The Emergency Price Control Act of 1942 specifically withheld
from the Administrator authority to regulate the rates of any
public utility. The amendatory Act of October 2, 1942 provided
"That no . . . public utility shall make any general increase in
its rates or charges which were in effect on September 15, 1942,
unless it first gives thirty days' notice to the President, or such
agency as he may designate, and consents to the timely intervention
by such agency before the Federal, State, or municipal authority
Page 321 U. S. 490
jurisdiction to consider such increase."
In a proceeding pursuant to a sliding scale arrangement
authorized by the local law, the Public Utilities Commission of the
District of Columbia granted an increase in the rates of a public
utility. The Director of Economic Stabilization was permitted to
intervene, but only for the purpose of adducing evidence as to the
inflationary effect of the proposed increase, and no such evidence
1. By the Emergency Price Control Act, as amended, Congress did
not intend to prohibit local regulatory authorities from permitting
any increase in utility rates which was not shown to be necessary
to prevent actual hardship. P. 321 U. S.
2. Upon the record, the Commission, in refusing to enlarge the
scope of the proceeding and to reexamine the basis of the sliding
scale arrangement, did not deny the Director a fair hearing. P.
321 U. S.
3. Upon the issues as properly limited by the Commission, the
Director was afforded opportunity for a full hearing. P.
321 U. S.
137 F.2d 547 affirmed.
Certiorari, 320 U.S. 730, to review the reversal of a judgment,
48 F. Supp. 703, which set aside an order of the Public Utilities
Commission of the District of Columbia authorizing an increase in
the rates of a public utility company.
Page 321 U. S. 491
MR. JUSTICE ROBERTS delivered the opinion of the Court.
Certiorari was granted in this case, 320 U.S. 730, at the
insistence of the Director of Economic Stabilization and the
Administrator, Office of Price Administration, of the United
States, to review a rate order of the Public Utilities Commission
of the District of Columbia. The application and effect of the
Emergency Price Control Act of 1942, [Footnote 1
] and the Act of October 2, 1942, [Footnote 2
] are involved.
The petitioners, who were intervenors before the Commission,
appealed from its order to the District Court of the District of
Columbia, which set aside the order as arbitrary and illegal.
] The Court of
Appeals for the District of Columbia reversed the District Court.
] Understanding of
the questions presented requires a detailed statement of their
The Commission was created, and its powers and duties defined by
Act of Congress in 1913, supplemented in 1926, 1935, and 1939.
] References will be
to the District of Columbia Code, 1940 edition. The statutes
require public utilities within the District to furnish safe and
adequate facilities, just and reasonable service at reasonable,
just, and nondiscriminatory rates, and to obey the lawful orders of
the Commission (§ 43-301). There are detailed provisions respecting
rates and depreciation (§ 43-315). For the purpose of its
functions, the Commission is directed to value
"the property of every public utility within the District of
Columbia actually used and useful for the convenience of the public
at the fair value thereof at the time of said valuation."
(§ 43-306.) Nothing in the statute is to
Page 321 U. S. 492
"taken to prohibit a public utility, with the consent of the
commission, from providing a sliding scale of rates and dividends
according to what is commonly known as the Boston sliding scale, or
other financial device that may be practicable and advantageous to
the parties interested."
But no such arrangement is lawful until found by the Commission,
after investigation, to be reasonable, just, and not inconsistent
with the purposes of the Act. Such arrangement must operate under
the supervision and regulation of the Commission, may be altered
and amended, and may be terminated by the Commission (§ 43-317).
Usual powers to fix rates, charges, and make rules and regulations
are conferred (§ 43-411). The Commission may make rules and
regulations to govern its proceedings and to regulate the mode and
manner of investigations and hearings before it (§ 43-402). Appeal
from its orders is authorized, and the scope of review defined (§§
Pursuant to its authority, the Commission initiated in 1931, and
concluded in 1935, a proceeding for the valuation of the property
of the Washington Gas Light Company at an expense of some $750,000
and arrived at a depreciated rate base as of 1932. It then entered
upon a further inquiry as to rates. After this had lasted some
time, it approved and adopted a sliding scale arrangement, which
involved a rate base, to be adjusted annually by adding net
property additions at cost, a rate of return, and a rate of accrual
to retirement reserve, in the light of which the rates of the
company were to be adjusted annually. It found that the plan was
practical, and would be advantageous to all parties interested.
This plan calls for an annual determination of the rate of return
earned during the "test year," and of the amount available for rate
increase or decrease for the succeeding "rate year," and schedules
and regulations to accomplish such increase or decrease. Such
determination is to be made after public
Page 321 U. S. 493
notice and opportunity for hearing. The plan defines a rate year
as "the twelve months' period from September 1st to August 31st,
inclusive," and the test year as "the twelve months' period ending
. . . June 30th preceding the rate year." At the inception of the
plan, rates were reduced by some $800,000 annually, and subsequent
annual hearings and determinations resulted in rate reductions in
each year after 1935, except in 1937 and 1941, when no changes were
The duration of the system was not prescribed, but, in its
order, the Commission stated that it construed the statute to
permit a termination upon reasonable notice, and found that ninety
days' written notice of termination by Commission or Company would
March 20, 1942, the Commission issued its order of investigation
in conformity with the sliding scale arrangement. After preliminary
investigation by its agents and the representatives of the company,
the Commission, pursuant to statutory requirement, issued, on July
21, 1942, notice of hearing as to rates, charges, and regulations
which were to become effective September 1, 1942, in accordance
with the sliding scale arrangement. The Price Administrator was
given leave to intervene, and was represented at a prehearing
conference and at all hearings, and his counsel was permitted to
cross-examine witnesses and to offer testimony. These began August
18 and continued on August 19, September 4, 8, 11, and 14, and
closed on the last named date. The Commission stated that it would
welcome testimony with relation to the aims and purposes of the
Office of Price Administration during the national emergency and
the relation of those aims and purposes to the proceedings, and
expressed the hope that the Administrator, as intervenor, would
develop testimony along lines which would enable the Commission to
determine whether an increase should be granted in view
Page 321 U. S. 494
of the national emergency. The Administrator's counsel offered
evidence, cross-examined witnesses, argued and filed a brief.
On application of other parties, the proceedings were reopened
and further hearing had September 30th. Counsel for the
Administrator participated and filed a second brief. The hearings
were again closed, and, October 13, the Commission issued its
findings, opinion and order.
The petitioners' standing in the proceedings deserves notice.
Section 302(c) of the Emergency Price Control Act of 1942 [Footnote 6
] provides: "Nothing in this
Act shall be construed to authorize the regulation of . . . rates
charged by any common carrier or other public utility." [Footnote 7
] The admission of the
Administrator as intervenor was therefore not pursuant to statute,
but was governed by the Commission's rules. The Commission had
provided for intervention in its rules. Rule 7.3 is:
"The Commission may grant or deny a petition for leave to
intervene, or may grant the petition upon such conditions and
limitations as it may prescribe."
Rule 7.5 is:
"The granting of a petition to intervene shall not have the
effect of changing or enlarging the issues in the proceeding,
except where such change or enlargement is expressly requested in
the petition and is expressly granted by the Commission after
opportunity for hearing upon the question has been afforded all
After final submission, and before promulgation of the
Commission's order, the Emergency Price Control Act was amended by
the Act of October 2, 1942, which, while prohibiting the President
from suspending that portion of the original Act exempting public
utilities from the scope of the statute, provided:
"That no common carrier or other
Page 321 U. S. 495
public utility shall make any general increase in its rates or
charges which were in effect on September 15, 1942, unless it first
gives thirty days notice to the President, or such agency as he may
designate, and consents to the timely intervention by such agency
before the Federal, State, or municipal authority having
jurisdiction to consider such increase."
50 U.S.C. Supp. III, § 961.
On the showing of the Commission's staff, the company would have
been entitled, under the sliding scale, to an increase in rates of
$324,718. The increase approved by the Commission was $201,424,
effective September 1, 1942. In its order, however, the Commission
directed the company's attention to the provisions of the Act of
October 2, 1942, and quoted its language. Accordingly, the company,
October 14, 1942, served notice upon the Director of Economic
Stabilization, who had been designated for the purpose by the
President, of the proposed increase in rates together with a copy
of the Commission's order and later consented to his intervention.
The court below has found that the requisite notice and consent to
intervention was given by the company in accordance with the
Counsel who had participated in all the prior proceedings for
the Administrator filed with the Commission October 19 a petition
in the name of the Administrator, and on behalf of the Director,
asking that the Commission vacate its order and reopen the
proceedings to allow the Director to intervene. The Commission
reopened the proceeding and set a hearing for November 2
"for the purpose of receiving from the Office of Price
Administration, on behalf of the Director of Economic
Stabilization, additional evidence relating to the inflationary
effect, if any, of the increase in rates authorized by order No.
2401, and intervention is granted for such purpose."
When the reopened proceedings came on for hearing, the same
counsel who had theretofore participated in behalf of the
Administrator appeared before the Commission, offered no
Page 321 U. S. 496
witnesses, but renewed a motion previously filed that the
proceeding be reopened "without restriction as to the type of
evidence to be presented" and that the Commission vacate its order.
The motion was denied, the Commission announcing that it was ready
to receive evidence in accordance with the order reopening the
proceeding. The petitioners offered no evidence. On being asked
whether they had any testimony to present in accordance with the
order to reopen the proceedings, they asked for a continuance so
that they might consult their associates. The request was granted.
On November 4, counsel recalled a witness for further examination,
but offered no other evidence. The proceedings were then closed for
the third time without the offer of any testimony relating to the
national economic policy developed under the Emergency Price
Control Act as amended "and the effect thereon of increase in rates
or charges of common carriers or other public utilities."
The Commission reconsidered the record and the testimony and,
November 9, issued its order in which it reviewed the proceedings
and found that the evidence adduced failed to show that the rates
authorized by order No. 2401 were unduly inflationary. It denied
the Director's petition to vacate the order. Thereafter, the
company put the new rates into effect as of November 16th. On
appeal by the petitioners, the District Court held that the action
of the Commission, in the light of the record, was arbitrary and
illegal, and vacated the order. The Court of Appeals reversed,
holding that the Commission had afforded petitioners full
opportunity for a hearing upon any question which, under the law
and the rules of the Commission, was open in the proceeding and
that it was not arbitrary or illegal for the Commission, on the
record made, to deny the abandonment of the sliding scale plan and
the prosecution of an entirely new rate investigation involving
fair value, depreciation, rate of return,
Page 321 U. S. 497
and other elements commonly considered in such an
The petitioners seek vacation of the order on the ground that
the Commission denied them a full and fair hearing. This contention
is based upon the substantive contention that, under the Acts of
January 30 and October 2, 1942, they were entitled to demand that
the Commission enlarge the scope of the hearing and convert the
inquiry into one whether an increase of rates was necessary to the
company to prevent hardship. The Commission, on the other hand,
insists that it was entitled to conduct the proceedings in
accordance with its statutory powers as they existed prior to 1942,
and, at most, accord the petitioners a full hearing as to the
effect of any order in its relation to inflation in the war
emergency. Thus, it appears that the controversy is essentially one
between two governmental agencies as to whether the powers of the
one or the other are preponderant in the circumstances.
In view of the petitioners' insistence that they were entitled,
in effect, to control and direct the inquiry without regard to the
statutory powers of the Commission, we shall first examine the
extent of the authority conferred upon petitioners by Congress.
The Emergency Price Control Act of 1942, while it gives the
Administrator power over prices of "commodities," which are not
generally regulated by public authority, specifically and expressly
withholds from the Administrator jurisdiction over public utility
rates. And, as we have noted, the Stabilization Act of October 2,
1942, did not alter this prohibition, but required merely that no
utility should generally increase rates in effect September 15,
1942, unless it first gave thirty days' notice to the President or
his representative and consented to the timely intervention of that
representative before the federal, state, or municipal authority
having jurisdiction to consider the increase.
Page 321 U. S. 498
It is not clear that this language confers a right of
intervention. The bill as passed by the Senate contained a
provision that there should be no increase in utility rates unless
they were approved by the President. The House refused to concur,
with the result that only the language now contained in the proviso
appeared in the bill. The assertion that, while the Price
Administrator or the Director may present his views to the
regulatory body, "he had nothing to say about its decision," was
made and not contradicted on the Senate floor in discussion of the
conference report. Evidently Congress intended to grant the
Administrator plenary control over commodity prices, since they
generally were not the subject of local regulation, but, in both
the original Act and the amendment, as this court has recently said
in Davies Warehouse Co. v. Bowles, 321 U.
, 321 U. S. 154
was careful "to avoid paralyzing or extinguishing local
institutions." Thus, it limited the right of the Executive to
notice by the utility and the utility's consent that the Executive
might be heard by the regulatory body having final authority in the
If the petitioners were admitted as intervenors by a state
commission, or by the District Commission, which is a respondent
here, they might, of course, be admitted to participation in the
proceeding upon reasonable terms, and one of the most usual
procedural rules is that an intervenor is admitted to the
proceeding as it stands, and in respect of the pending issues, but
is not permitted to enlarge those issues or compel an alteration of
the nature of the proceeding. To this effect was the Commission's
rule on the subject. It would seem, then, that, in the absence of
clear legislative mandate to the contrary, the petitioners should
not possess greater rights than other intervenors.
This the petitioners deny. They say that, notwithstanding the
absence of any categorical enactment, the general purpose of the
original Act and its supplement
Page 321 U. S. 499
show that Congress intended to prohibit state and local
regulatory authorities from permitting any increase in utility
rates which was not shown to be necessary to prevent actual
hardship. We are asked, then, not only to revise the views
expressed in Davies Warehouse Co. v. Bowles, supra,
the scope of the Acts, but to infer from a general expression of
congressional policy, the limitation of existing powers conferred
by law on regulatory commissions throughout the nation, both state
and federal, and the endowment of a different federal agency with
new and superior rights and powers. [Footnote 8
] This we are unable to do.
The other contention of the petitioners stems from their view as
to the effect of the Emergency Price Control Act and the
Stabilization Act. They insisted below that they were denied a fair
hearing because the Commission refused, in the current proceeding,
to alter and enlarge the scope and the character of the inquiry. It
will be remembered that, under the Commission's existing order, a
termination of the sliding scale arrangement required ninety days'
written notice. There was no application of any rate payer or any
purpose of the Commission in the spring of 1942 to abrogate the
arrangement. On the contrary, the Commission gave the required
notice for the usual annual adjustment under the plan; and, after
the necessary investigations by its agents, gave notice of hearing
with respect to such adjustment. At that point, and at a time when
no notice of increase of rates was required by any Act of Congress,
the Administrator, upon his application was permitted to intervene
in the proceeding.
In his petition, and at the hearings, he asserted and reiterated
that he had the right to go into the propriety of the rate base,
the operating expenses, including depreciation expenses, taxes, and
rate of return, summarizing his
Page 321 U. S. 500
demand as "a full and complete inquiry for the purpose of
determining what are fair and reasonable rates. . . ." The
petitioners now insist that their desire was limited to examination
of certain factors involved in the sliding scale. But the courts
below did not so understand. The District Court, which sustained
the appeal, said: "The Commission was requested to reconsider the
basic principle of the sliding scale arrangement. . . ." The Court
of Appeals said
"the Price Administrator departed from the field committed to
his care and demanded that the Commission suspend the application
of the sliding scale, and reexamine its basis in a complete
investigation of all the elements that enter into the determination
of a utility rate by a regulatory body."
These characterizations of the Administrator's contentions
before the Commission are supported by the record.
If we consider the petitioners' present position, we find that
the Commission heard all evidence offered, and says it weighed it.
The Administrator urged that the straight line method of
depreciation embodied in the sinking find plan must be discarded in
favor of a sinking fund method under the force of decisions of this
court, a position unsupported by our cases, and evidence was
offered to show the result which would ensue the substitution. Some
testimony was adduced as to rate of return, and the Commission's
report shows this was considered. In short, if the inquiry was
limited to the issues comprehended in the Commission's order of
investigation, the petitioners were afforded every opportunity for
a full hearing. On the subject respecting which the petitioners
were especially competent to enlighten the Commission -- namely,
the inflationary effect of a rate increase of 2.28% for one year,
amounting, on the average, to three cents per month per customer,
in the light of wage increases and increased commodity prices and
overall conditions in the national
Page 321 U. S. 501
economy -- no evidence was tendered by petitioners, in response
to repeated invitations by the Commission.
The judgment is
56 Stat. 23.
56 Stat. 765.
Byrnes v. Flanagan,
48 F. Supp. 703.
Washington Gas Light Co. v. Byrnes,
137 F.2d 547.
C. 150, 37 Stat. 974, c. 8, 44 Stat. 920, c. 742, 49 Stat. 882,
c. 40, 53 Stat. 569, D.C.Code, 1940 Ed. Tit. 43, §§ 101-1006.
56 Stat. 36, 50 U.S.C. § 942(c).
Compare Davies Warehouse Co. v. Bowles, 321 U.
Davies Warehouse Co. v. Bowles, supra; Yonkers v. United
States, 320 U. S. 685
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK, and MR.
JUSTICE MURPHY concur, dissenting.
This case goes hand in hand with Davies Warehouse Co. v.
Bowles, 321 U. S. 144
That decision expanded the "public utility" exemption in the
Emergency Price Control Act to include a wide variety of
enterprises. The present decision illustrates the value of that
The Stabilization Act prohibits any "utility" from making "any
general increase in its rates or charges which were in effect on
September 15, 1942" without giving the President's agent the right
to intervene in the proceedings. The present decision goes far
towards making that provision ineffective. It allows the commission
so to shape the issues of the rate proceeding as to exclude the
data most relevant to a determination of whether any rate increase
should be allowed. The power of a commission to shape the issues as
it desires and to restrict the Director of Economic Stabilization
to those issues is not a power which is apt to be neglected. The
Director may, of course, proclaim against rate increases. But he
does not need the right to intervene to prove that rate increases
are inflationary. That is self-evident. The right to intervene, if
it is not a right to introduce relevant data bearing on the true
earnings and returns of the utility, is an empty right indeed.
I agree that Congress did not transfer ratemaking powers from
the commissions to the Director. I agree that Congress must have
contemplated that some rate increases might take place, or else it
would have treated
Page 321 U. S. 502
the whole problem quite differently. But I find not the
slightest indication that the Director was to be denied a full
hearing. And I do not see how a full hearing could be accorded
unless he was given the opportunity to establish, if he could, that
the case under consideration showed no real hardship, that wartime
demands were not causing the company to suffer, that its financial
integrity and its ability to render service remained unimpaired,
that its property was not being confiscated, that it was not being
treated unfairly as compared with other companies.
We are told that this company has an inflated rate base of some
$1,000,000. We are told that its excessive charges for depreciation
expense were over $225,000, a year as compared with the rate
increase of about $200,000 a year. We are told that a full hearing
would have disclosed that the company was in fact earning more than
6 1/2%. I do not know what the evidence would show. But an offer of
proof in a rate case could not be more relevant.
I believe, moreover, that, when Congress halted general rate
increases and gave the Director a right to intervene, it did not
sanction rate increases regardless of need and regardless of
inflationary effect. I think it meant to make utility commissions
at least partial participants in the war against inflation, and
gave them a sector of the front to control. Though it did not
remove the established standards for ratemaking, I do not think it
intended utility commissions to proceed in disregard of the
requirements of emergency price control and unmindful of the
dangers of general rate increases. To the contrary, I think
Congress intended that there should be as great an accommodation as
possible between the old standards and the new wartime necessities.
The failure of the commission to make that accommodation is best
illustrated, perhaps, by its treatment of taxes. The commission
allowed the company to deduct as operating expenses all income
taxes up to and including 31%. That this amount
Page 321 U. S. 503
includes wartime taxes is evident from the fact that the highest
corporate tax rate which prevailed from 1936 to 1939 was 19%. We
all know that the extraordinary expenditures incurred for the
defense of the nation started with the Revenue Act of 1940. It has
been accepted practice to deduct income taxes as well as other
taxes from operating expenses in determining rates for public
utilities. Galveston Electric Co. v. Galveston,
258 U. S. 388
258 U. S. 399
But this is war, not business as usual. When income taxes are
passed on to consumers, the inflationary effect is obvious. And it
is self-evident that the ability to pass present wartime income
taxes on to others is a remarkable privilege indeed.