FPC v. NEW ENGLAND POWER CO.
Legal provision: 31 U.S.C. 483
Argument of Keith A. Jones
Chief Justice Warren E. Burger: We will hear arguments next in 72-1162, Federal Power Commission against New England Power Co.
Mr. Jones, I think you may proceed whenever you are ready.
Mr. Keith A. Jones: Mr. Chief Justice and may it please the Court.
This case is here on the Government’s petition for writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.
The issue is whether the Federal Power Commission under Title V of the Independent Officers Appropriations Act of 1952 which we have been discussing, whether the Federal Power Commission is authorized under that Act to impose annual fees upon the electric energy and natural gas companies for the purpose of partially deferring the cost of regulating those industries.
This issue is, of course, closely similar to the one discussed in the preceding case.
But the application of Title V in any given case depends on a large part upon the nature of the government --
Justice William O. Douglas: Well, it’s not only similar but it does raise the same issue, doesn’t it?
Mr. Keith A. Jones: One of the issues is identical, Mr. Justice Douglas.
But as I was saying, the application of Title V in any given case also depends upon the nature of the governmental activities in question.
For that reason, I will discuss at the outset how the particular activities of the Federal Power Commission for which the fees here have been assessed.
The Power Commission has authority to regulate two industries, electric energy and natural gas industries.
In connection with its regulation of the natural gas industry, at issue here are certain annual fees which the Commission has imposed in connection with its regulation of the sale of natural gas.
There are two types of sales in question.
One, from producers to pipeline companies, and the second is resale by pipeline companies in interstate commerce.
In regulating producer sales, the Commission reviews the contracts between the producer and the pipeline company for delivery of natural gas at the wellhead.
The delivery of natural gas at the wellhead cannot commence until the Commission approves the contract as to amount, price, and other terms and conditions of sale.
The approval of the contract takes the form of what is called the issuance of a producer certificate.
This certificate permits the pipeline company to take delivery of the natural gas at the wellhead and to begin transporting it in interstate commerce.
Instead of imposing a fee for the issuance of each particular certificate, the Commission has determined to impose an annual fee on each pipeline company based upon the amounts of natural gas reserves certified for delivery to that company in connection with the Producer Certificate Program during the year.
And this so-called added reserve fee is the first of the fees at issue in this case.
The Commission is also responsible for regulating the sales of the pipeline companies, as I have indicated.
The review of the sales by the pipeline companies takes the form of review and approval of pipeline rate schedules.
And this review procedure is invoked normally by the filing by a pipeline company of a new rate schedule.
Ordinarily or at least frequently, the Commission permits a new rate schedule to go into effect without holding rate setting hearings.
But when hearings are held, as is frequently the case, they can be time consuming, expensive, and quite complicated.
As a consequence, the rate setting proceeding, pertaining to any particular filing of a new rate schedule, may bear a little direct relationship to the dollar amount of the rate increase which is being sought.
For that reason, the Commission has determined that it’s more equitable to impose a fee not on the basis of each particular rate increase filing, but rather in the form of an annual fee imposed upon all pipeline companies on the basis of annual sales.
That is the second fee at issue in this case.
And those are the two pipeline company fees in question here.
The Commission also regulates the electric energy companies.
And its regulation of those companies is similar in basic outline to the regulation of the natural gas industry.
The Commission has responsibility for regulating the transmission of electric energy in interstate commerce, and the sale of that energy for resale.
In carrying out this responsibility, it conducts what is called a coordination and reliability program.
This program consists of a region-by-region monitoring of the adequacy of electric transmission and generating facilities in connect -- in relation to the growing demand for electric energy and the shifting pattern of its use from season to season and from day time and night time.
In connection with this program, the Commission is authorized to direct electric utility companies to interconnect their transmission facilities, one with the other.
These interconnections minimize the likelihood of blackouts and brownouts and permit the electric utility companies to share their generating facilities in effect, rather than relying entirely upon their own generating facilities.
Since this Coordination and Reliability Program is conducted on an industry-wide basis and not at the instance of any particular company, the Commission is determined that the only fair and practical means of allocating the cost of the program is through an industry-wide assessment.
And that assessment is the third of the fees at issue here.
The Commission also regulates the rates charged by electric utility companies in their sale of electric energy for resale.
The electric utility companies file new rate schedules and the Commission has imposed a sliding scale fee for the filing of a right schedule, and it’s anticipated that the sliding scale fee will cover the major portion of the cost of the Commission’s electric utility rate setting activities.
But since those activities or the cost of those activities cannot be known until the end of the year for any given year and also because the Commission undertakes certain incidental regulatory activities for which there’s no set fee, it is anticipated that the sliding scale fees will not cover the full pertinent regulatory cost here.
For that reason, the Commission has also imposed an annual fee on the electric utility companies to cover the residual cost of rate setting and other incidental costs.
To recapitulate, there are four fees here at issue.
The added reserve fee on the pipeline companies in connection with the Producer Certificate Program, the fee on the pipeline companies to cover the cost of rate setting activities, the fee on the electric utility companies to cover the cost of the Coordination and Reliability Program, and finally the fee on the electric utility companies to cover certain residual and incidental costs.
The Court of Appeals held all four fees to be invalid.
The court determined that a fee is justified under Title V only if it is in return for the conferral of a special benefit.
And the court concluded that there was not special benefit conferred on the two industries here in question.
The court went on to add that, in its view, the imposition of fees of this kind was somehow inconsistent with the Commission’s responsibility for regulating in a public interest.
I will now turn to the legal issues which are raised by the Court of Appeals’ opinion.
Justice Potter Stewart: Mr. Jones, before you do, and I’m asking this primarily simply out of curiosity.
We heard in the last case about the fees charged by the communications commission, and this went about the fees charged by the power commission.
Are these exceptional or is it the rule rather than the exception?
In other words, does the Securities and Exchange Commission, does the Interstate Commerce Commission, does the various other agencies, independent agencies and commission these days under Title V charge the industry generally?
Quite apart from the questions of filing fees or not, do you know?
Mr. Keith A. Jones: Well, frankly, I don’t know the answer to that question.
I have assumed that such industry-wide fees of this kind have not been imposed by the other regulatory commissions as of yet.
But I can’t say that with any certainty.
Justice Potter Stewart: Your impression is--
Mr. Keith A. Jones: That’s my impression.
Justice Potter Stewart: That these are perhaps the only two agencies that do it in this way, apart from filing fees.
Mr. Keith A. Jones: It may be that other agencies have recently imposed such fees or are giving serious consideration to doing so.
But, so far as I know, there are no other annual fees of this kind.
But, again, I say that I’m not positive.
Justice Potter Stewart: Thank you.
Mr. Keith A. Jones: Before turning to a discussion of the kinds of issues that were discussed under Title V in the previous case.
It’s necessary, I think, to deal with what properly considered is probably peripheral issue here.
But Title V, when it authorized the imposition of certain fees, included a proviso which stated that no statute prohibiting the collection or imposition of any fee was thereby repealed.
The New England Power Co. here has seized upon that proviso and contended that the Federal Power Commission drives no authority at all under Title V.
I think it’s necessary to turn our attention to that only briefly.
The company’s argument is that since the Federal Power Act itself did not authorize the imposition of fees of this kind.
Therefore, that must be taken to be an implicit prohibition on the imposition of fees and, therefore, that the proviso prohibits the Federal Power Commission from imposing any fees.
But the Title V proviso, by its very terms, was intended only to ensure that the statute would not be construed as repealing any expressed prohibition that was already on the books.
The House Report accompanying Title V described it “as providing authority for Government agencies to make charges for services and cases where no charge is made at present.”
The basic purpose of Title V was to confer authority where none previously existed.
Therefore, it seems to us clear beyond any serious question, that the Commission does have authority under Title V to impose fees.
An issue posed by this case is whether that authority extends to the particular fees in question.
Title V speaks in terms of work performed, services or benefits provided, or privileges granted to or for any person, including groups.
Now one of the major points of contention in these cases is whether the statutory phrase “any person, including groups” can in an appropriate case be applied to an industry as an entity.
It seems obvious to us that that statutory phrase does embrace the companies that comprise a single industry.
An industry consists of a group of companies and groups are covered by the explicit language of the statute.
Justice Potter Stewart: Where is the statute?
Have you got it in your --
Mr. Keith A. Jones: In our brief, it’s on pages 2 and 3.
Justice Potter Stewart: Alright.
I rather thought that the groups was included in the definition of “person.”
Let me see here.
Mr. Keith A. Jones: That’s right.
It says to or for any person (including groups, associations, organization, etcetera), reading on the bottom page of page 2.
Justice Potter Stewart: To or for any person, and the parenthetical material simply makes clear that the definition of a person is a broad definition.
Isn't that right?
Mr. Keith A. Jones: That’s correct.
Justice Potter Stewart: That your argument ultimately has to be then that a whole industry can be a person.
Is that right?
Mr. Keith A. Jones: Well there, I suppose, would be two parallel arguments.
One is that coal industry can be a person. Secondly, that when each member of an industry has work performed on its behalf, then a fee as to each member is appropriate and, therefore, a fee as to all members is appropriate.
Justice Potter Stewart: Because it’s to or for any person.
And you would agree that the parenthetical material following that is directed to the definition of “person” for the understanding of the meaning of the word “person” in this statute, would you not?
Mr. Keith A. Jones: Definition or an elaboration of the meaning.
Justice Potter Stewart: In other words, “person.”
And there, you say that within that parenthetical materials, there were groups which you say can mean, therefore, a whole industry but it comes back to whether or not the word “person” can mean a whole industry.
Is that it?
Mr. Keith A. Jones: Well, as I say, the fee of course is not imposed on the industry qua-industry.
It’s imposed on each of the separate members of the industry.
Justice Potter Stewart: Each constituent.
Mr. Keith A. Jones: Clearly, each company is a person, so that in that sense, a fee as to each member of the industry would clearly seems to be authorized under Title V.
Justice Potter Stewart: Well, this thing of value performed, furnished, provided, granted, prepared, or issued--
Mr. Keith A. Jones: The question would be, I suppose, whether the word “performed--
Justice Potter Stewart: To or for any person.
Mr. Keith A. Jones: -- for the industry” is for each member of the industry.
Justice Potter Stewart: It’s whether or not the thing of value to or for any person can be read because of this parenthetical phrase to mean “to or for an industry,” isn’t it, or “all the persons in the industry” be generally.
Mr. Keith A. Jones: Well, I think I understand you and I think I agree with you, Your Honor.
But, I’m not fully sure.[Attempt to Laughter]
Justice Potter Stewart: The question is not -- but I wondered if that isn’t the question as a matter of statutory construction?
Mr. Keith A. Jones: Well, I think the question is a matter of statutory construction, as it arises in this case, is whether an industry-wide benefit, that is a benefit or work performed for the whole industry indivisibly, nevertheless is a benefit to or for the constituent members of that industry for purposes of Title V.
And our position is that the bare language of the statute certainly permits that construction and, furthermore, that there is certainly no policy reason why an agency which confers a benefit on an industry as a group should not be able to assess a properly allocated fee as to each member of that industry.
That, at any rate, is our contention with respect to this aspect of Title V.
Justice Potter Stewart: So long as I’ve already interrupted you, Mr. Jones, could -- how much of a problem would it be for you to supply us, after sometime, within a reasonable time of the practices of the --
Mr. Keith A. Jones: We could make a --
Justice Potter Stewart: -- of the other major agencies like the CAB and the SEC and the --
Mr. Keith A. Jones: We could make a survey of that kind and let you know.
Justice Potter Stewart: -- [Voice Overlap] about whether or not they charge their -- the industries.
The industry they regulate a fee, are they component parts of the industry as an annual fee?
Mr. Keith A. Jones: We will be happy to do that and supply the Court with an admission.
Chief Justice Warren E. Burger: In doing that, Mr. Jones, let me just enlarge on it a little bit, if I may.
I notice that the language of the Title V is that, at the top of page 3, the head of each federal agency is authorized by regulation to workout some kind of fee schedule.
I have wondered whether, when you responded previously to Mr. Justice Stewart that, as far as you knew, only the FCC and the Federal Power Commission had moved whether this was a first step in an experimental exercise of the authority, these were two first steps, or whether the others just hadn’t got around to it or what the situation is.
I think if there is any governmental policy that is relevant --
Mr. Keith A. Jones: I think the answer to that --
Chief Justice Warren E. Burger: -- I think that that should be included with your information about what agencies have proceeded to exercise this authority?
Mr. Keith A. Jones: Well, the origin of the fees in these two cases is fairly clear from the statement of the facts in the respective briefs.
The relevant Appropriations Committees of the Congress have been urging that these two commissions certainly, for some time in the past, to impose fees of this kind.
And it’s in response to the Congress’ suggestion that these fees have been imposed.
For that reason, I doubt that there’s been a coordination of policy by all the independent agencies.
I think that these two agencies are moving in response to perceived Congressional demands.
Justice Potter Stewart: Title V does this for many years, so there has been no Department of Experiments --
Mr. Keith A. Jones: That’s right.
Justice Potter Stewart: In a 20-year period.
Mr. Keith A. Jones: That’s right.
Chief Justice Warren E. Burger: But it hasn’t been exercised until now, is that not?
Mr. Keith A. Jones: It’s been a discretionary authority which, at least by these two agencies, has not been exercised in this manner in the past.
The Federal Power Commission did impose fees upon the certification of -- excuse me, on the issue in certificates in public convenience and necessity several years ago and that was the exercise of authority under Title V.
Justice Potter Stewart: Of course, the Post Office has been doing this, I guess, since the first year violation, isn’t it, or something similar to that?
Mr. Keith A. Jones: It certainly imposes a user fee, that’s correct.
The respondents’ contention about the fee not being applicable to industries on account of industry-wide benefits is based upon a Budget Circular A-25 which was discussed in the preceding case.
We would simply point out here that that Budget Circular does not require the kind of restrictive reading which the power company and the natural gas companies would give it.
That does speak in terms of measurable unit of service to identifiable recipients.
But again, if an industry as such would identify a recipient of a benefit, then nothing in the Budge Circular by its terms would prohibit the assessment of an industry-wide fee.
Furthermore, as my colleague Mr. Korman pointed out in the preceding case, that Budget Circular does not apply to independent agencies.
It merely sets forth a general fee setting policy for the Executive Branch agencies.
Turning now to the question of whether the Commission, in performing the regulatory activities here in question, performs work, provides a service or a benefit, or grants a privilege to or for the companies in these industries; this is a question which must be considered, I think, on a fee-by-fee basis.
I turn, first, therefore to the added reserve fee which the Commission has imposed upon the pipeline companies in connection with the Producer Certificate Program.
That fee, it should be pointed out at the outset, is not an industry-wide fee.
That is, it’s not a fee which is assessed in amount and then arbitrarily allocated among the constituent members of the industry.
It’s a fee which is imposed only on those pipeline companies for which new reserves have been certified for delivery under the Producer Certificate Program during that year.
The certification of the contract for the delivery of reserves at that kind is analogous in purpose and effect to a license for the conduct of additional business.
And it’s clearly of benefit to the company because it thereby secures additional supplies which would not otherwise be available to it.
And, this added reserve fee, which is imposed, is imposed in a manner directly proportional to the amount of reserves which have been certified to that company for the year.
Therefore, it’s proportional to the benefit actually received by the company in connection with the Producer Certificate Program.
Because of this, we believe that no matter how this Court decides the other issues in the case, the added reserve fees is clearly valid under Title V.
Now, the other fees at issue here are imposed on an industry-wide basis.
That is, the full amount of the fee is first determined and then it’s allocated among the various members of the industry.
The fee imposed upon the electric utility companies to pay for the cost of the Coordination and Reliability Program relates to beneficial service which is provided to the entire industry as a whole.
In conducting the Coordination and Reliability Program, the Commission comprehensively studies the growing market for electric energy and it also studies the ability of the existing generating and transmission facilities to meet the needs of that market.
This study assists the companies in planning their capital budgeting and it facilitates their interconnection and cooperation with other electric energy companies.
As a consequence, they save money.
They don’t have to invest in generating facilities to the extent that they otherwise would and moreover, the delivery of electric energy becomes more reliable, the incidence of blackouts and brownouts is reduced.
And this increased reliability of the electric energy transmitted by the companies enhances the competitiveness of the companies vis-à-vis other fuel suppliers.
Because of this, it seems fairly clear that this program is beneficial to the industry.
Indeed, it seems likely that if the Commission did not conduct a program of this kind, the industry as a whole or the various members of the industry would have to conduct similar programs themselves.
And as I read their brief, the New England Power Co. in this case does not even contend that this program is not beneficial.
Their contention instead is that the fee is invalid because the program is conducted primarily in the public interest, for the public benefit.
But as Mr. Korman indicated in the preceding case, the implication of this argument is simply to read Title V out of the United States Code.
Every regulatory program is supposed to be conducted primarily for the public benefit.
In enacting Title V, Congress understood that it was conferring authority to impose fees for a wide range of regulatory services and activities required by law to be conducted primarily in the public benefit.
We see no incompatibility between the Commission’s authority to impose fees and its responsibility for regulating it in the public interest.
And this leaves for discussion the two industry-wide fees imposed to cover the cost of rate setting activities or the residual cost of such activities.
We feel that, as to each individual company whose rates are reviewed and approved by the Commission, there is a direct benefit conferred.
The approval of a new rate schedule is analogous to the issuance of a license for the conduct of business.
That is, the company could not continue its business at the higher rate schedule unless it receives the approval of the Commission.
The respondents, however, seem to make the general argument that this kind of benefit is really no benefit at all.
They say that they’d be better off with no rate regulation.
We feel that that’s not the issue in this case.
In the first place, the merits of that argument are far from clear.
These companies are insulated from destructive competition by the regulation of the Commission.
The numbers of pipeline companies and electric utilities are regulated by the Commission, and the kind of competition that might otherwise exist has been weeded out.
But whether or not regulation, as such, benefits the industries and economists might well differ at that point, we feel that, that as such is not the issue here.
Title V, when it speaks in terms of a benefit, speaks in terms of a benefit conferred within the context of a preexisting regulatory scheme.
Even the Budget Circular which talks in terms of a special benefit recognizes this because it gives us examples of regulatory activities: the issuance of licenses, of certificates of convenience and necessity, inspections, all of which would be unnecessary without regulation.
These are all benefits which are conferred only within the context of a preexisting regulatory scheme.
Unlike the issuance of a license, the approval of a rate schedule does confer a benefit within this context.
Indeed, even the electric utility companies have recognized this because they raise no objection to the sliding scale fee which is substantial that the Commission now imposes on the filing of new rate schedules.
This leaves only the contention of the respondents that it’s unfair to impose a fee for rate setting activities on a company who doesn’t file a new rate schedule during the year.
I would first point out about this contention that it does not go to the Commission’s authority to impose a fee to recapture the entire amount of rate setting activities.
That contention only goes to the reasonableness of the method that the Commission has employed for allocating this fee.
And as we understand the opinion of the Court of Appeals, which did not purport to reach questions of reasonableness, that issue is not one which is before the Court in this case.
But we, nevertheless, feel that the allocation chosen by the commission is reasonable.
The -- each particular company, whether or not files a rate schedule during a given year, is going to file a rate schedules from time to time in the long run.
And therefore, it benefits from having the commission services available and also especially benefits whenever its rate schedule is considered and approved.
And it seems to us, not unreasonable to allocate this fee on an annual basis over time rather than on a filing basis.
If there are no further questions, I’d like to reserve the remainder of my time.
Chief Justice Warren E. Burger: Very well.
Argument of Stanley M. Morley
Mr. Stanley M. Morley: Mr. Chief Justice and may it please the Court.
I am confining my argument to the portions of the decision of the Court of Appeals which relate to the natural gas industry.
And I would like to point out at the outset and I think it’s important that we keep in mind that, so far as this case is concerned as to the natural gas industry, it involves simply natural gas rate making cost on behalf -- incurred by the Federal Power Commission in the regulation of the pipeline industry, on the one hand, for its own cost incurred with respect to -- the Power Commission’s own cost incurred in regulating pipeline rates, but it is also imposing upon the pipelines the cost incurred by the Federal Power Commission for the regulation of the producers incurred in connection with their certification procedures, which are essentially rate making procedures.
And as much as the only real problem that ever arises with respect to producers certificates, it involves the price which they are to receive for their commodity.
Now, in the Court of Appeals decision, they didn’t -- the court below did not reverse the Federal Power Commission on the basis that it was rendering benefits not to special beneficiaries, but to the gas industry as a whole.
As is shown in the opinion, and I’m referring to pages 9a and b of the Government’s petition for cert, it is made abundantly clear that the court there was confining itself to this Court’s interpretation in the Hope case and in the so-called CATCO case or Atlantic Refining Co. versus Public Service of New York.
Justice William O. Douglas: What page is that, sir?
Mr. Stanley M. Morley: This is in, Your Honor, in the Government’s petition for certiorari and the Appendix A.
What I’m looking at, Your Honor, is at the bottom of pages 9a and the top of 9b.
Justice William O. Douglas: Thank you.
Mr. Stanley M. Morley: And you will notice there in the footnote that the Court did determine the Hope and CATCO cases to be controlling in as much as it is concluded that the only benefits derived from the Federal Power Commission’s rate making actions is for the public benefit, namely, the ultimate consumers of the natural gas for whom the Gas Act was enacted.
Now, when the Court of Appeals decided this case, it went through the legislative history and made specific reference to the Federal Power Commission’s earlier determination in Order No. 317, which was a rule making order, which proposed for the first time the assessment of fees under the Natural Gas Act pursuant to the requirements of Title V of the Independent Appropriations Act of 1952 and the Budget Bureau Circular No. A-25.
He, there, stated that he wholeheartedly concurred with the Commission’s interpretation of Title V and Order A-25 in its earlier rate making -- it's earlier notice of fee schedules.
Now in that notice, it’s clear and we’ve set it forth -- it's set forth in the Commission -- the Court’s opinion in page 10a of the Appendix to the petition.
They there, point out that they have reviewed their functions under the Natural Gas Act, and are of the opinion that the assessment of user charges or fees with respect to the exercise of regulatory activities under the Act and accounting provisions would not be appropriate since these activities are primarily for the benefit of the general public rather than the regulated companies.
And they also make clear that they didn’t think it was appropriate to charge the producers the cost of the Commission in administering the producer programs.
They first pointed out that it was difficult for administrative convenience and that it was -- and, overall, they felt that it did not come within their entitlements under Title V.
Now this --
Chief Justice Warren E. Burger: Well I suppose a regulatory agency can, and they sometimes do change their minds about these things, don’t they?
Mr. Stanley M. Morley: Well, no doubt about it, Your Honor.
However, the Commission passes this off in their Order 9 rehearing as mere dicta of the Commission as though they had not given serious consideration to these interpretations of Title V.
But I submit that the legislative history of the Title V does show that not only the Commission but the Congress has given most serious consideration to the very application of Title V which we’re concerned here with today.
Now, the legislative history is rather sparse and I assume that the main reason for that is that it was attest as a writer to an Appropriation Act and it wasn’t considered a serious matter as conferring legislative authority on the Government -- federal agencies.
But in any event, it’s abundantly clear and it’s made, if any doubt exists, by the statement of Senator -- Representative Yates on the floor of the House when he was discussing Title V of the Independent Offices Appropriation and he there makes specific reference to two agencies, namely the Federal Communications Commission and the Interstate Commerce Commission.
Chief Justice Warren E. Burger: What page are you on there?
Mr. Stanley M. Morley: I am on our brief, the green one, and that is Appendix B pages 3a through 5a.
You’ll notice on page 3a, Your Honor, he refers to the type of services for which they intended to recoup the costs of the Government and with regard to the Federal Communications Commission, he refers to franchises, licenses, certificates which obviously are grants to identifiable recipients as is contemplated by Title V and Budget Circular A-25.
The same is true with respect to his reference on page 4a to the Interstate Commerce Commission, which makes inspections for locomotives of railroad, safety appliance, signaling systems and also for the issuance of certificates of public convenience and necessity for bus lines and other common carriers, clearly, identifiable recipients of special services rendered on their behalf.
Now after the enactment of Title V, the Budget Bureau on November 5, 1953 issued its first Circular which was also designated A-25.
But that Circular was superseded by the one which we’re here concerned with which was adopted on September 23, 1959.
Shortly after that promulgation of the Budget Circular, the Federal Power Commission got out its first Notice of Proposed Rulemaking for the assessment of fees, that was issued on February 3, 1954.
And they therein proposed a rulemaking to prescribe fees for the filing and processing of export-import authorizations under the Natural Gas Act and also for the charging of fees for certificates of public convenience and necessity under Section 7.
Now, there’s a great deal of consideration given on discussions in the Commission -- in the Senate Report No. 14 and 67 which we have referred to in our brief at page 22, this report was adopted February 1, 1956 --
Chief Justice Warren E. Burger: You have to watch that microphone, Mr. Morley.
It gives you a little trouble.
Mr. Stanley M. Morley: -- was adopted on February 1, 1956 pursuant to Senate Resolution No. 140.
And in those hearings, the Senate Committee on -- was considering the very question of these fees and whether or not they should be done in a manner prescribed by Title V or whether or not they should be individual legislation enacted which will be directed to each of the individual agencies.
And in the course of this -- the hearings that were held, the Senate Committee on Interstate Foreign Commerce adopted a resolution stating in which the sense of the committee that the agencies under its jurisdiction, which obviously included the Federal Power Commission, should suspend until July 1, 1955 any pending or proposed proceeding involving the imposition of fees and charges pursuant to Title V.
Then, Senator Bricker also stated on the Floor of the Senate about the same time that the Committee on Interstate Foreign Commerce is of the unanimous opinion that such a proposal for assessing fees raises basic questions with regard to the fundamental philosophy of regulation.
The committee feels that Congress should set up the basic standards for each agency to follow in imposing charges for licenses.
So, in the course of the hearings, the then Chairman of the Federal Power Commission, Mr. Kuykendall, was -- wrote a letter to Senator McClellan, then Chairman of the Committee on Government Operations, in which he responded to a request from the Federal Power Commission respecting the status of fees charged as a result of the enactment of Title V.
Mr. Kuykendall referred the Chairman McClellan to the fact that they had issued the earlier rulemaking notice, which I’ve referred to, and then stated that the, “that proceeding, the initial rulemaking proceeding, is still pending but lies dormant in view of the resolution of the Senate Committee on Interstate and Foreign Commerce that such proceeding should be suspended until July 1, 1955 and the introduction of the Brick Bill as 2203 in the 83rd Congress prohibiting other than nominal fees.”
Then, Chairman Kuykendall concluded that Title V does not provide a sufficiently explicit expression from Congress with respect in method of attaining the goal of self-sustaining what seems lacking, he stated, is the necessary particularity as to the distinction between “services” to particular groups and service to the public interest.
Chief Justice Warren E. Burger: How could you really separate those things into tight little compartments in a regulatory agency, Mr. Morley?
Some things benefit both the public and the regulated industry.
Some are more particularly for the public.
Some are more particularly for the benefit of the industry.
Is that not true?
Mr. Stanley M. Morley: There’s no question about it, Your Honor.
And in that regard though, but what we’re concerned here, with so far as the natural gas pipeline industry is concerned, are rate matters.
The annual fee assessment for their pipeline programs which they say is the cost for administering their rate making factor --
Chief Justice Warren E. Burger: Now, doesn’t that benefit both the public and the utility?
Mr. Stanley M. Morley: Not in my opinion, Your Honor.
Chief Justice Warren E. Burger: It doesn’t?
Doesn’t it fix an assured return on a particular formula?
Mr. Stanley M. Morley: No, it doesn’t.
They -- the Federal Power Commission says that what they do, they can’t guarantee you a profit.
They will give you the opportunity to make the profit, but that doesn’t mean that you’re necessarily going to do it.
Now, it’s true enough, they fix --
Chief Justice Warren E. Burger: Well, some of it depends on management then.
Mr. Stanley M. Morley: I beg your pardon?
Chief Justice Warren E. Burger: Some of it depends on management, but within the framework, it’s -- there is a formula that is designed to give a profit, is there not?
Mr. Stanley M. Morley: Well, I think the situation is more or less, like Mr. Justice Brennan put it earlier, that this isn’t sort of a Blue Cross plan.
There are a lot of people --
Chief Justice Warren E. Burger: Mr. Justice Stewart’s conception of Blue Cross Blue Shield --
Mr. Stanley M. Morley: Excuse me.
That we’re here faced with an industry which many pipeline companies don’t have a rate case for years.
Another pipeline company will have several in one year and now, the whole -- the industry is not going to benefit because one company is having difficulty raising its revenues and maintaining an adequate stability to its economic environment.
I don’t think that it necessarily follows that the whole industry.
I think that it doesn’t follow that the whole industry benefits from any of the rate making activities of the Federal Power Commission.
I’m not -- it’s not my position as stated by counsel for the Government that Unger (ph) is saying that there should not be any rate regulation, we don’t say that.
We say that the cost of it is incurred for the benefit of all of the consumers for whom this Court has said the Natural Gas Act was enacted.
Justice William H. Rehnquist: Mr. Morley, in your brief that the statement of Congressman Yates that you are reading from earlier in Appendix B at page 4a, the first kind of home spun example he gives of the type of thing he is talking about there at the end of the first paragraph on 4a is the Chicago Elevator Inspection Program in his hometown.
And he says this is the kind of thing that the City of Chicago required a license from each elevator owner from in order to underwrite the cost of this inspection.
Well, certainly, that inspection is for the benefit of the public, isn’t it, and not for the benefit of the individual elevator owner?
Mr. Stanley M. Morley: Well, if Your Honor please, I don’t consider this apropos of the problem of a natural gas industry being regulated in its rates.
It’s -- obviously, elevator inspections are for the benefit of the public.
Justice William H. Rehnquist: And yet, that’s the example he thought as being referred to (Inaudible)?
Mr. Stanley M. Morley: Well, he has more -- this is sort of on a side.
As I read the thing, he is more concerned with the Federal Communications Commission and the Interstate Commerce Commission.
Now, there’s no question that this man, when he pays his fee to have his elevator inspected, his got to have as a prerequisite to getting into -- to putting the thing into operation, just like a pipeline has to get a certificate of public convenience and necessity to operate in interstate commerce.
We’re not challenging those fees.
Justice William H. Rehnquist: But on the point of benefit, there simply isn’t real benefit to the elevator owner.
Mr. Stanley M. Morley: Well, there’s a benefit to the extent that he’s permitted to operate his elevator.
Justice William H. Rehnquist: Well, you can say that about any type of thing I suppose, but so far as conferring some sort of an affirmative benefit, this would strike me at any way as being something that’s completely for the public and, yet, Congressman Yates thought it was clearly the kind of thing that would be included under Title V?
Mr. Stanley M. Morley: Well, it’s our view that the ultimate consumers who are the beneficiaries of rate regulation under the federal power -- under the Natural Gas Act, the activity has been undertaken for them, the benefit goes to them and, they’re the ones that should pay for it.
The natural gas pipeline company, what benefit does he receive from rate reduction or a rate increase of less than what he thought was appropriate?
He is not benefiting by that.
Justice William H. Rehnquist: Well, the elevator owner can make exactly the same point though, can’t he and yet, apparently that wouldn’t have been good enough for Congressman Yates?
Mr. Stanley M. Morley: I don’t think so because, in my view and with all due deference to your own view, I think this is more analogous to a certificate applicant before the Federal Power Commission.
The elevator owner is more comparable to a pipeline seeking a certificate than is the elevator operator with his tenants of the building.
Justice Potter Stewart: The analogy that Congressman Yates saw perhaps was what follows in the very next succeeding paragraph.
The Interstate Commerce Commission is required to inspect locomotives of railroad, safety appliances, signaling systems, various facilities of that type.
In addition to that, much to the work of the Commission is involved with hearings and so forth.
They say the Government pays every cent for this operation, i.e. the inspections, the safety inspections under the Safety Appliance Act, I suppose.
That perhaps, was the analogy that Congressman Yates saw the inspection of elevators in his hometown of Chicago and that, you submit, is quite different from rate regulation.
Mr. Stanley M. Morley: I do, Your Honor.
Justice Potter Stewart: Right.
Chief Justice Warren E. Burger: Mr. Morley, I think, you’ve a minute, if my calculations are that you’re impinging on Mr. Debevoise’s time now.
Mr. Stanley M. Morley: I just want to say one thing that in connection with the request of both Your Honor and Mr. Justice Stewart, that the ICC does assess fees for activity such as are mentioned here in center are that Congressman Yates’ statement.
But they do not assess fees for the cause of their rate making activities, and the same is true with respect to the Federal Communications Commission that it does not have any fee assessments for its common carrier rate activities.
And with respect to Your Honor’s question about the Act -- the situation with respect to Budget Circular A-25, you will find in the Senate Report to which I made frequent reference, No. 1467 of the 84th Congress, that that Budget Bureau Circular was circulated to all of the federal agencies, including the Federal Power Commission and notice is taken of it by the Congressional Committee in this report.
So, I think that that does indicate some congressional sanction of the application of it to federal power activities.
Chief Justice Warren E. Burger: Mr. Debevoise.
Argument of Thomas M. Debevoise
Mr. Thomas M. Debevoise: Mr. Chief Justice and may it please the Court.
In the time before lunch, I will try to get through the thinking completely different concepts under an Act which has no similarity basically to the ones you’ve heard so far this morning and an industry that is not regulated at the federal level in any way, shape, or form like the ones you have just been hearing about.
The Federal Power Act gives the Commission no licensing authority over any facility.
Contrary to what Government counsel stated this morning, the Federal Power Act does not let the Commission insulate the electric utility from destructive competition.
In the period since it was passed, the companies regulated -- the part regulated by the Commission has had its share of the market decrease by over 20%.
It does not have comprehensive rate jurisdiction over the industry.
Chief Justice Warren E. Burger: From what source is that competition that you’re suggesting?
Mr. Thomas M. Debevoise: It’s from the other parts of the industry, Your Honor.
In the case of your natural gas pipelines, the Commission regulates the whole industry, but is not true of the electric utility industry.
There were, when the Act was passed, already in existence public -- local public agencies.
Today, their number is over 2,000.
There were, just starting in 1935 REA cooperatives.
Today, their number is 960.
The Federal Government Dam Building Program was just starting.
TVA had not yet expanded to take over the northern part of Alabama and the parts of Kentucky and other places that it has today.
Now, as far as rate jurisdiction is concerned --
Chief Justice Warren E. Burger: When you say they’re not protected from competition, do you mean within their own area or they’re not protected from competition in the sense that they can’t expand into areas where, for example, REA or TVA is operating on municipal ownership?
Mr. Thomas M. Debevoise: Well, Your Honor, I’m speaking of it in FPC terms.
Their only jurisdiction is over sales from one utility system to another.
Now, they will not protect a company such as Otter Tail Power Company, which you had before you, from having the other systems which it serves taken away from them.
There’s no way they can.
As the federal dams have been built with low cost federal power, more and more of the smaller systems have naturally desired and been able to switch to taking the federal power to which they give preference.
And this is what I mean, there’d been new local public agencies established just as there have cooperatives.
A retail service area, in most areas that I know of, is free to elect to oust the electric utility that is serving them and if it’s an investor owned company at the end of its franchise or otherwise, and to set up a system.
There is no market protection for the electric utility industry under the federal power.
Now, this is true because of the history of the development of the industry.
By 1935, when the Federal Power Act was passed, the industry was already in existence.
It already was regulated extensively at the state level.
Federal regulation came about for two reasons in the Public Utility Act of 1935.
One was to give some regulation for the benefit of investors over the mushrooming, holding company systems which were competing with one another for retail properties across the country and, in some instances, were abusing financial accounting and other records for the detriment investors.
That was part one, the Public Utility Holding Company Act.
Part two of the Public Utility Act was the Federal Power Act and, here, the effort was just to regulate at the federal level those parts of the electric utility business which it was felt the states could not regulate.
And it spelled out right in Section 201 that the regulation is limited to the interstate transmission and sale in interstate commerce of electric energy.
The Federal Power Commission has no jurisdiction under parts two and three over any generating station.
It has no certification authority over any transmission line.
It does not regulate any rates except the interstate rates of the local power companies.
Now, until 1965 and your decision in Southern California Edison case, the percentage of revenues over which the FPC even claim jurisdiction was down around 2% or 3%.
Today, they claim jurisdiction over 7% of the revenues of the electric utility industry.
Under -- they have jurisdiction over none of the revenues of some of the companies that they regulate because, again contrary to what the Government said this morning, every public utilities subject to FPC jurisdiction does not have rate schedules on files with the FPC because they do not sell, in some cases, to other public utilities.
Chief Justice Warren E. Burger: Mr. Debevoise, neither -- no counsel up to now has intimated that the Fifth Circuit might have been correct and that the DC Circuit might have been correct.
And, I wonder if after lunch, if you have any views on that that you’d care to suggest that you would address yourself to them.
We will resume there after lunch.
Mr. Debevoise, you may proceed.
Mr. Thomas M. Debevoise: Mr. Chief Justice, to turn directly to your question, it is our position that if the certificate of compliance, as discussed this morning, is a license or a certificate, there is no conflict between the two circuits.
Now turning to the other agency practices which Justice Stewart mentioned this morning, on page 47 of our brief there is a listing of them.
The only one that I’m aware of that has taken full advantage of Title V for annual licenses is the Atomic Energy Commission.
There, they do charge annual -- make annual charges that cover two license fees that cover the regulatory cost associated with the processing of licenses, and health and safety compliance and inspection activities.
They do not attempt to charge back in those annual fees the cost related to rulemaking, development of standards, codes and criteria, safeguard activities, and the administration of state relation programs.
But the cost directly associated with their licensing program, they do charge back under Title V.
And there is an error in our brief on page 47 in the second paragraph where we refer to such charges as --
Unknown Speaker: What page?
Mr. Thomas M. Debevoise: Page 47 in the first full paragraph, line 7.
The word “nominal” should be stricken.
There is nothing nominal about the AEC annual fees to licensees.
Now, NEPCO has one peculiarity from the rest of the companies regulated by the commission.
I’ve told you that the industry as a whole, only 7% of their revenues are regulated by the Federal Power Commission.
In NEPCO’s case, as a member of a holding company where it supplies the distribution affiliates, the FPC regulates almost 100% of their rates and this becomes important a little further, but let us turn now to just what the FPC does regulate.
First, they have the authority to regulate exports of electric energy from the country.
There are very few of the industry, which are in a position or location to export.
Second, they have the authority to approve mergers of facilities or the accepting of securities of another system.
But that is only where there are jurisdictional facilities involved that excludes generation, excludes distribution, and it is only where the SEC doesn’t have jurisdiction under the Public Utility Holding Company Act.
Again, it is not a section that has many applications during the year.
Next, they have jurisdiction over security issuances by public utilities, but only over those public utilities which are not organized and operating in a state which regulates their security issuances.
There are very few of such companies.
Next, they have rate jurisdiction, again, only over interstate energy transactions which, I have mentioned, amounts to 7% of the industry’s revenues on a combined basis.
Now, when I say industry revenues there, I’m including revenues from investor-owned utilities that are large and are not subject to the FPC jurisdiction at all.
The utilities in Texas, for instance, which are not interconnected across the state line, they are not subject to FPC jurisdiction and their rates to other utilities are not regulated by the FPC.
Now, these are the regulatory activities of the Federal Power Commission over the electric utility industry, and it is the cost of these activities which are not covered by the filing fees they have established.
Substantial filing fees, in the case of rate cases, that they wish to recover back from the industry as a whole, those that are subject to their jurisdiction on the basis of the kilowatt-hours of jurisdictional energy transmitted or sold by those utilities.
I submit that for most of those sections there is no application to most of the utilities subject to the FPC jurisdiction.
In connection with the rate regulation, it is the buying systems, the several thousand systems which are not subject to FPC jurisdiction, which are the beneficiaries.
It is they who go before the Appropriations Committees and urge more funds for the FPC for rate regulation.
Now the FPC, in talking about the benefits which the industry receives from its rate regulation, said that it is redounded to the benefit of the electrics by creating the economical climate for greater usage which, in turn, strengthens their financial stability and their ability to sell debt and equity securities.
It’s this economic climate which the court below very nicely, without going into it, said was not sufficiently defined to be a special benefit to the electrics and just what does the FPC mean?
As I told you before, until 1965 in the Southern California Edison case, you were talking about a couple of percent of the revenues of the electric utility industry.
Actually, when Chairman Swidler came on board in 1961, there was one man at the FPC looking at rates of electric utilities.
We’re talking about a small percentage of their revenues.
The sales go, of the major categories, 48% to industrial customers, 22% to commercial.
Does the FPC claim that they have created the economic climate by their rate regulation of the electric utility industry that has caused the industrial expansion of the last 20 years?
That appears to be what their doing, but they go further and they say that it has strengthened their financial stability and their ability to sell debt and equity securities.
Well NEPCO, as I told you, is 100% rate regulated by the FPC.
There’s an FPC order of March 7,1972 at 47 FPC 732 where the FPC had to admit that because they listened to NEPCO’s customers in 1971, that NEPCO had been unable to sell any debt securities or preferred stock for a period of eight months and they had the grant from emergency relief.
Most investor on utilities are not subject to this kind of rate regulation jurisdiction by the FPC, but certainly, the rate regulation jurisdiction has not created an economic benefit to the companies which are subjected.
Now, the Government misstated our position when he said that because part two does not specifically authorize a fee, we say Title V cannot be applied, that is not what we say.
We said that the subject was before Congress in 1935 of charging fees under part two and three, that they specifically amended Section 10 (e) of part one under which the FPC does charge all of its cost of administration of part one against licensees.
They specifically amended it and, in doing so, specifically stated that they were limiting the cost of administration to be recovered through fees to part one.
That was enacted and that’s legislative history at page 11 of our brief in 1935.
So, we have the case of Congress specifically having under consideration and then specifically saying just what the FPC could charge fees for under parts two and three which they then spelled out in Section 312 of the Act.
And under Section 312, the FPC was limited by Congress to charges for special statistical services and other special or periodic services.
Chief Justice Warren E. Burger: That’s still the 1935 expression, is it?
Mr. Thomas M. Debevoise: Yes.
Now in addition to these regulatory features, the FPC increasingly in recent years has been getting into the matter of coordination and reliability.
They do so under the authority of Section 202 (a) and their specific authority in Section 311 where they are required to compile all sorts of facts and information on the industry to have it available for Congress.
Now, we’ve heard this morning that their activities under this part have saved us money, have meant we do not have to invest as much, have meant that we’ve become more reliable and enhance our competitiveness.
I would say that there is absolutely nothing in the record to support anything of that kind.
In a minute, I will read to you from their publications as to what their program is all about.
The one thing that was said that was entirely accurate is that their program consists of monitoring the industry.
They attend our regional reliability councils.
They don’t get involved with the engineering in depth.
They ask the industry to set up tasks forces to provide them with the information.
They coordinate it and correlate it, and report it to the Congress and to the American public.
Now, I’m not saying there’s no benefit when you are regulated to have this exchange, but I am saying that their program is not designed and does not directly benefit the industry.
In connection with that, if I could read to you just two excerpts from the National Power Surveys; “The National Power Survey is a major undertaking by the Federal Power Commission in cooperation with advisory committees drawn from all segments of the electric power industry to give greater impetus to the trend towards integration of the nation’s power systems.
In our opinion, the technology of large scale generating stations and extra high voltage transmission interconnections has now reached the stage where a closer coordination of the construction plans and operations of individual systems in the industry is highly feasible and necessary, if the consuming public is to receive the benefits of lower cost electricity which our technology now makes possible.”
Now, this is the thrust and purpose of the Federal Power Act and everything they have done, lower cost electricity.
They go on, “At stake, by 1980, are possible savings that was much as $11 billion a year to the American consumer, not to industry.”
It is not their thought that by taking advantage of technology, stockholders could line their pockets if stockholders are equated with the industry.
It is savings to the consumers.
The uniform system of accounts, the accounting regulations which throw cost to the future and flow through benefits today are all designed to benefit the consumer.
As far as the stockholders are concerned, in NEPCO’s case, you could sell your stock now for 6% less than you could 10 years ago on equivalent basis under regulation by the Federal Power Commission.
It is not the industry which is benefited by these things.
Now going further, where FPC regulation is supposed to make the public feel secure in the reliability of our systems, you go to the 1970 survey where they say, “In a very real sense, electric power is the lifeblood of a modern nation.
Axiomatic, to this point, is another, namely, that it is one thing to take electricity for granted as all of us have come to do in our daily lives, but quite a different thing to take for granted that it will always continue to be available.”
And the FPC has no control over whether or not it does continue to be available even in the segment of the industry that they regulate.
They cannot order a generating station to be built.
They cannot order a transmission line to be built.
So, I think it’s appropriate to refer to the legislative history that’s set forth in Tennessee Pipeline’s brief -- Tennessee Gas Pipeline at length from the Senate Report.
It’s at page 28 of their brief, “Where there is joint benefit to a particular beneficiary and to all of the people, the cost should equally be divided and where there is doubt as to the degree of preponderance of benefit, there should be no fee.”
Here, I would say, on this record, there is considerable doubt and I would like to, in closing, quote the next sentence from the one cited by the Government in connection with their authority to change their mind.
The next sentence in the City of Chicago case, from the one the Government cited is, “What is required by the rule of law is that agency policies and standards, whether or not modification of previous policies, be reasonable and non-discriminatory and flow rationally from findings that are reasonable inferences from substantial evidence.”
Now, this economic climate benefit is without any substantial evidence whatsoever and does not constitute a reasonable inference once you’ve determined that their role in regulating the industry is so small.
In this case, we have not objected to the fees for applications in those limited areas where they have authority.
We do object to paying and having our customers pay the cost of their whole program.
To the extent there is any meaning to it being a benefit to the industry, it is the customers of all of the electric utilities in the country which should pay.
At the moment, they do pay based on ability to pay through our taxing statutes.
To now say that the customers of investor-owned utilities should pay all of these costs because of some benefit to them makes no sense whatsoever.
TVA, the cooperatives, the municipal generating systems, they all participate in the national power surveys, in the reliability councils, were all interconnected.
Customers of the small municipals that we serve, they benefit just as much from reliability to the degree that the FPC promotes it.
There is no reason whatsoever and Title V does not authorize the switching of these costs to just the customers of the invest-your-own systems.
Chief Justice Warren E. Burger: Mr. Debevoise, do you -- would you think there is any difference in approach to the application of Title V to utilities whose rates are regulated and to broadcasters whose rates are not regulated?
Is there any basis for distinction on that score?
Mr. Thomas M. Debevoise: I think there’s a large distinction which maybe I was too concise on.
To the extent that we’re talking about license fees where the Government gives you authority.
It seems to me, Title V clearly applies.
Now, as I understand the CATV, there is no rate regulation there.
I think there is a big difference.
I think you have a rate regulation and the implementation of Government policy through the FPC to keep electric rates as low as possible, those they have jurisdiction over, is something that can hardly be said to be a special benefit to regulator and it’s certainly more a matter of Government policy and a benefit to the purchasers of power.
Chief Justice Warren E. Burger: Thank you, Mr. Debevoise.
Do you have anything further, Mr. Jones?
Rebuttal of Keith A. Jones
Mr. Keith A. Jones: Thank you, Mr. Chief Justice.
I would just like to clarify a few matters of fact.
The natural gas companies here contended that the regulation of producer sales is of benefit to producers and not to the pipeline companies.
And we would point out that the producers are entitled to sell in intrastate commerce without any permission in the Commission whatsoever.
They do not need a producer certificate to sell.
The pipeline companies, however, do need the issuance of such a certificate before they can acquire any supplies of domestic natural gas for the introduction of that gas in their business of transporting in interstate commerce.
Secondly, the electric utility company here contends that there are some electric utility companies subject to the regulation of the Commission which do not file rate schedules.
We are not aware of any such companies.
It’s our understanding that the jurisdiction of the Commission which runs to the sales for resale in interstate commerce would require the filing of rate schedules with respect to such sales.
However, even assuming that there might be from time to time a company for some reason which did not file a rate schedule, nevertheless the validity of this fee would be a matter of -- or the application of this fee to that company would be a question of the reasonableness of the allocation of the fee.
That does not go to the Commission’s authority under Title V to impose a fee covering the cost of rate setting activities.
Third, the electric utility company also suggests that, contrary to my statement in earlier argument, the Commission does not insulate them from competition in any way.
But to the contrary, this Court held last term in the Gold States case that the Commission must consider the competitive consequences of any activity subject to its regulation and it must act in accordance with what is necessary from a competitive point of view, and in imposing anti-competitive activity by certain of the utilities.
And fourth, once again, the electric utility company challenges the Commission’s assertion that the Coordination and Reliability Program is of benefit to the utilities.
And I would simply point out in this connection that this Court in the Gainesville Utilities case acknowledged that the interconnection which is ordered by the Commission in connection with this program was of signal benefit to the electric utility companies because it permitted them to draw upon the power sources of other companies in times of need and save them from the major expense of constructing adequate generating facilities to cover all of their hypothetical needs.
And last, once again the contention is made that Title V itself extends no authority whatsoever to the Federal Power Commission.
But the New England Power Company, in making this assertion, is in fact being inconsistent because they themselves acknowledge that the Federal Power Commission does have authority under Title V to assess fees for the filing of new rate schedules.
Title V is the only origin of that authority exercised by the Commission.
We feel that the question here is not whether the commission has authority or whether that authority extends to the fees here and we believe for the reasons that I have stated that it does.
If there are no further questions, I’m finished.
Chief Justice Warren E. Burger: Thank you, Mr. Jones.
Thank you gentlemen.
The case is submitted.