Fpc v. Florida Power & Light Co., 404 U.S. 453 (1972)

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Author: Justice Douglas

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Fpc v. Florida Power & Light Co., 404 U.S. 453 (1972)

MR. JUSTICE DOUGLAS, with whom THE CHIEF JUSTICE concurs, dissenting.

There can be no doubt that Congress has constitutional power to regulate under the Commerce Clause the interstate "commingling" of electric power involved in the instant case. See Connecticut Light & Power Co. v. FPC, 324 U.S. 515, 525-530. The question is whether it has done so.

The Examiner explains the "electromagnetic unity" theory and tells us in electrical engineering terms why that unasserted power of Congress exists:

An electric utility system such as [respondent’s] is essentially an electromechanical system to which all operating generators on the interconnected network are interlocked electromagnetically. This means that electric generators, under ordinary operating conditions, run either at exactly the same speed or at speeds which will result in a frequency of 60 cycles. No operating generator can change its speed by itself as long as it operates connected to the network. All generators connected to the same network must follow each other as to speed and frequency whenever there is a change in frequency, and the frequency of all interlocked generators is always exactly the same.

The electric systems of [respondent] and all other interconnected systems are essentially alike as to electrical, electromagnetic and electromechanical characteristics. Because they are alike, it is possible to have presently existing interconnected operations on a very large scale, extending from the Rocky Mountains to the Atlantic Ocean and from the Canadian to the Mexican border.

* * * *

If a housewife in Atlanta on the Georgia system turns on a light, every generator on [respondent’s] system almost instantly is caused to produce some quantity of additional electric energy which serves to maintain the balance in the interconnected system between generation and load.

37 F.P.C. 544, 567-568.

Evidently undesirous of explicitly overruling the proposition that "[m]ere connection determines nothing," Jersey Central Power & Light Co. v. FPC, 319 U.S. 61, 72 (1943), the Court avoids validating the FPC’s electromagnetic unity theory as the jurisdictional hold over the respondent. Instead, relying on the Commission’s expertise, the Court purports to hold a narrower ground that actual flows of FP&L’s electricity were. in fact, measured passing out of Florida through the employment of the Commission’s "commingled" tracing method. Closer analysis of this latter wizardry, which had previously been rejected by the Commission, Connecticut Light & Power Co., 3 F.P.C. 132 (1942), reveals, however, that actual flows were not, in fact, measured but were simply hypothesized using an engineering model which, as the dissenting commissioners observed, "[assumed] the fact in issue, and thus [begged] . . . the question of jurisdiction." The conventional tracing method previously used in cases such as this one reached an entirely different result -- that no actual interstate flow of FPL power had occurred. Jersey Central Power & Light Co. v. FPC, supra; Connecticut Light & Power Co. v. FPC, 324 U.S. 515.

The Commission’s abandonment of the conventional test in favor of the commingled method will now mean that every privately owned interconnected facility in the United States (except for those isolated in Texas) is within the FPC’s jurisdiction. Both tracing methods assume that a momentary increase in FP&L’s generation over its local needs will be passed on to the interconnecting Florida Power Corp. (Corp) system located between FP&L and the state line. The conventional system assumes that such excesses will be absorbed by the first few loads reached in the Corp system, and therefore will never cross the state line. On the other hand, the commingled approach assumes that the first load which the FP&L excess reaches will continue to rely upon other utilities’ power to a large extent, and therefore will absorb only a part of the FP&L excess. The leftover FP&L excess will then travel to the next load, but, again, will only supply part of those consumers’ needs, with the remainder passing on to the next load, and so on, until some fractional part of the original FP&L excess crosses the state line. Extending the assumption’s application, it is clear that any momentary increase in output by any generator located at any point in the ISG grid will send a surge of power throughout the entire network. If this assumption is approved, then it is difficult to perceive what remains of the Jersey Central proposition that "[m]ere connection determines nothing."

These scientific facts are, of course, the basis for the grid systems, much in vogue these days. But the Commission has no authority to order a company to enter a grid. Unless it is done voluntarily, as was true here, the Commission, by virtue of § 202(b) of the Federal Power Act, can act only{1} "upon application of any State commission or of any person engaged in the transmission or sale of electric energy." 16 U.S.C. § 824a(b).

A company transmitting electric energy in interstate commerce is subject to regulation by the Commission of its wholesale rates. 16 U.S.C. § 824(b). But there is no claim here that wholesale selling is involved; and the minuscule nature of the "commingling" that has taken place and its incidental nature are doubtless the reasons why the Commission has not undertaken that phase of regulation. The case is therefore unlike Pennsylvana Water & Power Co. v. FPC, 343 U.S. 414, 419-420. All that is involved here is an effort to make respondent follow the Commission’s Uniform System of Accounts.{2} 16 U.S.C. § 825(a).

Rather than the engineering battle over tracing method, the central question ought to be whether the "commingling" is so de minimis as to warrant the fastening of the federal bureaucracy on this local company. The limited purpose of this legislation was stated clearly in the Senate Report:

The decision of the Supreme Court in Public Utilities Commission v. Attleboro Steam & E. Co. (273 U.S. 83) placed the interstate wholesale transactions of the electric utilities entirely beyond the reach of the States. Other features of this inter state utility business are equally immune from State control either legally or practically.

S.Rep. No. 621, 74th Cong., 1st Sess., 17.{3}

While federal regulation was to be pervasive, once fastened onto a company, Congress expressed an unambiguous policy to preserve and to rely upon effective and adequate state regulation:

The revised bill would impose Federal regulation only over those matters which cannot effectively be controlled by the States. The limitation on the Federal Power Commission’s jurisdiction in this regard has been inserted in each section in an effort to prevent the expansion of Federal authority over State matters.

Id. at 18 (emphasis supplied). And this objective is presented in the statute’s language:

It is hereby declared . . . that Federal regulation . . . is necessary in the public interest, such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States.

Public Utility Holding Company Act of 1935, § 201(a), 49 Stat. 847. The Commission does not assert that Florida’s regulation of FP&L is inadequate. Each year, the Florida Public Service Commission conducts field audits of electric utilities to ensure compliance with its accounting practices and depreciation rates.{4} Other than enhancing the slogan of "federal leadership" the Commission cites no function which it might better fulfill than the state regime.

The Court’s result also runs counter to the expressed desire of Congress to encourage voluntary interconnection. Id. § 202(a), 49 Stat. 848. Interconnection between two local companies will now subject both to federal jurisdiction if either is also connected to a grid which at some point crosses a state line. To avoid the costs associated with switching from state to federal regulation, a utility may now be induced to sever such interconnections. As the dissenting commissioners recognized:

[I]nterconnections serve the objective of reliability, and . . . reliability is strongly in the public interest. But with the present near universality of interconnections, it would seem that the Commission’s opinion would as likely lead to present connections’ being broken as to new connections’ being established or existing connections strengthened.

37 F.P.C. at 559 (1967).

In light of these congressional purposes, I would not superimpose federal regulation on top of state regulation in case of de minimis transmissions not made by prearrangement or in case of wholesale transactions. In Jersey Central Power & Light Co. v. FPC, supra, at 66-67, we let federal regulation be fastened, though the energy transmitted was "small." Yet the transmissions apparently were neither accidental nor de minimis.Id. at 66 n. 4.

In the instant case, respondent is a member of the Interconnected Systems Group (ISG) which covers the southeastern and central portions of the United States. The Commission approved the Examiner’s finding that

all 140 members of the ISG operate in parallel, and are interlocked electromagnetically; and that FPL [respondent] can receive from or contribute to ISG up to 100 mw. The record further supports the Examiner’s findings that FPL normally has no control over the actual transfers of electric power and energy with any particular electric system with which it is interconnected; that, since electric energy can be delivered virtually instantaneously when needed on a system at a speed of 186,000 miles per second, such energy can be and is transmitted to FPL when needed from out-of-state generators, and in turn can be and is transmitted from FPL to help meet out-of-state demands; and, finally, that there is a cause and effect relationship in electric energy occurring throughout every generator and point on the FPL, Corp, Georgia, and Southern systems which constitutes interstate transmission of electric energy by, to, and from FPL.

37 F.P.C. at 549.

In the instant case, apart from the infinitesimal and sporadic exchanges, the Commission only found that "FPL [respondent] contributed 8 mw to ISG to assist a midwestern utility which had sustained a 580-mw generator loss." Ibid. And that single episode could be measured in terms of seconds only. Such fleeting episodes are not, in my view, sufficient to displace a state regime with the federal one, since the Congress promised that as much as possible be left to the States. I would not make that a hollow promise.

If we allow federal preemption in this case, then we have come full cycle, leaving local authorities control of electric energy only insofar as municipal plants are concerned. The federal camel has a tendency to occupy permanently any state tent.

That may be a wise course, but, if so, Congress should make the decision.

1. Apart from the exigencies of "war." See 1 U.S.C. § 824a(c).

2. This is not a case where State regulation has a hiatus that the federal regime fills. There is not, in other words, a no-man’s area here.

Fla.Stat. § 366.05 (1969), authorizes the Florida Power Commission to

prescribe uniform system and classification of accounts for all public utilities, which among other things shall set up adequate, fair and reasonable depreciation rates and charges.

A related section includes within the term public utility every person, corporation, partnership, association, or other legal entity and their lessees, trustees, or receivers operating, managing, or controlling any plant or other facility supplying electricity. Id. § 366.02.

The Commission exercises this power. See 1966 Florida Public Service Comm’n Annual Report 11:

The Accounting and Auditing Department has the responsibility of maintaining surveillance over the books and records of the various companies within the Electric . . . industries subject to regulation by the Commission.

In meeting this responsibility, the Department maintains a comprehensive file of statistical, financial, and accounting data in the form of annual, quarterly, and monthly reports submitted by the various companies. It maintains a continuous examination of these reports and conducts continuing field audits on the company premises to verify the accuracy . . . to determine the compliance of the basic accounting records with the Uniform System of Accounts prescribed in the Commission’s Rules and Regulations.

(Emphasis supplied.)

3. Public Utilities Comm’n v. Attleboro Steam & Electric Co., 273 U.S. 83 (1927), held that, even absent federal legislation, the Commerce Clause precluded state rate regulation of sales of energy made by a Rhode Island producer of electricity to a Massachusetts distributor. Thus, one purpose of the Act was to fill the "Attleboro gap" in rate regulation.

4. Inasmuch as virtually every privately owned utility in the United States (save those in Texas) is interwoven with a grid which at some point intersects a state boundary, the Commission’s commingled tracing assumption will effectively eliminate electric utility regulation by States. In light of the congressional intent to avoid this outcome, the Court has placed perhaps excessive reliance on the doctrine of judicial deference to agency expertise.

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Chicago: Douglas, "Douglas, J., Dissenting," Fpc v. Florida Power & Light Co., 404 U.S. 453 (1972) in 404 U.S. 453 404 U.S. 470–404 U.S. 476. Original Sources, accessed October 4, 2022, http://www.originalsources.com/Document.aspx?DocID=L16TC6SIWLMSEJT.

MLA: Douglas. "Douglas, J., Dissenting." Fpc v. Florida Power & Light Co., 404 U.S. 453 (1972), in 404 U.S. 453, pp. 404 U.S. 470–404 U.S. 476. Original Sources. 4 Oct. 2022. http://www.originalsources.com/Document.aspx?DocID=L16TC6SIWLMSEJT.

Harvard: Douglas, 'Douglas, J., Dissenting' in Fpc v. Florida Power & Light Co., 404 U.S. 453 (1972). cited in 1972, 404 U.S. 453, pp.404 U.S. 470–404 U.S. 476. Original Sources, retrieved 4 October 2022, from http://www.originalsources.com/Document.aspx?DocID=L16TC6SIWLMSEJT.