Student Post: Brandeis’ Dissent in Public Utilities Comm. of Rhode Island v. Attleboro Steam & Electric Co.

In Attleboro, the Rhode Island public utilities commission (Commission) sought to regulate the price a Rhode Island-based power supplier could charge its Massachusetts-based buyer. Commission decided it could regulate the price its home-state supplier charged the out-of-state buyer because the current price was unreasonable. Commission determined the price was unreasonable because the supplier was operating at a loss and if the supplier continued to operate this way, it would be detrimental to Rhode Island purchasers of electricity because the supplier would have to charge them more for the power they used to make up for the loss the supplier had from selling to Attleboro.

The Supreme Court of Rhode Island found Commission’s regulation invalid because it violated the Commerce Clause. The regulation violated the Commerce Clause because it put a direct burden on interstate commerce by charging the out-of-state buyer more than the contracted price.

The US Supreme Court majority agreed with the Rhode Island Supreme Court. It found the regulation violated the Commerce Clause because the supplier’s business was not essentially local, and that the regulation placed a direct burden on interstate commerce. The Court further held that regulations of companies whose business is not essentially local and places a direct burden on interstate commerce are beyond states’ powers.

In dissent, Justice Brandeis points out that because the supplier is a Rhode Island-based public utility, that it is governed by the Commission, and the Commission’s rules are binding on the supplier unless invalidated under the Commerce Clause. Brandeis argues the supplier is essentially local in its business because Attleboro only receives 3% of the electricity the supplier supplies. Additionally, Brandeis points out that Congress has said nothing about which regulations Commission impose on their suppliers are valid or invalid. Thus, Brandeis concludes that because Congress is silent on this issue of regulating interstate sales of electricity and because the business of the supplier is essentially local, the Commission regulation did not violate the Commerce Clause.

Note one after this case asks whether Brandeis’s method of allowing states to prescribe their own regulations to interstate electricity sales would have been as effective as a federal regulatory system to prevent rate discrimination. I believe it could be.

The states would still be under the gun of the Commerce Clause to refrain from interfering with interstate commerce, but given the first prong of the test for violating the commerce clause, states should have some wiggle room. The business must be something besides essentially local to fall under the Commerce Clause. I believe this gives states power to regulate interstate commerce that is incidental or essentially immaterial to the suppliers the states’ commissions regulate. I think this was the case in Attleboro. Three percent of all electricity supplied seems miniscule.

So given fifty ways of regulating this issue would bring about more ideas and debates, I believe granting this power to the states would potentially yield better ways to regulate and would still prevent rate discrimination because the Commerce Clause still looms in the background.