Court Opinion

ID: 9692741
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:03:07.68478+00
Date Added: 2024-06-11T18:19:36.566210
License: Public Domain

PER CURIAM:
Plaintiffs in this action, the United States and the Administrator of the General Services Administration (GSA), seek a declaratory judgment that Rule IV-A of the Maryland Public Service Commission (Commission)1 restricting witness examination by certain intervenors in proceedings before the Commission violates the federal constitution and the law of Maryland.2 Plaintiffs further seek a permanent injunction against the rule’s application.
Defendants moved to dismiss and both sides filed cross motions for summary judgment. After a consolidated hearing, the court is satisfied that the case may properly be finally decided on the present record.
In their motion to dismiss, defendants contend that plaintiffs are not entitled to relief because (1) the suit is barred by the Johnson Act (28 U.S.C. § 1342 (1962)), (2) plaintiffs have failed to exhaust their available state remedies, and (3) the court should abstain from asserting jurisdiction since plaintiffs have a right to judicial review of the rule in the state court. We deal with these defenses seriatim:
I

The Johnson Act

Defendants’ argument that the Johnson Act3 prohibits the type of declara*678tory and injunctive relief sought in this case clearly lacks merit. By its unambiguous language, the Johnson Act proscribes federal court injunctions of orders affecting public utility .rates. The contested rule relates only to procedural incidents to be afforded intervenors in rate cases before the Commission and falls outside the perimeters of the Johnson Act proscription. See Public Util. Comm’n v. United States, 355 U.S. 534, 540, 78 S.Ct. 446, 2 L.Ed.2d 470 (1958) (requiring submission of rates for approval not a rate order); Island Airlines, Inc. v. CAB, 352 F.2d 735, 744 (9 Cir. 1965) (order identifying permissible route not a rate order). See generally Tennyson v. Gas Serv. Co., 367 F.Supp. 102, 104-05 (D.Kan.1973), aff'd, 506 F.2d 1135 (10 Cir. 1974) (Johnson Act not broad limitation of federal jurisdiction).
Moreover, jurisdiction in this suit is not predicated solely on diversity of citizenship or repugnance to the federal Constitution as required for operation of the proscription of the Johnson Act. 28 U.S.C. § 1342(1). Jurisdiction is predicated in part upon 28 U.S.C. § 1345 providing federal jurisdiction where the United States is a party plaintiff.4 The Johnson Act, then, is not applicable. See Island Airlines, Inc. v. CAB, supra. Cf. Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976); Department of Employment v. United States, 385 U.S. 355, 357-58 & nn. 6-7, 87 S.Ct. 464, 17 L.Ed.2d 414 (1966).5

Exhaustion

We see no merit in defendants’ contention that plaintiffs did not exhaust their available state remedies.
On September 19, 1974, GSA petitioned the Commission to reconsider its new rule. On October 3, 1974, that petition was denied. The Public Service Commission has thus had the opportunity to consider plaintiffs’ claims with respect to Rule IV-A prior to the initiation of this suit in federal court. Defendants do not point to any other administrative remedies available to plaintiffs. Thus, even if we assume that exhaustion of administrative remedies is required, they have been exhausted.
Exhaustion of state judicial remedies is not required where the claim is based on the denial of federal constitutional rights. See Timmons v. Andrews, 538 F.2d 584 (4 Cir., 1976), and authorities collected therein.

Abstention

Defendants’ contention that we should abstain from exercising jurisdiction in this case is predicated on Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), and its progeny. We think that this line of authority does not require abstention.
The decision in Pullman, a case arising under federal question jurisdiction, was based not only upon the desirability of avoiding needless constitutional adjudication, but also upon a recognition of the appropriate roles of the federal and state courts, respectively, in our scheme of constitutional federalism. It was a case where a private litigant asserted a federal right against a state agency. Thus, its precise holding is that, where a private litigant is a party, “scrupulous regard for the rightful independence of the state governments,” as well as for the smooth working of the federal judiciary, requires that at times the federal courts abstain rather than pass upon difficult issues of state law which may moot constitutional claims.
*679In the case at bar, the United States is the plaintiff, and jurisdiction is based, inter alia on 28 U.S.C. § 1345. The problems of federalism inherent in this case are thus different from a case brought by a private litigant. Except in some suits for money damages or for collection of moneys due, the United States sues to redress or to prevent alleged injury to a national interest; and to anticipate our view of the merits, such is this case. We think it unseemly to hold either that a sovereign may not enforce its rights in its own courts, or that in enacting § 1345 Congress was not stating a sufficiently strong policy that the United States should be heard in its own' courts that the judicially created Pullman doctrine should be applied. Thus, the presence of the United States as a plaintiff and the nature of the suit militate strongly against the applicability of abstention. United States v. Akin, 504 F.2d 115 (10 Cir. 1974), reversed on other grounds sub nom. Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976).
Here, the factors which favor abstention are insufficient to overcome the interest of the United States in being allowed to sue in its own courts. Admittedly, the state law issues are not without difficulty; however, this alone is insufficient to justify abstention. Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9 (1943). Further, an incorrect construction of state law will not disrupt any delicately wrought scheme of substantive regulation; this case involves only the procedural rights of intervenors before the Public Service Commission, not the scope of the Commission’s power to regulate. Compare Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). We therefore hold that this is not an appropriate, case for the application of the Pullman doctrine of abstention.
II
Since we find no merit in defendants’ procedural and jurisdictional defenses, we turn to the merits of plaintiffs’ grounds for relief. GSA claims entitlement to relief on the grounds of both state law and the federal constitution. Despite our decision on abstention, we of course recognize the desirability of avoiding unnecessary adjudication of constitutional questions, and so we consider first plaintiffs’ state law claims. See Siler v. Louisville & Nashville R.R. Co., 213 U.S. 175, 193, 29 S.Ct. 451, 53 L.Ed. 753 (1909).

State Law Claims

Plaintiffs argue that under Hyson v. Montgomery County Council, 242 Md. 55, 217 A.2d 578 (1966), the half-hour limitation on cross-examination is invalid. Hyson held that where an agency is required to hold a public hearing, and to decide disputed adjudicative facts based upon evidence produced and a record made, a reviewing court could examine the record to insure that an adequate opportunity for cross-examination had been allowed. By its terms, Hyson applies only to agencies operating in a “quasi-judicial” rather than a “quasi-legislative” role. See also Albert v. Public Service Commission, 209 Md. 27, 120 A.2d 346, 350-51 (1956) (no right to hearing in quasi-legislative proceeding). Under Maryland law, it is unclear whether rate-making is a quasi-judicial or a quasi-legislative function and, hence, whether Hyson has any application. Compare Bosley v. Dorsey, 191 Md. 229, 60 A.2d 691 (1948) (rate-making “purely á legislative function”), and Spintman v. Chesapeake and Potomac Telephone Co., 254 Md. 423, 255 A.2d 304, 308 (1969) (rate-making “involves the legislative process of making a rule for the future”) with Public Service Commission v. Hahn Transportation, Inc., 253 Md. 571, 253 A.2d 845, 848 (1969) (suggesting that rate-making hearing is quasi-judicial).
But even if Hyson applies, we do not believe that the Maryland courts would hold this rule facially invalid. In Hyson, the court was faced with a situation in which the parties to a zoning hearing were each restricted to one hour’s cross-examination per witness. Nonetheless, the court declared that “[w]e have no intention of attempting to promulgate a comprehensive *680rule respecting the type or the amount of cross-examination that [the agency] must provide at hearings . . . ” 217 A.2d at 586. Rather, the court undertook a detailed analysis of the case before it in order to determine whether insufficient cross-examination had been allowed under the circumstances of that particular hearing.
We believe that under Maryland law, Rule IV-A would similarly not be held invalid on its face; instead, it is more probable that the state courts would examine each rate-making procedure to insure that there had been no unreasonable, prejudicial denial of the right to cross-examine in that case. In the present State of Maryland law, we thus think that GSA is not presently entitled to relief. We must therefore consider plaintiffs’ claims of invalidity under the federal constitution.

Constitutionality of the Rule

The rule’s claimed infraction of the federal Constitution is twofold — both of the supremacy clause and of the equal protection clause. We agree that the supremacy clause has been infringed; we find it unnecessary to consider whether the equal protection clause has also been infringed.
The authority for the Administrator of GSA to participate in utility rate proceedings is set forth in 40 U.S.C. § 481:
(a) The Administrator shall, in respect of executive agencies, and to the extent that he determines that so doing is advantageous to the Government in terms of economy, efficiency, or service, and with due regard to the program activities of the agencies concerned—
(4) with respect to transportation and other public utility services for the use of executive agencies, represent such agencies in negotiations with carriers and other public utilities and in proceedings involving carriers or other public utilities before Federal and State regulatory bodies. .
The purpose for granting the Administrator such authority is articulated in 40 U.S.C. § 471:
It is the intent of the Congress in enacting this legislation to provide for the Government an economical and efficient system for (a) . representation before Federal and State regulatory bodies. .
The statutory scheme reveals that Congress intended that the Administrator be an effective voice protecting federal interests and presenting the United States’ position at rate hearings. While we do not consider what would be the rights of the United States before a state regulatory agency which does not permit intervention by private parties, in one like the Public Service Commission of Maryland where intervention is permitted, there can be little doubt that the time limitation in Rule IV-A would severely hamper the Administrator in his attempt to carry out his duties under § 481. The outcome of rate hearings often depends upon the weight which the Commission gives to the elaborate calculations of opposing experts. In many cases, even when the issue of the level of rates has been determined, the United States, as a uniquely large consumer, may have a substantial interest in the form of the rate — an issue which is of less significance to People’s Counsel as the representative of a myriad of small consumers. The ability to cross-examine is thus critical. Due to the complex nature of the subject matter involved, effective cross-examination often must necessarily be involved and lengthy. In many cases it would be entirely unreasonable to expect the Administrator effectively to attack opposing positions within a thirty-minute time limit.
Further, the difficulty is exacerbated by the order in which cross-examination is to take place. While the time limit in Rule IV-A does not apply to the Office of People’s Counsel, which has unlimited time in which to cross-examine opposing witnesses, it is conceded that the order of procedure is for People’s Counsel to cross-examine last. If the Administrator followed People’s Counsel, the former could effectively use his thirty minutes in reinforcing points made by the latter, or in exploring small *681areas which People’s Counsel had failed to cover. Moreover, if broad areas remained untouched after People’s Counsel’s cross-examination, the Administrator might well be in a position successfully to obtain a waiver of the rule in order that all such areas might be fully explored.
But, under the order of procedure which is followed, the Administrator must speculate about what areas will be covered by People’s Counsel’s examination. This could lead to the federal representative spending his cross-examination time futilely exploring areas which are later fully covered by People’s Counsel; at the same time, important points which the Administrator wishes to bring to the attention of the Commission may remain entirely unexplored.
In short, in many cases Rule IV-A will prevent the Administrator from effectively representing the interests of the United States in utility rate proceedings. By setting an arbitrary time limit, the. Commission has ignored the variance between cases in the magnitude of the interests involved, the complexity of the subject-matter, the significance of the witnesses’ answers, the extent to which the issues probed by cross-examination have not been previously addressed, and the need of the parties to build an adequate record for judicial review. Any one of these factors might require that the Administrator have more than thirty minutes’ cross-examination in order to fulfill his mandate under 40 U.S.C. §§ 471 and 481(a)(4). Since the rule thus substantially impairs the mandate of Congress that the Administrator represent the United States before the Public Service Commission, we conclude that it is invalid under the Supremacy Clause of the Federal Constitution.' Accordingly, we conclude that defendants’ motions to dismiss and for summary judgment must be denied, and that plaintiffs’ motion for summary judgment should be granted.
III

Relief

In the light of the foregoing, we will give an immediate declaration of invalidity. We feel certain that our declaration of invalidity will be respected by the Commission and therefore we will not presently issue a permanent injunction unless or until (a) plaintiffs demonstrate that our confidence that our declaration will be respected is misplaced, or (b) defendants request the entry of an injunction now so as to make certain defendants’ avenues of further appellate review.
We request counsel to agree upon a form of final judgment and to present it within ten (10) days.

. Rule IV-A, promulgated by PSC Order No. 60923 (August 21, 1974), provides:
In a proceeding involving an application by a public service company seeking authority of the Commission to increase rates and charges for the utility service and where the direct testimony of witnesses has been prefiled, with the Commission and with intervening parties to the proceeding, not less than ten (10) days prior to the scheduled appearance of witnesses at a hearing, cross-examination shall be limited to a maximum of thirty (30) minutes per witness per intervening party to the proceeding. Re-direct of witnesses and re-cross examination of witnesses on their re-direct testimony shall be limited to a maximum of twenty (20) minutes, respectively, per witness per intervening party. Nothing herein shall be construed in any way to apply to the Office of People’s Counsel. (Emphasis added.)
It is undisputed that no public hearings were held by PSC prior to promulgation of the above rule and that no public notice of the PSC’s consideration of the rule was given prior to its promulgation except to the Committee on Administrative, Executive and Legislative Review of the State Legislature. See Request for Admission of Fact, ¶¶ l(b)(c) (Clerk’s File # 4); Answer to Request for Admission of Fact, ¶¶ 1(b)(c) (Clerk’s File # 5). Plaintiffs herein on September 19, 1974 filed a petition with the PSC urging reconsideration of the Rule; on October 3, 1974, PSC denied this request for consideration.

. While initially disputed, the necessity for a three-judge court to consider plaintiffs’ claims is now conceded by all parties. See United States v. Public Service Comm’n, Civ. No. B-74-1264 (D.Md., Dec. 3, 1975).

. The Johnson Act, 28 U.S.C. § 1342, provides:
The district 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:
(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and,
(2) The order does not interfere .with interstate commerce; and
(3) The order has been made after reasonable notice and hearing; and
(4) A plain, speedy and efficient remedy may be had in the courts of such State.

. Additionally, plaintiffs were not afforded notice or a hearing prior to the Commission’s promulgation of the contested rule, both of which are prerequisites to operation of the Johnson Act. 28 U.S.C. § 1342(3).

. In Moe, a unanimous Court, speaking through Mr. Justice Rehnquist and relying on the Department of Employment case, construed the Anti-Injunction Act, 28 U.S.C. § 1341, not to bar the United States from seeking to enjoin the enforcement of a state tax law. While the statute allegedly proscribing injunctive relief in the instant case is the Johnson Act, 28 U.S.C. § 1342, both provisions have been held inapplicable to actions brought by the United States. See C. Wright, Law of Federal Courts, § 51, p. 195 (1970).