FERC v. MISSISSIPPI
Legal provision: Amendment 10: Tenth Amendment
ORAL ARGUMENT OF REX E. LEE, ESQ. ON BEHALF OF THE APPELLANTS
Chief Justice Burger: We will hear arguments next in... 80-1749, Federal Energy Regulatory Commission against Mississippi.
Mr. Solicitor General, you may proceed when you're ready.
Mr. Lee: Mr. Chief Justice, and may it please the Court:
At issue in this case is the constitutionality of the Public Utility Regulatory Policies Act, one of five statutes enacted in 1978 as part of a comprehensive effort to deal with this nation's energy problems.
It would be helpful to consider the statute in two basic parts.
The first part consists of Titles I and III, which share three common statutorily-identified goals.
The first is to promote the conservation of energy supplied by utilities; second is to optimize the efficient use of facilities and resources by utilities; and the third is to ensure equitable rights to consumers.
Title I deals with electricity, and Title III with gas.
Title I requires state regulatory authorities and non-regulated electric utilities to consider the adoption of one set of standards, six in number, dealing with electric rates, and a second set of standards, five in number, dealing with terms and conditions of electric service.
The rate standards, all of them, and some of the electric service standards are directed toward two objectives.
The first is to cut down the amount of electric energy, and therefore imported oil, that is consumed in this country.
And the second objective is to shift electric demand away from peak periods, thereby diminishing the use of less efficient generating facilities and scarce fuels; notably, oil.
As to gas, Title III requires consideration of only two of the terms service standards.
Each of the standards, both Title I and Title III, is to be considered in a hearing after public notice, and a written statement of the reasons for declining to implement or adopt... in the event of a declamation to implement or adopt... any of the standards is to be made available to the public.
In addition, Titles I and III require that within one year after enactment of the statute and annually thereafter for ten years, state regulatory authorities and non-regulated utilities report the progress of their consideration of these standards to the Secretary of Energy who in turn is to submit a summary and analysis of the reports to Congress.
The other part of the statute is Title II, probably the most controversial.
Specifically, Section 210, whose objective is to encourage the development of cogeneration and small power production facilities.
Cogeneration is the combined product of both electrical energy and useful thermal energy such as heat or steam from a single process.
It has great potential as a source of energy conservation.
At one time it accounted for some 15 % of this nation's energy total, but with the advent of cheap fossil fuel power, that has diminished to 4 %.
A small power production facility is a facility having a capacity of no more than 80 megawatts and using something other fossil fuels, defined by the statute as biomass, waste, geothermal or renewable resources such as wind, water, solar energy, for the purpose of producing electric power.
Congress identified two impediments to the potential of cogeneration and small power production facilities as additional sources of domestic power with consequent lessening of dependence on foreign oil.
The first was its conclusion that subjecting cogeneration and small power production facilities to the usual state and federal regulatory burdens was unnecessary and would unduly discourage their development.
The more controversial aspect of the congressional determination was the second.
These two types of facilities must rely on traditional electric utilities, both as a source of backup power, and also as a market for their surplus power.
They do not sell generally to the public.
They use them only for their own purposes.
Evidence before Congress showed that since these facilities are potential competitors of public utilities, utilities were often less than cooperative in supplying either backup power or markets.
PURPA deals with each of these impediments.
Its response to the problem of surplus and backup power is the most hotly-contested of the Act's provisions.
What Congress eventually adopted in this respect represents a compromise.
The administration's proposal, which passed the House and was sent to the Senate, would have established a regulatory program virtually identical to that upheld by this Court in the Virginia Surface Mining Act case last term, under which the regulatory burden would have been assumed by federal authorities in the event that state authorities chose not to participate.
At the other end of the spectrum, the Senate bill would have required the Secretary to follow basically the Title I/Title III approach, which is simply to recommend guidelines to state public service commissions that they could adopt or not.
Opponents of the administration House bill, by the time it got to the Senate, presented to Congress substantial testimony and arguments to the effect that it was state rather than federal officials who possess the necessary expertise to implement reforms.
The legislation dealing with these issues should be responsive to local needs and local differences, and that what might be appropriate for Florida might not necessarily be appropriate for Oregon.
And that the states should be allowed to continue to experiment in the national interest with different regulatory approaches.
The compromise that became law was responsive to these arguments, which were grounded in the preservation of state interests.
The Act, in fact, gives the authority to make general rules to the Federal Energy Regulatory Commission in order to achieve the general objectives of the Act, but with the more specific authority to implement the statute being left to the states.
The Commission has, in fact, adopted regulations which afford the states great latitude in determining how the congressional objectives are to be achieved.
Under these regulations, state implementation may be accomplished by any one of three ways.
First of all, by the issuance of regulations.
Second, and probably most important for purposes of this lawsuit, by the resolution of disputes between utilities and qualifying facilities on a case-by-case basis.
And the third is a general catch-all; by any other action reasonably designed to give effect to the Commission's rules.
This suit was brought by the state of Mississippi and its public service commission with Mississippi Power and Light being permitted to intervene, against the Secretary of Energy who has general responsibility for Titles I and III, and the Federal Energy Regulatory Commission which has general responsibility for Title II, Section 210, seeking a declaratory judgment that the entire Act is beyond the scope of Congress' Commerce Clause power and an unconstitutional invasion of state sovereignty as declared by this Court in National League of Cities and Towns v. Usery.
Judge Cox's decision holding the statute unconstitutional on both grounds preceded this Court's decision in Hodel v. Indiana and Virginia Surface Mining, and this appeal followed.
There are two independent reasons in the government's view why the decision of the lower court must be reversed.
Mr. Lee: May I ask, Mr. Lee, you did say that whatever federal regulations are needed have now been promulgated?
Mr. Lee: --That is correct.
That is correct.
And they are extremely deferential to the states.
They leave to the states as much discretion as the proponents of that approach before Congress said they should--
Mr. Lee: How long have they been effective?
Mr. Lee: --They were adopted... I'll find that out.
The two reasons why this decision must be reversed, in our view, are, first, applying the standards announced by this Court in Hodel and earlier in Usery, there is no constitutional violation, looking at it as an exercise of Congress' Commerce Clause power.
And second, the Act is also a legitimate exercise of Congress' power to provide for our national defense.
I will look at the Commerce Clause issues first.
Last term in the Virginia Surface Mining case, this Court identified three hurdles plus a balancing test that a challenge to a congressional exercise of the Commerce power on Tenth Amendment grounds must surmount.
Before turning to a specific discussion of those three issues, however, I would like first to point out the aspect of this case that distinguishes it from National League of Cities and Towns v. Usery, and simply makes the rationale of that case inapplicable to this case.
The evil against which this Court's holding in National League of Cities and Towns protects is intrusion by one sovereign in a federal system into the prerogatives of another.
And that problem simply does not exist where, as here, the only reason that the states are exercising authority in the field at all is that Congress chooses to permit them to do so.
This difference between the Act in both of the predecessors to this case and this case is illustrated both by the history and also by the content of this legislation.
The appellees concede, as they must, that the state functions of whose federal invasion they complain could have been totally preempted by Congress.
The reason that Congress did not do so is that it was persuaded by the advocates of Federalism that the wiser policy and the more effective policy was to preserve a larger role for the states.
Mr. Lee: Mr. Lee, do you think Congress could direct, for instance, a state legislature to consider certain statutes?
Mandate that under the Tenth Amendment?
Mr. Lee: I believe, Justice O'Connor, that if it was in an area, that if it was in an area, that clearly could be preempted by Congress, in which Congress itself could have acted, and then Congress--
Mr. Lee: So in the Commerce area you would argue that Congress could go so far as to even mandate state legislatures to consider certain laws.
Mr. Lee: --Of course, the word "mandate" triggers sensitive nerves in the Tenth Amendment area.
But mandate a consideration, particularly in a circumstance such as you have in Titles I and III where the only obligation is simply to consider but not to adopt one way or the other--
Mr. Lee: But these public utility commissions of states are an administrative arm of the Legislative Branch of the government, and they are being told that they must consider certain action.
They are not being told they have to implement it, but they must consider it, isn't that so?
Mr. Lee: --That is absolutely correct, and for reasons that I attempt to discuss, we believe that that is constitutional.
The principal reason is, aside from the three hurdles, when you consider the balance of relevant interests, state and federal, particularly as applied to this kind of case, it is not that much of an intrusion, certainly not an unconstitutional intrusion, when you're dealing in areas like the Commerce Clause... and I reiterate that there is no dispute in this case that the turf on which we are operating is federal turf... it is congressional turf, the kind of regulatory area in which Congress could legislate if it chose to do so.
Instead, what Congress concluded was that its federal purposes would be better served if it permitted the states to consider certain basic objectives, not to adopt them but simply to consider them.
Mr. Lee: General Lee, what is the mechanism by which the FERC is entitled to enforce this duty to consider?
Mr. Lee: The duty to consider the Title I and III standards is vested in the Secretary.
And the mechanism is as follows.
There is the authority in the Secretary as to both Title I and Title III to intervene before the state regulatory proceedings.
In the event that the matter then proceeds to court, as to Title I the Secretary has the authority to participate as a party as an intervenor.
As to Title III, with respect to gas, he has the authority to participate only as an amicus.
Mr. Lee: What court does it proceed to?
Mr. Lee: The state courts.
And whatever courts properly review the proceedings... whatever courts the states have designated as those that are proper to--
Mr. Lee: Well, the law says that the body must consider it.
How does it... if the agency just... nothing ever comes before the agency, they don't put it on the docket, no one... does somebody suggest to them that they are under a legal obligation?
Mr. Lee: --I suppose the Secretary could appear and suggest they are under a legal obligation.
Mr. Lee: Could appear before them and say I move you or perhaps you should... and then they reject him and then--
Mr. Lee: And then they reject him.
Mr. Lee: --And then he can take them to state court to review an administrative agency--
Mr. Lee: As I read the statute, what it is talking about is that in the event that it is taken to state court, he does have the right to take--
Mr. Lee: --Oh, if it is taken to state court.
Well, how does it ever get there?
The agency says we don't want to go to court.
Mr. Lee: --Right.
The way the Act handles that, Justice White, is that in the event that the regulatory agency does not consider it, then in the next rate proceeding, which is basically an adjudicatory proceeding to... well, whether adjudicatory or legislative... in the next rate proceeding, it must consider it at that time.
Now, there is, of course,--
Mr. Lee: What if it decides it isn't going to do it?
Mr. Lee: --There is always that possibility that it can simply decide not to.
We assume, in light of the fact that states recognize the rule of law and that this is an area of federal authority, that they will conform in one way or another.
Mr. Lee: Is there some authority or even if there isn't, could the Secretary bring a suit and get an injunction ordering them to consider it, or not?
Mr. Lee: Apparently not.
There is a--
Mr. Lee: There is no provision for it, anyway, in the Act.
Mr. Lee: --No.
Apparently, the only authority that the Secretary has to enforce through federal court is his right to intervene in state court.
Mr. Lee: Mr. Solicitor, is there anymore effectiveness to this than there is to the Constitution's provision that the state officers must take an oath and support the Constitution of the United States?
Is it anymore effective than that?
Mr. Lee: My opponent, I am sure, would say that it does impose more extensive obligations than that.
The obligations that are imposed on the state that are to be balanced against the very substantial interest that the federal government has in regulating its energy program with concomitant consequences not only on energy savings themselves but on no such lesser interests as inflation, interstate commerce and national security are as follows.
On the one hand, the state must consider it; it must hold hearings, must give public notice.
Second, it must give written determination or written statements concerning its reasons.
In the event that it decides not to adopt one of the Title I or Title III standards, then it must give written statement of the reasons to do so.
And finally, the fourth is that it has to report on an annual basis for ten years.
And that's it under Title I and Title III.
Now, with regard to Section 210... this, as I say, is where we go beyond considering and actually having to do something... it would be anomalous in the extreme, I submit, to hold the Surface Mining Act, held constitutional last term, constitutional, and at the same time hold an act unconstitutional which was enacted as a compromise in direct response, in direct reaction, to Federalism interests asking for lesser intrusion in the state prerogatives and hold it unconstitutional in the name of the Tenth Amendment, which of course preserves state prerogatives.
Mr. Lee: Mr. Lee, in the Surface Mining case, couldn't the states continue regulating in that field as long as they didn't conflict with federal law?
I mean, there is a section preserving state law and procedure if it doesn't conflict.
And in this case, the state can't choose not to participate unless it just wants to get out public utility regulation totally.
So the choice for the states is much harder here, is it not, than it was in the Surface Mining case?
Mr. Lee: --Two answers to that, Justice O'Connor.
The first is I don't think it was harder because while both of them are complex pieces of legislation, the basic approach as to the Surface Mining Act was that state plans were submitted to the Secretary, and if they were acceptable, then the states could regulate.
Otherwise, the state took over and regulated directly.
Mr. Lee: You mean the federal government.
Mr. Lee: Excuse me, the federal government took over and regulated directly.
But the more persuasive distinction is that whatever the distinction, whatever the comparative intrusion on state interests, I think the best judge of that has to be the states themselves.
And it was organizations such as the National Association of Regulatory Utility Commissioners and others that presented extensive testimony before the Senate saying do not adopt the Virginia Surface Mining model because if you do, three things will happen.
One is it will be a greater than necessary intrusion in the state prerogatives; number two, we need the Flexibility in this area of electric generation regulation to make adaptation for the differences that exist from one locality to the other; and the final one is we need the opportunity to continue to experiment.
It was in... I think there is no doubt that if the House bill had passed it would be constitutional.
My opponents concede that it was a Virginia Surface Mining type statute.
The reason that the House bill did not pass was because the advocates of Federalism came in and said, this is too much of an intrusion under our prerogatives.
The other matter that needs to be mentioned in this respect--
Mr. Lee: I'm just curious, Mr. Solicitor, do we know what the recorded vote of the Mississippi senators and the House delegation were on this compromise?
Mr. Lee: --That's one thing I haven't checked into, Justice Brennan.
But it is significant in that respect that the group that is perhaps the most intensely affected, the regulatory commissioners themselves, were at the forefront of this plea, don't adopt the Virginia Surface Mining model, and they were also the ones who praised before the Federal Energy Regulatory Commission the approach that was followed.
Mr. Lee: Well, maybe they just talked Congress into passing a law that gave them an unconstitutional order.
Mr. Lee: Oh, so that they could win in this lawsuit.
At least if they did, they did a very sophisticated job of it in presenting their evidence before the Congress.
I'd like to deal now with the compliance by the states with the Section 210 requirements for the sale of surplus power and the purchase of backup power.
There are three opportunities; there are three ways that the states are given to comply, and the third one, of course, is the very broad one, "any other means" by which the policies of the federal regulation may be obtained.
But one of those options is simply to entertain disputes between regulated utilities on the one hand and qualifying facilities, cogeneration or small power production facilities, on the other on a case-by-case basis.
Thus viewed, all that Section 210, as certainly as implemented by the FERC regulations, does is simply to provide a federal rule of decision that is applicable in those cases where the state entertains lawsuits for other type of adjudicatory proceedings.
Thus viewed, regardless of what the constitutional rule might be in the event that regulations had been required,... in further answer to Justice O'Connor's question... or that legislation had been required, that obligation can be performed, can be satisfied, simply by entertaining disputes.
And that brings the case squarely within this Court's holding in Testa v. Katt, that it is not unconstitutional for the federal government, for Congress, to supply the rule of decision applicable in state adjudicatory proceedings so long as that same kind of rule, if enacted as a source of state law, would be constitutional.
I'd like to say just a word about the comparative weight of the federal and the state interests in this case.
This case demonstrates better than either of predecessor the wisdom of what this Court implied in National League of Cities and Towns, and expressly stated in the Virginia Surface Mining case, that the federal interest... that regardless of the three tests, that the federal interest nevertheless may be such that it justifies state submission.
On the federal side of the balance scale, it would be impossible to overstate the magnitude of this nation's energy problem.
It's important not only in its own right, but also because of its effect on inflation, the environment, interstate trade and national security.
Our opponents have said that it's in the future, and that it's not something that Congress has to deal with yet.
I submit that Congress is to be praised, rather than its statute to be held unconstitutional simply because it anticipated and dealt with the problem before we have, once again, such severe problems as we have had in the past.
The other side of the balance scale is the adverse effect on state interests.
I submit that for reasons discussed, these are minimal as to Titles I and III; they require only consideration.
And as to Section 210, since they can be satisfied by a means that has already been validated by this Court in Testa v. Katt, the comparative balance between state and federal interests clearly favors the constitutionality.
And finally, this statute is a proper exercise of Congress' national security powers.
The linkage between national security on the one hand, and on the other, the dependence on foreign oil in this case and controlling the price of timber sales involved in Case v. Bowles greatly favors the balance in this particular case.
The courts of appeals that have dealt with this issue have uniformly upheld congressional statutes enacted in the interest of national security when attacked on Tenth Amendment grounds.
I would like to reserve the rest of my time.
Chief Justice Burger: Very well.
ORAL ARGUMENT OF ALEX A. ALSTON, JR., ESQ. ON BEHALF OF THE APPELLEES
Mr. Alston: Mr. Chief Justice, and may it please the Court:
I think probably the best place to start with the question of constitutionality of PURPA would be look at the Act itself.
The Solicitor General went through the Act with some detail, and the mechanics of the Act that he did discuss I do not disagree with.
However, this is certainly more than just simply a suggestion to the state of Mississippi on how to regulate their public service commission.
It's certainly more than just a study telling the public service commission what to do.
Mr. Lee: Do you agree that the federal authority could have done all the things that they hoped the states would do?
Mr. Alston: Mr. Chief Justice, if, as a matter of fact, in the findings they found that this did have a substantial effect on interstate commerce, and if indeed they found that the Act itself was reasonable to affect the utilities themselves, then perhaps they could do that.
It may be absolutely so.
I don't know the answer to that question.
They may could have preempted the area.
But in the field of Federalism, if we talk about Federalism, that does not destroy the principles of Federalism.
I disagree with the Solicitor General.
If the federal government takes over an area, if they have a constitutional right to take over that area in the Constitution if it's permissible under the Commerce Clause, the federal government at that point carries the burden; they are the responsible party to exercise that law.
One of the great principles of Federalism, as a citizen of the state of Mississippi, I can look to my public officials.
We elect our public service commissioners.
I can look to them to implement, to promulgate state law.
I do not want for them to implement federal law.
I have no control over that.
It's deceptively simple to say, when they are looking at a statute like this, to say well, this is good.
A transient majority of Congress may say look, this is very good for the state of Mississippi, and what we'll do is we're going to tell the state of Mississippi what they are going to do.
That makes it easy.
But it completely destroys the concept of Federalism.
I'm not looking now to my public service commissioners to implement state law.
The public service commission is the one that gets called when the rates go up.
The burdens should not be placed on them unless they have consented to, by the electorate in the state of Mississippi.
Mr. Lee: What specifically do you object to?
The fact that... the Act saying that they must consider certain things, put certain things on their agenda?
Mr. Alston: Mr. Justice White, they completely set up an agenda for the state of Mississippi, and I was just going to go over that before the question was asked by Mr. Chief Justice.
It starts out in Section 111,
"The state of Mississippi is ordered."
You are hereby required... Section 111 says... to consider very, very complicated rate-making standards.
Section 113 says "You must" you are absolutely required, public service commission, to consider all of these other standards, six or eight standards.
Turning now to 302, 303 in the gas section, it says "You must" consider all of these standards.
Not only that, if the Court please, it tells you the procedure.
It sets the agenda for my public service commission, tells of the procedures that I have to follow.
Also, if these procedures disagree with what the procedures of the Act are, they override state law.
It's interesting, too, the Act says, that the purposes of this Act supplement state law.
Difficult to me to see how the federal government can supplement the state law to give our public service commissioners additional discretion.
But the Act goes further.
They mandate, they order that we do this, they tell the procedures that we're going to have to follow.
In addition to that, if you turn to Section 115, if the Court please, it says, here's the evidence you've got to look at when you consider these standards.
You go to 210... 210 is not just a minor section of the Act.
It says the state tax commission shall give notice and hearing and implement the rules as promulgated by the federal government, in connection with 210.
As far as any enforcement of the Act is concerned, I submit that the Solicitor General was just wrong in his answer to the Court, because as a matter of fact, under Section 123 it says any person can enforce upon the state tax commission what the Act is about.
You turn to the Conference Report, and I just happened to open to it when the Solicitor General was speaking... the Conference Report says specifically, this enforcement provision of obligation of state regulatory authorities and non-regulated utilities to hold hearings, to make... comply... requirements A and B.
They are reviewable under the orders of this Court, and they may be forced... the enforcement provision contemplates enforcement by writs of mandamus.
Mr. Lee: Does the Act mention that in a--
Mr. Alston: --Yes.
The Act, in 123, if the Court please, says they can enforce these provisions; any person can enforce these provisions.
Mr. Lee: --What does that mean, can enforce the provisions?
Mr. Alston: I don't know, except what the Conference Report says, Your Honor.
Mr. Justice White, the Conference Report says they can enforce it by writs of mandamus or other proceedings.
Mr. Lee: Well, any person couldn't do that without a case or a controversy.
I mean, just some wiseacre off the street couldn't go in and enforce it.
Mr. Alston: Yes.
The statute says any person, including the Secretary, speaking of the Secretary of Energy may bring an action to enforce the requirements of this title in the appropriate state court.
Mr. Lee: --In the appropriate state court.
Mr. Alston: Yes.
Mr. Lee: So he could bring an action in his own name against the regulatory commission seeking an order or an injunction or a writ of mandamus to make them carry out their obligations under the Act.
That's the way you read the Act.
Mr. Alston: That's exactly the way I read it, if the Court pleases.
Mr. Lee: Has any such action ever been brought, do you know?
Mr. Alston: Not that I know of.
Furthermore, under Section 210... that's under Titles I and III.
Furthermore, under Section 210 they are subject to civil and criminal penalties, they are subject to any penalty under the Federal Power Act.
In turning to the Federal Power Act, refusal to comply with the provisions would subject you to the penalties under that.
Mr. Lee: If the Act had said we request, rather than order, and some state utility commission had complied with the request but rejected all... and went through the motions but then... would you object to the Secretary having the right to appeal and challenge the agency decision?
Mr. Alston: I believe I would, Your Honor.
Mr. Lee: Under the Tenth Amendment?
I know you object to it, but would--
Mr. Alston: Yes, I believe, because... Mr. Justice White, are you talking about the intervention in the court proceedings and appeal from that?
Mr. Lee: I meant he can appear before the agency, I gather.
Mr. Alston: Yes, sir.
Mr. Lee: And suppose the agency has voluntarily gone through these motions.
They have been requested to but not ordered to, and they go through the motions.
They consider all these things.
They reject them all.
And the Secretary says, well, you certainly made a mistake; I'm going to go to court, I'm going to take you up.
And they say go ahead.
Would you say that's unconstitutional?
Mr. Alston: I think it would.
The fact that he can intervene in my state proceedings, and the fact that this is not consistent with the law of the state... you have to have a hearing, a determination, whether someone can intervene in any state proceedings, if the Court please.
That flies in the face of the principles and the procedures of our courts.
And then if he could appeal any of these decisions,... as a matter of fact, this appeal causes me some concern, Mr. Justice White, because if, really and truly, the federal government didn't care whether these were implemented or not, if they did care, why did they give them a right to appeal?
Mr. Lee: Well, what do you conceive the issue to be on appeal, say, before one of your state courts?
Or do you ordinarily hear an appeal from the utility commission?
Mr. Alston: I guess the issue on appeal would be whether or not the decision of the public service commission was arbitrary or capricious and not based on the proper standard, if the Court please, not based on substantial evidence.
Mr. Lee: So you think it would just be the ordinary state standard, and would vary from state to state, I suppose?
Mr. Alston: It would vary from state to state except that the procedure itself would be highly changed in connection with the state in the proceeding before the public service commission.
Because the rules of evidence and every other part of it would go into the question of whether or not the action was reasonable or based on substantial evidence.
Mr. Lee: I gather from that, the ultimate decision of your highest state court would not be reviewable here?
Mr. Alston: I think it would be reviewable under the Act all the way up to the United States Supreme Court, as by writs of certiorari and otherwise.
Review of the action in the Supreme Court in accordance with Sections 1257 and 1258--
Mr. Lee: Well, what federal question would there be?
That's what I... For 1257 there would have to be a final decision on the federal question, wouldn't there?
Mr. Alston: --A federal question would be perhaps, if we said we would not let the Secretary of Energy intervene, perhaps.
Mr. Lee: Maybe, but he intervenes.
He intervenes and the court affirms the rejection of all the federal standards.
Mr. Alston: --Secondly, if the Court please, we fail to follow the standards as set out in 115.
We were mandated under this procedure to follow the federal guidelines, as they told us.
We failed to do that.
It may be a federal question involved--
Mr. Lee: Whether or not you did violate something by what you did might be a federal question.
Mr. Alston: --Yes, sir.
Mr. Lee: I didn't understand you were required to follow them.
Just consider them.
Take, for example, the--
--But you have a routine of how you consider them.
Is that it?
Mr. Alston: Yes.
Mr. Lee: Is that what you're talking about about the guidelines?
Mr. Alston: Yes, you do have a routine.
If you take, for example, the master metering standard, you would have to consider the master metering standard, and you're required to do it.
You have to then--
Mr. Lee: Say you considered it and you said we don't like it, it doesn't work well in Mississippi.
Wouldn't that discharge your federal obligation?
Under Title I, that is.
Mr. Alston: --That's true.
Mr. Lee: Let me ask.
Could a consumer in Mississippi raise the same question in some of your agency procedures?
Could a consumer come in and file a petition and say I'd like to ask the commission to adopt a rule against declining block rates, or whatever they are, time-a-day rates--
Mr. Alston: I think the rule is 25 consumers under certain procedures, under the procedures set up by the court, could come in and ask for changes in the rules and rate-making--
Mr. Lee: Would it have been constitutional for Congress to pass a statute saying that the Secretary of Energy can direct 25 federal employees within the city of Jackson to file such a petition?
Who are all consumers.
Mr. Alston: --I don't know that I know the answer to that question.
Mr. Lee: Under the procedures, you'd be required to consider the standard.
Mr. Alston: Yes.
If 25 consumers came before them, they would have to make the decision of whether or not they wanted to proceed further with whatever was before them, the agency, at that time.
If it please the Court, we contend that this... the manner in which this Act was written is most unique.
They did not follow, the federal government did not follow, the provisions as they followed, or the scheme that they followed in all of the other regulatory provisions.
They gave the state the option of whether or not... as they did in the Surface Mining case, if the Court please... the option of whether or not they would desire to follow the procedures or not, and gave them the right to get out.
They didn't want to.
Under those circumstances, the federal government, at that point, would take over the whole administration of that area.
This is entirely different from what we are talking about today.
As a matter of fact, I have been trying to find some statute or some authority... and certainly the Solicitor General hasn't given me any authority... that would be constitutional where a statute is mandated on a state regulatory commission and they are required to follow the mandates of that statute.
And as a matter of fact, they commandeer the public service commission's machinery into going about this Act.
The only cases that I think I saw that are closest to it were the EPA cases that came up to this Court in EPA v. Brown.
Mr. Lee: I'm not sure you really mean your statement.
There are a lot of federal laws that forbid a state agency from doing certain things.
Mr. Alston: Yes, sir.
They may be state laws that forbid, but I don't--
Mr. Lee: Federal laws that forbid state agencies from doing certain things.
Mr. Alston: --There may be, if the Court please, statutes that forbid state agencies from doing certain things where there is a conflict.
But I know of no case.
Mr. Lee: Well, all right.
That makes a conflict.
If the prohibition is constitutional, that is a conflict if the state agency purports to do something that it's forbidden to do.
Mr. Alston: Yes, sir.
The point that I--
Mr. Lee: I know that this is different.
Mr. Alston: --Yes, sir.
The point that I 'm trying to make, I know of no statute and I have seen no case where affirmative burdens are placed on an administrative agency of a state.
Mr. Lee: Have you been able to find any other statute like this?
Has there ever been one, do you know?
Mr. Alston: I don't know of any statute like this.
The closest I can recall are the EPA v. Brown that came before this Court.
As you recall, in that case, the--
Mr. Lee: I know, but the state still had an option.
Mr. Alston: --The issue was, in that case, whether or not the administrator of the EPA could require the state to implement certain rules and regulations.
Mr. Lee: That's right.
Mr. Alston: The Solicitor General admitted that it could not do that, and therefore, this Court held, I believe, in 1977 that the issue was moot.
The only other time that I can recall anything that has been considered, if the Court please, is when Congress was attempting to pass no-fault insurance.
And I remember that the then-Attorney General Edward Levy was asked what his opinion on the constitutionality of requiring certain affirmative obligation on the state, and he was quick to tell Congress in those hearings that indeed, they could not.
Mr. Lee: Mr. Alston, would you agree that at least some portion of Section 210 simply preempt, as a matter of federal law, some applicable rules and don't pose a Tenth Amendment problem?
Would you agree with that?
That certainly some sections of Section 210 don't have that kind of a--
Mr. Alston: Your Honor, I do agree with that.
I think Section (e) could have been passed separately, and I think that would be severable, so that the small power plants and the cogeneration could be exempted from the Federal Power Act.
I would think that primarily 210 was executed so that the federal government would implement these rules and the states were forced to comply with these rules to see that the utilities followed the federal mandate.
Mr. Lee: --Do you think that Section 210 would significantly hinder states in their ability to perform other functions?
Mr. Alston: I think that they would significantly impair the state of Mississippi and the public service commission in their choices.
Section 210, they have not chosen to go into the area that's mentioned in Section 210.
As a matter of fact, they don't even have authority to go into... in some of the areas that are mentioned in 210, they have no jurisdiction whatsoever over interstate rates.
For example, in purchasing power from a small power plant, that would be an interstate transaction, as I understand the law on it.
The only authority the Mississippi Public Service Commission has would be to... for the regulation of interstate rates.
Mr. Lee: Do you think that Congress could say not only consider these, but what if Congress just said we find that it is essential to regulation of commerce that in ratemaking, state public utilities commissions shall follow the following standard.
And it just says what the standard is.
They don't say consider it, they prescribe it.
Mr. Alston: Do I consider that to be constitutional under the Tenth Amendment?
No, sir, I would not.
If they say you will follow, Mississippi Public Service Commission, you will follow these standards, I would consider that to be an impermissible intrusion on the sovereignty of the state.
Mr. Lee: Well, would you say that a... there are a lot of federal laws that affect the rates that a public utility commission can allow.
Mr. Alston: I'm not familiar of any such law.
The interstate rates that are promulgated by the Mississippi Public Service Commission are promulgated under the authority of the Mississippi Public Service Commision, and I don't know of any federal law that would change--
Mr. Lee: Do you think the federal law could limit the ratemaking activities of the... say in the railroad business?
Mr. Alston: --I would think if there were a finding of Congress that, of course, that intrastate railroads have a significant effect on interstate commerce.
Mr. Lee: I'm just saying now there is such a finding.
Mr. Alston: --Yes, sir, and they preempted that area of regulation.
Mr. Lee: They didn't preempt it; they just said, here is the standard you will use.
Mr. Alston: Under those circumstances, I believe that it would be unconstitutional just because... and I disagree with the Solicitor General on this point... just because the federal government could preempt an area that is in its constitutional power to do--
Mr. Lee: Well, it does, in a sense, preempt.
It says, here is the standard you will use.
Mr. Alston: --If Congress wanted to preempt the area, and take over all of the regulation of all of the utilities in the state of Mississippi, under those circumstances of course they could.
But it's a different thing I think, Your Honor.
I think it touches on sovereignty, the very sovereignty of the state of Mississippi.
The action is directly against the state as a state, it touches I think on attributes of sovereignty.
Mr. Lee: Let me put this slightly different question on what Justice White asked.
Supposing Congress passed a law saying that declining block rates shall be prohibited throughout the United States because we make findings that they use up too much energy?
Could they do that?
Mr. Alston: It's a possibility.
That's not putting an affirmative burden.
Mr. Lee: Well, it's an affirmative prohibition.
Could they say, then, we will require time-of-day rates in all parts of the country because they are in the interest of conservation?
Every state must have time-of-day rates.
And then if you say yes, to that, could they then say they must put them in effect unless they first consider them and decide not to put them in effect?
Would that be constitutional?
Mr. Alston: I don't believe so, Mr. Justice--
Mr. Lee: Then that crosses the line?
Mr. Alston: --Yes, sir, I think that would cross the line and be unconstitutional.
Mr. Lee: Well, what was your answer to Mr. Justice Stevens on there will be time-of-day rates everywhere?
Mr. Alston: Well, I would not--
Mr. Lee: And all the findings that you could possibly think of are made in this statute.
Mr. Alston: --That there will be time-of-day rates across the United States of America.
Mr. Lee: That's it.
And the necessity for it is spelled out in the findings.
Mr. Alston: That perhaps would be constitutional if that was... if they didn't tell the state tax commission how they had to implement the rules or how they had to go about the rules and it was certainly just the statement that everybody had to--
Mr. Lee: Well, suppose that the... let's say that that kind of a requirement would be constitutional.
And suppose a utility commission refused to put in time-of-day rates.
You apparently, if you say that rule was constitutional there must be some enforcement mechanism.
Mr. Alston: --I don't know of any enforcement.
Mr. Lee: How about the Solicitor General's Testa v. Katt reliance?
There, certainly, the federal government prescribed a rule of decision and said a state court had to follow it.
Mr. Justice Rehnquist, I don't think Testa v. Katt applies at all in this case.
As I read the case, I see it is that a state court simply cannot discriminate in a federal cause of action if they hear state causes of action under the same cause.
Of course, the statute that we're talking about goes much further.
The statute that is before the Court today, it first is an administrative agency, it is not a court, to start off with.
This is a legislative functioning, it's ratemaking, it's legislative in Mississippi, and these are affirmative burdens placed on the Mississippi Public Service Commission.
That's a far cry from what Testa v. Katt is being cited for.
Secondly, it would seem to me that certainly, the public service commission wouldn't even have jurisdiction over the question of wholesale rates in that connection, and certainly Testa v. Katt would never say that you can force jurisdiction on a court such as this.
There's no doubt that a statute such as we are talking about is attractive to Congress.
I can see where they can say that they do not want to take care of the burden of enforcing it, and put it on the states to enforce.
This is where we say that you run into the questions of Federalism, and this is where we say that we run into trouble.
Mr. Alston, the statute may also be more attractive to many states than the alternative of total federal regulation, wouldn't you say?
Mr. Alston: I don't know whether it would be more attractive or not.
I don't know how to answer that question.
I know it's not more attractive to the state of Mississippi.
I know it's not more attractive to the state of Louisiana, that also has filed an amicus brief in this case.
Mr. Lee: Federal preemption would be preferable, then.
Mr. Alston: No, I'm certainly not saying federal preemption would be preferable.
But I'm making the distinction in opposition to what the Solicitor General.
He said if you could preempt, of course, you have authority to do all of these things against state agencies.
I say that just does not follow.
Certainly, if you preempt that puts the burden on the national government.
Under our system of Federalism I know who to look to for my rate structure.
Mr. Lee: I suggest to you that there is that middle ground of preemption, and instead of taking over the whole regulatory job you just mandate a series of standards that must be followed.
There shall be time-of-day rates everywhere, or, they go right through the list.
They say this is what the rule of the game is.
That doesn't... and if that's constitutional, that doesn't mean the federal government is taking over the regulation.
Mr. Alston: But what it does, Your Honor, I think it runs completely afoul to the three tests of Hodel.
first, they are telling the state as a state what to do.
Mr. Lee: They tell them the rules of the game, that's right.
Mr. Alston: --And they're telling them how to follow it, the rules they've got to play, what they've got to consider.
They've got to let anybody intervene under the rules.
As a matter of fact, the purposes supplement state law, the procedures would override state law.
In addition to that, it involves attributes of state sovereignty.
That's the paradigm of state sovereignty, the ability to pass laws and to pass regulations.
Thirdly, we contend that it significantly impairs the ability of the state--
Mr. Lee: Is a highway patrolman in Mississippi bound to enforce the 55 mile speed limit, or do you know?
Mr. Alston: --Yes, sir, he is.
Of course, that's under a spending clause, under clauses where if we take money from federal funds, we--
Mr. Lee: You mean, except for that, he isn't.
Is that it?
Except for the fact that they are in part supported by the federal government?
What about... is a state officer required to enforce--
Mr. Alston: --Yes, sir, would be to enforce the mile an hour speed limit.
Mr. Lee: --Even if it isn't tied with a grant for federal highways?
Mr. Alston: If it was not tied to the grant to federal highways, I don't know that he would be.
Mr. Lee: Well, if the 55 mile an hour speed limit is one promulgated by Mississippi because it feels that otherwise it would lose its federal highway entitlement--
Mr. Alston: That's true.
Mr. Lee: --Let's assume... I took Justice White's question to be... that if there were no grants involved and this wasn't a quid pro quo, a condition of the grant, if there is a federal statute for 55 mile speed limit for the purpose of conserving gasoline and energy in the national interest, in your view, must Mississippi enforce that or does it have a choice?
Mr. Alston: I don't know if it would be necessary that it enforce that obligation.
I am not sure that you can force a state officer to enforce a federal regulation of that nature.
Mr. Lee: Even if they're related to commerce and the national security?
Even if they have made that claim?
Mr. Alston: And the 55 mile speed limit is applicable to all of them?
I would think then under those circumstances that he would, if the Court please.
Mr. Lee: Would be enforced?
Mr. Alston: Yes, sir.
Mr. Lee: Mr. Alston, let's back up a minute.
Doesn't your public service commission feel itself bound by the Due Process Clause of the Constitution?
Mr. Alston: I think we all are bound by the Due Process Clause.
Mr. Lee: So that's... so it's not absolutely free.
Mr. Alston: That is absolutely so.
We are bound by the Due Process Clause of the Constitution.
And the public service commission--
Mr. Lee: I hear you talking about mandamus.
Do you have mandamus in your state laws?
Mr. Alston: --Yes, sir.
Mr. Lee: Right now.
Mr. Alston: Yes, sir.
Mr. Lee: So that's not anything new, either, is it?
Mr. Alston: Mandamus is an old remedy, if the Court please, that we have followed for a long time.
Mr. Lee: I thought so.
And it would apply against the public service commission under the right state of facts.
Mr. Alston: And under the right state of facts, they could.
Mr. Lee: And without this provision you read from the report.
Mr. Alston: Mandamus would apply if the public service commission did not comply with administerial duties in doing certain things; the writ of mandamus may just apply.
In conclusion, I just wanted to state that certainly, it's no question the government recognizes that these mandates are forced on state's estates.
Certainly, the right to make the laws of the state of Mississippi, certainly the right to promulgate the regulations of the state of Mississippi, is an attribute of sovereignty.
That is the attribute of sovereignty.
We further contend that certainly, this impairs, the Act impairs the ability of the state of Mississippi to structure its integral operations in area of traditional functions, and this is indeed a traditional function.
Chief Justice Burger: We will resume there at 1:00 o'clock.
Mr. Lee, do you have rebuttal?
ORAL ARGUMENT OF REX E. LEE, ESQ. ON BEHALF OF THE APPELLANTS -- Rebuttal
Mr. Lee: Two brief matters.
First of all, the FERC regulations were promulgated in February of 1980.
Second, and finally, aside from whatever this Court's decision in National League of Cities and Towns v. Usery, may mean in another context, we simply submit that it should not apply whereas here, you have a true example of cooperative Federalism, where Congress is sharing some of its authority with the states in the interest of both federal and state government and out of plea in response to the request of the states.
And that, at a minimum, must be what this Court's articulation of a balancing test, both in National League of Cities and Towns and also in Hodel, means.
With regard to Titles I and III, Congress clearly could have set the rates if it had chosen to do so.
What an anomaly it would be if the Tenth Amendment were to become the vehicle for preventing Congress from responding to state pleas for flexibility and experimentation in the perceived interest of both federal and state governments to give states a larger role in that particular governmental function.
With regard to Section 210, Mr. Alston distinguished Testa v. Katt on the ground that no state functions were displaced.
Really, they haven't been here, either.
The states are given several options as to what they can do, but they are not required to bring into existence any new entity of government.
They are not required to have any of their existing public service commissions perform any functions that they are not now performing.
The obligation imposed by Section 210 and the implementing regulations can be performed by simply entertaining disputes before appropriate adjudicatory entities.
And that does not mean that any new entity must be brought into existence.
That point is made, for example, with respect to Nebraska, which has no public utility commission with authority to set rates.
In Nebraska, presumably, that responsibility can be performed simply by entertaining that kind of suit before the courts.
And that, at a very minimum, is what Testa v. Katt says.
And in that respect, Testa v. Katt is indistinguishable, that states are simply required to observe a federal rule of decision that is prescribed by the federal government but to be observed in state proceedings.
Mr. Lee: In that respect, you analogize it, I suppose, to the 55 mile an hour hypothetical that we proposed.
Mr. Lee: Yes.
And clearly, Mr. Chief Justice, if the federal government has the authority under the Spending Clause to impose that kind of an obligation on the states, then clearly, under its--
Mr. Lee: Would that be purely under the Spending Clause, or under the Commerce Clause?
Mr. Lee: --Well, the Spending Clause or the Commerce Clause.
Then clearly, if you take into account the kind of balancing and recognition of the comparative weights of federal and state interests, particularly where in many instances, in the view of many states in this case, they are identical, then Congress certainly, in light of that balancing approach, should have that kind of flexibility.
And if it has that kind of power under the Taxing and Spending and the Commerce Clauses over a 55 mile an hour speed limit, then clearly, under its powers over national security it should have the flexibility to deal in as cooperative Federalism approach as it has in 1978.
Mr. Lee: Mr. Solicitor General, are you disturbed at all by the breadth of the Standing Clauses in this statute?
Clauses that provide standing for, in one section, any consumer of electricity, which means every citizen, really; and in another section, standing for any person providing attorney's fees and other reasonable expenses?
A field day for lawyers, at least.
Are there other federal statutes that have gone that far in changing the state rules of standing before regulatory commissions, or courts?
Mr. Lee: Well, of course, those are problems that will have to be worked out on a case-by-case basis as those matters come before the state.
Since most of the proceedings are going to be in state court, it is not the Article III case or controversy requirement that will apply, but rather, state rules.
And in my view, they're governed by state law.
Chief Justice Burger: Thank you, gentlemen, the case is submitted.