the agency's approval whenever they modify their wholesale rates,
[
Footnote 12] the same
document setting out guidelines for what constitute proper
wholesale rates also states:
"Borrowers must, of course, submit proposed rate changes to any
regulatory commissions having jurisdiction, and must seek approval
in the manner prescribed by those
Page 461 U. S. 388
commissions."
REA Bulletin 111-4, pp. 1-2 (1972). [
Footnote 13] Since Bulletin 111-4 was issued
subsequent to the FPC's decision in Dairyland, the "regulatory
commissions having jurisdiction" to which it refers can only be
state regulatory agencies such as the Arkansas PSC. [
Footnote 14] Moreover, it is worth noting
that the REA's supervision of wholesale rates charged by its
borrowers appears to be no more exclusive than its supervision over
their retail rates, REA Bulletin 112-2 (1971); REA Bulletin 112-1,
pp. 1, 16 (1979), and it has never been contended that state
regulatory jurisdiction over those rates is preempted,
see
REA Bulletin 112-2, at 5; Brief for United States as
Amicus
Curiae 11. [
Footnote
15]
There may come a time when the REA changes its present policy,
and announces that state rate regulation of rural
Page 461 U. S. 389
power cooperatives is inconsistent with federal policy. If that
were to happen, and if such a rule was valid under the Rural
Electrification Act, it would of course preempt any further
exercise of jurisdiction by the Arkansas PSC.
See Ray v.
Atlantic Richfield Co., 435 U. S. 151,
435 U. S.
171-172 (1978);
cf. Fidelity Federal Savings &
Loan Assn. v. De la Cuesta, 458 U.S. at
458 U. S. 154;
Free v. Bland, 369 U. S. 663,
369 U. S. 668
(1962). Similarly, as Arkansas already recognizes,
see
Ark.Stat.Ann. § 73-202.3 (1979), the PSC can make no
regulation affecting rural power cooperatives which conflicts with
particular regulations promulgated by the REA. Moreover, even
without an explicit statement from the REA, a particular rate set
by the Arkansas PSC may so seriously compromise important federal
interests, including the ability of the AECC to repay its loans, as
to be implicitly preempted by the Rural Electrification Act.
See Jones v. Rath Packing Co., 430 U.S. at
430 U. S.
525-526,
430 U. S.
540-543;
cf. Rice v. Santa Fe Elevator Corp.,
331 U. S. 218,
331 U. S.
231-232 (1947). We will not, however, in this facial
challenge to the PSC's mere assertion of jurisdiction, assume that
such a hypothetical event is so likely to occur as to preclude the
setting of any rates at all.
Exxon Corp. v. Governor of
Maryland, 437 U. S. 117,
437 U. S.
130-131 (1978).
See generally Merrill Lynch, Pierce,
Fenner & Smith v. Ware, Inc., 414 U.
S. 117,
414 U. S.
136-140 (1973).
IV
A
Even in the absence of congressional legislation, "the Commerce
Clause contains an implied limitation on the power of the States to
interfere with or impose burdens on interstate commerce."
Western & Southern Life Insurance Co. v. Board of
Equalization, 451 U. S. 648,
451 U. S. 652
(1981) (footnote omitted). If the constitutional rule articulated
in
Attleboro were applied in this case, it would require
setting aside the PSC's assertion of jurisdiction over AECC, since
AECC, like
Page 461 U. S. 390
the utility in
Attleboro, sells at wholesale electric
energy transmitted in interstate commerce. [
Footnote 16] As we pointed out in
Illinois
Gas, however,
see supra at
461 U. S.
379-380, it is difficult to square the mechanical line
drawn in
Attleboro and its predecessor cases, and based on
a supposedly precise division between "direct" and "indirect"
effects on interstate commerce, with the general trend in our
modern Commerce Clause jurisprudence to look in every case 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
314 U. S. 505.
Cf. Pike v. Bruce Church, Inc., 397 U.
S. 137 (1970). This modern jurisprudence has usually,
although not always, given more latitude to state regulation than
the more categorical approach of which
Attleboro is one
example. But in any event, it recognizes, as
Attleboro did
not, that there is an
"infinite variety of cases, in which regulation of local matters
may also operate as a regulation of [interstate] commerce, [and] in
which reconciliation of the conflicting claims of state and
national power is to be attained only by some appraisal and
accommodation of the competing demands of the state and national
interests involved."
Southern Pacific Co. v. Arizona ex rel. Sullivan,
325 U. S. 761,
325 U. S.
768-769 (1945).
See Minnesota v. Clover Leaf
Creamery Co., 449 U. S. 456
(1981);
Pike v. Bruce Church, Inc., supra, at
397 U. S. 142;
Parker v. Brown, 317 U. S. 341,
317 U. S.
362-363 (1943).
We are faced, then, in this case, with precisely the question
left open in
Illinois Gas: do we follow the mechanical
test set out in
Attleboro, or the balance-of-interests
test applied
Page 461 U. S. 391
in our Commerce Clause cases for roughly the past 45 years? Of
course, the principle of
stare decisis counsels us, here
as elsewhere, not lightly to set aside specific guidance of the
sort we find in
Attleboro. Nevertheless, the same respect
for the rule of law that requires us to seek consistency over time
also requires us, if with somewhat more caution and deliberation,
to seek consistency in the interpretation of an area of law at any
given time. Thus, in recent years, this Court has explicitly
abandoned a series of formalistic distinctions -- akin to the one
in
Attleboro -- which once both defined and controlled
various corners of Commerce Clause doctrine.
See, e.g.,
Commonwealth Edison Co. v. Montana, 453 U.
S. 609 (1981) (abandoning rule that constitutionality of
state severance tax depended on whether it was imposed on goods
prior to their entry into interstate commerce);
Hughes v.
Oklahoma, 441 U. S. 322
(1979) (rejecting rule, based on legal fiction of ownership, that
States had absolute control over disposition of wild animals within
their borders);
Washington Revenue Dept. v. Association of
Washington Stevedoring Cos., 435 U. S. 734
(1978) (rejecting rule that tax on stevedoring automatically
constituted an impermissible "direct" tax on interstate commerce);
cf. Michelin Tire Corp. v. Wages, 423 U.
S. 276 (1976) (overruling "original package" rule in
Import-Export Clause doctrine).
The wholesale/retail line drawn in
Attleboro is no less
anachronistic than the rules we rejected in the cited cases.
Moreover, we have had no occasion, since the 1930's, either to
apply that line or to reject it in a case not governed by statute.
The difficulty of harmonizing
Attleboro with modern
Commerce Clause doctrine has been apparent for a long time, so much
so that we expressed skepticism about its continuing soundness as a
constitutional, rather than statutory, rule in
Illinois
Gas. Our constitutional review of state utility regulation in
related contexts has not treated it as a special province insulated
from our general Commerce Clause jurisprudence.
See New
England Power Co. v. New Hampshire,
Page 461 U. S. 392
455 U. S. 331
(1982);
Panhandle Eastern Pipe Line Co. v. Michigan Public
Service Comm'n, 341 U. S. 329,
341 U. S.
336-337 (1951). Finally, we can see no strong reliance
interests that would be threatened by our rejection today of the
mechanical line drawn in
Attleboro. Therefore, here, as in
few other contexts, the burden shifts somewhat to the party
defending the rule to show why it should be applied in this
case.
AECC makes essentially two arguments, in the course of its brief
and oral argument, for why
Attleboro should govern here.
First, it contends that the constitutional import of the
Attleboro line was reaffirmed in
FPC v. Southern
California Edison Co., 376 U. S. 205,
which was decided in 1964. This claim is simply wrong.
Southern
California Edison Co. did no more than interpret the Federal
Power Act, and it cited with approval the constitutional
agnosticism spelled out at length in
Illinois Gas.
See 376 U.S. at
376 U. S.
214.
Second, AECC argues that, although
"[t]he
Attleboro line of cases established an
admittedly mechanical test for determining the limitation of state
power, . . . the court arrived at that test by careful
consideration of what was national importance, as opposed to what
was essentially local and could be, therefore, regulated by the
states,"
Tr. of Oral Arg. 11, and that nothing that has happened since
has changed that implicit balance. This contention is also
unpersuasive. Even if we assume -- as is not necessarily the case,
see supra at
461 U. S. 390
-- that the underlying substantive concerns motivating the Court to
strike down the state regulation in
Attleboro were
identical to the considerations articulated in our more recent
cases, that in itself does not explain why the bright-line test
drawn in
Attleboro should be applied to the somewhat
different set of facts present here,
see n 16,
supra. Bright lines are
important and necessary in many areas of the law, including
constitutional law. Moreover,
Southern California Edison
Co. and other cases have made it clear that the Federal Power
Act draws a bright line between the respective jurisdictions of
federal and state regulatory agencies. Nevertheless,
Page 461 U. S. 393
AECC has given us no good reason why a bright line between state
regulation and unexercised federal power is more justifiable here
than in other contexts in which we must interpret the negative
implications of the Commerce Clause.
Attleboro and its predecessors are by no means judicial
atrocities, plainly wrong at the time they were decided. In the
first place, it is not entirely insignificant, quite apart from the
sort of statutory analysis in which we engaged in
461 U.
S. supra, that those cases were decided in a
day before Congress had already spoken with some breadth on the
subject of utility regulation.
Cf. Duckworth v. Arkansas,
314 U. S. 390,
314 U. S. 400
(1941) (Jackson, J., concurring in result). This Court was, in
1927, the sole authority safeguarding federal interests over a wide
range of state utility regulation. Under those circumstances,
drawing a fairly restrictive bright line may have made considerable
sense. Indeed, the line the Court drew in
Attleboro,
though by no means perfect, would undoubtedly lead in a large
number of cases to results entirely consistent with present-day
doctrine. Second, the judicial turn of mind apparent in
Attleboro, although problematic in many respects, can also
be a healthy counterweight in many contexts to an otherwise
too-easy dilution of guarantees contained in the Constitution.
Nevertheless,
Attleboro can no longer be thought to
provide the sole standard by which to decide this case, and we
proceed instead to undertake an analysis grounded more solidly in
our modern cases.
B
Illinois Gas cited as examples of the less formalistic
approach to the Commerce Clause such now-classic cases as
South
Carolina Highway Dept. v. Barnwell Bros., 303 U.
S. 177 (1938), and
Duckworth v. Arkansas,
supra. One recent reformulation of the test established in
those cases is found in
Pike v. Bruce Church, Inc.:
"Where [a] statute regulates evenhandedly to effectuate a
legitimate local public interest, and its effects on interstate
Page 461 U. S. 394
commerce are only incidental, it will be upheld unless the
burden imposed on such commerce is clearly excessive in relation to
the putative local benefits. If a legitimate local purpose is
found, then the question becomes one of degree. And the extent of
the burden that will be tolerated will, of course, depend on the
nature of the local interest involved, and on whether it could be
promoted as well with a lesser impact on interstate
activities."
397 U.S. at
397 U. S. 142
(citation omitted).
Applying the
Bruce Church test to this case is
relatively simple. The most serious concern identified in
Bruce
Church -- economic protectionism -- is not implicated here.
Compare Philadelphia v. New Jersey, 437 U.
S. 617 (1978),
with Minnesota v. Clover Leaf
Creamery Co., 449 U.S. at
449 U. S.
471-472. Moreover, state regulation of the wholesale
rates charged by AECC to its members is well within the scope of
"legitimate local public interests," particularly considering that,
although AECC is tied into an interstate grid, its basic operation
consists of supplying power from generating facilities located
within the State to member cooperatives, all of which are located
within the State.
Cf. id. at
449 U. S. 473,
n. 17.
An argument could be made that, because AECC's Board of
Directors consists exclusively of representatives of its 17
customers, it is effectively self-regulating, and that therefore
any state regulation is not supported by an appreciable state
interest.
Cf. Salt River Project Agricultural Improvement &
Power District v. FPC, 129 U.S.App.D.C. 117, 120, 391 F.2d
470, 473 (1968). Nevertheless, there is evidence that even
cooperative power utilities may engage in economically inefficient
behavior,
see generally R. Schmalensee, The Control of
Natural Monopolies 91-93 (1979), and sources cited, and we will not
under these circumstances second-guess the State's judgment that
some degree of governmental oversight is warranted.
See Clover
Leaf Creamery Co., supra,
Page 461 U. S. 395
at
449 U. S. 469,
449 U. S. 473;
Exxon Corp. v. Governor of Maryland, 437 U.S. at
437 U. S. 128.
[
Footnote 17]
Finally, although we recognize that the PSC's regulation of the
rates AECC charges to its members will have an incidental effect on
interstate commerce, we are convinced that "the burden imposed on
such commerce is not clearly excessive in relation to the putative
local benefits." Part of the power AECC sells is received from
out-of-state. But the same is true of most retail utilities, and
the national fabric does not seem to have been seriously disturbed
by leaving regulation of retail utility rates largely to the
States. Similarly, it is true that regulation of the prices AECC
charges to its members may have some effect on the price structure
of the interstate grid of which AECC is a part. But, again, we find
it difficult to distinguish AECC in this respect from most
relatively large utilities which sell power both directly to the
public and to other utilities. It is not inconceivable that a
particular rate structure required by the Arkansas PSC would be so
unreasonable as to disturb appreciably the interstate market for
electric power. But, as we said in our discussion of the preemption
issue,
see supra at
461 U. S. 389,
we are not willing to allow such a hypothetical possibility to
control this facial challenge to the PSC's mere assertion of
regulatory jurisdiction.
See Exxon Corp. v. Governor of
Maryland, supra, at
437 U. S.
128-129.
Page 461 U. S. 396
V
On this record, the PSC's assertion of jurisdiction over the
wholesale rates charged by AECC to its members offends neither the
Supremacy Clause nor the Commerce Clause. The judgment of the
Arkansas Supreme Court is
Affirmed.
[
Footnote 1]
See FPC v. Southern California Edison Co., 376 U.
S. 205 (1964), and
United States v. Public Utilities
Comm'n of California, 345 U. S. 295
(1953), for discussions of the relevant legislative history.
[
Footnote 2]
But cf., e.g., New England Power Co. v. New Hampshire,
455 U. S. 331
(1982).
[
Footnote 3]
We make no attempt in this opinion to trace the subsequent
development of these statutes, except as may be relevant to our
decision today.
[
Footnote 4]
The United States Court of Appeals for the District of Columbia
Circuit reached the same conclusion in
Salt River Project
Agricultural Improvement & Power District v. FPC, 129
U.S.App.D.C. 117, 391 F.2d 470 (1968).
But cf. n 7,
infra.
[
Footnote 5]
We discuss
infra at
461 U. S.
385-388, the role of the REA in regulating the rates set
by rural electric cooperatives. We also note,
infra at
461 U. S. 394,
the argument that AECC, because it is owned and directly managed by
its 17 principal customers, is essentially self-regulating.
[
Footnote 6]
There is a legitimate question in this case as to whether the
preemption argument advanced by AECC is properly before us. AECC's
jurisdictional statement raised only the pure Commerce Clause
issue, and did not offer preemption as a separate ground for
reversal. Only after the United States, as
amicus curiae,
relied strongly on a preemption argument did AECC devote
considerable attention to it in its brief on the merits.
Nevertheless, the relationship between legislative and judicial
enforcement of the Commerce Clause is close enough for the
preemption issue to come, if by the barest of margins, within those
"subsidiary question[s] fairly included" in the principal question
on appeal.
See this Court's Rule 15.1(a);
Brown v.
Socialist Workers '74 Campaign Committee, 459 U. S.
87,
459 U. S. 94, n.
9 (1982);
United States v. Arnold, Schwinn & Co.,
388 U. S. 365,
388 U. S. 371,
n. 4 (1967).
See also Vance v. Terrazas, 444 U.
S. 252,
444 U. S. 258,
n. 5 (1980).
A more serious, because jurisdictional, problem was raised by
AECC's counsel's statement at oral argument that, although the
preemption issue was raised before the Arkansas PSC, it may not
have been raised before the Arkansas Supreme Court. Tr. of Oral
Arg. 8. As it turns out, however, the preemption argument was
raised, if half-heartedly, both in AECC's petition for review in
the Pulaski County Circuit Court, Record 104, and in its brief in
the Arkansas Supreme Court, Brief for Appellee in No. 80-313, pp.
16-17.
[
Footnote 7]
Neither party here has challenged the correctness of that
determination, and we express no opinion on the subject. Were FERC
or the courts ever definitively to overrule
Dairyland Power
Cooperative, 37 F.P.C. 12, 67 P.U.R.3d 340 (1967), and decide
that the FPC did have jurisdiction, we would obviously be faced
with a very different preemption question.
[
Footnote 8]
As the dissent suggests, Congress in 1935 almost certainly
thought that state regulation of the wholesale activities of rural
power cooperatives operating in interstate commerce would be barred
under this Court's
Attleboro doctrine.
Cf. infra
at
461 U. S.
389-390. To the extent that Congress sought to freeze
its perception of
Attleboro into law, however, it did so
only as a means to accomplishing the end of workable federal
regulation, not as an end in itself. If we start from the premise
that Congress did not intend to subject rural power cooperatives to
the federal regulatory scheme it was creating in the 1935
legislation,
see n 7,
supra, then it would not have served Congress' purposes to
preempt state regulation over such cooperatives. Significantly, the
dissent does not put forward any argument to the contrary.
[
Footnote 9]
Similarly, although the Court of Appeals opinion in
Salt
River Project Agricultural Improvement & Power District v. FPC,
supra, did suggest in its initial description of rural power
cooperatives that they were effectively self-regulating as to
rates,
id. at 120, 391 F.2d at 473, its conclusions of law
upholding the FPC's refusal to take jurisdiction were grounded
fundamentally on considerations of interagency jurisdiction.
[
Footnote 10]
All this is not to say that officials of the REA have always
welcomed state regulation of rural power cooperatives, or thought
it was a good idea.
See, e.g., REA, Rural Electrification
on the March, pp. 25-26 (1938). But, of course, such expressions of
opinion do not constitute sufficient grounds for preemption.
[
Footnote 11]
Contrary to the suggestion in the dissent, we do not infer from
this legislative history that Congress either "authorized" or
"expected" "state regulation that this Court had barred States from
engaging in."
Post at
461 U. S. 400.
See n 15,
infra; n 8,
supra. The relevant inquiry, however, is not whether
Congress authorized or expected such regulation, but whether it
intended by its own actions to
forbid it.
Cf. Pacific
Gas & Electric Co. v. State Energy Resources Conservation &
Development Comm'n, ante p.
461 U. S. 190. In
answering that question, we look quite naturally to whether
Congress intended in any way to forbid state regulation of rural
power cooperatives.
[
Footnote 12]
How well this oversight works in practice may be another matter.
See REA Bulletin 111-1, Memorandum from REA Administrator
to All REA Electric Borrowers, Managers, and Board Presidents (Mar.
18, 1970) (complaining that some borrowers had neglected to obtain
the necessary review and approval by the REA). As the United States
admits in its brief,
"the REA does not control the rates and rate structure of . . .
generation and transmission associations as thoroughly or with the
formality of the Federal Power Commission."
Brief for United States as
Amicus Curiae 12.
[
Footnote 13]
See also REA Bulletin 3-1, p. 1 (1955) ("It is the
responsibility of borrowers . . . to initiate and carry forward
proceedings before regulatory bodies of appropriate jurisdiction in
which all required certificates of convenience and necessity,
franchises, and rate, tariff and other approvals are sought").
[
Footnote 14]
The dissent faults us for finding significance in REA Bulletin
111-4.
Post at
461 U. S.
400-401. In particular, it speculates that
"the statement [in Bulletin 111-4] could have been intended
[only] to direct wholly
intrastate cooperatives to comply
with the orders of state commissions."
Post at
461 U. S. 401
(emphasis added). It is our understanding, however, that, as of
1972, all the generating cooperatives in the country, except
perhaps those in Texas, were tied into an interstate grid. If this
is true, it is unlikely that the REA would have used as broad and
unqualified language as it did for the sole purpose of directing
cooperatives in one State to submit to state regulation.
[
Footnote 15]
In light of our discussion in text, an argument might be made
that state rate regulation of rural power cooperatives engaged in
sales for resale is not only not preempted, but is indeed
affirmatively authorized by the Rural Electrification Act.
Cf.
Western & Southern Life Insurance Co. v. Board of
Equalization, 451 U. S. 648,
451 U. S.
652-653 (1981);
Prudential Insurance Co. v.
Benjamin, 328 U. S. 408,
328 U. S.
423-426 (1946). On balance, however, it seems most
likely that Congress and the REA intended no more than to leave in
place state regulation otherwise consistent with the requirements
of the Commerce Clause.
See New England Power Co. v. New
Hampshire, 455 U.S. at
455 U. S. 341;
Lewis v. BT Investment Managers, Inc., 447 U. S.
27,
447 U. S. 49
(1980).
[
Footnote 16]
It is possible to distinguish
Attleboro on its facts,
since it was concerned with the sale of power by a company in one
State to a wholesale customer in another State. Nevertheless, it is
much more difficult to dismiss the broad principle articulated in
Attleboro and its predecessor cases, especially in light
of the reading given to those cases in our subsequent decisions.
See, e.g., Illinois Gas Co. v. Public Service Co.,
314 U. S. 498,
314 U. S. 504,
508 (1942);
FPC v. Southern California Edison Co., 376
U.S. at
376 U. S. 212,
376 U. S.
214.
[
Footnote 17]
Note also that the Arkansas PSC's regulation of AECC's rates can
be justified, if on no other grounds, as facilitating its
regulation of the retail rates charged by AECC's members: the PSC's
inquiry into the reasonableness of those retail rates must already
include an inquiry into the reasonableness of the wholesale rates
upon which they in part depend. Moreover, if the retail rates are
found unreasonable (by virtue of the wholesale rates' being
unreasonable), it seems likely that the retail cooperatives will,
through their representatives on AECC's Board of Directors, vote
for a reduction in the wholesale rates. Regulating AECC's rates
directly allows the PSC both to rationalize and to streamline this
process, and also to obtain the necessary information directly from
its source.
JUSTICE WHITE, with whom THE CHIEF JUSTICE joins,
dissenting.
I respectfully dissent. I believe that state regulation of rural
cooperative wholesale power rates is preempted because Congress has
occupied the field of wholesale power rate regulation.
Several years before the expansion of the jurisdiction of the
Federal Power Commission to regulate interstate wholesale power
rates, this Court had invalidated as repugnant to the Commerce
Clause state attempts to regulate interstate power wholesale rates.
Public Utilities Comm'n of R.I. v. Attleboro Steam &
Electric Co., 273 U. S. 83
(1927). The Court drew a bright line demarking the permissible
scope of state regulation. States could regulate retail sales of
energy in interstate commerce, but could not regulate wholesale
sales of energy in interstate commerce. "
Attleboro
declared state regulation of interstate transmission of power for
resale forbidden as a direct burden on commerce."
United States
v. Public Utilities Comm'n of Cal., 345 U.
S. 295,
345 U. S. 304
(1953). Had there been at the time of
Attleboro a
cooperative that generated electricity and sold it for resale
across state lines, state regulation of such sales would have been
foreclosed as an interference with commerce. I do not see how that
conclusion could be questioned.
Nor is it sensible to argue that such a cooperative's rates
became subject to state regulation when, a few years later,
Congress subjected to federal regulation most wholesale
Page 461 U. S. 397
rates previously unregulated. Quite the contrary is true.
Although, under the relevant cases, with which it was surely
familiar,
In re Rahrer, 140 U. S. 545
(1891);
Clark Distilling Co. v. Western Maryland R. Co.,
242 U. S. 311
(1917), [
Footnote 2/1] Congress
could have authorized state regulation of such rates, it chose not
to do so.
See New England Power Co. v. New Hampshire,
455 U. S. 331,
455 U. S. 341
(1982) ("Nothing in the legislative history or language of [16
U.S.C. § 824(b)] evinces a congressional intent
to alter
the limits of state power otherwise imposed by the Commerce
Clause,' . . . or to modify the earlier holdings of this Court
concerning the limits of state authority to restrain interstate
trade"). Instead, Congress enacted Titles II and III of the Federal
Power Act, 49 Stat. 847, 16 U.S.C. § 824 \et seq.\ (1976 ed.
and Supp. V), in 1935 (and the Natural Gas Act, 52 Stat. 821, 15
U.S.C. § 717 et seq. (1976 ed. and Supp. V), in 1938)
expressly adopting the Attleboro bright-line demarkation,
see FPC v. Southern California Edison Co., 376 U.
S. 205 (1964); United State v. Public Utilities
Comm'n of Cal., supra. That Act provided that the FPC would
set just and reasonable rates for public utilities that sold
electric power at wholesale. 16 U.S.C. § 824d(a). The term
public utility was defined broadly. 16
Page 461 U. S. 398
U.S.C. § 824(e) (1976 ed., Supp. V). [
Footnote 2/2] Nowhere in the Act is there any indication
that state authority to regulate wholesale rates was in any way
expanded beyond that permitted by the Commerce Clause as
interpreted in
Attleboro.
"What Congress did was to adopt the test developed in the
Attleboro line [of cases] which denied state power to
regulate a 'sale at wholesale to local distributing
companies.'"
FPC v. Southern California Edison Co., supra, at
376 U. S.
214.
"The line of the statute was thus clear and complete. It cut
sharply and cleanly between sales for resale and direct sales for
consumptive uses. No exceptions were made in either category for
particular uses, quantities or otherwise."
Panhandle Eastern Pipe Line Co. v. Public Service Comm'n of
Indiana, 332 U. S. 507,
332 U. S. 517
(1947).
Congress thus affirmatively asserted jurisdiction over wholesale
rates charged by all entities, either by giving the FPC
jurisdiction or by freeing such entities from regulation because of
their quasi-governmental nature. Neither of these options leaves
room for state control of wholesale rates charged by public
utilities (except those that are arms of the State or its political
subdivisions); the first gives sole control to the FPC, the latter
can be viewed as a decision that the rates of governmental and
quasi-governmental entities are "best left
unregulated,"
ante at
461 U. S.
384.
The Rural Electrification Act, 49 Stat. 1363, 7 U.S.C. §
901
et seq. (1976 ed. and Supp. V), was passed in 1936,
and the Federal Power Commission later held that cooperatives such
as appellant are not within its regulatory authority, not because
they were exempted by the Rural Electrification Act, but because
they are beyond the jurisdiction conferred
Page 461 U. S. 399
on the Commission by the Federal Power Act.
Dairyland Power
Cooperative, 37 F.P.C. 12, 67 P.U.R.3d 340 (1967). [
Footnote 2/3] This left the cooperatives'
wholesale rates unregulated and beyond the reach of state
authority, just as they would have been immediately after
Attleboro. In the 47 years since the passage of the Rural
Electrification Act, Congress has not sought to authorize state
regulation of the wholesale rates charged by rural cooperatives. It
has adhered to its wholesale-retail boundary between federal and
state authority. In all these years, there has been no state rate
regulation of rural cooperatives' wholesale rates. This was the
necessary result of Congress' adopting as its own the
Attleboro line, and thereby occupying the field of
wholesale regulation. [
Footnote
2/4]
Page 461 U. S. 400
The Court claims support for its apparent view that Congress
authorized (or somehow expected) state control over wholesale rates
charged by rural cooperatives in the legislative history of the
Rural Electrification Act. In particular, it points to statements
that cooperatives were to comply with state regulation of retail
rates, a power which the States possessed in the absence of
congressional authorization. The Court then opines that there is no
more reason to control retail rates than there is to control
wholesale rates. From these two premises, it infers that Congress
in effect authorized, or at the very least expected, state
regulation that this Court had barred States from engaging in. The
two premises, however, do not support the conclusion. Congress did
not expressly authorize state regulation of wholesale rates charged
by cooperatives, and I find nothing in the history of the Rural
Electrification Act to indicate that Congress was in any way
departing from its basic decision to embrace the holding in
Attleboro that the Commerce Clause barred the States from
regulating wholesale rates.
The second source for its apparent view that the Rural
Electrification Act allows state regulation of wholesale rates is a
statement appearing in a Rural Electrification Bulletin. The
statement basically instructs the borrower to comply with the
wholesale rate orders of any body that has jurisdiction to make
such rate orders. This statement is supposed to express a "policy
of the REA [that] is wholly inconsistent with preemption of state
regulatory jurisdiction" over wholesale rates.
Ante at
461 U. S. 387.
The Court's reliance on
Page 461 U. S. 401
this statement is misplaced. First, given the silence of the
Rural Electrification Administration on this point, an isolated
reference in an administrative bulletin is not persuasive evidence
of the Administration's position. Second, in the absence of any
persuasive evidence that Congress intended to depart from the
Attleboro line in the case of cooperatives, I doubt
seriously that the REA itself would purport to adopt a policy at
odds with the law. And surely it did not do so in advising
cooperatives to comply with the orders of any authority having
jurisdiction. Nor am I persuaded that there was a general
understanding at the state level that each of the States to which a
generating cooperative delivered power at the wholesale level was
free to regulate that cooperative's wholesale prices. Finally, the
statement could have been intended to direct wholly intrastate
cooperatives to comply with the orders of state commissions. In
such a situation, a State would have jurisdiction over wholesale
rates and the Administration might well have concluded that it
should honor state control over intrastate rates. [
Footnote 2/5]
Given the 4-year period in which Congress has asserted
jurisdiction over wholesale rates and never manifested any belief
that its policies would be furthered by state regulation of such
rates, this Court should not purport to negate the congressional
decision to abide by
Attleboro. I would hold, as a matter
of preemption, that, absent a contrary indication from Congress,
States may not regulate wholesale rates of cooperatives. [
Footnote 2/6]
[
Footnote 2/1]
Clark Distilling upheld the Webb-Kenyon Act, 37 Stat.
699, prohibiting importation into a State of liquor to be received,
possessed, or sold in violation of the laws of the State. About the
time Congress passed the Public Utilities Holding Company Act,
Congress also enacted a law substantially similar to the
Webb-Kenyon Act, the Ashurst-Sumners Act, 49 Stat. 494, which made
it unlawful to transport goods made by convict labor into any State
where the goods were to be received, sold, or possessed in
violation of its law.
See Kentucky Whip & Collar Co. v.
Illinois Central R. Co., 299 U. S. 334,
299 U. S. 351
(1937) ("The Ashurst-Sumners Act as to interstate transportation of
convict-made goods has substantially the same provisions as the
Webb-Kenyon Act as to intoxicating liquors. . . . The subject of
the prohibited traffic is different, the effects of the traffic are
different, but the underlying principle is the same").
But see 53 U. S. Board of
Wardens, 12 How. 299 (1852) (dicta).
[
Footnote 2/2]
Section 824(e) defines a public utility as "any person who owns
or operates facilities subject to the jurisdiction of the
Commission under this subchapter." Section 796(4) defines a person
as "an individual or a corporation." Section 796(3) defines a
corporation as "any corporation, joint-stock company, partnership,
association, business trust, organized group of persons, whether
incorporated or not. . . ."
[
Footnote 2/3]
The Court accepts the holding in
Dairyland that the FPC
lacks jurisdiction over rural cooperatives. It then notes that the
FPC believed that regulation of some rural cooperatives would be
proper. From all this, the Court concludes that the lack of
regulation of rural cooperatives does not represent a judgment that
their wholesale rates are "best left unregulated,"
ante at
461 U. S. 384.
The FPC, however, did not suggest that the State had any role to
play in filling this regulatory void. Furthermore, there is no
evidence that Congress thinks, or thought, that the cooperatives'
wholesale rates should be regulated, or that, if they should be,
the States, rather than the FPC or the Rural Electrification
Administration, should do the regulating.
[
Footnote 2/4]
Indeed, the only indication of the views of Congress with
respect to the question of jurisdiction over the rates of rural
cooperatives is the spate of bills introduced around the time that
the FPC was considering the
Dairyland Power case. These
bills were designed to add rural cooperatives to the list of
governmental instrumentalities exempt from FPC jurisdiction,
e.g., H.R. 5348, 90th Cong., 1st Sess. (1967); H.R. 8426,
90th Cong., 1st Sess. (1967), and reaffirm the jurisdiction of the
Rural Electrification Administration over rural cooperatives. S.
1365, 90th Cong., 1st Sess. (1967) (introduced by Sens. Holland and
Smathers); H.R. 7799, 90th Cong., 1st Sess. (1967) (introduced by
Rep. Fascell). The Department of Justice, the FPC, and the
Department of Agriculture (of which the REA is a part) took the
position that the legislation was not needed to protect
cooperatives from FPC control in light of the Commission's
decision, in
Dairyland Power (which had been announced by
the start of the hearings on the bill), that rural cooperatives
were governmental instrumentalities exempt from FPC jurisdiction.
Hearings on H.R. 5348
et al. before the Subcommittee on
Communications and Power of the House Committee on Interstate and
Foreign Commerce, 90th Cong., 1st Sess., 3 (1967) (letter from Lee
C. White, Chairman, FPC, to Hon. Harley O. Staggers);
id.
at 5 (letter from Orville L. Freeman, Secretary of Agriculture, to
Hon. Harley O. Staggers);
id. at 6 (letter from Warren
Christopher, Deputy Attorney General, to Hon. Harley O. Staggers).
The bills were not reported out of committee.
[
Footnote 2/5]
It is surely more reasonable to read a statement that a borrower
is to comply with rate orders of any body that has jurisdiction to
mean only that borrowers should comply with regulations governing
intrastate wholesale sales, over which a State could
constitutionally exercise jurisdiction, rather than reading it to
mean that borrowers are to comply with rate orders of commissions
whose exercise of jurisdiction is clearly unconstitutional.
[
Footnote 2/6]
I do not reach the question of whether the limitation on state
power implicit in the Commerce Clause proscribes Arkansas'
assertion of jurisdiction in this case.