Appellants Brief — Federal Energy Regulatory Commission v. Mississippi

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OCTOBER TERM, 1980

FEDERAL ENERGY REGULATORY COMMISSION AND

JAMES B. EDWARDS, SECRETARY OF ENERGY,

APPELLANTS

THE STATE OF MISSISSIPPI, Er AL.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF MISSISSIPPI

| BRIEF FOR THE APPELLANTS

REX E. Lan

Solicitor General

CAROL E. DINKINS

Assistant Attorney General

Louis F, CLAIBORNE

Deputy Solicitor General

ELLiorr SCHULDER

Assistant to the Solicitor General

~ KaTuryn A, OBERLY

‘ §SUSAN VirGINIA Cook

. . Attorneys

5 Department of Justice

CHARLES A. Moon Washington, D.C, 20530

: General Counsel (202) 633-2217

Iost M. Furr 1

JOANNE LEVEQUE

Attorney ° ö .

Commission Wey

Washington, D.C. 20426

7 LED

No. 80-1749 5 725 27 1961

CSrE VA.

me Court, U.

QUESTION PRESENTED

Titles I and III of the Public Utility Regulatory

Policies Act of 1978 require state regulatory authori-

ties to consider the adoption and implementation of

certain rate design and regulatory standards for elec-

tric and natural gas utilities. Section 210 of the Act

requires state regulatory authorities to implement

rules promulgated by the Federal Energy Regulatory

Commission under which regulated electric utilities

must offer to sell electricity to and purchase elec-

tricity from qualifying cogeneration and small power

production facilities.

The question presented in this case is whether

these statutory provisions are within Congress’ power

to regulate interstate commerce and are consistent

with the principle of state sovereignty embodied in

the Tenth Amendment.“

*In addition to the State of Mississippi, the Mississippi

Public Service Commission was a plaintiff below and the Mis-

sissippi Power and Light Company participated as an inter-

venor in support of the plaintiffs.

(1)

TABLE OF CONTENTS

Opinion below

Jurisdiction

Constitutional and statutory provisions involved

Statement

A. The statutory background

1. Titles I and III of PURPA

2. Section 210 of Title II of PURPA A..

B. The proceedings below

Summary of argument

Argument

I. The challenged provisions of the Public Utility

Regulatory Policies Act of 1978 are within Con-

gress’ plenary power to regulate interstate

commerce

II. The challenged provisions of PURPA do not

violate the Tenth Amendment .... A

A. The provisions of PURPA survive the Tenth

Amendment test established in Virginia Sur-

face Mining

B. Even assuming that PURPA works some in-

terference with state sovereignty, the federal

interest it advances overrides state interests..

Conclusion

TABLE OF AUTHORITIES

Cases:

Adams v. Maryland, 347 U.S. 17999

Baldwin v. Montana Fish & Game Commission, 436

US. 371

Brown v. EPA, 521 F.2d 827, vacated and re-

manded, 431 U.S. 999

(mi)

—

39, 40

Cases—Continued Page

Buckley v. Valeo, 424 U.S. ...... 43

California v. Taylor, 353 U.S. 5583 31

Champlin Refining Co. v. Corporation Commission

of Oklahoma, 286 U.S. 210 43

Connecticut Light & Power Co. v. FPC, 324 U.S.

— 0A A ian 35, 38

Coyle v. Oklahoma, 221 U.S. 559 ũ 16, 27, 31, 35

District of Columbia v. Train, 521 F.2d 971, va-

cated and remanded sub nom. EPA v. Brown,

Ek TRA. OD scinsticciiserentiaeennaidaialale 35, 39, 40

El Paso & Northeastern Ry. v. Gutierrez, 215

U.S. 87 43

FPC v. Florida Power & Light Co., 404 U.S. 453. 24

FPC v. Southern California Edison Co., 376 U.S.

—— ³ 5ð¹ow]5»G̃ͤ¼ ̃ 6x nee 31

Fry v. United States, 421 U.S. 542. 16, 26, 27, 41, 42

Hodel v. Indiana, No. 80-231 (June 15, 1981) ....17, 19, 25

Hodel v. Virginia Surface Mining & Reclamation

Ass’n, No. 79-1538 (June 15, 198177 passim

Hughes v. Oklahoma, 441 U.S. 32ù·˖ů 23

Jersey Central Power & Light Co. v. FPC, 319

TTT 38

Kentucky v. Dennison, 65 U.S. (24 How.) 66 30

Lane County v. Oregon, 74 U.S. (7 Wall.) 71 ........ 27

Maryland v. EPA, 530 F.2d 215, vacated and re-

manded sub nom. EPA v. Brown, 431 U.S. 99.... 39, 40

. Monell v. New York City Department of Social

DJI . 30

National League of Cities v. Usery, 426 U.S. 833. assim

Public Utilities Commission of Rhode Island v.

Attleboro Steam & Electric Co., 273 U.S. 83........ 31

Southern Pacific Co. v. Arizona, 325 U.S. 761 28

Testa v. Katt, 880 U.S. 3886 . . . .. . . . . .. 29

United States v. California, 297 U.S. 1755 31

United States v. Jackson, 390 U.S. 570 . . 43

Constitution, statutes and regulations:

United States Constitution:

Article I, Section 8 (Commerce Clause) 2

Article IV, Section 4 14

Constitution, statutes and regulations Continued Page

Article VI (Supremacy Clause) 2,14

TOMES T— 8 passim

Energy Tax Act of 1978, Pub. L. No. 95-618, 92

T 2

Federal Water Power Act of 1920, ch. 285, 41 Stat.

— AAA —ꝛ ͤ — 30

National Energy Conservation Policy Act, Pub. L.

No. 95-619, 92 Stat. 3206 et S .. . .

Natural Gas Policy Act of 1978, Pub. L. No, 95-

e ———

Powerplant and Industrial Fuel Use Act of 1978,

Pub. L. No. 95-620, 92 Stat. 3289 et seq. ............

Public Utility Regulatory Policies Act of 1978,

Pub, L. No. 95-617, 92 Stat. 3117 et seq. ..............

Title I, 16 U.S.C. (Supp. III) 2601 et seq. ........ 2

Section 2, 16 U.S.C. (Supp. III) 2601.... 1

Section 101, 16 U.S.C, (Supp. III) 2611.

Section 111, 16 U.S.C. (Supp. III) 2621. 4,6

Section 111(a), 16 U.S.C. (Supp. III)

en eee 8, 36

Section 111(b), 16 U.S.C. (Supp. III)

EE 6

Section 111 (e) (2), 16 U.S.C, (Supp. III)

r 6-7

Section 112 (b), 16 U.S.C. (Supp. III)

EEE 5

Section 112(c), 16 U.S.C. (Supp. III)

11111 5

Section 118, 16 U.S.C. (Supp. III) 2623. 5,6

Section 118(a), 16 U.S.C. (Supp, III)

T 3. 7, 86

Section 113 (e), 16 U.S.C, (Supp, III)

Section 114, 16 U.S.C. (Supp. III) 2624. 6

Section 116, 16 U.S.C, (Supp. III) 2626. 8

Section 117(a), 16 U.S.C. (Supp. III)

r 8, 36

Section 117(b), 16 U.S.C. (Supp. III)

2627 (b) 3, 86

Constitution, statutes and regulations—Continued Page

Section 121, 16 U.S.C. (Supp. III) 2631.. 7

Section 122, 16 U.S.C. (Supp. III) 2632. 7

Section 123(b) (1), 16 U.S.C. (Supp. III)

—

Section 123 (e) (1), 16 U.S.C. (Supp, III)

Section 124, 16 U.S.C. (Supp. III) 2634. — 7,37

Section 131, 16 U.S.C. (Supp. III) 2641.... 6

Section 132 (b), 16 U.S.C. (Supp. III)

r 6

Section 138, 16 U.S.C. (Supp. III) 2643. 8, 28

Section 141, 42 U.S.C. (Supp. III) 6807.... 12, 36

Section 142, 42 U.S.C. (Supp. ITI) 6808.... 12, 36

Title II, 16 U.S.C, (Supp. III) 796 et seq.:

Section 201(17) (A), 16 U.S.C. (Supp.

JJ˖öͤ¶ ' cisssstsieseemiehorepbotsesniainesiannn

Section 201(18)(A), 16 U.S.C, (Supp.

Section 210, 16 U.S.C. 824 a- 8 passim

Section 210 (a), 16 U.S.C. (Supp. III)

Z 10, 11

Section 210(b), 16 U.S.C. (Supp. III)

. 10

Section 210 (e), 16 U.S.C. (Supp. III)

r 10

Section 210 (e), 16 U.S.C, (Supp. III)

r RSE Ser CaP AAR 11, 29

Section 210(f), 16 U.S.C. (Supp. III)

EEC 10, 39

Section 210(f) (1), 16 U.S.C. (Supp. III)

r 29

Section 210 (h), 16 U.S.C, (Supp. III)

r 11

Section 210 (h) (2), 16 U.S.C. (Supp. III)

C 29

Title III, 15 U.S.C, (Supp. III) 8201 et seg. 2

Section 801, 15 U.S.C. (Supp. III) 3201. 3

Section 308, 15 U.S.C. (Supp. III) 3203. 6

Vil

Constitution, statutes and regulations—Continued Page

Section 303 (a), 15 U.S.C. (Supp. III)

3203 (a) 3, 7, 36

Section 303 (e), 15 U.S.C. (Supp. III)

Section 805, 15 U.S.C, (Supp. III) 3205. 7

Section 806, 15 U.S.C. (Supp. III) 3206. 8, 21

Section 307 (a) (2), 15 U.S.C. (Supp. III)

3207 (a) (2) . .

Section 307 (b) (1), 15 U.S.C. (Supp. III)

Section 307 (b) (2), 15 U. S.C, (Supp. III)

r 8

Section 808, 15 U.S.C. (Supp. III) 3208. 3, 36

Section 809, 15 U.S.C. (Supp. III) 3209. 8

Section 310, 15 U.S.C. (Supp. III) 3210. 7, 87

f 2 9

Miss. Code Ann. (1978) :

1E 37

r 37

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, T ern 11

D, neaenciaiioens 11

e 11, 39

. ean 11

, T 39

Miscellaneous:

123 Cong. Rec. (1977):

, ˙fH——BTʃ T 22

PPTP 9

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EEE 20, 42

. 42

J stein tiriicietechan ineheendenaanaenenaeaa hain 20

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„„ E e 33

eee 33

Vin

Miscellaneous Continued Page

T 9

TT 33

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r 22

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77 T TT—————c—pĩ—ĩ———c—c— 33

TTT 9

. — 20

Err 22

%ꝙͤͤ 0 ——T—T—V— beeen ated 22

TTT 20, 42

r 10

124 Cong. Rec. (daily ed. Oct. 7, 1978):

TT 19, 84

RAE ER Re ene EOD 19, 34

124 Cong. Rec. (daily ed. Oct, 9, 1978):

EAR RRR SEPT RCS NRC Te 34

, R uer cere eoEnENN 34

TTT 19, 34

„ rr eee 34

124 Cong. Rec. (daily ed. Oct, 14, 1978):

r 20

, ss crsncssicchnscieehbdbistnancsnesuntsanes 20

Electric Utility Rate Reform and Regulatory Im-

provement: Hearings on H.R. 12461, et al. Before

the Subcomm, on Energy and Power of the

House Comm. on Interstate and Foreign Com-

merce, 94th Cong., 2d Sess. (Pts. 1 & 2) (1976). 19

Electric Utility Rate Reform and Regulatory Im-

provement: Hearings on S. 1666, et al. Before

the Senate Comm. on Commerce, 94th Cong.,

D x 19

44 Fed. Reg. 76197-76198 (1979) 23

45 Fed. Reg. 12214-12287 (1980) 11

Hart, The Relations Between State and Federai

Law, 54 Colum. L. Rev. 489 (195) 30

H.R. 6831, 95th Cong., Ist Sess, (1977) 32

H. R. 8444, 95th Cong., Ist Sess. (1977) 32

H.R. Conf. Rep. No. 95-1750, 95th Cong., 2d Sess.

(1978) 10, 37, 38

Miscellaneous Continued Page

H.R. Rep. No. 74-1318, 74th Cong., Ist Sess.

T 31

H.R. Rep. No. 95-496 (Pt. 4), 95th Cong., Ist Sess.

c 10, 19, 21, 22

H.R. Rep. No. 95-543, 95th Cong. Ist Sess. (1977).. 19, 20

Moody's Public Utility Manual (1980) .................... 23

National Energy Act: Hearings on H.R. 6831, et al.

Before the Subcomm, on Energy and Power of

the House Comm. on Interstate and Foreign

Commerce, 95th Cong., Ist Sess. (Pt. 3) (1977).. 9, 19,

20, 22

Public Utility Rate Proposals of President Carter’s

Energy Program: Hearings on S. 122, S. 1300,

S. 1363, S. 4169 (Part E) Before the Subcomm.

on Energy Conservation and Regulation of the

Senate Comm. on Energy and Natural Resources,

95th Cong., Ist Sess. (Pts. 1 & 2) (1977) 9, 19, 20,

22, 23

. 1469, 95th Cong., Ist Sess. (Pt. E) (1977) 32

S. 2114, 95th Cong., Ist Sess. (1977)

S. Rep. No. 74-621, 74th Cong., Ist Sess. (1935).. 1

S. Rep. No. 95-361, 95th Cong., Ist Sess. (1977).. 2

S. Rep. No. 95-442, 95th Cong., Ist Sess. (1977) ..2, g, 4, 5,

19, 20-21, 22, 38, 34

In the Supreme Court of the United States

OCTOBER TERM, 1980

No. 80-1749

FEDERAL ENERGY REGULATORY COMMISSION AND

JAMES B. EDWARDS, SECRETARY OF ENERGY,

APPELLANTS

THE STATE OF MISSISSIPPI, ET AL.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF MISSISSIPPI

BRIEF FOR THE APPELLANTS

OPINION BELOW

The opinion of the district court (J.S. App. la-7a)

is not reported.

JURISDICTION

The final judgment of the district court (J.S. App.

8a-9a) was entered on February 27, 1981. The Fed-

eral Energy Regulatory Commission and the Secre-

tary of Energy filed a joint notice of appeal to this

Court on March 13, 1981 (J.S. App. 10a). The juris-

dictional statement was filed on April 17, 1981, and

the Court noted probable jurisdiction on June 15,

1981 (J.A. 95). The jurisdiction of this Court rests

on 28 U.S.C. 1252. Hodel v. Virginia Surface Mining

(1)

E Reclamation Ass’n, No. 79-1538 (June 15, 1981),

slip op. 8 n.15; Williams v. Zbaraz, 448 U.S. 358,

366-368 (1980).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

1, The pertinent portions of Article I, Section 8

(the Commerce Clause) and Article VI (the Su-

premacy Clause) of the Constitution, and the Tenth

Amendment are set forth at J.S. App. 12a.

2. Title I (16 U.S.C. (Supp. III) 2601 et seq.),

Section 210 of Title II (16 U.S.C. (Supp. III) 824a-

8), and Title III (15 U.S.C. (Supp. III) 3201 et seq.)

of the Public Utility: Regulatory Policies Act of 1978

are set forth at J.S. App. 12a-67a.

STATEMENT

A. The Statutory Background

The Publie Utility Regulatory Policies Act of 1978,

Pub. L. No, 95-617, 92 Stat. 3117 et seg. (PURPA),

was enacted by Congress as part of a package of

legislation * designed to combat the nationwide energy

crisis. At the time, the generation of electrical energy

consumed more than one-fourth of all energy re-

sources used in the United States. S. Rep. No. 95-

442, 95th Cong., Ist Sess. 7 (1977). Approximately

one-third of all electricity in this country was gene-

rated by oil and natural gas, and electricity genera-

tion was one of the fastest growing segments of the

nation’s economy. S. Rep. No. 95-361, 95th Cong.,

Ist Sess. 32 (1977). Furthermore, electric utilities

That ‘¢islative package also included the Natural Gas

Policy Act of 1978, Pub. L. No. 95-621, 92 Stat. 3850 et ged.;

the National Energy Conservation Policy Act, Pub. L. No. 95-

619, 92 Stat. 3206 et geg.; the Energy Tax Act of 1978, Pub.

L. No. 95-618, 92 Stat. 3174 et geg.; and the Powerplant and

Industrial Fuel Use Act of 1978, Pub. L. No. 95-620, 92 Stat.

3289 et seq.

were plagued with skyrocketing fuel costs and de-

creasing efficiency in the use of their generating ca-

pacity; both of these factors had an adverse effect on

rates to consumers and on the economy. S. Rep. No.

95-442, supra, at 9. Accordingly, Congress deter-

mined that conservation by electric utilities of oil and

natural gas was essential to the success of any effort

to lessen the nation’s dependence on foreign oil, to

avoid a repetition of the shortage of natural gas that

the nation had experienced in the winter of 1977,

and to control consumer costs.

1. Titles land II of PURPA

Titles I and III of PURPA are administered (with

minor exceptions) by the Secretary of Energy. These

provisions are designed to encourage the adoption of

certain retail regulatory policies for electrical and

natural gas utilities. Both titles share three common

goals: (1) to promote conservation of energy sup-

plied by utilities; (2) to optimize the efficient use of

facilities and resources by utilities; and (3) to in-

sure equitable rates to consumers. 16 U.S.C. (Supp.

III) 2611; 15 U.S.C. (Supp. III) 3201. In order to

achieve these goals, Titles I and III provide that

state regulatory authorities and nonregulated utilities

must “consider” the adoption and implementation of

specific rate design and regulatory standards. While

the Act requires the consideration of these standards,

there is no requirement that any of the standards

actually be adopted or implemented. See 16 U.S.C.

(Supp. III) 2621(a), 2623 (a); 15 U.S.C. (Supp.

III) 3203 (a).“ See also 16 U.S.C. (Supp. III) 2627

(a), (b); 15 U.S.C. (Supp. III) 3208.

2 For example, 16 U.S.C. (Supp. III) 2621(a) and 15 U.S.C.

(Supp. III) 3203 (a) state, in identical language:

Nothing in this subsection prohibits any State regula-

tory authority or nonregulated electric utility from mak-

Section 111 of PURPA, 16 U.S.C. (Supp. III)

2621, requires each state regulatory authority or non-

regulated utility to consider whether to adopt and

implement the following rate design standards: (1)

Cost of service—rates for each class of electric con-

sumers should reflect the costs of service to that class;

(2) Prohibition of declining block rates*; (3) Time-

of-day rates; (4) Seasonal rates“; (5) Interruptible

rates“; and (6) Development of load management

ing any determination that it is not appropriate to imple-

ment any such standard, pursuant to its authority under

otherwise applicable State law.

® “Declining block rates” are a traditional and still common

structure used by utilities to charge for electricity. The high-

est unit rate is charged for basic electrical consumption, with

a declining per-unit price for each block of additional con-

sumption. See S. Rep. No. 95-442, supra, at 26-27.

*“Time-of-day rates” are a technique for reducing peak

load. “Peak load“ is the greatest demand for a utility’s elec-

tricity. Demand varies by hour and season, usually reaching

a daily peak in the afternoon and a seasonal peak in mid-sum-

mer or mid-winter. Utilities must have enough generating

capacity to meet that demand; steps that reduce peak demand

also reduce the required amount of generating capacity and

the use of “peaking” generating equipment, which is frequently

gas or oil fueled. Under time-of-day rates, utilities charge

more for electricity consumed during peak load hours. See

S. Rep. No. 95-442, supra, at 29.

5 “Seasonal rates” also reduce peak load by charging higher

rates for electricity consumed during the seasons when demand

is greatest.

* “Interruptible rates” reduce peak load by charging a lower

rate for electrical service which the utility can interrupt, or

stop, during peak demand periods.

techniques.’ Consideration of these standards was to

have commenced not later than two years after

PURPA’s enactment, or by November 8, 1980, and a

decision whether to adopt the standards is to be made

by November 8, 1981. 16 U.S.C. (Supp. III) 2622

(b). However, the statute does not provide for any

penalties if these deadlines are not met; the state

authorities or nonregulated utilities must simply con-

sider the standards at the first rate proceeding com-

menced after the deadline. 16 U.S.C. (Supp. III)

2622 (c).

Section 113 of the Act, 16 U.S.C. (Supp. III) 2623,

requires state regulatory authorities (and nonregu-

lated utilities) to consider a second set of standards

relating to the terms and conditions of electric serv-

ice: (1) Prohibition of master metering in new build-

ings *; (2) Restrictions on the use of automatic ad-

Load management techniques” are methods used to reduce

the demand for electricity at peak times, For example, util-

ities can use remote-control devices to turn off air conditioners,

heaters or other appliances for brief times during periods

when the demand for electricity is particularly great.

Each of PURPA’s rate design standards is intended to

communicate accurately to users the true cost of the energy

they are consuming. Time-of-day, seasonal and interruptible

rates as well as load management techniques operate to

reduce peak demand on a utility’s generating capacity, which

in turn reduces the need for construction of new power plants

and the use of more expensive “peaking” generating plants

that commonly burn oil or gas, consuming scarce fossil fuels.

See S. Rep. No. 95-442, supra, at 9, 25.

Master metering” is the use of one electric meter for

multiple units. Studies have shown that tenants of master

metered buildings use an average of 35% more electricity

than tenants in buildings where each unit has its own indi-

vidual meter. S. Rep. No. 95-442, supra, at 31.

justment clauses*; (3) Disclosure to consumers of

information regarding rate structures; (4) Proce-

dural requirements relating to termination of serv-

ice; and (5) Prohibition of the recovery of advertis-

ing costs from consumers. Section 303 of Title III,

15 U.S.C. (Supp. III) 3203, requires consideration of

the latter two regulatory standards with respect to

natural gas utilities. A decision as to the standards

contained in Sections 113 and 303 was to have been

made by November 1980, but, as with the Section 111

standards, there is no statutory penalty for failing to

meet this deadline. Under Section 114 of Title I, 16

U.S.C. (Supp. III) 2624, each state authority (and

nonregulated utility) is also required to consider

whether utilities should set lower electrical rates for

essential needs of residential consumers if the utility

does not have such a rate in effect on November

1980.

Titles I and III prescribe certain procedures to be

followed by state regulatory authorities and non-

regulated utilities in considering the standards. For

example, each of the standards is to be considered

in a hearing after public notice, and a written state-

ment of the reasons for declining to implement or

adopt any of the standards is to be made available

to the public. 16 U.S.C. (Supp. III) 2621(b), (c)

® “Automatic adjustment clauses” provide that as a utility’s

fuel costs rise it may increase its rates without public hearing

or review by state regulatory authorities. Because automatic

adjustment clauses provide the utility with no incentive to

reduce its costs or to shift from oil or gas fueled generatine

facilities, they tend to discourage the efficient use of energy

resources.

10 The Act authorizes the Secretary of Energy to prescribe

voluntary guidelines and provide technical assistance in order

to aid the state regulatory authorities in their consideration of

the Title I standards. 16 U.S.C. (Supp. III) 2641, 2642(b).

(2), and 2623 (a), (e); 15 U.S.C. (Supp. III) 3203

(a), (e). “Any person” may bring an action in state

court to enforce the obligation to hold hearings and

make determinations. 16 U.S.C. (Supp. III) 2633

(e) (1); 15 U.S.C. (Supp. III) 3207 (b) (1). Regula-

tory authorities and nonregulated utilities that had al-

ready considered the standards contained in Titles I

and III prior to the enactment of PURPA need not

repeat the consideration process as long as the initial

proceeding was in “substantial conformance” with

PURPA’s requirements. 16 U.S.C. (Supp. III) 2634;

15 U.S.C. (Supp. III) 3210.

The Secretary of Energy, affected utilities, and

consumers have the right to intervene and participate

in any rate-related proceeding considering the Title

I standards. 16 U.S.C. (Supp. III) 2631; the Secre-

tary alone has a right of intervention under Title

III. 15 U.S.C. (Supp. III) 3205.“ The Act provides

that any person (including the Secretary) who has

intervened or otherwise participated in the original

proceeding may obtain review in state court of any

determination made with respect to the adoption of

the Title I standards. 16 U.S.C. (Supp. III) 2633

(e) (1). The Act does not authorize the Secretary

1 Titles I and III both provide that the Secretary may bring

an action in federal court to enforce his right to intervene.

16 U.S.C. (Supp. III) 2633 (b) (1); 15 U.S.C. (Supp. III)

8207 (a) (2).

12 Consumers who have contributed substantially to the

adoption of a position that they have advocated in proceedings

to consider the Title I standards are entitled to reasonable

attorney’s fees, expert witness fees, and other reasonable costs

from the utility. Procedures governing the award of such

fees and costs, or alternative means of compensating persons

who would not otherwise be adequately represented, may be

established by states, state regulatory authorities, or nonregu-

lated utilities. 16 U.S.C. (Supp. III) 2682.

to seek judicial review of decisions regarding the

Title III standards; he may, however, participate as

amicus curiae in any judicial review proceeding in-

itiated by others. 15 U.S.C. (Supp. III) 3207(b) (2).

Titles I and III also contain certain reporting re-

quirements. Within one year after PURPA’s enact-

ment, and annually thereafter for ten years, state

regulatory authorities (and nonregulated utilities)

are to report the progress of their consideration of

the Titles I and III standards to the Secretary of

Energy, who, in turn, is to submit a summary and

analysis of these reports to Congress. 16 U.S.C.

(Supp. III) 2626; 15 U.S.C. (Supp. III) 3209. Under

Section 133, 16 U.S.C. (Supp. III) 2643, electric

utilities are required to collect information concern-

ing their costs of service. This information must be

filed periodically with the Federal Energy Regula-

tory Commission and appropriate state regulatory

agencies, and must be made available to the public.

Title III requires the Secretary of Energy, in con-

sultation with the Commission, state regulatory au-

thorities, gas utilities and gas consumers, to submit

a report to Congress on gas utility rate design. 15

U.S.C. (Supp. III) 3206.

2. Section 210 of Title Il of PURPA

Section 210 was designed to encourage the develop-

ment of cogeneration and small power production fa-

cilities. 16 U.S.C. (Supp. III) 824a-3. “Cogeneration”

is the combined production of both electrical energy

and useful thermal energy such as heat or steam. 16

U.S.C. (Supp. III) 796 (18) (A). It includes, for ex-

ample, a boiler that uses the steam it generates both

to supply heat for an industrial process and to drive

a turbine to generate electricity. Because cogenera-

tion in effect involves reuse of what would otherwise

be waste energy, significantly less fuel is expended

than would be needed to produce the two forms of

energy by separate processes. A “small power produc-

tion facility” is one that has a production capacity of

no more than 80 megawatts and uses biomass, waste,

or renewable resources (such as wind, water, or solar

energy) to produce electric power. 16 U.S.C. (Supp.

III) 796(17) (A).

Reliance on these sources of energy can reduce the

demand for traditional fossil fuels. As Congress

recognized, however, longstanding institutional im-

pediments operated to discourage the development of

these facilities. First, in order to function effec-

tively, cogeneration and small power production fa-

cilities must rely on traditional electric utilities, both

as a source of backup power and as a market for the

surplus power they generate.” But, as Congress was

aware, public utilities were not always cooperative

in this regard.“ Second, if cogeneration and small

power production facilities were subject to regulation

as public utilities, the complications and costs of

18 Public Utility Rate Proposals of President Carter’s Energy

Program: Hearings on S. 122, S. 1300, S. 1868, S. 1364, S.

1469 (Part E) Before the Subcomm. on Energy Conservation

and Regulation of the Senate Comm. on Energy and Natural

Resources, 95th Cong., Ist Sess. (Pt. 1) 191 (1977) (herein-

after referred to as “Senate Hearings’); National Energy

Act: Hearings on H.R. 6881, et al. Before the Subcomm. on

Energy and Power of the House Comm. on interstate and For-

eign Commerce, 95th Cong., Ist Sess. (Pt. 3) 823 (1977)

(hereinafter referred to as “House Hearings’).

4 See 123 Cong. Rec. 25848 (1977) (remarks of Sen.

Percy) ; id. at 32403 (remarks of Sen. Durkin) ; id. at 32487

(remarks of Sen. Haskell); id. at 32419 (remarks of Sen.

Hart). House Hearings (Pt. 3), supra, at 562-558.

complying with the regulatory requirements would

discourage the development of these alternative

energy sources.“

In order to alleviate the first impediment, Con-

gress, in Section 210(a), 16 U.S.C. (Supp. III) 824a-

3 (a), directed the Federal Energy Regulatory Com-

mission, in consultation with state regulatory au-

thorities, to promulgate “such rules as it determines

necessary to encourage cogeneration and small power

production,” including rules requiring utilities to of-

fer to sell electricity to, and purchase electricity from,

qualifying cogeneration and small power production

facilities.“ Section 210(f), 16 U.S.C. (Supp. III)

824a-3(f), requires each state regulatory authority

and nonregulated utility to implement the rules

adopted by the Commission under Section 210(a) re-

garding the purchase and sale of electricity to and

% See H.R. Conf. Rep. No, 95-1750, 95th Cong., 2d Sess.

98 (1978); H.R. Rep. No. 95-496 (Pt. 4), 95th Cong., Ist

Sess. 157 (1977); 123 Cong. Rec. 32399 (1977) (remarks of

Sen. Cranston) ; id. at 32660 (remarks of Sen. Percy).

1% The Commission was also directed to adopt rules to as-

sure that the rates involved in these sales and purchases are

just and reasonable. 16 U.S.C. (Supp. III) 824a-3(b), (c).

With respect to sales from the utility to the cogenerator, Con-

gress intended “just and reasonable” to refer to traditional

utility ratemaking concepts. With regard to purchases by

the utility from the cogenerator, Congress intended that the

rate should be just and reasonable to the customers cf the

utility end should not exceed the incremental cost to the

utility of generating the additional energy itself or purchasing

it from another source. In both instances, Congress provided

that the rates shall not discriminate against qualifying facili-

ties, expressing concern that utilities might try to discourage

sales or purchases by charging discriminatory rates. H.R.

Conf. Rep. No. 95-1750, supra, at 97-98.

from qualifying facilities. In Section 210 (h), 16

U.S.C. (Supp. III) 824a-3(h), the Commission is

authorized to enforce this requirement in federal

court against any state authority or nonregulated

utility; if the Commission does not act after being

requested to do so, enforcement may be sought by

an electric utility or a qualifying facility.

In Section 210(e), 16 U.S.C. (Supp. III) 824a-3

(e), Congress sought to remove the second institu-

tional barrier to development of cogeneration and

small power production facilities by directing the

Commission to prescribe rules under which such fa-

cilities are exempt from certain state and federal

laws governing electric utilities.

Pursuant to Section 210(a), the Commission has

adopted rules relating to purchases and sales of elec-

tricity to and from qualifying facilities. 18 C. F. R.

Part 292; 45 Fed. Reg. 12214-12237 (1980). The

Commission’s regulations afford state regulatory au-

thorities and nonregulated utilities great latitude in

determining the precise manner in which to imple-

ment the requirements of these rules. 18 C.F.R.

292.401(a), (b). Under these regulations, state im-

plementation may be accomplished by the issuance of

regulations, on a case-by-case basis, or by any other

action reasonably designed to give effect to the Com-

mission’s rules.“

Congress recognized that compliance with the re-

quirements of PURPA would involve the expenditure

of state funds. Accordingly, it authorized the Sec-

retary of Energy to make grants to state regulatory

authorities to assist them in carrying out the pro-

*The regulations also seek to minimize Commission in-

volvement generally by encouraging utilities and qualifying

facilities to resolve problems through negotiation. 18 C.F.R.

292.301 (b).

visions of Titles I and III (including the reporting

requirements), and the provisions of Section 210. 42

U.S.C, (Supp. III) 6807.“

B. The Proceedings Below

On April 24, 1979, appellees, the State of Missis-

sippi and the Mississippi Public Service Commission,

filed this action against the Secretary of Energy and

the Federal Energy Regulatory Commission in the

United States District Court for the Southern Dis-

trict of Mississippi, seeking a declaratory judgment

that Titles I and III and Section 210 of PURPA are

unconstitutional (J.A. 1, 3-12). Appellees alleged

that the Act is beyond the scope of Congress’ power

under the Commerce Clause and, moreover, consti-

tutes an invasion of state sovereignty in violation of

the Tenth Amendment. The essence of their argu-

ment was that PURPA impermissibly infringes on

Mississippi’s retail ratemaking authority over intra-

state sales by public utilities located in the State

and places an intolerable burden on state public

utility regulatory activities.

Following cross-motions for summary judgment by

all parties, the district court held that PURPA ex-

ceeds Congress’ powers under the Commerce Clause

(J.S. App. la-7a). In the court’s view (id. at 4a),

„there is literally nothing in the Commerce Clause

of the Constitution which authorizes or justifies the

federal government in taking over the regulation and

18 Congress earmarked $40 million for each of the fiscal

years 1979 and 1980 for assistance to state regulatory authori-

ties to defray the costs of complying with PURPA. 42 U.S.C.

(Supp. III) 6808.

1% The Mississippi Power and Light Company was permitted

to intervene in support of the plaintiffs.

control of public utilities. These public utilities

were actually unknown at the writing of the Con-

stitution.”

In addition, the district court observed that the

Mississippi Public Service Commission was authorized

under state law “to regulate and control intrastate

activities and policies of all utilities operating within

the sovereign state of Mississippi” (J.S. App. 2a).

Citing the Tenth Amendment (J.S. App. 2a n.2) and

this Court’s decision in National League of Cities v.

Usery, 426 U.S. 833 (1976) (J.S. App. 5a-6a n.4),

the court declared that “[t]he sovereign state of

Mississippi is not a robot, or lackey which may be

shuttled back and forth to suit the whim and caprice

of the federal government * * *” (id. at 2a). The

court explained (id. at 7a):

The United States is simply not delegated or

vested by the Constitution with the power or au-

thority to displace and to usurp the regulatory

power and authority of the state of Mississippi

over these utilities in the exercise of their intra-

state functions and duties with respect to their

intrastate customers in Mississippi. This Act

simply does not even attempt to regulate com-

merce among the several states but it is a clear

usurpation of power and authority which the

United States simply does not have under the

Commerce Clause of the Constitution.

Accordingly, the court concluded that “the United

States does not have the power or authority to im-

pose its three standards under PURPA upon the

state of Mississippi under the guise of providing the

solution to the nation’s energy problems” (ibid.).

In its final judgment (J.S. App. 8a-9a), the dis-

trict court specified that it found Titles I and III and

Section 210 of PURPA unconstitutional “in that they

constitute a direct intrusion on integral and tradi-

tional functions of the State of Mississippi and violate

the Constitution of the United States, especially the

Tenth Amendment, the Supremacy Clause * * * and

{the guarantee of] a republican form of govern-

ment * * o”

SUMMARY OF ARGUMENT

The district court’s decision invalidating all of

Titles I and III and Section 210 of PURPA rests on

two grounds. First, the court held that the statutory

provisions are beyond Congress’ power under the Com-

merce Clause because they are directed at the intra-

state operations of public utilities. Second, the court

ruled that the provisions violate the Tenth Amend-

ment because they displace the authority of the states

to regulate the intrastate activities of such utilities.

Neither of these conclusions withstands analysis.”

The challenged provisions do not exceed Congress’

commerce power. Congress found that a federal pro-

gram designed to increase energy conservation and

efficient use of energy resources was necessary to

promote interstate commerce. That finding has a ra-

tional basis. Congress was aware that problems in

the electric utility industry were contributing heavily

2 Although the district court’s final judgment also pur-

ported to rest (J.S, App. 9a) on the Supremacy Clause

(Article VI) and the guarantee of a republican form of

government (Article IV, Section 4), the court’s decision failed

to explain how these constitutional provisions render the

statute invalid. We accordingly do not address these provi-

sions in this brief.

to the nation’s increasing dependence on foreign oil.

Moreover, the retail practices of electric utilities had

a particularly adverse effect on the nation’s oil sup-

plies; for example, the retail rates of many utilities

were structured in such a way as to discourage effi-

cient consumption of energy, and the reluctance of

many utilities to deal with cogenerators and small

power producers constituted a major barrier to devel-

opment of these alternative sources of energy.

Congress enacted the provisions at issue in order

to protect interstate commerce from the adverse effects

of these and other practices by utilities that led to

inefficient utilization of energy resources. The means

chosen by Congress are rationally related to this le-

gitimate legislative purpose. That is enough to sustain

Congress’ exercise of its commerce power.

Virginia Surface Mining & Reclamation Ass'n, No.

79-1588 (June 15, 1981).

The challenged provisions do not violate the Tenth

Amendment. This case is not like National League

of Cities v. Usery, 426 U.S. 833 (1976), where this

Court invalidated the application to the states of man-

datory federal minimum wage legislation. In Na-

tional League of Cities, A dollid ak bilee bbe:

come Tenth Amendment objections by taking over the

traditional functions of state and local governments

in such areas as fire prevention, police protection and

sanitation. Here, on the other hand, the federal gov-

ernment already exercised regulatory authority over

the interstate activities of public utilities, and Con-

gress could have preempted the states completely in

the regulation of intrastate transactions. There is

no reason to invalidate the statute because Congress,

out of deference to state sovereignty, adopted a less

intrusive scheme that permits the states to continue

to perform their regulatory functions with respect to

, Heddy U

intrastate transactions by public utilities. The leg-

islative history clearly demonstrates that PURPA

was carefully crafted so as to preserve the states’

“‘separate and independent existence... National

League of Cities v. Usery, supra, 426 U.S. at 851,

quoting from Coyle v. Oklahoma, 221 U.S. 559, 580

(1911).

Furthermore, the statute does not require the states

to restructure integral governmental operations, since

the states are not obligated to participate in the reg-

ulatory program unless they are already involved in

the business of utility regulation. Beyond that, each

of the specific provisions at issue permits the states

broad discretion in determining how to achieve com-

pliance with the regulatory program. In light of these

factors, the statute cannot be said to impair the

ability of the states “‘to function effectively in a

federal system.’” National League of Cities v. Usery,

supra, 426 U.S. at 852, quoting from Fry v. United

States, 421 U.S. 542, 547 n.7 (1975). In any event,

even if the statute does operate against the states

in a manner that would otherwise be impermissible

under the Tenth Amendment, the nature of the fed-

eral interest in combatting the nationwide energy

crisis justifies the statute’s limited interference with

state prerogatives. United States v. Fry, supra.

ARGUMENT

THE CHALLENGED PROVISIONS OF THE PUBLIC

UTILITY REGULATORY POLICIES ACT OF 1978

ARE WITHIN CONGRESS’ PLENARY POWER TO

REGULATE INTERSTATE COMMERCE

The district court invalidated the statutory pro-

visions at issue as beyond congressional power be-

cause, in its words (J. S. App. 4a), [there is liter-

ally nothing in the Commerce Clause of the Constitu-

tion which authorizes or justifies the federal gov-

ernment in taking over the regulation and control of

{the intrastate operations of] public utilities.” That

approach misapprehends the proper role of the

courts in assessing the validity of federal legislation

implementing the Commerce Clause. As this Court

recently noted, [a] court may invalidate legisla-

tion enacted under the Commerce Clause only if it is

clear that there is no rational basis for a congressional

finding that the regulated activity affects interstate

commerce, or that there is no reasonable connection

between the regulatory means selected and the as-

serted ends.” Hodel v. Indiana, No. 80-231 (June 15,

1981), slip op. 7. See Hodel v. Virginia Surface Min-

ing & Reclamation Ass’n, No. 79-1538 (June 15,

1981), slip op. 9. In the latter case, the Court pointed

out (id. at 9-10) that

[jjudicial review in this area is influenced above

all by the fact that the Commerce Clause is a

grant of plenary authority to Congress. aa

2 Cities v. Usery, 426 U.S.,

v United tates 829 U.S. 14, 15

(1946); NLRB v. Jones & Laughlin Steel Corp.,

301 U.S. 1, 37 (1937). This power is “complete

in itself, may be exercised to its utmost extent,

cae cs tan haan: Gibbons v. Ogden,

9 Wheat. 1, 196 (1824). Moreover, this

has made clear that the commerce extends

not only to “the use of channels of interstate or

persons or things in commerce,” but also to “

tivities affecting commerce.” Perez v. United

States, 402 U.S. 146, 150 (1971). As we ex-

in Fry v. United States, 421 U.S. 542,

pee (1975) “felven activity that is y intra-

te in character may be regulated

—— the activity, — with like conduct by

others similarly situated, affects commerce among

the States or with foreign nations.” See National

League of Cities v. Usery, supra, at 840; Heart

of Atlanta Motel, Inc. v. United States, supra, at

255; Wickard v. Filburn, 317 U.S. 111, 127-128

(1942); United States v. Wrightwood Dairy Co.,

315 U.S. 110, 119 (1942); United States v.

Darby, supra, at 120-121.

The challenged provisions of FURPA pass muster

under these settled principles.

1. In enacting PURPA, Congress found that the

activities it sought to regulate affect interstate com-

merce, Section 2 of the Act, 16 U.S.C. (Supp. III)

2601, recites Congress’ finding that

the protection of the public health, safety, and

Nee

proper author-

ity under the Constitution to regulate interstate

commerce require—

Me aio e ll providing for increased

electric energy, increased ef-

ficiency in the use of facilities and resources

—4 electric utilities, and equitable retail

rates for eleetrie eonsumers,

measures respeet to

the wholesale sale of electric energy, [and]

+ * * *

(4) a program for the conservation of

natural gas while insuring that rates to

natural gas consumers are equitable [.]

The initial inquiry is whether the findings have a

rational basis. Hodel v. Virginia Surface Mining &

Reclamation Ass’n, swpra, slip op. 10; Hodel v. In-

diana, supra, slip op. 7.

The legislative record provides ample support for

Congress’ findings. After extensive hearings,” the

appropriate committees in both Houses of Congress

issued reports detailing the magnitude of the nation’s

energy problems and the need to alleviate those prob-

lems by promoting energy conservation and more

efficient use of energy resources. See S. Rep. No.

95-442, 95th Cong., Ist Sess. 7-10 (1977); H.R. Rep.

No. 95-543, 95th Cong., Ist Sess. 5-10 (1977); H.R.

Rep. No. 95-496 (Pt. 4), 95th Cong., Ist Sess. 3-7,

125-130 (1977).% Congress was aware that domestic

*1 The President's proposed National Energy Act was in-

troduced in Congress in May 1977. The Subcommittee on

Energy Conservation and Regulation of the Senate Committee

on Energy and Natural Resources conducted five days of

hearings on the portions of the legislation that were incor-

porated into PURPA. Senate Hearings (Pts. 1 & 2), supra.

The Subcommittee on Energy and Power of the House Com-

mittee on Interstate and Foreign Commerce held hearings

for four days on PURPA. House Hearings (Pt. 3), supra. In

addition, hearings on similar legislative proposals were held

in both the Senate and the House during prior sessions of Con-

gress. H.R. Rep. No. 95-496 (Pt. 4), supra, at 170-175. See,

e.g., Hlectric Utility Rate Reform and Regulatory Improve-

ment: Hearings on S. 1666, et al. Before the Senate Comm. on

Commerce, 94th Cong., 2d Sess. (1976) ; Electric Utility Rate

Reform and Regulatory Improvement: Hearings on H.R.

12461, et al. Before the Subcomm. on Energy and Power of

the House Comm. on Interstate and Foreign Commerce, 94th

Cong., 2d Sess. (Pts. 1 & 2) (1976).

* See also 124 Cong. Rec. 817528 (daily ed. Oct. 7, 1978)

(remarks of Sen. Jackson); id. at 817580 (remarks of Sen.

Bumpers) ; 124 Cong. Rec. 817804 (daily ed. Oct. 9, 1978)

oil production had failed to keep up with demand, and

that, as a result, the nation had become increasingly

dependent on foreign sources of oil. H.R. Rep. No. 95-

496 (Pt. 4), supra, at 3.“ The House Committee ob-

served that “[rJeliance upon imported oil to meet the

bulk of U.S. oil demands could seriously jeopardize the

stability of the Nation’s economy and could undermine

the independence of the United States.” Ibid. See

H.R. Rep. No. 95-543, supra, at 5-6. At the same

time, the nation had recently experienced severe short-

ages in its supplies of natural gas. Id. at 7. In light

of these events, Congress concluded that the energy

problem was nationwide in scope.“

Problems in the electric utility industry, particu-

larly declining efficiency, were contributing heavily to

increased consumption of foreign oil. Both the House

and Senate committees pointed out that the electric

industry was the most capital-intensive major in-

dustry in the United States, and that it consumed

more than one-fourth of the total energy resources

used in this country while supplying only 12% of the

nation’s end user demand for energy. S. Rep. No.

(remarks of Sen. Robert Byrd); 124 Cong. Rec. H 13103

(daily ed. Oct. 14, 1978) (remarks of Rep. Ashley); id. at

H18121-H18122 (remarks of Rep. Dingell); 123 Cong. Rec.

25894 (1977) (remarks of Rep. Ashley); id. at 25916-25917

an Wala, Rep. Ottinger) ; id. at 27068-27064 (remarks of

%In 1970, the United States imported 23% of its oil. By

1976, this percentage had increased to 42% and was expected

to continue rising. See H.R. Rep. No. 95-548, supra, at 5.

Zee, ¢.g., 128 Cong. Rec. 82487-82488 (1977) (remarks

of Sen. Brooke); id. at 32444 (remarks of Sen. Percy) ; Sen-

ate Hearinge (Pt. 1), supra, at 295; House Hearings (Pt. 8),

supra, at 70.

95-442, supra, at 7, 8; H.R. Rep. No. 95-496 (Pt. 4),

supra, at 125. In recent years, the electric utility

industry had been beset by numerous problems, in-

cluding “declining load factors,“ increasing fuel

costs, rapidly rising costs of new capacity, lower than

expected powerplant reliability and a virtual end to

the economies of scale associated with increasing sizes

of generating plants.” H.R. Rep. No. 95-496 (Pt. 4),

swpra, at 129. See S. Rep. No. 95-442, supra, at 9.

These problems resulted in higher electric bills for

the consuming public, a result exacerbated by the

rate structures employed by most utilities, which, in

effect, granted volume discounts to large users. Id.

at 26.

Congress believed that these developments demon-

strated the need to establish federal standards regard-

ing retail sales of electricity in order to encourage the

restructuring of electric utility rates in a manner that

would communicate accurately to customers the costs

of the energy consumed. Through these changes Con-

gress sought to promote conservation and more ef-

ficient use of scarce energy resources. See S. Rep. No.

95-442, supra, at 24-82; H.R. Rep. No. 95-496 (Pt.

4), supra, at 131-133, 136-138, 170-171.“ The House

Load factor,” the ratio of average utility load to “peak

load” (see note 4, supra) is used to measure a utility’s

efficiency of existing; generating plants. See S. Rep. No. 95-

442, supra, at 9; H. &. Rep. No. 95-496 (Pt. 4), supra, at 129.

* Because it wa uncertain about the feasibility of estab-

179

Committee explained that while some states had be-

gun to experiment in the area of eleetrie utility rate

design, many states were not expected to do so for a

variety of reasons, including competition with other

states for industries that are large-scale consumers of

electricity, and the lack of sufficient expertise and re-

sources at the state level to conduct the types of cost

studies that are necessary prior to implementing rate

design reforms. Id. at 129-130, 132-133.”

In addition, Congress determined that the increased

development of cogeneration and small power produc-

tion facilities would help to conserve energy. The

evidence before Congress showed the substantial po-

tential contribution of industrial cogeneration and

small power production to the nations’ energy sup-

plies. S. Rep. No. 95-442, supra, at 21, 23.“ Thus, it

was estimated that if the proper incentives were given,

industrial cogeneration alone could produce sufficient

electric power by 1987 to account for 7% to 10% of

the nation’s electrical generating capacity, represent-

ing energy savings equivalent to 200,000 barrels of oil

per day, and allowing significant cuts in capital ex-

penditures for new power plants.” Congress concluded

that legislation was necessary to overcome several in-

stitutional barriers that hindered the development of

* See 128 Cong. Rec. 32438 (1977) (remarks of Sen.

Brooke); id. at 82448 (remarks of Sen. Percy) ; Senate Hear-

ings (Pt. 1), supra, at 164, 295-296, 327-828, 344, 422, 427,

428.

*8See 128 Cong. Rec. 24714-24716 (1977); id. at 25848,

82660 (remarks of Sen. Percy); id. at 32418-82420 (remarks

of Sens. Hart and Sasser) ; Senate Hearings (Pt. 1), supra, at

186-188; id. (Pt. 2), at 210, 218-227; House Hearings (Pt.

8), supra, at 8238-824, 341, 356.

2 Senate Hearings (Pt. 1), supra, at 126, 141-148, 236.

these alternative energy sources. See pages 9-11,

supra.

Even absent such strong support in the legislative

record for Congress’ findings that the activities it

sought to regulate have a substantial effect on in-

terstate commerce, it is difficult to conceive of a more

basic element of interstate commerce than energy—

a product that reaches into virtually every home and

commercial or manufacturing facility in the country.

No state relies solely on its own resources in this re-

gard, nor is it permitted to withhold its resources

from others. See, e. g., Hughes v. Oklahoma, 441 U.S.

322, 387-889 (1979); Baldwin v. Montana Fish &

Game Commission, 436 U.S. 371, 385-386 (1978).

For example, the utilities involved in this case, the

Mississippi Power and Light Company and the Mis-

sissippi Power Company, sell to their retail cus-

tomers electric power that is generated in part be-

yond Mississippi’s borders (see J.A. 93, 94). By

means of a widespread interstate electric grid, these

Mississippi utilities draw on utilities and facilities

located in other states to meet the load demands of

their customers and they offer reciprocal services to

utilities in other states.” It is evident that the policies

adopted by utilities such as these with regard to such

matters as rate design and relationships with cogen-

eration facilities have a substantial impact upon the

nation’s fuel supply and on the demand for imported

oil. Thus, the intrastate activities of the utilities reg-

* These two companies are the only two Mississippi utili-

ties subject to rate regulation by the State that are also sub-

ject to Title I of PURPA. See 44 Fed. Reg. 76197-76198

(1979). Both are wholly owned by multi-state public utility

holding companies that operate integrated and interconnected

systems in the southern states. See Moody's Public Utility

Manual 2201-2208, 2235, 2242, 2714-2716, 2758, 2766 (1980).

ulated by the Mississippi Public Service Commission

bring these utilities squarely within the reach of

Congress’ power over interstate commerce. See FPC

v. Florida Power & Light Co., 404 ve 453, 458

(1972).

The district court’s conclusion that federal regula-

tion of the intrastate activities of Mississippi's utili-

ties is beyond Congress’ power under the Commerce

Clause cannot be squared with this Court’s recent

decision in Hodel v. Virginia Surface Mining d Rec-

lamation Asen, swpra. In rejecting the argument

that the Surface Mining Control and Reclamation

Act of 1977 was not a valid exercise of congressional

power under the Commerce Clause “because the Act

regulates land use, a local activity not affecting in-

terstate commerce,” the Court emphasized that I tj he

denomination of an activity as a ‘local’ or ‘intra-

state’ activity does not resolve the question whether

Congress may regulate it under the Commerce

Clause.” Slip op. 14. There can be no dispute that

energy, like coal, “is a commodity that moves in in-

terstate commerce.” Id. at 14-15.

2. The remaining inquiry is whether “the Act’s

regulatory scheme is reasonably related to the goals

Congress sought to accomplish.” Hodel v. Virginia

Surface Mining & Reclamation Ass’n, swpra, slip op.

16. One can debate whether the means chosen rep-

resent the wisest choice. But it is clear enough that

Congress was not irrational in concluding that

limited federal regulation of retail sales of electricity

and natural gas, and of relationships between co-

generators and electric utilities, was essential to pre-

vent “destructive interstate competition” (id. at 15)

and to protect interstate commerce from the adverse

effects of various practices in which utilities had

yh)

677

engaged that led to inefficient utilization of energy

resources. The rate design and regulatory standards

in Titles I and III certainly tend to promote the con-

servation of energy and the efficient use of resources

(see pages 4-6 and notes 3-9, supra). Similarly, the

provisions concerning cogeneration and small power

production in Section 210 work to bolster the nation’s

self-sufficiency in the energy field by encouraging the

development of alternative energy sources (see pages

8-11, swpra)." That is enough to sustain the chal-

lenged portions of PURPA as within Congress’ power

under thy Commerce Clause.“

THE CHALLENGED PROVISIONS OF PURPA DO

NOT VIOLATE THE TENTH AMENDMENT

In addition to holding that the Commerce Clause

did not authorize Congress to enact provisions that

regulate the intrastate activities of public utilities,

1 The briefs of several amici, including that of the National

Alliance for Hydroelectric Energy, Inc., et al., describe the

actual and potential contributions of Section 210 to improving

the nation’s energy posture.

Even if some of the specific provisions of Titles I and III

cannot be shown to be related to the basic congressional pur-

pose of fostering interstate commerce, that would not render

any of those provisions unconstitutional. As the Court stated

in Hodel v. Indiana, supra, slip op. 18 n.17 (citations omitted):

pendently and directly related to a valid congressional

goal. It is enough that the challenged provisions are an

iptegral part of the regulatory program and that the

the district court concluded that the provisions at

issue violate the constitutional limitation imposed by

the Tenth Amendment. Citing this Court’s decision

in National League of Cities v. Usery, 426 U.S. 833

(1976), the court below ruled that the Act contra-

venes the Tenth Amendment because it intrudes on

integral and traditional functions of the State of

Mississippi” (J. S. App. 8a-9a) by “displac[ing]”

and “usurp[ing]” the State’s exercise of regulatory

power over the intrastate functions of public utilities

that operate within its borders (id. at 7a).

In National League of Cities, the Court held that

the 1974 amendments to the Fair Labor Standards

Act, which “extended the minimum wage and maxi-

mum hour provisions to almost all public employees

employed by the States and by their various political

subdivisions” (426 U.S. at 836), were unconstitu-

tional because they “directly supplant[ed] the con-

sidered policy choices of the States’ elected officials

and administrators as to how they wish to structure

pay scales in state employment” (id. at 848). Noting

that “[o]ne undoubted attribute of state sovereignty

is the States’ power to determine the wages which

shall be paid to those whom they employ in order to

carry out their governmental functions, what hours

those persons will work, and what compensation will

be provided where these employees may be called

upon to work overtime” (id. at 845), the Court con-

cluded that “the challenged amendments operate[d]

to directly displace the States’ freedom to structure

integral operations in areas of traditional govern-

mental functions * * *” (id. at 852) and therefore

“would impair the States’ ‘ability to function effec-

tively in a federal system’” (ibid., quoting Fry v.

United States, 421 U.S. 542, 547 n.7 (1975)) and in-

trude upon state “ ‘functions essential to separate and

independent existence.“ 426 U.S. at 845, quoting

Coyle v. Oklahoma, 221 U.S. 559, 580 (1911), and

Lane County v. Oregon, 74 U.S. (7 Wall.) 71, 76

(1869).

More recently, in Hodel v. Virginia Surface Min-

ing & Reclamation Ass'n, swpra, slip op. 21 (cita-

tions and footnote omitted; emphasis in original),

the Court concluded that

in order +o succeed, a claim that congressional

commerce power legislation is invalid under the

reasoning of National League of Cities must

satisfy each of three requirements. First, there

must be a showing that the challenged statute

regulates the “States as States.” Second, the

federal regulation must address matters that

are indisputably “attributes of state ty.”

And third, it must be apparent that the States’

compliance with the federal law would directly

impair their ability “to structure integral op-

erations in areas of traditional functions.”

In addition, the Court noted that even where these

three requirements are met, “[t]here are situations

in which the nature of the federal interest advanced

may be such that it justifies State submission.” Ibid.

n.29, citing Fry v. United States, swpra. With these

principles in mind, we turn to examine the statutory

provisions at issue here.

A. The Provisions of PURPA Survive the Tenth Amend-

ment Test Established in Virginia Surface Mining

We note at the outset that Congress could have

preempted the states completely in the regulation of

retail sales by utilities of electricity and natural gas,

and in the regulation of transactions between utili-

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1. The regulation of intrastate activities of elec-

tric and gas utilities is not an essential attribute of

state sovereignty.” Joint federal and state jurisdic-

tion over public utilities has existed since the passage

of the Federal Water Power Act of 1920, ch. 285,

41 Stat. 1063. As the public utility system devel-

pany (Motion to Affirm at 18) on Kentucky v. Dennison, 65

U.S. (24 How.) 66 (1861), is misplaced. In that case, the

the

regulatory systems that were inter-

Court as beyond the constitutional

authorities. FPC v. Southern Cali-

Co., 876 U.S. 205, 218-214 (1964);

Commission of Rhode Island v. Attle-

Steam d Electric Co., 273 U.S. 88, 89-90 (1927).

S. Rep. No. 74-621, 74th Cong., Ist Sess.

); H.R. Rep. No. 74-1318, 74th Cong., Ist

(1935). Given this long history of con-

federal and state regulation of public utili-

regulatory program established by PURPA

cannot be said to “abrogate the States’ * * * plenary

authority” to make determinations “ ‘essential to

[their] separate and independent existence.“ Na-

tional League of Cities v. Usery, supra, 426 U.S. at

Compare Coyle v. Oklahoma, 221 U.S. 559

(1911) (holding that Congress may not interfere

with a State’s choice as to where to locate its seat

of government), with Un ed States v. California,

297 U.S. 175 (1986) and California v. Taylor, 353

Hep

285 rag

efi ek

pletely preempted the states in this area. Such legis-

lation would not have been subject to attack under

the Tenth Amendment even though it might have

displaced the states’ exercise of their “police powers.”

Hodel v. Virginia Surface Mining d Reclamation

Ase’n, supra, slip op. 24-26. It is difficult to ap-

preciate why the statute should be more vulnerable

because Congress chose a less radical course out of

concern that preemptive federal regulation would con-

stitute undue interference with the traditional au-

thority of state regulatory commissions over retail

utility ratemaking.

There is no doubt that Congress believed it was

deferring to state prerogatives. As initially proposed

by the President (Pt. E of S. 1469 and H.R. 6831,

95th Cong., 1st Sess. (1977)) and approved by the

House of Representatives (H.R. 8444, 95th Cong., Ist

Sess. (1977) ), the bill would have established a regu-

latory program similar to that upheld in Virginia Sur-

face Mining. Under this scheme, state regulatory au-

thorities would have been permitted, but not required,

to enforce the retail ratemaking and regulatory stand-

ards and federal rules concerning cogeneration; if

the state authorities chose not to participate in the

program, the regulatory burden would have been

assumed by federal authorities. See H.R. Rep. No.

95-548, ewpra, at 20-21; H.R. Rep. No. 95-496 (Pt.

4), supra, at 183, 145. The Senate, however, de-

the Administration and House proposals. Numerous

witnesses testifying before the Senate subcommittee

expressed opposition to federal preemption for a

variety of reasons, including the belief that the neces-

sary expertise to implement substantive reforms in

this area was at the state, not the federal, level; that

the creation of an additional regulatory layer would

be burdensome and impractical; that a centralized

regulatory authority would not be sufficiently respon-

sive to local needs; and that the states should be

allowed to continue to experiment with different reg-

ulatory approaches.” Based on this testimony, the

Senate Committee concluded that enactment of pre-

emptive legislation would represent an unwarranted

“extension of Federal involvement into utility regu-

lation.” S. Rep. No. 95-442, supra, at 18; see id. at

9.° The Senate accordingly restricted the federal

* For example, a representative of the National Associa-

tion of Regulatory Utility Commissioners (“NARUC”), a

quasi-governmental organization composed of the utility com-

missions of all 60 states, summarized his position as follows:

[We would indicate first that the preemption of valid

State regulatory authority is unnecessary and unjustifi-

able, Second, State commissions are involved already in

the innovative ratemaking process, Third, the imposition

of another layer of * * * regulation at the retail level

would result in increased administrative burden and more

regulatory lag .

Senate Hearings (Pt. 1), supra, at 768. See also id. at 284,

268, 271, 812-818, 382-888, 862-865, 867-869, 870-871, 429,

435, 451, 458, 474, 485-487, 490, 514, 755, 758, 778, 887; id.

(Pt. 2), at 10, 81, 87, 44-45, 127, 445-447.

n See also 128 Cong. Rec. 82898, 82480 (1977) (remarks

of Sen. Johnston); id. at 82394, 82411 (remarks of Sen. Dom-

enici) ; id. at 82894-82896 (remarks of Sen. Jackson); id. at

$2896 (remarks of Sen. Bartlett); id. at 82410 (remarks of

Sen. Durkin).

role “to one of data collection, further study and

evaluation of ratemaking methods and informed ad-

vocacy of rate reform within the existing and tradi-

tional State and local ratemaking procedures.” Id.

at 13-14. In addition, the Senate sought to encour-

age, without federal preemption, the development of

cogeneration and small power production facilities.

Id. at 14.

The bill that emerged from conference reflected a

compromise between the House and Senate versions.

As Senator Jackson remarked in presenting the Con-

ference Report to the Senate, “[t]he conference bill

leaves intact the authority and discretion of the State

commissions and nonregulated municipal and coopera-

tive utilities with respect to ratemaking.” 124 Cong.

Rec. 817528 (daily ed. Oct. 7, 1978). Senator Robert

Byrd similarly observed that the conference bill

preserves existing regulatory relationships. This

means that local conditions will continue to dic-

tate local policies. At the same time, it encour-

ages ty and innovation. Indeed, the

beauty of the conference report is that it is a

national policy which is responsive to each

State’s needs without penalizing a State which

does not fit the norm.

124 Cong. Rec. 817804 (daily ed. Oct. 9, 1978).“

The legislative history thus reflects an overriding

concern to permit state officials to retain their tradi-

tional authority over retail utility regulation. In en-

50 See also 124 Cong. Rec. 817580 (daily ed. Oct. 7, 1978)

(remarks of Sen. Bumpers) ; 124 Cong. Rec. 817801 (daily ed.

Oct. 9, 1978) (remarks of Sen. Metzenbaum); id. at 817802

817808 (remarks of Sens. Hansen and Jackson); id. at 817806

(remarks of Sens, Durkin and Jackson).

acting PURPA, Congress sought to wield its com-

merce power in a fashion that would preserve the

states’ “ ‘separate and independent existence.’” Na-

tional League of Cities v. Usery, supra, 426 U.S at

851, quoting from Coyle v. Oklahoma, supra, 221

U.S. at 580. As the legislative record clearly demon-

strates, PURPA was carefully crafted in recognition

—rather than in derogation—of the benefits of our

dual system of government.”

2. The challenged provisions do not “directly im-

pair [the states’] ability ‘to structure integral oper-

ations in areas of traditional functions.’” Hodel v.

Virginia Surface Mining & Reclamation Ass'n, supra,

slip op. 21, quoting from National League of Cities

v. Usery, supra, 426 U.S. at 852. To begin with,

nothing in Titles I and III or Section 210 of PURPA

requires the states to establish a public service com-

mission or to extend state jurisdiction to utilities that

are not subject to state regulation. PURPA merely

obligates the states to perform certain regulatory

functions with respect to the utilities that they are

already regulating.” Examination of the particular

% See Connecticut Light & Power Co. v. FPC, 824 U.S. 615,

580 (1945) (“[(T]he ‘insulated chambers of the States’ are

still laboratories where many lessons in regulation may be

learned by trial and error on a small scale without involving

a whole national industry in every experiment.“).

Thus, the provisions at issue do not give rise to the con-

cerns expressed in District of Columbia v. Train, 521 F. 2d

971, 994 n.27 (D.C, Cir. 1975), vacated and remanded sub

nom. EPA v. Brown, 481 U.S. 99 (1977), to the effect that

the Tenth Amendment protects the states “from federal com-

pulsion to exercise state governmental functions in an area

where they choose to remain inactive.” Here, the states are

not obligated to participate in the regulatory program unless

they are already engaged in the business of regulating utili-

provisions of the Act and of the regulations promul-

gated by the Commission under Section 210 under-

scores our contention that these provisions represent a

minimal intrusion on preexisting state regulatory ac-

tivities.”

Titles I and III do not displace the states’ basic

authority to design a public utility rate structure

that is responsive to state needs. In these provisions

Congress did not grant federal authorities the power

to force any particular substantive choices upon a

state; rather, the Act clearly provides that the states

are free to choose whether or not to adopt or imple-

ment any of the federal standards. 16 U.S.C (Supp.

III) 2621(a), 2623 (a), 2627(a), (b); 15 U.S.C.

(Supp. III) 3203 (a), 3208.

Moreover, the hearings on the PURPA standards

are to be conducted in accordance with state proced-

ures, except that minimum due process elements—

notice and a public statement of reasons in support of

a determination—must be provided. But that can be

no ground of complaint here. Mississippi law already

ties. Where a state is involved in utility regulation, direct

preemptive federal regulation of utilities would seem to consti-

tute a greater intrusion upon the state’s prerogatives than a

system in which the state is given broad discretion to admin-

ister a limited federal program.

“ Mississippi argues (Motion to Affirm at 10) that the pro-

visions at issue impose a financial burden upon the State.

But, as this Court recently reiterated in Hodel v. Virginia

Surface Mining & Reclamation Ass'n, supra, slip op. 26 n.33,

a measurable financial impact, standing alone, is insufficient

to establish a Tenth Amendment violation. Moreover, Con-

gress was aware that compliance with PURPA would involve

some expenditures of state funds, and it therefore made fed-

eral funds available to help the states meet those expenses. 42

U.S. C. (Supp. III) 6807, 6808.

provides for reasonable notice (Miss. Code Ann. § 77-

3-33 (1973)), and requires the Public Service Com-

mission to keep a “full and complete record” of all

hearings (Miss. Code Ann. § 77-3-63 (1973)) and to

“make and file its findings and order, and its opinion,

if any” (Miss. Code Ann. § 77-38-59 (1973)). Fur-

thermore, under state law a Ill findings shall be sup-

ported by substantial evidence presented in the hear-

ing and shall be in sufficient detail to enable the court

on appeal to determine the controverted questions pre-

sented by the proceeding, and the basis of the commis-

sion’s conclusion” (ibid.). Thus, the proceedings of

the Mississippi Public Service Commission need not be

altered significantly, if at all, to meet the require-

ments of PURPA.

If a state regulatory authority decides to adopt one

or More of the federal standards, it has full discre-

tion to determine the manner of implementation, It

was intended that the standards be adapted to local

needs; they may be partially implemented or phased-

in, and exceptions or other means may be provided

to alleviate any resulting hardships. H.R. Conf. Rep.

No. 95-1750, supra, at 13, 16. In addition, state

regulatory authorities and nonregulated utilities that

had already considered the rate design and other

standards prior to the enactment of PURPA need

not repeat the consideration process as long as the in-

itial proceeding was in “substantial conformance”

with PURPA’s requirements. 16 U.S.C. (Supp. III)

2634; 15 U.S.C. (Supp. III) 3210.

“ Congress recognized that state regulatory authorities

could not have anticipated the Act’s procedural provisions,

and noted that not having permitted intervention and partici-

In drafting the provisions of Section 210, Congress

was also careful to minimize federal interference with

state governmental functions. Congress has tradi-

tionally regulated wholesale electricity transactions,

while leaving to the states the regulation of retail sales

of electricity and intrastate transmissions of electric

power incident thereto. See 16 U.S.C. 824 (a); Con-

necticut Light & Power Co. v. FPC, 324 U.S. 515,

530 (1945); Jersey Central Power & Light Co. v.

FPC, 819 U.S. 61 (1948). A sale from a cogenerator

to a utility is a wholesale transaction (and thus sub-

ject to Commission regulation), whereas the sale of

back-up power from a utility to a cogenerator is a

retail transaction. Congress was presented with a

novel situation: in order to foster development of co-

generation and small power production facilities, regu-

lation of both retail and wholesale transactions be-

tween those facilities and electric utilities was deemed

essential. Because the states were already involved in

regulating retail transactions, Congress, in Section

210, preserved state authority over these transactions.

In addition, because wholesale sales of surplus elec-

tricity from the cogenerator to the utility may have an

impact upon the utility’s retail sales to its regular

customers, Congress provided that states already in-

volved in regulating retail transactions of a particu-

lar utility should also exercise regulatory responsibil-

ities over this limited class of wholesale transactions.

Although state regulatory authorities are required

to “implement” the rules promulgated by the Com-

mission pursuant to Section 210, considerable discre-

tion is afforded as to how to achieve compliance. Un-

pation by the Secretary or affected consumers and utilities

would not “automatically constitute the absence of substan-

tial conformance.” H.R. Conf. Rep. No, 95-1760, supra, at 85.

der the Commission’s regulations, state implementa-

tion “may consist of the issuance of regulations, an

undertaking to resolve disputes between qualifying

facilities and electric utilities * , or any other ac-

tion reasonably designed to implement [the Commis-

sion’s substantive rules ].“ 18 C.F.R. 292.401(a). In

addition, the regulations provide that state authorities

may apply to the Commission for waivers from the

general regulatory requirements. 18 C. F. R. 292.403.

During the rulemaking proceeding that led to the

promulgation of these regulations, the National As-

sociation of Regulatory Utility Commissioners (see

note 36, supra) stated that it “strongly supports

the delegation of authority to State regulatory com-

missions to implement Section 210 of PURPA” (J.A.

84). As NARUC further explained (J.A. 86),

“fajlthough this delegation is prescribed by section

210(f) of PURPA, we particularly support the pro-

visions in the proposed regulations which grant the

States broad flexibility in determining the procedures

by which the regulations are implemented.” These

comments reflect the extent of discretion that state

officials retain under the Commission’s Section 210

regulations.

We do not deal here with a scheme comparable to

the situations presented in Maryland v. EPA, 580 F.2d

215 (4th Cir, 1975), vacated and remanded sub nom.

EPA v. Brown, 481 U.S. 99 (1977); District of Co-

lumbia v. Train, 521 F.2d 971 (D.C. Cir. 1975),

vacated and remanded sub nom. EPA v. Brown, 481

U.S. 99 (1977); and Brown v. EPA, 521 F.2d F.2d

827 (9th Cir, 1975), vacated and remanded, 431 U.S.

99 (1977). In those cases, the EPA Administrator

’ construed the Clean Air Act as authorizing him, in

the event a state failed to submit an acceptable imple-

mentation plan regulating the sources of air pollution,

to promulgate a detailed federal plan and to compel

the states, upon pain of civil and criminal penalties,

to implement that plan by enacting legislation and ap-

propriating funds. See Maryland v. EPA, supra, 580

F.2d at 224; District of Columbia v. Train, supra,

521 F. ad at 979-980; Brown v. EPA, supra, 521 F.2d

at 880.“ Noting that the Administrator’s interpreta-

tion of his powers under the Clean Air Act would

raise serious constitutional questions, the courts of

appeals held that the Act did not authorize the Ad-

ministrator to direct the states to implement the fed-

For example, the court in Brown v. EPA, supra, 521 F.2d

at 880 (footnotes omitted), pointed out that

the Administrator’s plan contemplated among other

Angeles, San Francisco, Sacramento Valley, San Joaquin

Valley and San Diego Regions; the operation by the State

of California of an inspection and maintenance program

designed to reduce emissions from automobiles; limita-

tions to be imposed by the State on the use of motor-

cycles ; the tution by the State of an oxidizing catalyst

retrofit program; control of dry cleaning solvent vapor

losses; the imposition of surcharges on parking spaces;

the development of a procedure of review and approval

of construction or modification of parking facilities; the

establishment by the State of a computer-aided carpool

system; and the fixing by the State of certain

tial bus and carpool lanes. This plan specifically

State of California to undertake those tasks

it, to report its compliance to the Agency,

of the inspection and maintenance pro-

to report the date by which the State would recom-

any needed legislation and to submit [a] signed

the

from the Governor and State Treasurer identi-

sources and amounts of funds for the program”

the “text of needed legislation” if existing legislation

authorize the funds which the program will

aii

eral plans. In contrast to the EPA cases, the pro-

visions of Section 210 and the Commission’s regula-

tions promulgated thereunder do not compel the

states to regulate in an area where they have chosen

to remain inactive (see page 35 and note 40, supra),

or to enact legislation, promulgate regulations, or ex-

pend state funds. Moreover, unlike the EPA cases,

where the states were directed to carry out a detailed

regulatory program, the states have great flexibility

under Section 210 to determine the means of com-

pliance.

In sum, the provisions of PURPA, which impose

only a minimal burden on the states in an area in

which the federal government has concurrent respon-

sibility, do not “impair the States’ ‘ability to function

effectively in a federal system.’” National League of

Cities v. Usery, supra, 426 U.S. at 852, quoting frow

Fry v. United States, supra, 421 U.S. at 547 n.7.

B. Even Assuming That PURPA Works Some Inter-

ference with State Sovereignty, The Federal Interest

It Advances Overrides State Interests

Even if all three of the prerequisites set out in

Virginia Surface Mining are met, a Tenth Amend-

ment challenge may still not succeed. In some situa-

tions, the nature of the federal interest advanced may

be such that it justifies the subordination of state

In Fry v. United States, supra, for example, this

Court upheld the authority of Congress, in the Eco-

nomic Stabilization Act of 1970, to impose a tem-

porary freeze on the wages of state and local gov-

ernment employees. Subsequently, in National League

of Cities, the Court distinguished its previous hold-

ing in Fry, stressing that the statute at issue there

was enacted in response to “an extremely serious prob-

lem which endangered the well-being of all the com

ponent parts of our federal system and which only

collective action by the National Government might

forestall.” 426 U.S. at 853. It noted that “(t]he

means selected were carefully drafted so as not to

interfere with the States’ freedom beyond a very

limited, specific period of time.” Ibid. The Court ob-

served in conclusion that “(t]he limits imposed upon

the commerce power when Congress seeks to apply it

to the States are not so inflexible as to preclude tem-

porary enactments tailored to combat a national

emergency.” Ibid.; see also id. at 856 (Blackmun,

J., eoneurring).

The provisions at issue here are clearly sustainable

under the above reasoning. The nation’s energy prob-

lem—both in 1978, when PURPA was enacted, and

today—is certainly as serious a national problem as

was the inflation that triggered the legislation in-

volved in Fry. The legislative history of PURPA

shows Congress’ deep concern about the nation’s

increasing dependence on imported oil as a threat to

our national interests (see page 20, supra). More-

over, Congress perceived the energy problem to be a

pervasive and long-range one, requiring a response

at the national level.“ Finally, as we have shown,

“{t}he means selected were carefully drafted so as

not to interfere with the States’ freedom” except in

“ See, ¢.g., 128 Cong. Rec. 832444 (1977) (remarks of Sen.

Percy) ; id. st 25804 (remarks of Rep. Ashley); id, at 26916.

— (remarks — of Rep. Ottinger); id. at 25941 (remarks of

a limited way. National League of Cities v. Usery,

supra, 426 U.S. at 853.“

CONCLUSION

The judgment of the district court should be

reversed.

Respectfully submitted.

Rex E. Lez

Solicitor General

CAROL E. DINKINS

Assistant Attorney General

Louis F. CLAIBORNE

General Counsel ELLiorr SCHULDER

Deputy Solicitor KATHRYN A, OBERLY

JOANNE LEVEQUE SusAN VN Cook

Attorney Attorneys

Federal Energy Regulatory

Commission

AvausT 1981

(1909). See Champlin Refining Co. v. r

sion of Oklahoma, 286 U.. 210, 234 (1982) ; United States v.

Jackson, 390 U.S. 570, 685-587 (1968) ; Buckley v. Valeo, 424

U.S. 1, 108-109 (1976). At the least, PURPA should be up-

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