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decided: May 3, 1943.



Stone, Roberts, Black, Reed, Frankfurter, Douglas, Murphy, Jackson, Rutledge

Author: Reed

[ 319 U.S. Page 62]

 MR. JUSTICE REED delivered the opinion of the Court.

These two cases bring here for review the construction of §§ 201 and 203 (a) of the Federal Power Act, as amended by the Public Utility Act of 1935.*fn1 These sections are included in Title II, Part II, of the latter act, which Part relates to federal regulation of the business of the transmission of electric energy in interstate commerce and the sale of such energy at wholesale. By these sections, the public utilities subject to the Federal Power Commission are defined and the acquisition of securities of such utilities by any other utility subject to the act is forbidden without authorization of the Commission.

I. After the enactment of the above amendments to the Federal Power Act, and without seeking Commission authorization, the New Jersey Power & Light Company purchased from others than the issuer certain securities of the Jersey Central Power & Light Company. The Federal

[ 319 U.S. Page 63]

     Power Commission, being of the opinion that both the purchaser and the issuer were public utilities within the definition of the Federal Power Act and that therefore the acquisition of the stock was illegal, on June 7, 1938, entered an order that the purchaser submit information concerning the acquisition of the stock and show cause why the Commission should not proceed to enforce the requirements of the act. To this order, the purchaser answered that the Jersey Central was not a public utility within the definition of the act and that the approval by the Federal Power Commission to the acquisition was therefore not required by law. By permission of the Commission, the Jersey Central intervened and made the same contention as to its status. Thus there were presented for determination two questions: first, whether Jersey Central was a public utility under the act; and second, whether if it was a public utility, this acquisition of its stock was permissible in view of the declaration of § 201 (a) that federal regulation should "extend only to those matters which are not subject to regulation by the States." This purchase is subject to regulation by New Jersey.

It is admitted that the purchaser, Jersey Power, is a public utility under the act. The Commission after investigation and hearing held that Jersey Central also was a public utility under the act. 30 P. U. R. (N. S.) 33. This holding was based on findings that Jersey Central owns and operates transmission facilities (an electric line) extending from its substation adjacent to its generating plant in South Amboy, New Jersey, to the south bank of the Raritan River in the same state where the line joins the transmission facilities of another company, not here involved, the Public Service Electric & Gas Company. This latter company transmits the energy from the point of junction on the Raritan to a common bus

[ 319 U.S. Page 64]

     bar*fn2 in one of its substations, located also in New Jersey at Mechanic Street, Perth Amboy. From the bus bar, Public Service has transmission facilities extending to the mid-channel of Kill van Kull, a body of water between New Jersey and Staten Island, New York. At mid-channel, Staten Island Edison Corporation, another utility, connects with its transmission facilities which extend to its own Atlantic substation on Staten Island. The Commission further found, in the words quoted below, that energy generated in New Jersey by Jersey Central was consumed in New York and energy generated in New York was consumed in New Jersey.*fn3

The evidence upon which these findings were based showed that the energy was delivered from Jersey Central

[ 319 U.S. Page 65]

     to and from Public Service under contract and that Public Service likewise delivered and received energy under contract to and from Staten Island Edison. Jersey Central had no control over the destination of its energy after it made delivery to Public Service at the Raritan but it did, of course, control the distribution of energy received from Public Service. The deliveries from Jersey Central to Public Service were substantial, above fifty-five million kilowatt hours in each year of the period 1934 to 1937, inclusive. Those from Public Service to Staten Island were smaller for the same period, amounting to three to four million k. w. h. annually and the flow from Staten Island to Public Service aggregated about the same amount. Although, as will appear hereafter, the evidence shows some Jersey Central energy is consumed in New York, the amount is unknown.

The connection between Public Service and Staten Island is maintained primarily to guard the Staten Island distribution against breakdown. It is used for emergencies a few times per year on an average. Surplus energy is occasionally sold. The rest of the time the line is maintained "in balance." This is to avoid a delay of transmission in an emergency. If the connection were not maintained, an appreciable time would be lost in communicating and reestablishing the connection. Any oscillation of the balance, created by increased demand in New York or New Jersey, carries energy in one direction or in another to be consumed on one side or the other of the line between the states. This is called "slop-over" energy. These bulk deliveries were the subject of the sale agreements between Public Service and Staten Island.

Since the bus bar into which the Jersey Central energy is fed also receives large amounts of energy from other sources, the facts heretofore detailed do not prove conclusively that energy generated by Jersey Central passes to and is consumed in New York. This further evidence

[ 319 U.S. Page 66]

     appears from testimony presented by investigators of the Commission. Their examination of Public Service records discloses that there were moments of time between January 26, 1937, and September 6, 1938, when all the energy flowing into the bus bar at Mechanic Street came from Jersey Central and at the same moments energy flowed from Mechanic Street in New Jersey to the Atlantic substation in New York. As no pools of energy exist from which the flow to New York could have been drawn, it necessarily follows that Jersey Central production was instantaneously transmitted to New York. Cf. Utah Power & Light Co. v. Pfost, 286 U.S. 165. The amount of energy transmitted was small. The evidence was developed from 184 log readings selected from 25,000. Of the 184 log readings, 12 showed this flow of energy from Jersey Central to New York between August 26, 1935, the effective date of the Federal Power Act, and March 14, 1938, the date of the present purchase of stock.*fn4 Twelve showed such flow shortly after the purchase.

[ 319 U.S. Page 67]

     This evidence, we think, furnishes substantial basis*fn5 for the conclusion of the Commission that facilities of Jersey Central are utilized for the transmission of electric energy across state lines.

Petitions for rehearing were denied. An appeal was taken to the Circuit Court of Appeals under the provisions of § 313 of the act.*fn6 The determination of the Commission was affirmed, 129 F.2d 183, and in view of the important questions of federal law raised by the petitions for certiorari, we granted review. 317 U.S. 610.

[ 319 U.S. Page 68]

     The primary purpose of Title II, Part II, of the 1935 amendments to the Federal Power Act, supra note 1, was to give a federal agency power to regulate the sale of electric energy across state lines. Regulation of such sales had been denied to the states by Public Utilities Page 68} Commission v. Attleboro Steam Co., 273 U.S. 83. On account of the development of interstate sales of electric energy, it was deemed desirable by Congress to enter this field of regulation.*fn7

II. Petitioners concede that some energy generated by Jersey Central and sold and delivered by it to Public Service passes thereafter to New York. Their contention is that the arrangements by which this energy passes to New York does not make Jersey Central a public utility,

[ 319 U.S. Page 69]

     within the definition of the act, because it "does not own or operate facilities for the transmission of electric energy, or sale of electric energy at wholesale, in interstate commerce." "A person owning or operating facilities . . . must own the facilities which transmit -- send across -- the energy, and this connotes voluntary, intentional action." From the asserted fact that Jersey Central has no control over the energy produced by it after its delivery to Public Service, petitioners conclude that this short transmission and sale, wholly in New Jersey, is an intrastate transaction. Without this separation from the movement across the New Jersey-New York line, the transmission by Jersey Central would fall within the definition of commerce declared by two former decisions of this Court.

In Public Utilities Commission v. Attleboro Steam Co., 273 U.S. 83, 86, this Court held in interstate commerce the sale of locally produced electric current at the state boundary with knowledge that the buyer would utilize the energy extrastate. The passage of custody and title at the line was held immaterial. We see no distinction between a sale at or before reaching the state line.

The other case is Illinois Gas Co. v. Public Service Co., 314 U.S. 498. In this case, a wholly-owned subsidiary bought gas in Illinois from its parent corporation. The parent had transported the gas across the state line and delivered it at a reduced pressure to the subsidiary in Illinois. The subsidiary transported the gas wholly intrastate and sold and, on again reducing pressure, delivered it to an Illinois distributing company. The intrastate movement by the subsidiary was held by us to be a part of interstate commerce. We said that the point at which title and custody passed, without arresting movement, did not affect the essential interstate movement of the business.

But we need not decide whether the intervention of Public Service between Jersey Central and Staten Island

[ 319 U.S. Page 70]

     Edison and the consequent loss of actual control of the energy by Jersey Central is significant to distinguish the two cases just cited. Petitioners, as we understand their briefs, concede, and rightly so, that power rests in Congress to regulate such a flow of energy from Jersey Central as here occurs. Such a flow affects commerce. Cf. Wickard v. Filburn, 317 U.S. 111, and cases cited.*fn8 But petitioners say that Congress did not intend to exercise its full power over interstate transmission and directed only that transmission "in interstate commerce" should be regulated. As contrasted with "affecting commerce" in the Public Utility Holding Company Act of 1935, 49 Stat. 803, § 1 (c), or the "current of commerce" in the Commodity Exchange Act, 42 Stat. 998, or the broad language of the Bituminous Coal Act, 50 Stat. 83, or the Agricultural Adjustment Act, 50 Stat. 246, the words "in interstate commerce" are said, by petitioners, to be the "strictest test of jurisdiction available to Congress." But the argument, we think, gives no effect to the definition of "transmitted in interstate commerce" as used in this act. In the note below there is set out the pertinent provisions of § 201 which indicate the meaning given the phrase, which provisions are italicized for quick reference.*fn9 Subsections (a) and (b) show the intent to regulate such transactions as are beyond state power under the Attleboro

[ 319 U.S. Page 71]

     case, supra. Subsection (c) defines the electric energy in commerce as that "transmitted from a State and consumed at any point outside thereof." There was no change in this definition in the various drafts of the bill. The definition was used to "lend precision to the scope of the bill."*fn10 It is impossible for us to conclude that this definition means less than it says and applies only to the energy at the instant it crosses the state line and so only to the facilities which cross the line and only to the company which owns the facilities which cross the line. The purpose of this act was primarily to regulate the rates ...

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