Source: https://www.legalcrystal.com/case/97494/jersey-central-power-light-co-vs-fpc
Timestamp: 2018-01-17 12:53:22
Document Index: 248619163

Matched Legal Cases: ['§ 201', '§ 201', '§ 201', '§ 203', '§ 1', 'art 2', '§ 201', '§ 201', '§ 201', '§ 201', '§ 201', '§ 203']

Jersey Central Power and Light Co Vs Fpc - Citation 97494 - Court Judgment | LegalCrystal
Jersey Central Power and Light Co. Vs. Fpc - Court Judgment
LegalCrystal Citation legalcrystal.com/97494
Case Number 319 U.S. 61
Appellant Jersey Central Power and Light Co.
jersey central power & light co. v. fpc - 319 u.s. 61 (1943) u.s. supreme court jersey central power & light co. v. fpc, 319 u.s. 61 (1943) jersey central power & light co. v. federal power commission no. 299 argued january 4, 5, 1943 reargued march 4, 5, 1943 decided may 3, 1943 * 319 u.s. 61 certiorari to the circuit court of appeals for the third circuit syllabus 1. the conclusion of the federal power commission in this case that facilities owned and operated by a power company within a state -- which connected with facilities of a second company, also within the state, whose facilities connected with those of a third company, in another state -- were utilized for the transmission of electric energy.....
Jersey Central Power & Light Co. v. FPC - 319 U.S. 61 (1943)
U.S. Supreme Court Jersey Central Power & Light Co. v. FPC, 319 U.S. 61 (1943)
1. The conclusion of the Federal Power Commission in this case that facilities owned and operated by a power company within a State -- which connected with facilities of a second company, also within the State, whose facilities connected with those of a third company, in another State -- were utilized for the transmission of electric energy across state lines held supported by substantial evidence. P. 319 U. S. 67 .
2. Federal regulation of the transmission of electric energy in interstate commerce, under the Federal Power Act of 1935, is not limited to energy at the instant it crosses the state line, nor to companies which own the facilities which cross the line. P. 319 U. S. 71 .
3. The jurisdiction of the Federal Power Commission does not extend to all connecting transmission facilities, but only to those which transmit energy actually moving in interstate commerce. P. 319 U. S. 72 .
4. Since the power company here in question owns and operates a transmission line which is a facility within the jurisdiction of the Federal Power Commission under § 201(b), it is a "public utility" under § 201(e). P. 319 U. S. 73 .
5. The purchase by a company which is a public utility under the Federal Power Act of the stock of another company which also is a public utility under the Act requires the approval of the Federal Power Commission, notwithstanding that the purchase could be, and the transfer is, regulated by the State. P. 319 U. S. 74 .
6. The limitation of § 201(a) of the Federal Power Act -- "such federal regulation, however, to extend only to those matters which are not subject to regulation by the States" -- is inapplicable to regulation under § 203(a) of the acquisition of securities. P. 319 U. S. 76 .
These two cases bring here for review the construction of sections 201 and 203(a) of the Federal Power Act, as amended by the Public Utility Act of 1935. [ Footnote 1 ] These sections are included in Title II, Part II, of the latter act, which Part relates to federal regulation of the business of the transmission of electric energy in interstate commerce and the sale of such energy at wholesale. By these sections, the public utilities subject to the Federal Power Commission are defined and the acquisition of securities of such utilities by any other utility subject to the act is forbidden without authorization of the Commission.
bar [ Footnote 2 ] in one of its substations, located also in New Jersey at Mechanic Street, Perth Amboy. From the bus bar, Public Service has transmission facilities extending to the mid-channel of Kill van Kull, a body of water between New Jersey and Staten Island, New York. At mid-channel, Staten Island Edison Corporation, another utility, connects with its transmission facilities which extend to its own Atlantic substation on Staten Island. The Commission further found, in the words quoted below, that energy generated in New Jersey by Jersey Central was consumed in New York, and energy generated in New York was consumed in New Jersey. [ Footnote 3 ]
appears from testimony presented by investigators of the Commission. Their examination of Public Service records discloses that there were moments of time between January 26, 1937, and September 6, 1938, when all the energy flowing into the bus bar at Mechanic Street came from Jersey Central, and, at the same moments, energy flowed from Mechanic Street in New Jersey to the Atlantic substation in New York. As no pools of energy exist from which the flow to New York could have been drawn, it necessarily follows that Jersey Central production was instantaneously transmitted to New York. Cf. Utah Power & Light Co. v. Pfost, 286 U. S. 165 . The amount of energy transmitted was small. The evidence was developed from 184 log readings selected from 25,000. Of the 184 log readings, 12 showed this flow of energy from Jersey Central to New York between August 26, 1935, the effective date of the federal Power Act, and March 14, 1938, the date of the present purchase of stock. [ Footnote 4 ] Twelve showed such flow shortly after the purchase.
This evidence, we think, furnishes substantial basis [ Footnote 5 ] for the conclusion of the Commission that facilities of Jersey Central are utilized for the transmission of electric energy across state lines.
Petitions for rehearing were denied. An appeal was taken to the Circuit Court of Appeals under the provisions of section 313 of the act. [ Footnote 6 ] The determination of the Commission was affirmed, 129 F.2d 183, and, in view of the important questions of federal law raised by the petitions for certiorari, we granted review. 317 U.S. 610.
Commission v. Attleboro Steam Co., 273 U. S. 83 . On account of the development of interstate sales of electric energy, it was deemed desirable by Congress to enter this field of regulation. [ Footnote 7 ]
In Public Utilities Commission v. Attleboro Steam Co., 273 U. S. 83 , 273 U. S. 86 , this Court held in interstate commerce the sale of locally produced electric current at the state boundary with knowledge that the buyer would utilize the energy extrastate. The passage of custody and title at the line was held immaterial. We see no distinction between a sale at or before reaching the state line.
The other case is Illinois Gas Co. v. Public Service Co., 314 U. S. 498 . In this case, a wholly owned subsidiary bought gas in Illinois from its parent corporation. The parent had transported the gas across the state line and delivered it at a reduced pressure to the subsidiary in Illinois. The subsidiary transported the gas wholly intrastate and sold and, on again reducing pressure, delivered it to an Illinois distributing company. The intrastate movement by the subsidiary was held by us to be a part of interstate commerce. We said that the point at which title and custody passed, without arresting movement, did not affect the essential interstate movement of the business.
Edison and the consequent loss of actual control of the energy by Jersey Central is significant to distinguish the two cases just cited. Petitioners, as we understand their briefs, concede, and rightly so, that power rests in Congress to regulate such a flow of energy from Jersey Central as here occurs. Such a flow affects commerce. Cf. Wickard v. Filburn, 317 U. S. 111 , and cases cited. [ Footnote 8 ] But petitioners say that Congress did not intend to exercise its full power over interstate transmission, and directed only that transmission "in interstate commerce" should be regulated. As contrasted with "affecting commerce" in the Public Utility Holding Company Act of 1935, 49 Stat. 803, § 1(c), or the "current of commerce" in the Commodity Exchange Act, 42 Stat. 998, or the broad language of The Bituminous Coal Act, 50 Stat. 83, or the Agricultural Adjustment Act, 50 Stat. 246, the words "in interstate commerce" are said by petitioners to be the "strictest test of jurisdiction available to Congress." But the argument, we think, gives no effect to the definition of "transmitted in interstate commerce" as used in this act. In the note below, there is set out the pertinent provisions of section 201 which indicate the meaning given the phrase, which provisions are italicized for quick reference. [ Footnote 9 ] Subsections (a) and (b) show the intent to regulate such transactions as are beyond state power under the Attleboro
case, supra. Subsection (c) defines the electric energy in commerce as that "transmitted from a State and consumed at any point outside thereof." There was no change in this definition in the various drafts of the bill. The definition was used to "lend precision to the scope of the bill." [ Footnote 10 ] It is impossible for us to conclude that this definition means less than it says, and applies only to the energy at the instant it crosses the state line, and so only to the facilities which cross the line and only to the company which owns the facilities which cross the line. The purpose of this act was primarily to regulate the rates and charges of the interstate energy. If intervening companies might purchase from producers in the state of production, free of federal control, cost would be fixed
Petitioners make the point, however, that this interpretation subjects connected facilities to the Commission's jurisdiction which facilities were deliberately eliminated by Congress. As an illustration, they cite the provisions of section 201(a) as they appeared in a predecessor bill. [ Footnote 11 ] We do not think that the result which the petitioners apprehend follows from our interpretation. The language of section 201(a) and (b) indicates a distinction between the facilities for generation or production and those for transmission. Also, it is sales at wholesale only which are regulated, and, finally, Commission power does not extend over all connecting transmitting facilities, but only over those which transmit energy actually moving in interstate commerce. Mere connection determines nothing.
III. Although only the facilities of a public utility used in the transmission or sale at wholesale of electric energy in interstate commerce or the rates and charges for such energy are subjected by Parts II and III of the act to regulation by the Federal Power Commission, that Commission has general power over the issue of all securities or assumption of all obligations by such a public utility. [ Footnote 12 ] This generality of control is, in turn, limited by an exception in the case of utilities organized and operating in a state where its security issues are regulated by a state commission. [ Footnote 13 ]
In the section of Part II in question here, however, which prohibits the purchase of the security of any other public utility without authorization of the Commission, there is no exception of any kind. [ Footnote 14 ] Consequently, the action of Jersey Power, admittedly a public utility under Part II, in purchasing the stock of Jersey Central, hereinbefore held to be a public utility under the act, requires Commission approval unless some other provision of law exempts the transaction from this control. Petitioners find this exemption in the concluding words of section 201(a) -- "such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States." [ Footnote 15 ] The Commission denies that this limitation is to be read into section 203(a). If the limitation is to be read as applying to section 203(a), the limitation exempts this transaction, and the purchase here involved is beyond the reach of Commission power for the reason that the purchase could be, and the transfer is, regulated by the State of New Jersey. [ Footnote 16 ]
and distribution. This conclusion finds strong support in the fact that not only section 203(a), here under discussion, but sections 204(a), [ Footnote 17 ] 208, [ Footnote 18 ] and 301(a) [ Footnote 19 ] regulate matters obviously subject to state regulation. If the scope of the limitation was as broad as petitioners contend, none of these sections just referred to would be effective. Section 203(a) would be a nullity, as, of course, the disposition and acquisition of facilities, merger, consolidation, or purchase of securities by their utilities may be regulated by the States. But this does not follow where a specific limitation is placed on the issue of securities by section 204. Section 204 is not rendered useless by subsection (f), since it is applicable to states without state commissions authorized to regulate security issues. See notes 12 and 13 supra. In view of the contemporaneous legislation as to
holding companies (Title I, Public Utility Act of 1935, 49 Stat. 803) which left independent operating companies or subsidiaries of unregistered holding companies free to acquire securities in other operating companies, [ Footnote 20 ] it is difficult to conclude that, by section 201(a), Congress limited the regulation of the acquisition of securities by section 203(a). [ Footnote 21 ]
The legislative history points to this result. When S. 2796, containing the progenitor of the disputed section, was reported by the Committee on Interstate Commerce of the Senate, [ Footnote 22 ] section 201(a) concluded:
1st Sess., p. 26. Sections 208 and 301, with their regulation of matters subject to state regulation, remained unchanged. More significant even than these indicia of the scope of the concluding words of section 201(a) is the fact that the Committee which adopted the new concluding words adopted also section 204, subsection (f), withdrawing federal regulation from security issues where such issues are "regulated by a State commission." While, of course, this may have been done to make certain that state power would not be infringed, such meticulous care was entirely unnecessary if the wording of section 201(a), simultaneously added, had the effect now urged. [ Footnote 23 ] One might deduce from the language of the report in the House that the precise question at issue here was in the mind of the House Committee, and was resolved in accord with our conclusion. [ Footnote 24 ] From this record of the pains taken by the Congress to make clear the respective responsibilities
The order entered determined that Jersey Central Power & Light Company is a public utility, and that the acquisition of its stock by New Jersey Power & Light Company was a violation of section 203(a) of the Federal Power Act. 30 P.U.R. (N.S.), 33, 36. This order fixed the status of Jersey Central as a utility amenable to the provisions of the Act: e.g., rates, sec. 205(a); ascertainment of cost of property, sec. 209(a); accounts, sec. 201. Rochester Telephone Corp. v. United States, 307 U. S. 125 ; Federal Power Commission v. Pacific Co., 307 U. S. 156 ; Columbia Broadcasting System v. United States, 316 U. S. 407 .
"The new part 2 of the Federal Water Power Act would constitute the first assertion of Federal jurisdiction over this major interstate public utility. The decision of the Supreme Court in Public Utilities Commission v. Attleboro Steam Co., 273 U. S. 83 , placed the interstate wholesale transactions of the electric utilities entirely beyond the reach of the States. Other features of this interstate utility business are equally immune from State control, either legally or practically."
There is no dispute concerning the exigency which moved Congress to adopt the statute. It had been settled that the transmission and sale of a commodity, such as electricity or gas, produced in one state, transported and furnished directly to consumers in another state, in interstate commerce, did not preclude regulation of the rates to the consumer by the state of delivery. [ Footnote 2/1 ] In 1927, however, this court held that, where a company generated electric energy and transmitted it, under contract, to another public utility in an adjoining state at the state line, whence the purchasing company transmitted and sold the energy to its consumers, the rate at which the first company sold to the second was not subject to regulation by the authorities of the state of origination. [ Footnote 2/2 ] The court stated:
"It is hereby declared that the business of transmitting and selling electric energy for ultimate distribution to the public is affected with a public interest, and that Federal regulation of matters relating to generation to the extent provided in this Part . . . and of that part of such business which consists of the transmission of electric energy in interstate commerce and the sale of such energy at wholesale in interstate commerce is necessary in the public interest, such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States. "
It is conceded that Jersey Central, as respects generation and sale of the energy in question, and as respects also its security issues, was, at the date of adoption of the federal Act, and still is, subject to regulation under the law of New Jersey, and that law does regulate these matters. [ Footnote 2/3 ]
The construction now given to the Act makes the Commission's power to regulate Jersey Central depend not on the nature of its own business, as § 201(a) and (b) plainly require, but on the interstate character of the business of Public Service, over which Jersey Central has no control and which is subject to regulation by the Commission. § 201(b) and (e). I can find no support in the language, history, or avowed purposes of the Act for such a construction. Moreover, it is in flat contradiction to the words of § 201(a), (b), and (e), which, when read together, explicitly exclude from the jurisdiction of the Commission a "person" who "owns or operates facilities" otherwise subject to the jurisdiction of the Commission by providing, in § 201(a), that the federal regulation is "to extend only to those matters which are not subject to regulation by the States." Jersey Central is engaged in generating electricity which it sells and delivers to Public Service, all within the State. When the present Act was adopted, it was not doubted, and, in the light of our decisions, it could not be, that the seller's business was intrastate, and subject to state regulation. The manufacture and sale of a product wholly within a state is not interstate commerce, even though the product is destined by the buyer to be shipped out of the state in interstate commerce. [ Footnote 2/4 ] That this is equally the case where
the product produced and sold within the state is gas or electricity is implicit in our decisions. [ Footnote 2/5 ] As will presently appear more in detail, while it was the purpose of Congress, in enacting the Federal Power Act, to extend the national control over the interstate transmission and sale of electrical energy, which had been held to be beyond the control of the states, the purpose was equally to preserve unimpaired the existing state power of regulation over intrastate production and sale. The provisions of § 201 to which I have referred were introduced into the legislation which became the Federal Power Act in the course of its progress through Congress with the repeatedly declared object of accomplishing that precise purpose.
I conclude that the provisions of § 203 [ Footnote 2/6 ] relating to regulation of security issues should not be considered, since
When a proposed bill first came before a committee of the House of Representatives, the chairman of the Federal Power Commission, its sponsor, said: [ Footnote 2/7 ]
"The new title II of the act is designed to secure coordination on a regional scale of the Nation's power resources, and to fill the gap in the present State regulation of electric utilities. It is conceived entirely as a supplement to, and not a substitute for, State regulation. "
The National Association of Railroad and Utility Commissioners, while recognizing the need of federal legislation to fill the "gap" created by decisions of this court, urged that the bill, as introduced, would overlap and break down state regulation, and submitted amendments designed to avoid this result. [ Footnote 2/8 ]
The spokesman for the Association said of these proposed changes: [ Footnote 2/9 ]
In reporting the revised bill to the Senate, the Committee said: [ Footnote 2/10 ]
the amended bill to the House, the Committee reported: [ Footnote 2/11 ]
" The bill takes no authority from State commissions, and contains provisions authorizing the Federal Commission to aid the State commissions in their efforts to ascertain and fix reasonable charges. . . . Probably, no bill in recent years has so recognized the responsibilities of State regulatory commissions as does title II of this bill. "
affecting commerce, as well as commerce itself. It is interesting to compare, in this connection, other statutes enacted by the same Congress. Three adopted in July and August, 1935, covered activities "affecting" commerce; [ Footnote 2/12 ] three, including the Federal Power Act in question, adopted in August, 1935, did not cover activities "affecting" commerce. [ Footnote 2/13 ] Thus, the legislature's discriminating use of language argues strongly for denial of the jurisdiction the Commission asserts.
Pennsylvania Gas Co. v. Public Service Commission, 252 U. S. 23 .
Public Utilities Commission v. Attleboro Steam Co., 273 U. S. 83 .
See Chassaniol v. Greenwood, 291 U. S. 584 ; Parker v. Brown, 317 U. S. 341 , 317 U. S. 360 -361, and cases cited.
Union Dry Goods Co. v. Public Service Corp., 248 U. S. 372 ; Public Utilities Commission v. Landon, 249 U. S. 236 , 249 U. S. 245 ; Pennsylvania Gas Co. v. Public Service Commission, 252 U. S. 23 ; Missouri v. Kansas Gas Co., 265 U. S. 298 , 265 U. S. 308 ; East Ohio Gas Co. v. Tax Commission, 283 U. S. 465 , 283 U. S. 471 ; cf. Utah Power & Light Co. v. Pfost, 286 U. S. 165 ; Coverdale v. Arkansas-Louisiana Pipe Line Co., 303 U. S. 604 , 303 U. S. 611 .