Alabama Power Co. v. Citizens of State
Alabama Power Co. v. Citizens of State
Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 373
The opinion of December 11, 1998, is withdrawn and the following is substituted therefor.
These appeals concern the constitutionality of Act No. 85-645, 1985 Ala. Acts, p. *Page 374 983, which is intended to prevent the unnecessary duplication of facilities that supply "retail electric service" across the State of Alabama. Various municipalities that provide retail electric service, and certain individual and commercial consumers, challenged Act No. 85-645 on numerous constitutional grounds. The trial court held, among other things, that Act No. 85-645: (1) violates the substantive-due-process rights of certain "electric suppliers" and consumers; (2) is a local law and does not comply with the notice requirements for a local law; (3) grants special privileges to private corporations; (4) suspends the operation of the general law for the benefit of private corporations; (5) contains a vague and ambiguous section that incorporates private agreements; and (6) usurps the judicial function of setting the amount of compensation for takings. The plaintiffs named as defendants "the citizens of the State of Alabama"; the trial court refused to dismiss the citizens of the State of Alabama from the actions and also refused to dismiss certain named electric suppliers from the actions. Because we hold that Act No. 85-645 constitutes a valid exercise of the Legislature's power to enact economic regulatory statutes; that the trial court erred in refusing to dismiss the disinterested citizens of the state; and that the trial court correctly refused to dismiss the named electric suppliers, we affirm in part, reverse in part, and remand.
Because of the large investment required to construct and maintain electric-generation and -distribution facilities and the potential for wasteful duplication of such facilities, the Alabama Legislature enacted statutes that limited duplication by restricting competition while protecting consumers by regulating the prices charged for electric service. See, e.g., Act No. 37, Ala. Acts 1920, p. 38 (providing that no facility for the production or transmission of electricity shall be constructed without a certificate of convenience and necessity and providing that rates for utility services shall provide a fair net return on the reasonable value of property devoted to public service).
For many years, the Alabama Legislature delegated the function of regulating the electric industry to the Alabama Public Service Commission (the "PSC"). See, e.g., Ala. Code 1886, § 1120 (establishing the PSC); Ala. Code 1923, §§ 9661, 9771, 9813, 9621 (authorizing the PSC to promulgate regulations and to set utility rates). Although the PSC has long had the authority to regulate public-utility companies, such as Alabama Power Company ("APCo"), it has had a more limited authority to regulate other types of electric suppliers. See, e.g., Ala. Code 1975, §
Under the noncomprehensive regulatory system, four main types of retail electric suppliers became established in Alabama. The Tennessee Valley Authority (the "TVA") provides retail electric service in the northern part of the state. Approximately 22 electric cooperatives (the "Co-ops") supply retail electric service to their members, often in rural areas, including the portion of the state serviced by the TVA. Approximately 36 municipalities, or their utility boards, supply retail electric service to residents of those municipalities, and in some instances to nonresidents. Outside the TVA area, APCo supplies retail electric service to those consumers not served by the Co-ops or the municipalities.
In response to what it viewed as the increasing potential for duplication of facilities and costs of electric distribution systems, the Legislature conducted an investigation of the "economic, financial and environmental impact associated with the potential for duplication of electric distribution facilities used for the furnishing of electric retail service." Act No. 85-645, Ala. Acts 1985, § 1. From its investigation, the Legislature concluded:
Id. at § 1."[W]ith respect to retail electric sales, the benefit normally associated with competition between two or more entities for customers is outweighed by the tremendous cost burden which must be borne by such customers associated with the maintenance of two or more duplicate sets of facilities. It is the further finding of the Legislature that the existence of duplicate facilities for the furnishing of electricity at retail is not in the public interest because of the adverse impact which such duplication has on environmental and aesthetic values and on safety. It is therefore declared that the policy of the State of Alabama is to ensure effective, economical and orderly supply of electric service at retail to customers in the State and to avoid unnecessary duplication of facilities by electric suppliers for the furnishing of such services which would result in waste and in degradation of the environment. To accomplish these objectives, it is necessary and in the public interest to establish, mandate and implement procedures for determining which electric supplier shall furnish electric service to customers at retail within various areas of the State including areas within the corporate limits of municipalities in the State."
To implement its policy decision to prevent wasteful duplication of electric facilities across the state, the Legislature devised the comprehensive regulatory plan embodied in Act No. 85-645 (the "Act")1 to assign service territories to retail electric suppliers. The Act separates service territories into three categories: (1) territories outside municipal limits; (2) territories inside municipal limits; and (3) special territories. Section 3 of the Act addresses the potential for duplication of electric distribution facilities outside the corporate limits of municipalities. For such areas, retail electric service will be provided to a customer by the supplier whose distribution lines are closer to that customer. Act No. 85-645, § 3(a). However, non-municipal suppliers may compete to provide retail electric service to large new industrial customers without regard to the "closer to" rule. Id. at § 3(b).
Section 4 of the Act addresses the potential for duplication of electric facilities inside the corporate limits of municipalities. Where two or more suppliers deliver retail electric service within a municipality, *Page 376 the Act grants the primary supplier the option to purchase the distribution facilities of a secondary supplier. Act No. 85-645, § 4(a). Under the "option" rule, the option price is the value of the distribution facilities computed at replacement cost, plus two and one-half times the last year's gross revenue, plus certain other adjustments. Id. To the extent a primary supplier elects not to exercise the purchase option, the "closer to" rule applies inside municipal limits. Id. at § 4(a)(5). In general, municipal suppliers may not extend retail electric service to customers outside their municipal limits as those limits existed on April 26, 1984. Id. at §§ 3(c), 2(h). In addition to providing for the assignment of service territories by the "closer to" rule for areas outside municipal limits and by the "option" rule for areas inside municipal limits, the Act, in § 7, continues the PSC's prior practice of assigning service territories for particular geographic areas in accordance with agreements between electric suppliers. The Legislature reviewed a number of agreements between electric suppliers and determined that certain of them satisfactorily resolved the duplication problems for the particular geographic areas they covered. Act No. 85-645, § 7. Section 7 incorporates those agreements approved by the Legislature (the "Nonduplication Agreements") by reference and finds that the agreements serve the public interest in a manner consistent with the purposes of the Act with respect to the particular geographic areas to which they apply. Id.
The trial court tried the case on remand in 1990. In March 1997, it rendered a declaratory judgment holding the Act unconstitutional on several grounds. First, the trial court concluded that the Act violated the substantive-due-process rights of the Opponents under §§ 6 and 13 of the Constitution of Alabama of 1901 by imposing regulatory means that were not sufficiently related to the ends stated by the Legislature. Second, the trial court held that the Act's incorporation of the Nonduplication Agreements amounted to the enactment of local laws without the local notice required by §
Further, the trial court refused to dismiss as parties the citizens of the State of Alabama and certain named suppliers. The Opponents appeal this ruling.
"Uniformly, the courts recognize that [the] power [to strike down a statute as unconstitutional] is a delicate one, and to be used with great caution. . . . It follows that, in passing upon the constitutionality of a legislative act, the courts uniformly approach the question with every presumption and intendment in favor of its validity, and seek to sustain rather than strike down the enactment of a coordinate branch of the government. All these principles are embraced in the simple statement that it is the recognized duty of the court to sustain the act unless it is clear beyond reasonable doubt that it is violative of the fundamental law. . . .
"Another principle which is recognized with practical unanimity, and leading to the same end, is that the courts do not hold statutes invalid because they think there are elements therein which are violative of natural justice or in conflict with the court's notions of natural, social, or political rights of the citizen, not guaranteed by the constitution itself. Nor even if the courts think the act is harsh or in some degree unfair, and presents chances of abuse, or is of doubtful propriety. All of these questions of propriety, wisdom, necessity, utility, and expediency are held exclusively for the legislative bodies, and are matters with which the courts have no concern. This principle is embraced within the simple statement that the only question for the court to decide is one of power, not of expediency or wisdom."
(Emphasis added.) (Citations omitted.)
Both the Constitution of the United States and the Constitution of Alabama of 1901 guaranty "due process of law." U.S. Const. amends.
Id. at 75-76 (Holmes, J., dissenting) (citations omitted). The words "due process of law" offered no standard by which the Justices could evaluate economic legislation; thus, the majority had imposed its own economic philosophy onto the Constitution. Accord Morehead v. New York ex rel. Tipaldo,"The
Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics.[5] . . . Some [statutes] embody convictions or prejudices which judges are likely to share. Some may not. But a constitution is not intended to embody a particular economic theory, whether of *Page 379 paternalism and the organic relation of the citizen to the State or of laissez faire. It is made for people of fundamentally differing views. . . ."
In Lochner and its progeny, the activist reevaluation of economic legislation based on the nontextual, political views of the Justices transformed the Supreme Court from a judicial tribunal into a "superlegislature" and transformed the Justices from Article III judges into Platonic Guardians. See Ferguson v.Skrupa,
The political struggle between the Supreme Court on the one hand, and Congress and the Executive on the other, ultimately convinced the Supreme Court to extricate itself from the legislative function of reviewing the substance of economic regulation. See John E. Nowak Ronald D. Rotunda, ConstitutionalLaw 362-80 (4th ed. 1991). In West Coast Hotel Co. v. Parrish,
Id. at 152. Thus, "where the legislative judgment is drawn in question, [a court's inquiry] must be restricted to the issue whether any state of facts either known or which could reasonably be assumed affords support for [the economic regulation]." Id. at 154. Accord Williamson v. Lee Optical Co. of Oklahoma, Inc.,"[T]he existence of facts supporting the legislative judgment is to be presumed, for regulatory legislation affecting ordinary commercial transactions is not to be pronounced unconstitutional unless in the light of the facts made known or generally assumed it is of such a character as to preclude the assumption that it rests upon some rational basis within the knowledge and experience of the legislators."
While this Court has not engaged in a campaign to strike down economic legislation, it has applied some of the less activist substantive-due-process formulations previously employed by the Supreme Court of the United States. For example, in Franklin v.State ex rel. Alabama State Milk Control Bd.,
Since McAdory,
Because this Court's rearticulations of the substantive-due-process test are arguably susceptible to an activist interpretation, the Opponents invite this Court to take advantage of this susceptibility by engaging in aLochner-type review of economic regulatory statutes. Specifically, they would have this Court reevaluate the Legislature's findings of significant costs of duplication and of the sufficiency of the relation between the Act's regulatory provisions and its goals of reducing those costs. We decline to do so. *Page 381
The lessons of our federal counterpart's activist substantive-due-process experiment are clear. The Constitution of Alabama of 1901 does not vest the Judiciary with the essentially legislative power to reevaluate the broad policy considerations inherent in crafting economic policy. See Ala. Const. 1901, §
Accordingly, we refuse to impose an unrestrainable, extra-constitutional standard onto the words "due process of law," because to do so would inevitably lead us to sit as a "superlegislature" with respect to wholly legislative policy decisions. Therefore, we reject the means-end relationship test of Lochner and its progeny, in favor of the more deferential articulation of the substantive-due-process test enunciated inCarolene Products,
The Act's provision of service territories for retail electric suppliers is rationally related to the Legislature's legitimate concern with preventing the economic, environmental, and safety costs that the Legislature reasonably might determine are inherent in the duplication of electric-distribution facilities.10 The elaborate *Page 382
evidentiary arguments of the parties regarding the need for the Act are inapposite.11
This Court has long recognized that it is possible for the duplication of electric-generation and electric-distribution facilities to result in increased costs to consumers.12 SeeEx parte Birmingham,
Section
"A general law is a law which in its terms and effect applies either to the whole state, or to one or more municipalities of the state less than the whole in a class. A general law applicable to such a class of municipalities shall define the class on the basis of criteria reasonably related to the purpose of the law. . . .
"No general law which at the time of its enactment applies to only one municipality of the state shall be enacted, unless notice of the intention to apply therefor shall have been given and shown as provided in Section 106[13] of this Constitution for special, private or local laws. . . .
"A special or private law is one which applies to an individual, association or corporation. A local law is a law which is not a general law or a special or private law."
(Emphasis added.)
This Court has consistently recognized that a statute is a "general law" if, when viewed as a whole, it fulfills its chief purpose with respect to the particular object at which the purpose is directed. See Dillon v. Hamilton,
State ex rel. Collman v. Pitts,"To hold that every law enacted as a general one, and which deals with state-wide questions, becomes local, because qualified and limited in some of its details to meet local requirements and conditions, would render it practically impossible to pass general laws . . . and at the same time vary the minor details thereof, so as to meet the exigencies or differences of various localities confronted with different conditions."
In Collman,
In Crosslin, 436 So.2d at 863-64, this Court upheld a statute that imposed a statewide beer tax on wet counties, and provided separate formulas for the distribution of the tax revenues for certain counties. This Court held the statute was a general law because its chief feature — the imposition of a uniform tax — applied generally. Id. at 864. Although the tax *Page 384
did not affect every county, it was nonetheless general, because it applied to every county in which the object of the tax — the sale of beer — was present. Accord, e.g., Opinion of the Justices No.349,
The main purpose of the Act is to prevent the unnecessary duplication of retail-electric-distribution facilities. The Act accomplishes this purpose in every area of the state in which there is actual or potential duplication. It does so by its chief feature, the assignment of service territories to electric suppliers. If § 7 of the Act and the Nonduplication Agreements were viewed separately from the "closer to" and "option" rules, the "closer" to and "option" rules would nonetheless be general in nature. Because the parties to the Nonduplication Agreements have agreed to an assignment of service territories that eliminates unnecessary duplication within a particular geographic area, the object of the Act to avoid actual or potential duplication is not present in the covered areas. Thus, the "closer to" and "option" rules, even if viewed in isolation, would apply to every area of the state in which there was actual or potential duplication.14 Collman,
If, on the other hand, § 7 and the Nonduplication Agreements are properly viewed as an integral part of the Act, then the Nonduplication Agreements serve as one of three means by which the Legislature avoids the unnecessary duplication of electric-service facilities. The chief feature of the Act is the assignment of service territories to electric suppliers. Ala. Act No. 85-645, § 1 ("To accomplish these objectives, it is necessary and in the public interest to establish, mandate and implement procedures fordetermining which electric supplier shall furnish electric serviceto customers at retail within various areas of the State including areas within the corporate limits of municipalities in the State.") (emphasis added). The Act employs three procedures, or means, by which its chief feature is effected: (1) the assignment of service territories outside municipal limits; (2) the assignment of service territories inside municipal limits; and (3) the assignment of service territories pursuant to agreements that sufficiently eliminate duplication in particular geographic areas. Section 7 of the Act *Page 385
does not exempt specific localities from the chief feature of the Act, the assignment of service territories. Nor does § 7 allow the parties to the Nonduplication Agreements to assign and reassign service territories pursuant to their wishes as embodied in agreements that form no part of the Act. Instead, § 7 of the Act expressly incorporates the assignment of service areas contained in the Nonduplication Agreements, binding the parties to the terms of those agreements by the force of statutory law.15 Thus, the chief feature of the Act — the assignment of service territories — accomplishes the purpose of the Act — the elimination of actual or potential duplication of electric-service facilities — throughout the state. Collman,
Section
"The operation of a general law shall not be suspended for the benefit of any individual, private corporation, or association; nor shall any individual, private corporation or association be exempted from the operation of any general law except as in this article otherwise provided."
Section 108 prohibits an exemption for a private corporation from a general statute designed to govern a general circumstance. Accordingly, this Court has held that the exemption of one business from the general prohibition of the sale of liquor on Sundays was repugnant to the predecessor of § 108 because the exemption thwarted the general purpose of the regulatory statute.Beauvoir Club v. State,
Section
"[N]o . . . law . . . making any irrevocable or exclusive grants of special privileges or immunities, shall be passed by the legislature; and every grant or franchise, privilege, or immunity shall forever remain subject to revocation, alteration, or amendment."17
(Emphasis added.) For almost a century this Court has recognized that while § 22 does prohibit the grant of an irrevocable franchise, it does not prohibit the grant of a revocable "special exclusive privilege . . . awarded . . . for the convenience and benefit of the public," and it has stated, "If this doctrine be not correct, then the State can make no contract for . . . any . . . work of [a] public-utility. . . ." Dickinson v. Cunningham,
"`While [the Legislature] may grant special privileges and immunities to build . . . works of public-utility, and by a failure to duplicate a grant make it in effect for the time being exclusive, yet no Legislature can forestall action by a succeeding Legislature, or bind the state by making the grant in terms exclusive. . . . [E]ven if exclusive privileges were granted, the monopoly feature thereof should always be subject to revocation.'"Town of New Decatur v. American Tel. Tel. Co.,
Indeed, we have specifically recognized, with respect to public utilities providing electric service, that "the State . . . has the power to . . . authorize [them] to conduct their business ina particular area of the State." Alabama Power Co. v. Citizens ofthe State of Alabama,
The Legislature's approval of the Nonduplication Agreements as a means to eliminate unnecessary duplication of electric-service facilities constitutes a continuation of the PSC's well-settled practice in approving nonduplication agreements. See Ala. Code 1975, §
With respect to the public's notice of the terms of the Nonduplication Agreements, this Court has stated that the power to declare a statute void for vagueness
"should be exercised only when a statute is so incomplete, so irreconcilably conflicting, or so vague or indefinite, that it cannot be executed, and the court is unable, by the application of known and accepted rules of construction, to determine, with any reasonable degree of certainty, what the legislature intended."Jansen v. State ex rel. Downing,
Those charged with observing the terms of the Nonduplication Agreements are the parties to those agreements, and they admittedly have full and adequate notice of the duties and obligations imposed on them by the agreements.19 There is no contention that the Nonduplication Agreements fail to provide clear guidelines to the parties with respect to their duties and obligations.20 Because the Act is not "so vague or indefinite, that it cannot be executed," we cannot hold it unconstitutionally vague on the particular grounds asserted by the Opponents. Jansen,
The Takings Clause of the Constitution of the United States provides:
"No . . . private property [shall] be taken for public use, without just compensation."
U.S. Const. amend.
In this case, the secondary suppliers, the selling property owners, do not argue that the option price provided by the Act is too low. Instead, the municipal suppliers — the potential purchasers — contend that the option price is too high and that they are entitled to a judicial determination of just compensation. The federal Takings Clause, however, operates primarily to protect the owner of private property from having his property taken under compulsion by the government without just compensation. See Lucas,
"Against the objection of the owner of private property taken for public use, the Congress may not directly or through any legislative agency finally determine the amount that is safeguarded to him by that clause. If as to the value of his property the owner accepts legislative or administrative determinations . . ., no constitutional question arises. But, when he appropriately invokes the just compensation clause, he is entitled to a judicial determination of the amount."Baltimore Ohio R.R. v. United States,
Section
"Municipal and other corporations and individuals invested with the privilege of taking property for public use, shall make just compensation, to be *Page 390 ascertained as may be provided by law, for the property taken, injured, or destroyed by the construction or enlargement of its works, highways, or improvements, which compensation shall be paid before such taking, injury, or destruction."
Like the federal constitution, the Alabama constitution prohibits only compulsory takings. In addition, §
Section
"Any person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, municipal ordinance, contract, or franchise and obtain a declaration of rights, status or other legal relations thereunder."
Section
"All persons shall be made parties who have, or claim, any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding."
This Court has held that to support a declaratory judgment there must be shown in the record an actual controversy wherein legal rights are affected. Town of Warrior v. Blaylock,
The citizens of the State of Alabama were initially joined as parties to this declaratory-judgment action pursuant to § 9(d) of the Act, which provides that a judgment validating the Act "shall be forever conclusive against all citizens of the state, electric suppliers, municipalities and other governmental units." On remand from the first appeal in this case, in Alabama Power Co. v.Citizens of the State of Alabama,
In contrast, the named electric suppliers are legally bound by the provisions of the Act to defined service territories. The Act actually and directly affects their legal rights and obligations. See, e.g., Act No. 85-645, § 3(a) (imposing the obligation of providing electric service to suppliers in areas outside municipal limits); § 4(a)(5) (providing that § 3 of the Act applies inside municipal limits if the primary supplier elects not to exercise its purchase option). Accordingly, the trial court did not err in refusing to dismiss the named electric suppliers from the action.
V. Conclusion
The Act is a valid exercise of the police power of the State of Alabama and does not suffer from any of the constitutional infirmities asserted by the Opponents. Those citizens of the state having no cognizable interest in this action are not proper parties, but the named electric suppliers, which are directly governed by the Act, are proper parties. Accordingly, we affirm the trial court's order refusing to dismiss the electric suppliers; we reverse the trial court's order holding the Act unconstitutional; we reverse the trial court's order refusing to dismiss those citizens of the state without any interest in the case; and we remand for further proceedings not inconsistent with this opinion.
OPINION OF DECEMBER 11, 1998, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION FOR REHEARING OVERRULED; AFFIRMED IN PART; *Page 392 REVERSED IN PART; AND REMANDED.
Hooper, C.J., and Maddox, Houston, Lyons, Brown, and Johnstone, JJ., concur.
"No person shall be . . . deprived of life, liberty, or property, without due process of law. . . ."
The
"No State shall . . . deprive any person of life, liberty, or property, without due process of law. . . ."
Section 6 of the Constitution of Alabama of 1901 provides in pertinent part:
"[I]n all criminal prosecutions, the accused . . . shall not . . . be deprived of life, liberty, or property, except by due process of law. . . ."
Section
"[A]ll courts shall be open; and that every person, for any injury done him, in his lands, goods, person, or reputation, shall have a remedy by due process of law; and right and justice shall be administered without sale, denial, or delay."
"The doctrine that prevailed in Lochner . . . and like cases — that due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely — has long since been discarded. We have returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws. . . .Ferguson v. Skrupa,". . . We refuse to sit as a `superlegislature to weigh the wisdom of legislation,' and we emphatically refuse to go back to the time when courts used the Due Process Clause `to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought.' . . . Whether the legislature takes for its textbook Adam Smith, Herbert Spencer, Lord Keynes, or some other is no concern of ours. [A statute] may be wise or unwise. But relief, if any be needed, lies not with us but with the body constituted to pass laws for the State. . . ."
"[W]here the whole power of one department is exercised by the same hands which possess the whole power of another department, the fundamental principles of a free constitution are subverted."The Federalist No. 47, at 302-03 (James Madison) (Clinton Rossiter ed., 1961) (emphasis omitted).
Similarly, the Opponents' argument that nonmunicipal competition and selective approval of the Nonduplication Agreements violate their equal-protection rights is unavailing. See Pennell v. City of San Jose,
"No special, private, or local law shall be passed . . . unless notice of the intention to apply therefor shall have been published, without cost to the state, in the county or counties where the matter or thing to be affected may be situated. . . ."
"[E]ach electric supplier is hereby granted a legislative franchise and assigned the sole obligation . . . for provision of retail electric service to all new premises [in its assigned service area]. . . . No other electric supplier shall render electric service to such premises."
Reference
- Full Case Name
- Alabama Power Company v. the Citizens of the State of Alabama Dixie Electric Cooperative v. the Citizens of the State of Alabama the Municipal Utilities Board of Albertville v. the Citizens of the State of Alabama Kenneth E. Everett v. the Citizens of the State of Alabama
- Cited By
- 32 cases
- Status
- Published