Source: https://www.law.cornell.edu/supremecourt/text/355/534/
Timestamp: 2016-05-28 14:20:15
Document Index: 451727967

Matched Legal Cases: ['§ 2201', '§ 530', '§ 1253', '§ 2201', '§ 2', '§ 530', '§ 530', '§ 530', '§ 1342', '§ 2301', '§ 2301', '§ 2304', '§ 530', '§ 22', '§ 22', '§ 3012', '§ 6011', '§ 8012', '§ 1', '§ 22', '§ 65', '§ 22']

PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Appellant, v. UNITED STATES of America. | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews PUBLIC UTILITIES COMMISSION OF the STATE OF CALIFORNIA, Appellant, v. UNITED STATES of America.
355 U.S. 534 (78 S.Ct. 446, 2 L.Ed.2d 470)
Argued: Jan. 7, 1958.
[HTML] dissent, HARLAN, BURTON
[HTML] See 356 U.S. 925, 78 S.Ct. 713.
The United States filed this suit for declaratory relief, 28 U.S.C. 2201, 28 U.S.C.A. § 2201, in a three-judge District Court, asking that § 530 be declared unconstitutional insofar as it prohibits carriers from transporting government property at rates other than those approved by the Commission and requesting relief by injunction.
The District Court rendered judgment for the United States, 141 F.Supp. 168. The case is here by appeal, 28 U.S.C. 1253, 2101(b), 28 U.S.C.A. §§ 1253, 2101(b). We noted probable jurisdiction. 352 U.S. 924, 77 S.Ct. 221, 1 L.Ed.2d 159.
We are met at the outset with a contention that there is no 'actual controversy' between the United States and the Commission within the meaning of 28 U.S.C. 2201, 28 U.S.C.A. § 2201. If so, there is a fatal constitutional, as well as statutory, defect because of the manner in which the judicial power is defined by Art. III, § 2, cl. 1, of the Constitution. See Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617. The argument is that there is no allegation that the Commission had done or had threatened to do anything adverse to the United States or its agent.
Prior to 1955, § 530 provided that every common carrier 'may transport, free or at reduced rates: * * * property for the United States * * *.'
In 1955, § 530 was amended to eliminate that provision and substitute the provision already noted that the Commission 'may permit' common carriers to transport property of the United States at reduced rates 'to such extent and subject to such conditions as it may consider just and reasonable.' As also noted above, this amendment further provided that no common carrier shall be prevented from transporting property of the United States 'at reduced rates no lower than rates which lawfully may be assessed and charged by any other such common carrier or by highway permit carriers * * *.'
Prior to this amendment the Commission had authorized highway permit carriers to deviate from the prescribed minimum rates in connection with the transportation of property for the armed forces of the United States. To prevent the continuation of this exemption the Commission on August 16, 1955, canceled the deviation authorization for permit carriers as of September 7, 1955, the effective date of the amendment to § 530. On request of the Department of Defense the Commission postponed the effectiveness of that cancellation until December 5, 1955. On November 29, 1955, the Commission denied a further extension, stating:
The Commission has plainly indicated an intent to enforce the Act; and prohibition of the statute is so broad as to deny the United States the right to ship at reduced rates, unless the Commission first gives its approval. The case is, therefore, quite different from Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291, where a carrier sought relief in a federal court against a state commission in order 'to guard against the possibility,' id., 344 U.S. at page 244, 73 S.Ct. at page 240, that the Commission would assume jurisdiction. Here the statute limits transportation at reduced rates unless the Commission first gives approval. The controversy is present and concretewhether the United States has the right to obtain transportation service at such rates as it may negotiate or whether it can do so only with state approval.
It is argued that 28 U.S.C. 1342, 28 U.S.C.A. § 1342, bars the grant of relief in this case. It provides that the federal courts 'shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:
We come to the merits. Congress has provided a comprehensive policy governing procurement. 10 U.S.C. (Supp. V) §§ 23012314, 10 U.S.C.A. §§ 23012314. While competitive bidding is the general policy, § 2304 provides that 'the head of an agency may negotiate such a purchase or contract, if
'(10) the purchase or contract is for property or services for which it is impracticable to obtain competition;
One provides that 'volume shipments' shall be referred 'at the earliest practicable time to the appropriate military traffic management office for a determination of the reasonableness of applicable current rates and, when appropriate, for negotiation of adjusted or modified rates.'
The Army regulations provide that the 'least costly means of transportation will be selected which will meet military requirements and still be consistent with governing procurement regulations and transportation policies as expressed by Congress, contingent upon carrier ability to provide safe, adequate, and efficient transportation.'
Navy regulations provide that when applicable freight rates 'appear excessive' they 'may be negotiated for more equitable rates.'
The Air Force regulations provide for negotiations for adjustments or modifications of 'commercial carriers' rates * * * only after a determination has been made as to the unreasonableness, unjustness or otherwise apparent unlawfulness of effective rates * * *.'
It seems clear that these regulationswhich have the force of law, Leslie Miller, Inc., v. State of Arkansas, 352 U.S. 187, 77 S.Ct. 257, 1 L.Ed.2d 231; Standard Oil Co. of California v. Johnson, 316 U.S. 481, 62 S.Ct. 1168, 86 L.Ed. 1611sanction the policy or negotiating rates for shipment of federal property and entrust the procurement officers with the discretion to determine when existing rates
will be accepted and when negotiation for lower rates will be undertaken. It also seems clear that under § 530 of the California Public Utilities Code this discretion of the federal officers may be exercised and reduced rates used only if the Commission approves. The question is whether California may impose this restraint or control on federal transportation procurement.
It is the practice of the Government not only to negotiate separate rates which vary from the class or 'paper rate'
but also to negotiate a 'freight all kinds' rate which will cover hundreds of diverse items for the supply of a division of the Army or for a vessel that are needed at one place at one particular time. There is no provision in the California Code or the regulations for the making of such shipments. The findings are that if the Code is applied here, this type of arrangement would be abolished:
Although Congress can no doubt foreclose a State from regulation of transportation rates between the Government and private carriers, such a purpose must be made manifest. The excerpts from federal procurement statutes and regulations quoted in the Court's opinion provide, in my view, an inadequate foundation for the conclusion that Congress has directed procurement officers to by-pass state minimum-price or rate regulation. It is difficult to believe that so important a decision has been taken in such an obscure manner. In contrast to the situation presented by the express exemption in § 22 of the Interstate Commerce Act, 49 U.S.C. 22, 49 U.S.C.A. § 22, of transportation for the United States from the rate provisions of that Act, no procurement statute declares inapplicable rate schedules covering intrastate transportation pursuant to state law, and there is no indication that federal procurement officers were not to operate within the framework of state economic regulation in negotiating to secure the best terms possible. The statutes and regulations relied upon by the Court as a manifestation of congressional intent to displace state economic regulation are substantially the same as those found wanting in this respect in Penn Dairies, Inc., v. Milk Control Comm. of Pennsylvania, 318 U.S. 261, at page 275, 63 S.Ct. 617, at page 623, 87 L.Ed. 748, where this Court said:
In the absence of an express federal policy to nullify state regulation, this Court's decisions make clear that the fact that the Government may not henceforth receive more advantageous shipping rates in California than those applicable to other intrastate shippers is not sufficient by itself to vitiate this state statute. The fact that the economic incidence of state price regulation or taxation falls upon the Government no longer alone gives rise to an implied constitutional immunity from such regulation. E.g., Penn Dairies, supra, 318 U.S. at page 269, 63 S.Ct. at page 620; State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, 86 L.Ed. 3; James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155. In Penn Dairies, the Court upheld a Pennsylvania law setting minimum prices for milk as applied to a dealer selling milk in Pennsylvania to the United States for consumption at military camps. I can see no constitutional distinction between state regulation of the price of milk the Government must buy and of the price at which the Government must ship the milk it has bought. And surely, insofar as economic effect is concerned, nothing turns on the character of the commodity shipped, whether it be milk or a hydrogen bomb. Apart from discriminatory application of such a regulatory statute to the Government and other considerations not pertinent here, the constitutional validity of this California statute depends entirely on its noneconomic impact upon the Governmentthat is, upon a determination whether this statute interferes with the performance of governmental functions by military personnel or other federal employees. See Johnson v. State of Maryland, 254 U.S. 51, 41 S.Ct. 16, 65 L.Ed. 126; State of Arizona v. State of California, 283 U.S. 423, 51 S.Ct. 522, 75 L.Ed. 1154.
This Court should scrupulously withhold its hand from voiding state legislation until the effect on federal interests has appeared with reasonable certainty through clarifying construction and implementation of the challenged enactment by the State. Past decisions of the Court reflect the application of this general principle in a variety of situations involving state statutes or administrative action. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 501, 61 S.Ct. 643, 645, 85 L.Ed. 971; Spector Motor Service, Inc., v. McLaughlin, 323 U.S. 101, 105, 65 S.Ct. 152, 154, 89 L.Ed. 101; Leiter Minerals, Inc., v. United States, 352 U.S. 220, 228229, 77 S.Ct. 287, 292, 1 L.Ed.2d 267. Cf. Alabama State Federation of Labor, etc. v. McAdory, 325 U.S. 450, 471, 65 S.Ct. 1384, 1394, 89 L.Ed. 1725; Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 246247, 73 S.Ct. 236, 241 242, 97 L.Ed. 291. In Spector Motor, the Court stated: '(A)s questions of federal constitutional power have become more and more intertwined with preliminary doubts about local law, we have insisted that federal courts do not decide questions of constitutionality on the basis of preliminary guesses regarding local law.' 323 U.S. at page 105, 65 S.Ct. at page 154. And the language of the Court in Alabama State Federation of Labor, etc. v. McAdory, 325 U.S. at page 471, 65 S.Ct. at page 1394, is very much in point here:
It would seem, therefore, that negotiation was contemplated where rates, fixed by a government agency, are involved. And see H.R.Rep. No. 109, 80th Cong., 1st Sess., pp. 89. As stated by W. John Kenney, Acting Secretary of the Navy, who submitted the draft of this bill:
10 U.S.C. 3012(g), 10 U.S.C.A. § 3012(g) provides, 'The Secretary (of the Army) may prescribe regulations to carry out his functions, powers, and duties under this title.' For comparable provisions applicable to the Navy and Air Force see 10 U.S.C. 6011, 10 U.S.C.A. § 6011 and 10 U.S.C. 8012(f), 10 U.S.C.A. § 8012(f) respectively.
Id., § 1.30610.
Army Regulation 55142, 2, dated April 19, 1956.
Air Force Manual 751, 80501(b), dated July 10, 1956.
Section 22 of the Interstate Commerce Act, 24 Stat. 379, as amended, 49 U.S.C. 22, 49 U.S.C.A. § 22, exempts transportation for the United States from the rate provisions of that Act. The provision in the law, respecting land-grant rates, which imposes on the United States the obligation to pay 'the full applicable commercial rates,' 49 U.S.C. 65, 49 U.S.C.A. § 65, applies only to rates fixed by the Interstate Commerce Commission and is made expressly subject to § 22 of the Interstate Commerce Act.