Source: https://www.legalcrystal.com/case/103112/fpc-vs-florida-power-light-co
Timestamp: 2018-02-20 12:15:04
Document Index: 296248951

Matched Legal Cases: ['§ 201', '§ 201', '§ 201', '§ 313', '§ 8251', '§ 202', '§ 824', '§ 824', '§ 825', '§ 201']

Fpc Vs Florida Power and Light Co - Citation 103112 - Court Judgment | LegalCrystal
Fpc Vs. Florida Power and Light Co. - Court Judgment
LegalCrystal Citation legalcrystal.com/103112
Case Number 404 U.S. 453
Respondent Florida Power and Light Co.
fpc v. florida power & light co. - 404 u.s. 453 (1972) u.s. supreme court fpc v. florida power & light co., 404 u.s. 453 (1972) federal power commission v. florida power & light co. no. 70-38 argued november 15, 1971 decided january 12, 1972 404 u.s. 453 certiorari to the united states court of appeals for the fifth circuit syllabus the federal power commission (fpc) properly determined that the transfer of power from florida power & light co. (fp&l;) to another florida utility's "bus" (a transmission line into which subsidiary lines connect) and the simultaneous transfer of power from that utility's "bus" to a georgia company gave the fpc jurisdiction over fp&l; under § 201(b) of the federal power act, which.....
FPC v. Florida Power & Light Co. - 404 U.S. 453 (1972)
U.S. Supreme Court FPC v. Florida Power & Light Co., 404 U.S. 453 (1972)
The Federal Power Commission (FPC) properly determined that the transfer of power from Florida Power & Light Co. (FP&L;) to another Florida utility's "bus" (a transmission line into which subsidiary lines connect) and the simultaneous transfer of power from that utility's "bus" to a Georgia company gave the FPC jurisdiction over FP&L; under § 201(b) of the Federal Power Act, which grants jurisdiction to the FPC over
The FPC's conclusion that FP&L; energy was commingled with that of the other Florida utility, and thus was transmitted in interstate commerce, was substantially supported by expert opinion that is in accord with the known facts of electricity, and is sufficient to support its jurisdiction. Pp. 454-469.
WHITE, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, and BLACKMUN, JJ., joined. DOUGLAS, J., filed a dissenting opinion, in which BURGER, C.J., joined, post, p. 404 U. S. 469 . STEWART, POWELL, and REHNQUIST, JJ., took no part in the consideration or decision of the case.
Section 201(c) defines energy transmitted in interstate commerce as energy "transmitted from a State and consumed at any point outside thereof." [ Footnote 1 ] In Connecticut Light & Power Co. v.
Page 404 U. S. 455
FPC, 324 U. S. 515 (1945), we noted that, by this definition the initial jurisdictional determination "was to follow the flow of electric energy, an engineering and scientific, rather than a legalistic or governmental, test." Id. at 324 U. S. 529 ; FPC v. Southern California Edison Co., 376 U. S. 205 , 376 U. S. 209 n. 5 (1964).
In the case now before us, the FPC hearing examiner and the Commission itself, utilizing two scientific tests, determined that the Florida Power & Light Co. (FP&L;) generates energy that is transmitted in interstate commerce. They therefore held the company subject to the Commission's jurisdiction. Respondent FP&L; argues that an alternative model better represents the flow of its electricity; by use of this model, it purports to demonstrate that its power has not flowed in interstate commerce. The Court of Appeals for the Fifth Circuit rejected the FPC's tests as "not sufficient to prove the actual transmission of energy interstate." 430 F.2d 1377, 1383 (1970). It did not approve FP&L;'s test ("Both [the FPC and the FP&L; tests] suffer from the same vice," id. at 1385), but, because the FPC must shoulder the burden of proof, its finding of jurisdiction was set aside.
We granted certiorari to determine if either of the FPC's tests provides an acceptable basis at law and a sufficient basis in fact, for the establishment of jurisdiction. 401 U.S. 907 (1971).
FP&L; is Florida's largest electric utility. At the time relevant to this litigation, it served nearly one million customers, ranked ninth nationally among electric companies in revenues, 14th in investment in gross utility electric plant, and 16th in kilowatt-hour sales. Despite this significant size, the peninsular nature of Florida, the concentration of the company's sales in the southern part of the State, [ Footnote 2 ] and the recurrent threat of hurricanes which might sever power lines combine to make the operations of the company unusually insular and independent of the operations of like companies in other States. All of FP&L;'s equipment, including transmission lines, is confined to Florida, and none of its lines directly connects with those of out-of-state companies.
FP&L; does, however, indirectly connect with out-of-state companies. As a member of the Florida Pool, it is interconnected with the Florida Power Corp. (Corp), [ Footnote 3 ] the Tampa Electric Co., the Orlando Utilities Commission, and the City of Jacksonville. These interconnected utilities and authorities coordinate their activities and exchange power as circumstances require. [ Footnote 4 ] In 1964, FP&L; transferred over 107 million kwh to Corp
and received over 61 million kwh from Corp. [ Footnote 5 ] If power from FP&L; flows in interstate commerce, it is because Corp interconnects just short of Florida's northern border with Georgia Power Co., [ Footnote 6 ] and regularly exchanges power with it. [ Footnote 7 ] Georgia's lines transmit the power out of or into Florida. There are numerous instances in which transfers between Georgia and Corp are recorded as coinciding with transfers between Corp and FP&L.; [ Footnote 8 ]
The Georgia-Corp interconnection serves another function. Corp, FP&L;, and the other Florida Pool participants are members of the Interconnected Systems Group (ISG), a national interlocking of utilities that automatically provides power in case of emergencies. In time of emergency, this power also would flow through Corp's links with Georgia. To date, FP&L; has had no occasion to call for ISG power. But when a midwestern utility sustained a 580-megawatt generating loss, a regularly scheduled 8-megawatt FP&L; contribution to the Florida Pool coincided with an 8-megawatt contribution from the pool to the ISG system.
These relationships establish the focal issue in this case. The FPC may exercise jurisdiction only if there is substantial evidentiary support for the Commission's conclusion that FP&L; power has reached Georgia via Corp or that Georgia's power has reached FP&L; because of exchanges with Corp. What happens when FP&L; gives power to Corp and Corp gives power to Georgia (or vice versa)? Is FP&L; power commingled with Corp's own supply, and thus passed on with that supply, as the Commission contends? Or is it diverted to handle Corp's independent power needs, displacing a like amount of Corp power that is then passed on, as respondent argues? Or, as the Commission also contends, do changes in FP&L;'s load or generation, or that of others in the interconnected system, stimulate a reaction up and down the line by a signal or a chain reaction that is, in essence, electricity moving in interstate commerce? Upon answer to these questions jurisdiction rides.
If FP&L; were directly involved in power exchanges with Georgia, there would be no serious question about the resolution of this case. Section 201 of the Federal Power Act owes its origin to the determination of this Court that a direct transfer of power from a utility in Rhode Island to a utility in Massachusetts is in interstate commerce. See Public Utilities Comm'n v. Attleboro Steam & Electric Co., 273 U. S. 83 (1927). "Part II [of the Act] is a direct result of Attleboro. " United States v. Public Utilities Comm'n of California, 345 U. S. 295 , 345 U. S. 311 (1953). There can be no doubt that § 201 achieves its end and fills the " Attleboro gap" by giving the FPC jurisdiction over direct exchanges. Connecticut Light & Power Co. v. FPC, 324 U. S. 515 (1945).
Nor would there be any difficulty in resolving this case if the company or companies that stood between FP&L; and the out-of-state power companies could be shown to be sometimes no more than a funnel. In
Jersey Central Power & Light Co. v. FPC, 319 U. S. 61 (1943), the first of the major FPC jurisdictional cases to be considered by this Court, Jersey Central supplied power to the Public Service Electric & Gas Co. (also a New Jersey company), which in turn had exchange arrangements with Staten Island Edison Corp. (a New York company). The transfer from PSE&G; to Staten Island was effected through a "bus" -- a transmission line of three conductors into which a number of subsidiary lines connect. The FPC showed through extensive sampling of the logs of the relevant companies that, on at least a dozen occasions when Staten Island drew power from the bus, only Jersey Central was supplying the bus. Thus, the intermediate presence of PSE&G; was shown to be, in some circumstances, a null factor, and it was established that Jersey Central energy was moving in interstate commerce.
This is not, however, the equivalent of saying that the flows did not occur, or that there was not substantial evidence for concluding that they did. The Court of Appeals was hardly less emphatic than the Federal Power Commission in its conclusion that FP&L;'s "proof" that the flows did not occur was unconvincing. The court purported to have no opinion whether the flows had actually occurred. The question that must be resolved, therefore, is whether the evidence presented, though not so certain and convincing as that which the FPC offered in Jersey Central, was nonetheless adequate to establish jurisdiction.
The Federal Power Commission followed alternate routes to its conclusion that FP&L; energy moved in interstate commerce. The first course, based on what the Commission called the electromagnetic unity of response of interconnected electrical systems, is best represented in the words of the hearing examiner:
"The cause and effect relationship in electric energy occurring throughout every generator and point on the Georgia, Corp and Florida systems constitutes interstate transmission of electric energy by, to, and from Florida. It is the electromagnetic unity of response of Florida, Corp, Georgia and other interconnecting systems that constitutes the interstate transmission of electric energy by Florida. [ Footnote 9 ]"
By this analysis, a change in FP&L;'s load or generating pattern depletes or adds to the force available in out-of-state lines; therefore, FP&L; is transmitting energy in interstate commerce.
The alternative analysis by the Commission and its staff experts concentrates on power flow within the "Turner bus" -- the point of connection between Corp's and FP&L;'s systems. Power supplied to the bus from a variety of sources is said to merge at a point and to be commingled just as molecules of water from different sources (rains, streams, etc.) would be commingled in a reservoir. On this basis, the FPC need only show (1) FP&L; power entering the bus and (2) power leaving the bus for out-of-state destinations at the same moment, in order to establish the fact that some FP&L; power goes out of State. [ Footnote 10 ] The FPC purported to make this demonstration by a series of tracing studies. [ Footnote 11 ]
FP&L; objects. The first approach is said to be technologically
sound, but legally insufficient in that it does not demonstrate that any FP&L; power flows in interstate commerce, but only that it affects interstate commerce. Congress, it is argued, could have chosen to grant the FPC jurisdiction over activities affecting commerce, but it clearly did not do so. [ Footnote 12 ]
The second approach of the FPC purports to meet the standard at law, but, according to FP&L;, it is technologically unsound. A bus is not a point, but rather a tangible, physical three-strand power line, in this case 225 feet in length. It is argued that it is not a general reservoir. Power, according to this argument, enters and is drawn off the line at discrete identifiable points. Power from any given source will not flow further along the line than loads of wattage cumulatively equal to the wattage of the power source. The distribution of entry lines and wattage loads on the Turner bus is said to demonstrate that all of the FP&L;'s power will be exhausted by Corp's load lines before the point, further down the line, where Georgia's load intervenes. When power flows in the opposite direction ( i.e., north to south), again the effect is one of displacement: Georgia's power goes to Corp's loads, and the output of Corp's generators is thus displaced to FP&L.;
We do not find it necessary to approve or disapprove the Federal Power Commission's analysis based on unity
The conclusion of the FPC that FP&L; energy commingled with that of Corp and was transmitted in commerce rested on the testimony of expert witnesses. The major points expounded by these witnesses were probed, and, in our opinion, not undercut, by the hearing examiner's questions, FP&L;'s cross-examination, and rebuttal testimony of FP&L; witnesses. The hearing examiner found the testimony persuasive, and held that his conclusions could be independently reached upon it. A majority of the Commission, reasoning similarly, endorsed these conclusions.
A court must be reluctant to reverse results supported by such a weight of considered and carefully articulated expert opinion. Particularly when we consider a purely factual question within the area of competence of an administrative agency created by Congress, and when resolution of that question depends on "engineering and scientific" considerations, we recognize the relevant agency's technical expertise and experience, and defer to its analysis unless it is without substantial basis in fact. An appreciation of such different institutional capacities is reflected in the congressional directive defining the terms of judicial review of FPC action: "The finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive." Federal Power Act § 313(b), 16 U.S.C. § 8251(b). See Gainesville Utilities Dept. v. Florida Power Corp., 402 U. S. 515 , 402 U. S. 526 -529 (1971).
The Court of Appeals appears to have rejected the Commission's conclusions for two reasons. First, it apparently regarded these conclusions as supported by mere speculation, rather than evidence. In its view, expert opinion about the nature of reality, however logically compelling, is not fact. [ Footnote 13 ] Second, even if the Commission's views might be said to be supported by substantial evidence, the Court of Appeals apparently thought it important that the Commission acknowledged that its conclusions rest upon representations of a reality imperfectly understood. From this, the Court of Appeals concluded that it was dealing with a "simplified characterization" that, despite the frequent use of that same characterization by other courts of appeals, [ Footnote 14 ] was too uncertain in its application to any particular situation to be used as the basis for establishing jurisdiction. We reverse and reinstate the FPC's order because we do not think these points are well taken. As to the Court of Appeals' first reservation, we hold that well reasoned expert testimony -- based on what is known and uncontradicted by empirical evidence -- may, in and of itself, be "substantial evidence" when first-hand evidence on the question (in this case, how electricity moves within
a bus) is unavailable. [ Footnote 15 ] This proposition has been so long accepted, [ Footnote 16 ] and indeed has been so often applied specifically to challenges to the FPC's determination of
technical matters, that we do not consider it fairly in dispute. See, e.g., FPC v. Southern California Edison Co., 376 U. S. 205 , 376 U. S. 209 n. 5 (1964); Travelers' Indemnity Co. v. Parkersburg Iron & Steel Co., 70 F.2d 63, 64 (1934); United States ex rel. Chapman v. FPC, 191 F.2d 796, 808 (1951), aff'd, 345 U. S. 153 (1953). As Judge Parker said in the Court of Appeals' opinion in the latter case:
345 U.S. at 345 U. S. 171 .
The elusive nature of electrons renders experimental evidence that might draw the fine distinctions required by this case practically unobtainable. That does not
mean that expert testimony is insubstantial and that FP&L; is beyond federal regulation.
We do not think Jersey Central sets such high jurisdictional standards. Special circumstances in that case (the occasional operation of PSE&G; as a null factor) permitted the FPC to present clear and compelling proof of interstate transactions. But we assessed the FPC's determination not by the standards of certainty, but rather by the substantial evidence test. [ Footnote 17 ] The fact that the FPC was exceptionally convincing in that leading case does not raise the standard that it must meet in all future cases.
A requirement of tracing studies of the sort demanded by the Court of Appeals -- if they are feasible at
all [ Footnote 18 ] -- would take one to two years to conduct. [ Footnote 19 ] Even under the FPC's supposedly too easily met criteria of jurisdiction, the FP&L; matter took almost four years to pass through Commission proceedings; [ Footnote 20 ] it has been before the courts for four more years. If the congressionally mandated system is to function meaningfully, the judiciary cannot overwhelm it with unworkably high standards of proof. New England Division Case, 261 U. S. 184 , 261 U. S. 197 (1923); Railroad Comm'n of Wisconsin v. Chicago, Burlington & Quincy R. Co., 257 U. S. 563 , 257 U. S. 579 (1922).
We note, moreover, that Jersey Central -type tracing studies become less feasible as interconnections grow more complicated. Arkansas Power & Light Co. v. FPC, 368 F.2d 376, 382 (CA8 1966), quoting 34 F.P.C. 747, 751. The requirement of Jersey Central -type tracing might encourage the artificial and wasteful complication of interconnections for the purpose of avoiding federal jurisdiction. More important, as interconnections proliferate and energy pools grow larger, jurisdictional hurdles like those erected by the Court of Appeals would become ever more difficult to clear. Thus, the greater the need for regulation, the more likely it would become (under the Court of Appeals' rule) that regulation would not be achieved.
As pointed out by the Court of Appeals for the Seventh
Circuit in an FPC case similar to this one, even in a criminal prosecution, where the highest standards of proof are required, guilt may be shown by circumstantial evidence. [ Footnote 21 ] The FPC has used tracing studies to show what went into and out of the Turner bus at a given moment; it has marshaled expert opinion to suggest what may reasonably be said to have occurred in the bus at the instant of transmission; it has presented this evidence in a closely reasoned and empirically uncontradicted opinion. Recognizing that the men responsible do not now fully understand electricity, [ Footnote 22 ] though they know how to use it, and use it on an ever-expanding basis, we do not demand more of the Commission than that its conclusions be substantially supported by expert opinion that is in accord with the facts known for certain. The Commission has done enough to establish its jurisdiction.
Seventy-five percent of FP&L;'s load is concentrated at the southern tip of Florida, some 400 miles south of the Georgia border. Transcript of Proceedings before the FPC 241. Reprinted in App. 2 et seq. (hereinafter referred to as (T)).
It has other interconnections across state lines, but we concentrate, as did the FPC, on a single Georgia-Corp connection. If FP&L; power is shown to flow through this connection, the others need not be considered, because jurisdiction is established. See n. 7 infra.
FPC staff exhibits revealed 42 instances, discovered by meter readings at selected hours over a four-month period, in which a transfer from Georgia to Corp's bus was instantly followed by a transfer from that bus to FP&L.; Hearing Exhibits Nos. 18, pp. 1048-1054 (T), and 19, pp. 1055-1059 (T). Five instances of power flow from FP&L; to Corp's bus, followed by transmission from that bus to Georgia were recorded over the same period. Hearing Exhibit No. 32, p. 1116 (T).
If any FP&L; power has reached Georgia, or FP&L; makes use of any Georgia power, no matter how small the quantity, FPC jurisdiction will attach, because it is settled that Congress has not
Connecticut Light & Power Co. v. FPC, 324 U. S. 515 , 324 U. S. 536 . See also Pennsylvania Water & Power Co. v. FPC, 343 U. S. 414 (1952).
This argument is developed by the dissent in Jersey Central Power & Light Co. v. FPC, 319 U. S. 61 , 319 U. S. 78 et seq. Note particularly p. 319 U. S. 88 :
Jersey Central, supra, n 12, at 319 U. S. 67 .
The final FPC decision was handed down on May 2, 1967. We do not know when the FPC began its investigation of FP&L.; But ignoring what must have been an extended period of initial staff work, we observe that the record shows that FP&L; was formally notified on October 3, 1963, that, in the opinion of the FPC staff, it was subject to FPC jurisdiction. Order Initiating Investigation and Hearing 2412 (T).
"We reject I&M;'s fundamental proposition in this case that, in order to prevail, the Federal Power Commission must do what I&M; claims to be impossible, that is, to prove by either tracing or some other unnamed 'scientific and engineering proof' that out-of-state energy reaches the wholesale customers. We might recall that, even in criminal cases, guilt beyond a reasonable doubt often can be established by circumstantial evidence."
There can be no doubt that Congress has constitutional power to regulate under the Commerce Clause the interstate
"commingling" of electric power involved in the instant case. See Connecticut Light & Power Co. v. FPC, 324 U. S. 515 , 324 U. S. 525 -530. The question is whether it has done so.
37 F.P.C. 544, 567-568.
Evidently undesirous of explicitly overruling the proposition that "[m]ere connection determines nothing," Jersey Central Power & Light Co. v. FPC, 319 U. S. 61 , 319 U. S. 72 (1943), the Court avoids validating the FPC's electromagnetic unity theory as the jurisdictional hold over the respondent. Instead, relying on the Commission's expertise, the Court purports to hold a narrower ground that actual flows of FP&L;'s electricity were. in fact, measured passing out of Florida through the employment of the Commission's "commingled" tracing method. Closer analysis of this latter wizardry, which had previously been rejected by the Commission, Connecticut Light & Power Co., 3 F.P.C. 132 (1942), reveals, however, that actual flows were not, in fact, measured but were simply hypothesized using an engineering model which, as the dissenting commissioners observed, "[assumed] the fact in issue, and thus [begged] . . . the question of jurisdiction." The conventional tracing method previously used in cases such as this one reached an entirely different result -- that no actual interstate flow of FPL power had occurred. Jersey Central Power & Light Co. v. FPC, supra; Connecticut Light & Power Co. v. FPC, 324 U. S. 515 .
The Commission's abandonment of the conventional test in favor of the commingled method will now mean that every privately owned interconnected facility in the United States (except for those isolated in Texas) is within the FPC's jurisdiction. Both tracing methods assume that a momentary increase in FP&L;'s generation over its local needs will be passed on to the interconnecting Florida Power Corp. (Corp) system located between FP&L; and the state line. The conventional system assumes that such excesses will be absorbed by the first few loads reached in the Corp system, and therefore will never cross the state line. On the other hand, the commingled approach assumes that the first load which the FP&L; excess
reaches will continue to rely upon other utilities' power to a large extent, and therefore will absorb only a part of the FP&L; excess. The leftover FP&L; excess will then travel to the next load, but, again, will only supply part of those consumers' needs, with the remainder passing on to the next load, and so on, until some fractional part of the original FP&L; excess crosses the state line. Extending the assumption's application, it is clear that any momentary increase in output by any generator located at any point in the ISG grid will send a surge of power throughout the entire network. If this assumption is approved, then it is difficult to perceive what remains of the Jersey Central proposition that "[m]ere connection determines nothing."
These scientific facts are, of course, the basis for the grid systems, much in vogue these days. But the Commission has no authority to order a company to enter a grid. Unless it is done voluntarily, as was true here, the Commission, by virtue of § 202(b) of the Federal Power Act, can act only [ Footnote 2/1 ] "upon application of any State commission or of any person engaged in the transmission or sale of electric energy." 16 U.S.C. § 824a(b).
A company transmitting electric energy in interstate commerce is subject to regulation by the Commission of its wholesale rates. 16 U.S.C. § 824(b). But there is no claim here that wholesale selling is involved; and the minuscule nature of the "commingling" that has taken place and its incidental nature are doubtless the reasons why the Commission has not undertaken that phase of regulation. The case is therefore unlike Pennsylvana Water & Power Co. v. FPC, 343 U. S. 414 , 343 U. S. 419 -420. All that is involved here is an effort to make respondent
follow the Commission's Uniform System of Accounts. [ Footnote 2/2 ] 16 U.S.C. § 825(a).
S.Rep. No. 621, 74th Cong., 1st Sess., 17. [ Footnote 2/3 ]
" The revised bill would impose Federal regulation only over those matters which cannot effectively be controlled by the States. The limitation on the Federal Power Commission's jurisdiction in this regard has been inserted in each section in an effort to prevent the expansion of Federal authority over State matters."
Public Utility Holding Company Act of 1935, § 201(a), 49 Stat. 847. The Commission does not assert that Florida's regulation of FP&L; is inadequate. Each year, the Florida Public Service Commission conducts field audits of electric utilities to ensure compliance with its accounting practices and depreciation rates. [ Footnote 2/4 ] Other than enhancing the slogan
In light of these congressional purposes, I would not superimpose federal regulation on top of state regulation in case of de minimis transmissions not made by prearrangement or in case of wholesale transactions. In Jersey Central Power & Light Co. v. FPC, supra, at 319 U. S. 66 -67, we let federal regulation be fastened, though the energy transmitted was "small." Yet the transmissions apparently were neither accidental nor de minimis. Id. at 319 U. S. 66 n. 4.
In the instant case, respondent is a member of the Interconnected Systems Group (ISG) which covers the southeastern and central portions of the United States.
"In meeting this responsibility, the Department maintains a comprehensive file of statistical, financial, and accounting data in the form of annual, quarterly, and monthly reports submitted by the various companies. It maintains a continuous examination of these reports and conducts continuing field audits on the company premises to verify the accuracy . . . to determine the compliance of the basic accounting records with the Uniform System of Accounts prescribed in the Commission's Rules and Regulations. "
Public Utilities Comm'n v. Attleboro Steam & Electric Co., 273 U. S. 83 (1927), held that, even absent federal legislation, the Commerce Clause precluded state rate regulation of sales of energy made by a Rhode Island producer of electricity to a Massachusetts distributor. Thus, one purpose of the Act was to fill the " Attleboro gap" in rate regulation.