Document: 485 U.S. 293 108 S.Ct. 1145 99 L.Ed.2d 316 Eric J. SCHNEIDEWIND, et al., Petitionersv.ANR PIPELINE COMPANY and ANR Storage Company. No. 86-986. March 22, 1988. Syllabus Under a Michigan statute (Act 144), public utility transporting natural gas in for use must obtain approval of the Public Service Commission (MPSC) before issuing long-term securities. Act 144 directs MPSC to approve proposed security issuance when it is satisfied that funds derived therefrom are be applied lawful purposes essential successful carrying out purposes, or represents accumulated undistributed earnings invested capital assets not previously capitalized. Respondent companies, which serve customers other States as well Michigan, companies within meaning federal Natural Gas 1938 (NGA), subject jurisdiction Federal Energy Regulatory (FERC). They filed suit against petitioners, members MPSC, District Court, seeking declaratory judgment lacked over their issuances because was pre-empted by NGA violated Commerce Clause. The court rejected respondents' claims. Court Appeals reversed, holding both pre-emptive effect regulatory scheme Clause barred application respondents. Held: regulation respondents through impinges on field has occupied exclusion state law, therefore pre-empted. Pp. 300-310. (a) Although FERC expressly authorized regulate companies' securities, comprehensive all wholesales interstate commerce gives number tools—such its authority fix rates withhold certificates convenience necessity—for examining controlling such securities exercise authority. 300-304. (b) Congressional intent pre-empt finance transportation sale cannot inferred, contended, from mere fact might have been precluded under "dormant" principles at time NGA's enactment 1938. Nor can any inferences States' drawn, petitioners Congress' subsequent failure enact legislation would given explicit 304-306. (c) When amounts facilities used resale commerce, regulation. every some indirect pre-empted, 144's "indirect." Its central purpose matters Congress intended exclusively. 306-309. (d) conclusion seeks also supported imminent possibility collision between NGA. P. 310. 801 F.2d 228, affirmed. BLACKMUN, J., delivered opinion Members joined, except KENNEDY, who took no part consideration decision case. Don L. Keskey, Lansing, Mich., petitioners. Howard Trienens, Chicago, Ill., Justice BLACKMUN Court. 1 This case presents once again with question concerning State's ability activities companies. 2 * Respondents Pipeline Company (Pipeline) (Storage) wholly owned subsidiaries American Resources (Resources), Delaware corporation which, like Storage, principal place business Michigan. Both (NGA Act), ch. 556, 52 Stat. 821, amended, 15 U.S.C. § 717 seq.1 Thus, (FERC), body charged implementation See 1(b) Act, 717(b).2 3 owns operates an pipeline system gas, exclusively resale, 51 distribution centers eight States, where either stored future delivery. purchases producers Texas, Oklahoma, Kansas, Louisiana, Wyoming. 4 independently Pipeline, organized 1978 develop operate storage reservoirs nonaffiliated customers. receives outside and, demand, redelivers State. four fields 5 Petitioners (MPSC). Michigan's Utilities Securities 1909 Mich.Pub.Acts 144, amended Mich.Comp.Laws Ann. 460.301 seq. (1967 Supp.1987),3 exercising claiming right transport use4 "is . issue amount stock fairly capitalized." 460.301(3). may conduct investigation, including appraisal company's property expense, deciding whether allow issue, 460.301(2), "may impose condition grant reasonable terms conditions [it] considers proper." 6 United Western complaint official capacities, lacks thus they lawfully market without approval.5 argued violates Clause, Const., Art. I, 8, cl. 3. 7 concluded neither nor violation 627 F.Supp. 923 (WD Mich.1985). On pre-emption "compliance regulations physical impossibility, does stand obstacle accomplishment execution full objectives Congress." Id., 930. As "an evenhanded relatively limited [respondents], historically had minimal commerce," while serving legitimate local interests. F.Supp., 933. 8 Sixth Circuit bar 228 (1986). because, omitting requirement advance "in otherwise 'comprehensive' scheme, implicitly determined should regulations," F.2d, 233-234, conflict company projects financing plans, id., 235-236. Furthermore, reasoned, inasmuch "the burdens delay, administrative hassle 'advance approval' far outweigh benefits, if any, interests protecting consumers investors unconstitutionally commerce." 238. 9 Because views those Supreme set forth Co. v. Pub. Serv. Comm'n, 405 Mich. 376, 275 N.W.2d 457 (1979), we granted certiorari decide require marketing II 10 circumstances law pre-empts familiar. Arkansas Elec. Coop. Corp. 461 375, 383, 103 1905, 76 (1983). Fidelity Savings & Loan Assn. De la Cuesta, 458 141, 152-154, 102 3014, 3022, 73 664 (1982). A requires examination congressional intent. 152, S.Ct., 3022. Of course, explicitly define extent enactments law. See, e.g., Shaw Delta Air Lines, Inc., 463 85, 95-96, 2890, 2898-2900, 77 490 In absence statutory language, however, indicate occupy Such properly inferred pervasiveness precludes supplementation interest sufficiently dominant, object sought obtained character obligations imposed reveal same purpose." Rice Santa Fe Elevator Corp., 331 218, 230, 67 1146, 1152, 91 L.Ed. 1447 (1947). Finally, even entirely displaced particular field, actually conflicts will found " 'when impossible comply Florida Lime Avocado Growers, Inc. Paul, 373 132, 142-143 [83 1210, 1217-1218, 248] (1963), stands Congress, Hines Davidowitz, 312 52, [61 399, 404, 85 581] (1941).' California Coastal Comm'n Granite Rock Co., 480 572, 581, 107 1419, 1425, 94 577 (1987), quoting Silkwood Kerr-McGee 464 238, 248, 104 615, 621, 78 443 (1984). 11 this conclude regulates III A. 12 long recognized "comprehensive 'all commerce.' Northern State Corporation 372 84, 91, 83 646, 650-51, 601 Phillips Petroleum Wisconsin, 347 672, 682, 74 794, 799, 98 1035 (1954).6 confers upon exclusive resale. U.S., 89, 649. exercises variety powers. Sections 4, 5, NGA, §§ 717c, 717d, 717f, give tools 13 First, determine "just reasonable" rate jurisdiction, hearings undertake detailed company. 717c. For example, calculate return capital, examines structure (the percentages come debt, common stock, preferred stock), establishes allowable each type determines overall weighted average, accordance kind capital. New York FERC, 259 U.S.App.D.C. 86, 96, 813 448, (1987). related directly allows charge. "equity ratio moves beyond generally accepted limits," imputed "reasonable structure" rather than actual structure. Alabama-Tennessee 38 ¶ 61,251, p. 61,849, aff'd relevant rehearing, 40 61,244, pp. 61,813-61,816 ratemaking limit burden ratepayers abnormally high equity ratios. Tarpon Transmission 41 61,044 addition, power effectively permits control, albeit indirectly, FERC's prevent overcapitalized inflated presumably acts strong deterrent development 14 Second, "certificate necessity" constructs, extends, acquires, facility commerce. 7(c)(1)(A) 717f(c)(1)(A). certificate only finds able willing project compliance rules scheme. 7(e), 717f(e). attach "to rights thereunder necessity require." Ibid. fulfilling duty, promulgated extensive statement plans description issuance. 18 CFR 157.14(14) (1987).7 Power Commission, predecessor, hesitated certification ensure financed interest.8 Third, various powers protect deleterious effects ill-considered improper area. officers directors prohibited profiting issues. 12, 717k. No abandon service approval, finding available supply depleted, present permit abandonment." 7(b), 717f(b). keep accounts Uniform System Accounts submit review deems necessary. 10, 717g 717i; pt. 201 examine change "any rule, regulation, practice, contract affecting [rates that] unjust, unreasonable, unduly discriminatory, preferential." 5(a), 717d(a). 16 these substantial obligations, true, remind us, express were granted, more apparent, nature provision, preissuance engages sales occupy. B 17 initial matter, argue "[s]ecurities clearly states control 1938." Brief 12. premise argument Court's statements intended, enacting cover areas could reach decisions. Panhandle Eastern Pipe Line Indiana, 332 507, 514-516, 68 190, 193-195, 92 128 (1947) covers carriers; direct though made carriers). certain method enacted 1938, argue, covered now Our inquiry, so easily answered. Even jurisprudence never settled authorities rely what settled: relating wholesale Illinois Central 314 498, 506-507, 62 384, 386-387 (1942). remains, domain. syllogism flawed. "To freeze perception [the scope constitutionally permissible regulation] into did means accomplishing end workable itself." n. 1912 8. If intend pre-empting necessarily served purpose. An enactment. 19 Similarly, petitioners' reliance companies9 deserves passing mention. reluctant draw act. Trucking Assns., Atchison, T. S.F.R. 387 397, 416-418, 87 1608, 1618-1620, 847 (1967); Red Lion Broadcasting FCC, 395 367, 381, 11, 89 1794, 1802 23 371 (1969). Indeed, support bills convinced testimony already provided "broad complete securities" arguments matter best left States. Hearings H.R. 5306 Subcommittee House Committee Interstate Foreign Commerce, 81st Cong., 2d Sess., 53 (1950). if, decided deny access tool, follow tool. form simply employed. That authoritative determination force. Transcontinental Oil Bd. Mississippi, 474 409, 422, 106 709, 716-717, 88 732 C 20 We turn then, crux issue: Since find is, 21 noted earlier, [or] 460.301(3)(Supp.1987). authoritatively construed designed ratepayers. Attorney General 412 385, 402, 187, 193 By guarding "evils injurious overcapitalization," Indiana 400, 410, 450, 453 protects ensures "efficient uninterrupted rates." It our view, facilities, 22 that, take much debt lack resources maintain properly. threaten consumers, lead increase, hurt another scenario, needs, requiring charge higher (because usually return). explain overcapitalization sense correlation value property. imbalance respect, rates.10 Each uses attempt jurisdiction. keeping raising levels above point, rate." rates. aim way proper maintenance continuance services, benefit investors, falls purview since critical short, things directed at, precisely authority.11 24 Cf. Metropolitan Life Ins. Massachusetts, 471 724, 753-756, 105 2380, 2396-2398, 728 (1985). effect, presented whose regulate. Not function but equipped adequately address precise concerns purports manage. reviewed above, potential instances overcapitalization, To "overcapitalization" property, monitors accounting requirements. continued operations excessive problems power. discussed finances includes involved new facilities.12 abandonments. practices agency leveraged, risky, capitalized investments. 25 pre-issuance achieves ends regard responsibilities. D 26 91-93, 650-652; Maryland 451 725, 751 (1981). ever denied FERC-approved project, disagreement wisdom interfere state-ordered alteration impinge 27 "affect[s] [FERC] comprehensively achieve uniformity objective Act" "prospect interference power," then "collision inevitable consequence." 91-92, 650-651. hypothetical always show authority, see 237, 1155-56, (1947), "imminent possibility" further demonstrates occupation 28 consequently, pre-empted.13 IV 29 need whether, absent 425, 718. 30 31 ordered. 32 KENNEDY 'Natural-gas company' [an individual corporation] engaged resale." 2(6) (1) 717a(6) (1). below contending constitutes courts argument, 923, 925-926 Mich.1985), (CA6 1986), reasoning "transportation" storage. 'Underground necessary integral operation piping area production consumption.' Ibid., Columbia Exclusive Easement, 776 125, 129 1985), 578 930, 933 (ND Ohio 1983). agree. Petitioners, event, do press point here. "Congress undertook establish most transactions electric utilities created (now Commission) carry task." 378, 1909, provides part: "Sec. 1. [A] corporation, association, use, purchasing stocks, bonds, notes, evidences indebtedness payable periods months after date issuance, acquisition construction, completion, extension, improvement discharge refunding represent capitalized, commission issues order authorizing acquired secured indebtedness, reasonably required person, Approval presume constructed included base. "(2) association desiring shall make written requires. After receiving application, commission, determining inquiry hold hearings, witnesses, books, papers, documents, contracts importance enabling determination. interested municipalities organizations membership consists utility, intervene commission. "(3) information investigation act notes issue. granting proper. "(4) months, commission; whole part, refunded bonds evidence running consent "(5) apply shares, issued taken incorporators agents, assigns, trustees first instance, stockholders trustees, instance. "(8) carrying, transporting, piping, distribution, selling state, derives less 5% consolidated gross revenues offer residential general commission." (Supp.1987). Subsection (8) provides, 3, supra, "derives [Michigan]." parties agreed basis stipulation facts, appendix thereto, answers three sets interrogatories, replies two requests admissions. Policy (NGPA), 3351, 3301 seq., compromise transactions. 420-421, 715-716, Louisiana Hall, 571, 580, 101 2925, 2931-2932, 69 856 NGPA reflected belief different pricing needed balance demand. Gas, 421, 716. changes wrought bearing outcome disclosure includes: "(i) applicant's outstanding liabilities. "(ii) manner applicant proposes dispose .; persons, known, whom sold class classes persons. "(iii) showing total unit, estimated price net proceeds applicant. "(vi) Statement anticipated cash flow, provision during period construction years requirements, dividends, retirements. "(vii) showing, life annual expects retire sinking fund extinguishment obligation. "(viii) sheet income (12 months) recent available. "(ix) Comparative pro forma sheets operation, giving project. "(x) Conformed copies agreements, contracts, mortgages, deeds trust, indentures, agreements materials supplies render services underwriting documents similar nature. "(xi) reports, letters, submitted underwriters, insurance others regarding financing, studies, forecasts earnings, financial statements, documents. "(xii) applications supporting exhibits, registration submittals, Exchange supplements, modifications above. "(xiii) Any additional data adequacy availability project." Trailblazer 61,503 (1982) (certificate "conditioned applicants' waiver recovery investment fail"); Midwestern F.P.C. 653, 656 (1959) pay dividends until interim converted reduced 75% capitalization). opinions rehearing ways 62,355 (1983), 61,068 (1984), 34 62,016 (1986) Trailblazer, 759 (1963) 1313 Midwestern. introduced, S. 2746, 1st Sess. (1949); 1880, 84th (1955). perhaps worthy note purported respondents, appear highly artificial best. consumers. hard international national markets, invest markets. concede probably own small percentage one "securities regulation" traditional term, i.e., protection fraudulent deceptive issuances. end, many "blue sky" governs 451.701 Supp.1987). While concern, applies Normally, unless declare "some specificity." 583, 1426, These indicative, broad disposal regulating intrudes occupied. R.J. Reynolds Tobacco Durham County, 479 130, 148-149, 499, 511-12, 93 449 (1986); cf. Hillsborough County Automated Medical Laboratories, 707, 717, 2371, 2377, 714 facial challenge regulated grain warehouses fashion 144. reached Warehouse 39 486, 241 (1946 ed.), licensing provisions, rates, warehouses. case, unlike issuances, ha[d] traditionally occupied." 1152. amici solely Moreover, nearly warehouseman 233, warehousemen licensed Secretary Agriculture matters, 237. words Court: "The test asserts Act." 236. fails test.

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