We are here concerned with a petition to review aii order of the Federal Power Commission issued by ft on June 11, 1940 allegedly pursuant to Section 20, Part I of. ' the Federal Power Act. 1 The petitioner, Safe Harbor Water Power Corporation, operates a hydroelectric power plant on the Susquehanna River at Safe Harbor, Pennsylvania, under a fifty year license issued to it in 1930 by the Federal Power Commission-. Under a long term contract expiring in 1980, Safe Harbor sells all of the electrical energy created by it to its two parent companies, Consolidated Gas Electric Light and Power Company, of Baltimore, at Baltimore, Maryland, and the Pennsylvania Water and Power Company, of Holtwood, Pennsylvania. The two last named companies own all of the stock of the petitioner. We will refer to the Consolidated Gas Electric Light and Power. Company as the Maryland Company and The Pennsylvania Water and Power Company as the Pennsylvania Company. The Maryland Company and the Pennsylvania Company are entitled to take electric power from Safe Harbor in the direct proportion of- their respective stock ownerships ; viz., the Maryland Company is entitled to two-thirds and the Pennsylvania Company is entitled- to one-third of the electrical energy produced. The Pennsylvania Company in turn sells the electric energy which it purchases to the Maryland Company and others at wholesale. 2 The greater part of the electricity created by Safe Harbor goes, into interstate commerce. Though title to some of it passes from Safe Harbor to the Pennsylvania Company in Pennsylvania and is not in interstate commerce, we think that the assertion of the Federal Power Commission that the Safe Harbor hydroelectric project'-dn Pennsylvania is operated as part of a large integrated interstate electric system is substantially correct. A-goodly portion, of the *803 electricity manufactured by Safe Harbor enters Maryland and the District of Columbia. 3
The Commission fixed Safe Harbor’s wholesale rate for electricity on the statutory rate base of net investment prescribed for licensees by Part I of the Act. The rate base was found by the Commission to be $27,863,000 and the Commission allowed a 6% rate of return thereon, amounting to the sum of $1,672,000 in annual earnings for Safe Harbor above operating expenses, taxes, depreciation and rate case expense. The Commission’s order requires Safe Harbor to reduce its annual wholesale rate for electricity by about $350,000 annually.
The petitioner raises questions which fall under three heads. The first is: Has this court jurisdiction to review the rate order made by the Commission under Section 20 ? Second: Is the order of the Commission reducing the licensees’ rates invalid because made without jurisdiction and in disregard of the provisions of Section 20 of Part I of the Federal Power Act, 16 U.S.C.A. § 813? Third: Assuming jurisdiction to be vested in the Commission to make the order complained of, are, the terms of that order confiscatory, arbitrary, or based on insufficient evidence?
As to the Jurisdiction of This Court.
The Commission issued an order on July 23, 1940 denying rehearing of the cause. Upon September 10, 1940, Safe Harbor filed a petition for review in this court under Section 313(b), 16 U.S.C.A. § 8251(b), and a bill for an injunction in the District Court of the United States for the Eastern District of Pennsylvania naming the United States and the individual members of the Commission as parties respondent pursuant to the provisions of Section 20 of the Federal Water Power Act of 1920, c. 285, 41 Stat. 1073, 16 “U.S.C.A. § 813. The first question posed for our determination is-whether this court or the District Court for the Eastern District of Pennsylvania has jurisdiction to review the order of the Commission. - '
Section 313(b), 16 U.S.C.A. § 8251(b) provides that the aggrieved party to an order of the Commission may obtain a review of such order in the circuit court of appeals for the circuit wherein the licensee is located or has its principal place of business “ * * * by filing in such court, within sixty days after the order of the Commission upon the application for rehearing, a written petition praying that the order of the Commission be modified or set aside in whole or in part.” The subsection also states that upon the filing of the transcript the court of appeals to which the petition is filed shall have exclusive jurisdiction to affirm, modify or set aside the order of the Commission. The transcript in the case at bar was filed in this court upon October 1, 1940.
Safe Harbor contends in respect to the complaint filed by it in the District Court for the Eastern District of Pennsylvania that because Section 20 of the Federal Water Power Act of 1920, 16 U.S.C.A. § 813, provides that the persons subject to regulation “ * * * shall have the same rights of hearing, defense, and review * * as railroad companies under the Interstate Commerce Act which includes the right of review specified by the Urgent Deficiencies Act, October 22, 1913, c.. 32, 38 Stat. 208, 28 U.S.C.A. §§ 41 (subdivision 28), 43-48, the District Court possessed original jurisdiction to enjoin, set aside, annul or suspend in whole or in part the order of the Commission. Safe Harbor further contends that the District Court should have been constituted as a three judge court precisely as if it were reviewing an order of the Interstate Commerce Commission.
We entertain no doubt as was stated by the learned District Judge in his opinion in this case, Safe Harbor Water Power Corp. v. United States,
While it is the law that repeals by implication are not looked on with favor, United States v. Jackson,
Two direct appeals were taken by Safe Harbor from the District Court to the Supreme Court; one was from the judgment dismissing the complaint entered by a single judge as distinguished from the judgment to like effect which might have been entered by a three judge court. The second appeal was from the order of the District Court refusing to vacate its judgment dismissing the complaint. The defendants argued before the Supreme Court that that tribunal had no jurisdiction upon direct appeal from the district' court and, if the district judge’s determination that the complaint did not state a cause of action requiring a three-judge court was correct, then the Supreme Court was without any appellate jurisdiction whatsoever.
The Supreme Court dismissed both appeals, Safe Harbor Water Power Corp. v. United States,
We affirm the judgment of the court below as the proper exercise by a single *805 district judge of the court’s power to dismiss the complaint. This disposes of the appeal at No. 7688.
We dismiss the appeal at No. 7689, taken from the order of the court below refusing to vacate the judgment of dismissal, because that order is not appealable.
What we have stated in this part of our opinion disposes also of the question raised as to jurisdiction of this court of the appeal at No. 7544. This is the appeal which raises the main questions and accordingly we will proceed to rule upon the substantive questions of law involved.
As to the Jurisdiction of the Commission to Regulate the Rates Charged by Safe Harbor.
Did the Commission have jurisdiction under Section 20 to regulate the wholesale electric rates charged by Safe Harbor ? We have indicated that the greater part of the electricity generated by the hydroelectric units operated by Safe Harbor goes from Pennsylvania into Maryland and therefore moves in interstate commerce. Congress possesses the authority to regulate the rates charged for such electricity. None the less there are two questions for our determination. The first is what was the intention of Congress. The second is could Congress do what it intended to do. We will endeavor to answer the first question first.
It must be borne in mind that Safe Harbor was licensed under Section 19 of the Act, 16 U.S.C.A. § 812, by the Federal Power Commission .to operate ■ its hydroelectric units upon the Susquehanna River. Without the license of the Commission the power company could not function at all. Section 19 provides as a condition of 'the issuance of the license that the licensee “ * * * shall abide by such reasonable regulation of the services to be rendered to customers or consumers of power, and of rates and charges of payment therefor, as may from time to time be prescribed by any duly constituted agency of the State m which the service is rendered or the rate charged.” It goes on to state that in case power created by the licensee is used m public service within a state which has not set up a commission empowered to regulate and control services and rates then “it is agreed as a condition of such license” that jurisdiction to regulate rates and services furnished by the licensee or by its customer is in the Commission which retains such regulatory power until the state has set up a commission for regulation.
In the case at bar regulation is sought by the Commission under the provisions of Section 20. The pertinent portions of Section 20 provide that: “When said power or any part thereof shall enter into interstate or foreign commerce the rates charged and the service rendered by any such licensee, * * * or by any person, corporation, or association purchasing power from such licensee for sale and distribution or use in public service shall be reasonable, nondiscriminatory, and just to the customer and all unreasonable discriminatory and unjust rates or services are hereby prohibited and declared to be unlawful; and whenever any of the States directly concerned has not provided a commission or other authority to enforce the requirements of this section within such State * * * or such States are unable to agree through their properly constituted authorities on the services to be rendered, or on the rates or charges of payment therefor * * * jurisdiction is hereby conferred upon the commission, upon complaint of any person aggrieved, upon the request of any State concerned, or upon its own initiative to enforce the provisions of this section, to regulate and control so much of the services rendered, and of the rates and charges of payment therefor as constitute interstate or foreign commerce * * * »
It will be observed how very similar in one major particular the provisions of Section 19 and 20 are. Regulation of power is to be encompassed through state authority and not through the power of the Federal government unless the state has failed to set up a regulatory commission. Only in the event of such failure does the Federal .Power Commission possess jurisdiction to regulate rates and services.
It is contended by Safe Harbor that since Section 20 states that the Federal Power Commission shall have regulatory jurisdiction only when a state or states concerned “has not provided a commission or other authority to enforce the requirements of this section within such State * * * or such States are unable to agree through their properly constituted authorities on the services to be rendered, or on the rates or charges of payment therefor * * * ”, the contingency specified is not one growing out of the constitutional impotency of a *806 state to make its commission’s actions effective, but rather the simple failure of a state to set up a regulatory agency. In other words if a state regulatory agency or state regulatory agencies have been set up it is immaterial whether or not the state agency or state agencies possess the constitutional power to deal with the regulation of hydroelectric power in interstate commerce unless they are unable to agree as to how they would regulate something in respect to which they are impotent.
This would be a curious emasculation of the statute. Congress intended the contrary and this is indicated from the words employed in Section 20, “a commission or other authority to enforce * * * or to regulate and control * * * ”. It was the intention of Congress that there should be regulation and control of hydroelectrical energy and not that impotent public bodies would be set up by the states to go through the motions of regulation. The petitioner’s view in this regard is not supported by the legislative history of the section. Section 20 as originally submitted to Congress 5 did employ the words, “ * * * whenever the States directly concerned have not the authority individually to take action or are unable .to agree through their properly constituted authorities * * subsequently stricken out in favor of the present words of the Section, but the debates and reports 6 indicate quite clearly that Congress proposed in fact to regulate hydroelectric power and not make vain gestures of regulation.
' The question is whether Congress intended to regulate interstate commerce in hydroelectric power by the Federal Power Commission or through the medium of state commissions. Put thus baldly, the first reaction might be that Congress intended to regulate interstate commerce in hydroelectric energy by a federal agency-leaving to the state commissions intrastate regulation. But such a conclusion flies in the face of the words of Section 20. The section is expressly intended for the regulation of hydroelectric power which “shall enter into interstate or foreign commerce”. It speaks of the states “directly concerned” and of states directly concerned being “unable to agree through their properly constituted authorities on the services to be rendered, or on the rates or charges of payment therefor * * * Moreover, the debates and reports show that the members of Congress were thinking in terms of state regulation of interstate hydroelectric power. Senator LaFollette, a member of the special Water Power Committee, stated, Congressional Record, Vol. 56, Part 9, p. 8932, “The only place where the government interferes between the States is where they have not any commission, and if there is any charge of monopoly usually it is the fault o-f the State and not the fault of this law or the Commission.” The use- of the phrase “between the States” is particularly indicative of what was in the mind of Senator LaFollette. See also the Statement of Representative Lee, who said, Congressional Record, 66th Cong. 2nd Sess., Vol. 59, Part 7, p. 6528: “The bill provides that the regulation of rates, of service, and of issuance of securities shall be exercised by the several states whenever they have established agencies with the necessary authority.” The emphasis here is again on agencies of states, indicating clearly the thought that hydroelectric energy would pass from one state .to another and be regulated in the states by the states.
We conclude that it was the intention of Congress to regulate hydroelectric power by state commissions using the federal agency set up in Section 20 only where the state commissions did not or could not perform the function expected of them.
Could Congress provide for the regulation of hydroelectric power coming into the states in interstate commerce by state commissions ? This is the vital question for oúr determination, but before it can be answered another inquiry must be made. Are the generation, transmission and consumption of hydroelectric energy matters of such national concern as to require regulation solely by the Federal government? This question is capable of being answered either in the affirmative or in the negative, depending on circumstances. The transmission of power from state to state may be such a matter of national concern as to require regulation solely by a Federal agency, while on the other hand the consumption of that power in the state to which it has been transmitted may be pure
*807
ly a matter of local interest. The principle of Public Utilities Comm. v. Attleboro Steam & Electric Co.,
There is no doubt that Congress cannot ctelegate the power of the central government to regulate interstate commerce to a state or state agency. It should also be borne in mind that in the case at bar we need not concern ourselves with the doctrine of the silence of Congress
7
for Congress has spoken in Section 20. When Congress enacted Section 20 in 1920 it had before it the decision of the Supreme Court in the Pennsylvania Gas Co. case. When Congress reenacted the Section in 1935, the Supreme Court had decided not only State of Missouri v. Kansas Natural Gas Co.,
In the instant case it is necessary to go one step further, however. While the Public Service Commission of Maryland within the doctrine of the Pennsylvania Gas Co. case can regulate the rates and services charged for the hydroelectric energy generated by Safe Harbor and consumed in Maryland or delivered at the district line at Takoma Park for the District of Columbia, and the Pennsylvania Public Utility Commission likewise can regulate electrical energy designed for consumption in Pennsylvania, it is obvious that there must be cooperation and agreement between these two state authorities if there is to be a really effective regulation of rates and services for the hydroelectric energy with which we are concerned. In short the power generated by Safe Harbor and used in Pennsylvania and Maryland must be treated as an integrated whole. Otherwise either state commission might impose unreasonable regulations or service schedules for the benefit of their respective citizens. The compact clause, clause 3 of Section 10 of Article I of the Constitution of the United States, affords the opportunity to the respective state commissions of Pennsylvania and Maryland to regulate under their police powers these rates and services as part of an integrated system of hydroelectric energy. We think that this was what Con *808 gress intended when it enacted Section 20, and with the permission thus accorded, the two states concerned are at liberty to regulate these rates and services constitutionally and lawfully. Such a result is in line with the decision of the Supreme Court in the Pennsylvania Gas Co. case.
Section 20 conveys the consent of Congress to the states to make agreements of cooperation under the compact clause. They may so act under it. The subject matter of such a cooperative compact is. one in which “ * * * Congress must exercise national supervision through its power to grant or withhold consent, or to grant it under appropriate Conditions.” 9 The foregoing quotation contains the essence of what we have stated heretofore. In the case at bar in the absence of a finding by the Federal Power Commission that the States of Pennsylvania and Maryland “ * * * are unable to agree through their properly constituted authorities on the services to be rendered, or on the rates or charges of payment therefor * * * ”, jurisdiction to regulate remains in the state commissions of those states and is not in the Federal Power Commission.
Congress made the jurisdiction of the Federal Power Commission to regulate hydroelectric energy under Part I of the Federal Power Act dependent upon the inability of the states concerned with the electric energy to agree upon its regulation. Such an agreement would be a compact. The word “compact” is high-sounding and usually associated with an extensive body of official formulas, but we conclude that a compact like an agreement may be deemed to arise out of actions which are quite informal, Chief Justice Taney in the case of Holmes v. Jennison,
In reaching these conclusions we are not unmindful of the Report to Congress made by the Federal Power Commission in which an opinion of the Chief Counsel to the Secretary of the Commission reaches an opposite result. 10 Though we think that the opinion of the Commission and its counsel is entitled to great weight, we are unable to agree with the views expressed by the Commission in the case at bar in respect to the application of Section 20. Though Congress had the opinion before it in 1935 when the Federal Power Act was passed, the Commission’s views on this subject (if they were as are now asserted by the Commission) had not been enforced by actual order and for this reason represented theory rather than practice. We conclude that this portion of the Report cannot be given the same weight as if it furnished a specific ruling put in practice by the Commission.
*809 In conclusion we state that whether or not the Federal Power Commission has jurisdiction over Safe Harbor as a public utility transmitting and selling electric energy at wholesale in -interstate commerce under the provisions of Part II of the Federal Power Act, 16 U.S.C.A. § 824 et seq., is immaterial. The Commission has chosen to fix the rates charged by Safe Harbor under the authority which Section 20 confers upon it with respect to licensees of water power projects-upon navigable rivers which is an entirely different basis for Federal jurisdiction. Regulation of electrical energy created by boiling water, carboelectrical energy, and regulation of electrical energy created by falling water, hydroelectrical energy, present a subject for reflection under the respective provisions of Parts I and II of the Federal Power Act, but are not properly in this case.
In view of what we have decided it is unnecessary to pass upon the third question presented by the appeal: Whether or not the Commission’s order is confiscatory, arbitrary, or based on insufficient evidence.
The order of the Federal Power Commission is set aside as beyond its jurisdiction.
Notes
The 1935 Federal Power Act, 49 Stat. 863, 16 U.S.C.A. § 791a et seq., Part I of which is the 1920 Federal Water Power Act, 41 Stat. 1063-1077, 16 U.S.C.A. § 791.
These others include the cities of Lancaster, Coatesville and York, Pennsylvania.
The Maryland. Company in turn sells the electricity to customers in Baltimore and Washington and adjacent territories. Some of the electricity is sold to the Pennsylvania Railroad Company for operating trains between Harrisburg and Philadelphia and Washington, D. C.
Judge Bard also said: “The existing Federal Power Act consists of three parts: Part I is the old Federal Water Power Act of 1920 [See Act of June 10, 1920, c. 285, 41 Stat. 1063, 16 U.S.C.A. § 791 and preceding historical note] and the amendments under Title II of the Public Utility Holding Company Act of 1935; [Act of August 26, 1935, c. 687, Title II, 49 Stat. 838, 16 U.S.C.A. §§ 791a, 796-823. Sections 792 and 793 following section 791a are also parts of the existing Act, having been amended in 1930] parts II and III weré added in this 1935 Act. [49 Stat. 847, 16 U.S.C.A. §§ 824 et seq., 825 et seq.] Part I empowers the Commission to license pow *804 er projects on navigable waters, and gives it certain powers of regulation over the licensee. Part II, as added in 1935, gives the Commission jurisdiction over the transmission and sale of electricity at wholesale in interstate commerce, whether or not by licensees. Part III, likewise added in 1935, contains general procedural and administrative provisions applicable to both Parts I and II.”
It was originally introduced by Senator Shields on April 9, 1917, as S. 1419.
See Congressional Record, Vol. 56, Part 9, pp. 8932, 9044, 9110, and H.R. No. 61, 66th Cong., 1st Sess.; Congressional Record, 66th Cong., 1st Sess., Congressional Record Vol. 58, Part 3, p. 2238.
See “The Silence of Congress” by Henry Wolf Bickle, 41 H.L.R. 200, and the authorities therein cited.
See “The Compact Clause”, by Messrs. Frankfurter and Landis, p. 1641, Vol. 3,
“Selected Essays on Constitutional Law”, and note 136 wherein the authorities are collected.
“The Compact Clause” by Messrs. Frankfurter and Landis, p. 1616. See note 8 supra. The balance of the quotation is as follows: “The framers thus astutely created a mechanism of legal control over affairs that are projected beyond State lines and yet may not call-for nor be capable of, national treatment. They allowed interstate adjustments but duly safeguarded the national interest.”
See the Ninth Annual Report of the Federal Power Commission to Congress, (1929) pp. 89, 90, 119-131.