La. Pub. Svc. Comm’n v. Fcc, 476 U.S. 355 (1986)

Louisiana Public Service Commission v.

Federal Communications Commission
No. 84-871.

Argued January 13, 1986
Decided May 27, 1986 *
476 U.S. 355

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Syllabus

The Communications Act of 1934 (Act) grants to the Federal Communications Commission (FCC) broad authority to develop and regulate "interstate and foreign commerce in wire and radio communication," 47 U.S.C. § 151, but also provides that "nothing in this chapter shall be construed to apply or to give the Commission jurisdiction with respect to (1) charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication service," § 152(b). In 1980 and 1981, the FCC issued orders changing its prior rules concerning practices for depreciating telephone plant and equipment. Subsequently, upon the petition of private telephone companies, the FCC ruled that § 220 of the Act, which expressly directs the FCC to prescribe depreciation practices, operated to preempt inconsistent state depreciation regulations for intrastate ratemaking purposes, and that, as an alternative ground, federal displacement of state regulation was justified as being necessary to avoid frustration of validly adopted federal policies. The Court of Appeals affirmed.

Held: Section 152(b) bars federal preemption of state regulation over depreciation of dual jurisdiction property for intrastate ratemaking purposes. Pp. 368-379.

(a) Sections 151 and 152(b) are naturally reconciled to define a national goal of the creation of a rapid and efficient telephone service, and to enact a dual regulatory system to achieve that goal. P. 370.

(b) Neither the legislative history of § 152(b) nor the Act’s structure supports the view that the words "charges," "classifications," and "practices," as used in § 152(b), were intended to refer only to "customer charges" for specific services, and not to depreciation charges. Those words are terms of art that are to be interpreted by reference to the trade to which they apply, and thus they embrace depreciation. Pp. 371-373.

(c) There is no merit to the argument that § 152(b) does not control, because the plant involved is used interchangeably to provide both interstate and intrastate service, and that § 152(b)’s reservation of authority to state commissions should be confined to intrastate matters that do not substantially affect interstate communication. Although state regulation will generally be displaced to the extent that it stands as an obstacle to the accomplishment of the full purposes and objectives of Congress, a federal agency may preempt state law only when and if it is acting within the scope of its congressionally delegated authority. Here, § 152(b) constitutes a congressional denial of power to the FCC to require state commissions to follow FCC depreciation practices for intrastate ratemaking purposes, and the FCC may not take "preemptive" action merely because it thinks such action will best effectuate federal policy. Moreover, the Act itself establishes a process designed to resolve "jurisdictional separations" matters, by which process it may be determined what portion of an asset is employed to produce or deliver interstate, as opposed to intrastate, service, 47 U.S.C. § 410(c). Thus it is possible to apply different rates and methods of depreciation to plant once the correct allocation between interstate and intrastate use has been made. Pp. 373-376.

(d) Nor is there merit to the argument that § 220, which directs the FCC to prescribe the classes of property for which depreciation charges may be included under operating expenses in fixing rates, and which prohibits carriers from departing from FCC-set regulations respecting depreciation, requires automatic preemption of all state regulation respecting depreciation. The meaning of § 220 is not so unambiguous or straightforward as to override § 152(b)’s command that "nothing in this chapter shall be construed to apply or to give the Commission jurisdiction" over intrastate service. Pp. 376-378.

737 F.2d 388, reversed and remanded.

BRENNAN, J., delivered the opinion of the Court, in which WHITE, MARSHALL, REHNQUIST, and STEVENS, JJ., joined. BURGER, C.J., and BLACKMUN, J., dissented. POWELL and O’CONNOR, JJ., took no part in the consideration or decision of the cases.