ARKANSAS ELEC. COOP. V. ARK. PUBLIC SER v. COMM'N
Legal provision: Federal Power
ORAL ARGUMENT OF ROBERT D. CABE, ESQ. ON BEHALF OF THE APPELLANT
Chief Justice Burger: We will hear arguments next in Arkansas Electric Cooperative Corporation against Arkansas Public Service Commission.
Mr. Cabe, you may proceed whenever you're ready.
Mr. Cabe: Mr. Chief Justice, and may it please the Court:
This case arises out of an attempt by the Arkansas Public Service Commission to regulate the wholesale sales of power and energy by Arkansas Electric Cooperative Corporation to its member cooperatives.
This is an appeal from the decision of the Arkansas Supreme Court, affirming the PSC's assertion of jurisdiction over these wholesale rates.
The facts of the case, while undisputed, are most important to a determination of the issues before the Court.
AECC is a generation and transmission electric cooperative which makes no sales at retail to ultimate consumers.
It is engaged exclusively in sales at wholesale.
Most of these sales are to its 17 members who are themselves local distribution cooperatives.
The remainder of AECC sales are to other utilities which also generate, transmit and sell electricity in interstate commerce.
AECC's member cooperatives sell the energy they obtain to their customers, who are the ultimate consumers of the power.
The retail rates and operations of the member cooperatives are fully regulated by the PSC.
AECC is concededly subject to PSC jurisdiction for purposes other than regulation of wholesale rates.
AECC's rates, including the ones at issue before the Court in this case, are established by AECC's board of directors which includes two representatives of each of the 17 local distribution cooperatives who are the members.
Succinctly stated, AECC arranges for the power and energy necessary to supply the needs of its member cooperatives in the following manner.
First, it owns and operates generating plants.
Second, it contracts with three separate multi-state systems to buy energy when its facilities are insufficient to provide the needs or when it could even buy the power and energy more economically than it can generate it.
Third, because AECC has very limited transmission facilities, it arranges with these same three multi-state systems for dispatch and transmission on the part of the grid that is operated by each of these multi-state systems.
Pursuant to these arrangements, most of the output of the AECC generating plants is delivered to the grid.
AECC's member cooperatives then obtain from the grid the energy they need to serve their customers.
In fact, only about 10 percent of the energy which AECC sells to its member cooperatives is ever involved with transmission facilities actually owned by AECC.
The other 90 percent passes exclusively over the system or grid of the multi-state utilities with which it does business.
All of the systems which transmit energy for and sell energy to and buy energy from AECC have generating facilities both in Arkansas and in other states, and all of these generating facilities are tied into integrated systems among themselves.
When energy is delivered by the grid to a local distribution cooperative, the amount of the energy can, of course, be metered and precisely measured.
However, the generating source of that energy may have been at any plant attached to that grid whether inside or outside Arkansas, whether belonging to AECC or belonging to the generating facility of one of the other multi-state systems.
The PSC in this case does not appear to seriously dispute the proposition that AECC sales are sales at wholesale in interstate commerce.
The decisions in Attleboro and Colton make clear that the state is prohibited by the Commerce Clause from regulating sales at wholesale in interstate commerce.
Unidentified Justice: Mr. Cabe, it's your position that that prohibition arises from the Commerce Clause itself, I take it, and not from any other federal legislation.
Mr. Cabe: That is correct, Your Honor.
Unidentified Justice: So you're not arguing, then, that the REA has preempted.
Mr. Cabe: Our position has always been in this case, Justice O'Connor, primarily based on the proposition that the Commerce Clause, standing alone, prohibits state assertion of jurisdiction over the rates in question.
Unidentified Justice: You did write in the brief about the REA.
Mr. Cabe: Yes, Your Honor.
Unidentified Justice: Did you raise that argument before the Supreme Court in Arkansas?
Mr. Cabe: Pardon me?
Unidentified Justice: Did you raise that preemption argument in Arkansas?
Mr. Cabe: Yes, that argument was raised in the briefs filed with the PSC when the matter was originally heard by the PSC at that stage of the proceeding.
It was raised briefly in the briefs at the level of the Arkansas Supreme Court.
When we submitted our Jurisdictional Statement in this case, we relied exclusively on the Commerce Clause argument.
However, before probable jurisdiction was noted, the court invited the Solicitor General of the United States to state the views of the United States, and when the Solicitor General did so he employed a preemption analysis in support of the argument.
For that reason, we included the preemption argument, but it is our position that the Commerce Clause standing alone by itself prohibits state exercise of jurisdiction in this situation.
Unidentified Justice: You don't disagree, I take it, with the normal rule that an amicus curiae can't broaden the issues in a case.
That is, that the fact that the Solicitor General as amicus curiae raises an issue doesn't mean that it's necessarily... he's entitled to do so.
Mr. Cabe: Yes, Your Honor.
And I think, of course, the Court has within its discretion the authority to consider the point.
In our view, it is not necessary for the Court to reach that point.
The Commerce Clause standing alone is sufficient to decide the case.
Unidentified Justice: Do you think the state court rejected your REA submission?
Mr. Cabe: The state court specifically held... the state supreme court specifically held that the PSC--
Unidentified Justice: To reach its result it had to reject your REA submission.
Mr. Cabe: --I'm not sure the REA... we would call it a very strong REA submission, Justice White.
The supreme court specifically held in--
Unidentified Justice: It needs to have been... at least, it needs to have been presented to the highest court of the state before we have even jurisdiction to consider the question.
Mr. Cabe: --It was... Excuse me... It was raised in the petition for rehearing.
Mention was made of the--
Unidentified Justice: That isn't early enough.
Was it raised... did you say it was raised in the initial briefs or not?
Mr. Cabe: --It was raised in the initial briefs at the PSC level of the proceeding.
Unidentified Justice: But how about the supreme court?
Mr. Cabe: No, Your Honor, I don't believe it was.
Unidentified Justice: I'm not sure we have jurisdiction to reach the question.
Mr. Cabe: As I say, in our view it is not necessary to reach the preemption issue.
It is only necessary to consider the Commerce Clause aspects of the case.
Unidentified Justice: You tried two or three times to say what your idea was of what the supreme court said.
Would you tell me what you were going to say?
Mr. Cabe: I was going to say, Justice Marshall, that the supreme court specifically said that the PSC was neither prohibited by the Commerce Clause nor preempted by any federal enactment from exercising jurisdiction in this case.
The line of cases which culminated with Attleboro concluded with respect to the natural gas and electric utility industry that the Commerce Clause prohibited state regulation of the parts of those businesses that were national in character but allowed, in the absence of conflicting congressional enactment, state regulation of the parts of the business that were essentially local.
This division between what was essentially local and what was of paramount national importance was thus applied in the Attleboro line of cases to arrive at the rule that state regulation of wholesale sales in interstate commerce was not permissible, but states could regulate sales at retail by local distributing companies to ultimate consumers of the energy.
Unidentified Justice: Well, Attleboro wouldn't just automatically apply to any wholesale sale; it would have to be a wholesale sale in interstate commerce.
Mr. Cabe: Exactly, Your Honor, that's correct.
Unidentified Justice: And if this generating facility generated its own power and delivered it over its own lines to local coops within the single state, I wouldn't think... you wouldn't be here arguing that.
Mr. Cabe: Absolutely not, Your Honor, and that, in fact, of course, is the situation in Texas where at least until recently, utilities there generated, transmitted and delivered power strictly in interstate commerce without interstate connection.
But that's not the case here.
Unidentified Justice: What about the 10 percent that is delivered directly to customers within the state from a generating facility of the--
Mr. Cabe: It's not delivered directly from the generating facility; it passes over transmission lines that AECC owns.
Unidentified Justice: --I see.
None of it--
Mr. Cabe: After it has gone onto the grid, then it might come--
Unidentified Justice: --None of it is delivered directly.
Mr. Cabe: --Not by direct connection, no.
All of those plants, all of those local distributing cooperatives are tied to the grid, and that's where they obtain virtually all of the energy that they sell to their customers.
Unidentified Justice: I see.
Mr. Cabe: Given the limited transmission facilities that AEC owns... that AECC owns, and the desirability of buying energy and selling energy to the other interstate companies, AECC could not accomplish its purposes without these complex arrangements with the multi-state systems and grids, which involve energy generated outside the state of Arkansas as well as energy generated inside the state of Arkansas.
The Attleboro line of cases established an admittedly mechanical test for determining the limitation of state power and the area which must be regulated, if at all, only through exercise of federal power.
However, the court arrived at that test by careful consideration of what was national importance as opposed to what was essentially local and could be, therefore, regulated by the states.
I don't feel that that test has been changed or diminished in any way by later decisions of this Court in any cases dealing with the gas or electric utility industries.
Unidentified Justice: Well, Mr. Cabe, didn't those cases have, though, the fact that the Federal Power Act adoption which did result in a preemption by Congress.
And what do you do with the Illinois Natural Gas Company case which did recognize that there is a balancing line of questions, as well as the so-called mechanical bright line view, and in Illinois Gas declined to settle that question.
And isn't that the question we have here?
Mr. Cabe: In answer to your first question, the Attleboro line of cases was decided before passage of the Federal Power Act.
Attleboro itself, which culminated the line, was decided in 1927 and that act was not passed until 1935.
Unidentified Justice: Right.
Mr. Cabe: So it was decided without reference to any federal enactment.
Secondly, in the Illinois Natural Gas case, the court said that it was not necessary to reach that issue about whether the balancing type approach was appropriate in view of those other cases, although those cases did not involve decisions dealing with either the natural gas or electric utility cases.
In our view, the court did balance, back in the Attleboro line, when it determined what was essentially local and what was national in character.
It did take into consideration what was of such national importance that the states could not reach it.
Unidentified Justice: So I take it you say there's still a gap, then.
There's still an Attleboro gap because these rates aren't regulated at the national level, are they?
Mr. Cabe: Except to the extent that they are regulated or controlled or supervised by REA, Your Honor.
Unidentified Justice: Yes, but not by the federal--
Mr. Cabe: Not by the Federal Energy Regulatory Commission.
They are not regulated by that agency.
Unidentified Justice: --So the Attleboro gap still exists.
Mr. Cabe: Perhaps as to the cooperatives, yes, sir, it does still exist.
If you ignore REA, then the gap still exists.
While the test--
Unidentified Justice: Although Congress attempted to fill it, didn't it?
Mr. Cabe: --In the Federal Power Act?
Yes, Congress did fill the gap certainly with respect to investor-owned utilities, but the FPC at that time in the Dairyland decision in 1967 concluded that Congress did not intend to include cooperatives within the definition of public utility under the Federal Power Act.
And that result was concurred in by the D.C. Circuit in the Salt River Project case.
While the test has not been changed by any later decision, the Attleboro line of cases test has not been changed by any later decision, later decisions have commented on the scope and breadth of the test.
In United States versus Public Utilities Commission of California, this Court illustrated the clear and decisive nature of the test when it noted that Attleboro left no power in the states to regulate sales for resale in interstate commerce.
Unidentified Justice: And Congress thought Attleboro was the law, I take it.
Mr. Cabe: Absolutely.
Unidentified Justice: Whether it was right or wrong, they seemed to adopt it.
Mr. Cabe: Yes, sir.
Most clearly, the comments in the congressional history seem to indicate quite clearly that Congress assumed that Attleboro prohibited all state regulation of sales at wholesale and interstate commerce, and as indicated in the United States versus Public Utilities Commission case and the Colton case, this Court has affirmed that reading of the Attleboro line of cases.
Also in the United States versus Public Utilities Commission decision the court observed that the Natural Gas Act and the Federal Power Act established limitations on the Federal Power Commission which
"were designed to coordinate precisely with those constitutionally imposed on the states. "
Now, this brings us to the Colton case which concerned FPC jurisdiction over sales by Southern California Edison Company entirely to customers located in central and southern California, although the sales in issue apparently included some very small portion of energy which was generated outside the state of Arkansas.
Two of the holdings of that case are important in our view.
First, in view of the Federal Power Act's establishment of federal jurisdiction in precisely the area which had been denied to the states, the holding that Edison sales were sales at wholesale in interstate commerce under FPC jurisdiction leads us to the conclusion that AECC sales, also at wholesale in interstate commerce, are beyond state power to regulate.
Second, we think it important that Colton noted that the Attleboro line of cases and the test established therein and adopted by Congress made inappropriate a case-by-case analysis of the impact of state regulation of sales at wholesale in interstate commerce, but cut it cleanly and said that those sales were entirely within federal power to regulate and beyond state power to regulate.
Unidentified Justice: Mr. Cabe, suppose that Attleboro and Colton were not on the books, had never been decided.
Would you be here making the same argument?
Mr. Cabe: Yes, sir, I would.
Unidentified Justice: And then resting, what, on Pike against Bruce?
Mr. Cabe: If you want to apply the Pike versus Bruce Church analysis, Your Honor, we believe that state regulation of these sales is still inappropriate.
AECC as an electric cooperative is, by statute and command of law, a non-profit organization.
Its revenues must equal its expenditures.
If the state of Arkansas, through regulating the sales to the Arkansas local distribution cooperatives, reduces the revenues which AECC obtains from those sales, then AECC, to remain non-profit by command of law, would then have to raise the prices which it charges to these multi-state systems to and with which it sells and exchanges energy.
So for that reason, it would be our conclusion that even under a Pike versus Bruce Church analysis there would be such an impact on interstate commerce, in addition to all of the reasons stated in the Attleboro line of cases that regulation of these sales should be beyond state power, even if they have not already been so held.
It is our position in this case that Attleboro's recognition of the paramount national importance of the regulation of sales of electricity at wholesale in interstate commerce is even more appropriate today than it was in 1927.
This is because of the recent development of these vast, multi-state, interconnected grids and pools which are designed to provide power more reliably and more economically.
By utilizing both the facilities of these interstate systems or grids and by utilizing energy generated in several states including Arkansas, AECC makes the necessary power and energy available to its member cooperatives.
Attleboro, in our opinion, is still good constitutional law, and regulation of these sales by the state of Arkansas is beyond their constitutional power, and for that reason, we think that the decision of the Supreme Court of Arkansas should be reversed.
Chief Justice Burger: Mr. Broadwater.
ORAL ARGUMENT OF JEFF BROADWATER, ESQ. ON BEHALF OF THE APPELLEE
Mr. Broadwater: Mr. Chief Justice, and may it please the Court:
AECC's argument that state regulation of its rights is precluded by the Commerce Clause was heard and rejected by the Arkansas Public Service Commission and by a majority of the Arkansas Supreme Court.
Specifically, as you've heard AECC argue, that this Court's decision in Attleboro and the line of cases on which the Attleboro court relied, precludes state regulation of its sales to the retail cooperatives.
AECC has interpreted Attleboro as barring state regulation of wholesale sales in interstate commerce, and it is argued that its sales to the retail cooperatives are such sales.
Now, although these sales are physically intrastate, we agree that for purposes of determining the scope of congressional power under the Commerce Clause, these sales are in interstate commerce.
We do not, however, agree that Attleboro requires a reversal of the result below.
Factually, Attleboro is clearly distinct.
That case involved physically intrastate sales between utilities in different states.
This case involves physically... excuse me, Attleboro involved physically interstate sales between utilities in separate states.
This case involves physically intrastate sales between utilities in the same state.
AECC has not really relied on the factual similarities in the two cases, but it has relied on some of the language and analysis in Attleboro and in the Attleboro line of cases.
The Attleboro court I think started with the premise that the states could not impose a direct burden on interstate commerce.
Wholesale rights were generally seen to be in interstate commerce.
Retail rights were generally seen to be essentially local.
Rate regulation was seen to be a burden on commercial activity.
Therefore, the states could regulate the retail rates but they couldn't regulate the wholesale rates.
AECC's mistake, I think, is in assuming that this Court's analysis of Commerce Clause issues has not evolved beyond this point.
The doctrine that a state can never impose a direct burden on interstate commerce is simply no longer the law.
Professor Lawrence Tribe, in his book, "American Constitutional Law" discusses the Attleboro decision.
He doesn't criticize the result reached there, but he does say this of the analysis.
He says, the opinion was couched in terms of the now-discredited direct/indirect dichotomy.
And then quoting from the opinion,
"Being the imposition of a direct burden on interstate commerce, it must necessarily fall. "
I think the later decisions of this Court support Professor Tribe's characterization of the direct/indirect dichotomy as a now-discredited doctrine.
For example, in South Carolina--
Unidentified Justice: Or maybe you should say Professor Tribe correctly read our decision.
Mr. Broadwater: --I think so.
For example, in the South Carolina State Highway Department versus the Barlowe Brothers, the court says that indeed, in many instances, state regulation of interstate commerce has been upheld.
Mr. Justice Stone, writing for the Court, recited dozens of cases in which state regulation of a variety of subjects... railroads, navigable waterways, highways, quarantine laws, game laws... had been upheld, even though, he said, in each of these cases, regulation involves a burden on interstate commerce.
But so long as the state action does not discriminate, the burden is one which the Constitution permits because it is an inseparable incident of the exercise of a legislative authority which, under the Constitution, has been left to the states.
I think a more recent case reflecting the court's departure from the direct burden analysis used in Attleboro is FERC versus Mississippi, decided just last term.
In that case, the court said that retail rates were in interstate commerce, but noted... and I don't think anyone doubted it... that the states retained the power to regulate retail rates.
Now, under the direct burden test, if retail rates are in interstate commerce, the states can't regulate them.
The fact that retail rates are now seen to be in interstate commerce and yet, the state's power to regulate them isn't contested, I think is evidence of how far the court has come from the direct burden analysis used in Attleboro.
Now, the Colton case doesn't endorse the position... doesn't the support the position of AECC, and doesn't endorse the Attleboro decision.
The Colton case cites an earlier case interpreting the Natural Gas Act, the Illinois Natural Gas Company case.
And in both those cases, the court says that two lines of cases dealing with state power under the Commerce Clause exist.
The Attleboro line and the more flexible line.
And the court says that... I think implicitly in Colton and expressly in Illinois Natural Gas... that it doesn't have to choose... that in those cases it didn't have to choose between the two lines of cases.
That when Congress passed the Natural Gas Act and when it passed the Federal Power Act, it had Attleboro in mind, and it was trying to remedy what it saw as the jurisdictional back credit by Attleboro.
The court interpreted the Natural Gas Act and the Federal Power Act accordingly to simply achieve the intent of Congress, and Congress had Attleboro in mind when it passed those statutes.
Unidentified Justice: Counsel, let me ask a pragmatic question.
Why is the Commission so anxious to regulate these rates?
Isn't there a kind of a built-in safety factor that the Board and the members themselves would keep these rates at a reasonable level?
Mr. Broadwater: Well, I think whether or not the Commission ought to regulate AECC is a legislative question, and the legislature of the state of Arkansas has decided we ought to.
And I think there are some factors that support that.
I don't think AECC has really presented any evidence to us exactly how the self-regulation works.
I know it takes the Commission a team of accountants and engineers and economists and lawyers to set and design electric rates.
I think it's really unlikely that the average customer or the average retail cooperative is going to be in a position to be able to really participate in the making of AECC's rates.
I don't see how self-regulation would necessarily protect the interest of a minority within the cooperative.
I don't know what's to stop a majority within the cooperative from deciding they're going to force the minority to subsidize them.
And something I would note just in passing... each one of the cooperatives has the same representation on AECC's board, regardless of the size of the cooperative.
Which means the one man/one vote rule that this Court has said is required in the legislative bodies doesn't even exist on the AECC's board.
So I wonder how representative it may be of the members.
I think this Court in recent cases has, indeed, chosen between the rigid test selected in Attleboro and the more flexible test, and I think in Pike versus Bruce Church and in subsequent cases it has adopted the more flexible test.
Unidentified Justice: How do you respond to the argument of the appellant that even under the more flexible test, the Arkansas regulatory attempt must be found invalid?
Mr. Broadwater: I don't agree with that, because I think that first, the sales are essentially local.
They're between an Arkansas buyer and an Arkansas seller.
Virtually all the electricity is consumed in Arkansas.
AECC has three plants in Arkansas; it owns partial interest in three others; virtually all of the power is generated in Arkansas.
All the parties to the transactions have ready access to the political and legal processes of the state of Arkansas for the protection of their interests.
Now, AECC has said that well, since some of this power may come from out of state, it's not essentially local and the state shouldn't be allowed to regulate it.
In response to that, I would say that same power is the power that's sold at the retail level, and we're there allowed to regulate that.
So that the aside of generation may not necessarily be controlling.
So I think under Pike versus Bruce Church, first, we should prevail because it's essentially local, and second, really the only burden that the AECC has alleged, I think, is the burden of having to participate in a rate-making procedure before a state regulatory commission.
Well, that burden is no different than the burden we're allowed to impose at the retail level, and it's no different than the burden that Congress has imposed on the wholesale sale of investor-owned utilities before the Federal Energy Regulatory Commission.
So I think that a burden that is clearly permissible in these other contexts shouldn't be held to clearly outweigh the state interest in essentially local commercial activity.
And I think Pike versus Bruce Church is the proper test.
Unidentified Justice: What is the reason that these rates aren't subject to the Federal Power Act?
Mr. Broadwater: The Federal Power Act... the Federal Power Commission held that it didn't have jurisdiction over the rates, and the Federal Court of Appeals I think for the District of Columbia Circuit has also held--
Unidentified Justice: And what was the reason it didn't have jurisdiction?
Mr. Broadwater: --I think there's an exemption in the Federal Power Act for government instrumentalities.
Unidentified Justice: That's what it really turned on, isn't it?
Mr. Broadwater: I think on that--
Unidentified Justice: Not on its position with respect to wholesale rates in interstate commerce.
Mr. Broadwater: --No, Your Honor.
And I think it was that and also, we should remember that the Federal Power Act was passed, I think, in 1935.
The REA was passed in 1936, so when Congress passed the Federal Power Act they didn't have really a clear idea of what form the cooperatives were going to take.
And I think in part because of that, the Federal Power Commission was hesitant to exert jurisdiction over something that didn't really exist when the Federal Power Commission was created.
But it wasn't the distinction between wholesale and retail rates that was crucial.
The purpose that the Commerce Clause is designed to achieve is to, I think, promote free trade among the states and to prevent economic warfare among the states.
And I think that the more flexible test in Pike versus Bruce Church would better accomplish that purpose than a mechanical distinction between wholesale and retail rights.
For example, imagine a generating cooperative selling electricity... doing business in one state, selling electricity to a small rural retail cooperative.
And imagine a large investor-owned utility selling large amounts of power to a multi-national manufacturing concern.
Which has the greater impact on interstate commerce and on the national economy?
I suggest the retail sale to the large manufacturing company may really be of greater significance.
And I would also suggest that the abuses the Commerce Clause was designed to prevent may be more likely to occur in the case of the retail sales because there, the state commission may be tempted to set that industrial customer's rates very high so he can subsidize other customer classes, and then they'll expect him to recover his added costs through sales in other states or even in foreign countries.
The mechanical distinction between wholesale and retail rates would have the Commerce Clause I think ignore those kind of political and economic realities.
AECC in its brief argued the virtue of self-regulation.
It was the opinion of the Arkansas legislature that self-regulation was not the answer.
Twenty-five states have placed retail cooperatives under the Jurisdiction of state regulatory commissions.
Yet, AECC is one step farther removed from the ultimate customer than are the retail cooperatives.
And for that reason, I would suggest that the need for state regulation in the case of AECC is even greater than the need for state regulation in the case of the retail cooperatives.
And neither is REA regulation sufficient.
AECC admits that REA gives it considerable discretion in setting its rates, and no real evidence has been presented that REA examines, say, questions of rate design.
Even though the commission noted in its brief that we consider rate design issues to be as important as questions dealing with the level of rates.
I think the reason for the lack of scrutiny from REA is obvious.
There are over a thousand cooperatives subject to the jurisdiction of the administrator of the REA.
If only a fourth of those cooperatives seek rate increases annually, the Administrator of the REA is reduced to reviewing one rate case virtually every working day.
Unidentified Justice: Well, REA is basically a loan organization.
Mr. Broadwater: That's right.
And there's even very little statutory authority that would, I think, justify their getting in the rate-making business.
Section 904 of the REA provides that before the administrator makes loans, he should certify that reasonable adequate security exists.
And that's really all there is, I think, in the Act from which you can infer any REA authority over the rates.
As a matter of fact, when the Rural Electrification Act was pending before Congress, the first administrator of the REA testified before a congressional committee that he thought the setting of rates was entirely a state matter, and that he didn't have any jurisdiction over the setting of rates within a single state.
Now, you might ask, did he have retail... only retail rates in mind or was he thinking in terms of wholesale rates.
I think it's very likely that the testimony went to both wholesale and retail rates because the original Act provided for the creation of both wholesale and retail cooperatives.
So I think clearly,--
Unidentified Justice: Was this Administrator Cook that you're referring to?
Mr. Broadwater: --Yes, sir.
So I think clearly, if these rates are to be given any real scrutiny, it's going to have to come from the state level.
AECC has argued that there could be conflict between state regulation and the REA.
Yet, 25 states regulate the retail rates; a dozen states regulate wholesale rates, and despite this extensive history, AECC has not produced a single example of an actual conflict between state regulation and the end regulation under the REA.
I would suggest that this failure of proof demonstrates that this alleged conflict is really mere speculation and that if it ever does occur, I think that's something that Congress could remedy.
Madame Justice O'Connor in her opinion in FERC versus Mississippi observed that the utility regulation is a field marked by valuable state innovation.
That, indeed, the whole body of experience in this area has developed at the state level.
We are simply--
Unidentified Justice: That opinion didn't persuade enough of my colleagues to agree, though, did it?
Mr. Broadwater: --That may be unfortunate.
But we're simply asking that this Court allow that development to continue.
Chief Justice Burger: Do you have anything further, Mr. Cabe?
ORAL ARGUMENT OF ROBERT D. CABE, Esq. ON BEHALF OF THE APPELLANT -- REBUTTAL
Mr. Cabe: Only one point, Your Honor, and that is that it would be our observation that the decision in FERC versus Mississippi is not inconsistent with the finding in the Attleboro line of cases of paramount national importance in matters of wholesale sales, in view of the Court's approval of the congressional finding.
Retail sales now have an immediate effect on interstate commerce and can be even totally preempted by Congress.
Thank you very much.
Chief Justice Burger: Thank you, gentlemen.
The case is submitted.