1. By the 1931 amendments to §§ 6 and 29 of the United States
Warehouse Act, Congress terminated the dual system of regulation
provided by the original Act and substituted an exclusive system of
federal regulation of warehouses licensed under the Federal Act
with reference to the subjects covered thereby, except to the
extent that express exceptions in the Federal Act subject certain
phases of the business to state regulation. Pp.
331 U. S.
229-236, p.
331 U. S. 234,
n. 12.
2. Warehouses licensed under the United States Warehouse Act
need not obtain state licenses or comply with state laws regulating
those phases of the business which are regulated under the Federal
Act, except those phases of the business which the Federal Act
expressly subjects to state law. Pp.
331 U. S.
234-236, p.
331 U. S. 234,
n. 12.
3. As amended, the Federal Act is not merely paramount over
state law in the event of conflict, but completely supersedes the
state law, except to the extent that it fails to cover the field or
makes express exceptions in favor of state law. Pp. 234-
331 U. S. 236,
p.
331 U. S. 234,
n. 12.
4. The test of applicability of state laws is whether the matter
on which the State asserts the right to act is in any way regulated
by the Federal Act. If it is, the federal scheme prevails though it
is a more modest, less pervasive regulatory plan than that of the
State. P.
331 U. S.
236.
5. By this test, each of the following matters is beyond the
reach of state law, since Congress has declared its policy with
reference to them in the United States Warehouse Act (p.
331 U. S.
236):
(1) Just and reasonable rates. Pp.
331 U. S. 224,
331 U. S.
236.
(2) Discrimination. Pp.
331 U. S. 225,
331 U. S.
236.
(3) Dual position of warehousemen. Pp.
331 U. S. 225,
331 U. S.
236.
(4) Mixing high quality public grain with inferior grain owned
by warehouseman, delay in loading grain. Pp.
331 U. S. 226,
331 U. S.
236.
(5) Sacrificing or rebating storage charges, retaining desirable
transit tonnage, utilizing preferred storage space. Pp.
331 U. S. 227,
331 U. S.
236.
Page 331 U. S. 219
(6) Maintenance of unsafe and inadequate elevators; inadequate
and inefficient warehouse service. Pp.
331 U. S. 227,
331 U. S.
236.
(7) Operating without a state license. Pp.
331 U. S. 228,
331 U. S.
236.
(8) Abandonment of warehousing service. Pp.
331 U. S. 228,
331 U. S.
236.
(9) Failure to file and publish rate schedules; rendering
warehousing service without filing and publishing schedules. Pp.
331 U. S. 229,
331 U. S.
236.
6. In the absence of any actual conflict with the Federal Act,
the states are free to continue to regulate matters which are not
regulated by the Federal Act,
e.g.:
(1) Failure to secure prior approval of state officials for
management, construction, engineering, supply, financial and other
contracts between the warehouseman and its affiliates. P.
331 U. S.
236.
(2) Failure to secure prior approval of contracts and leases
between the warehouseman and other public utilities. Pp.
331 U. S.
236-237.
(3) Failure to secure approval of issuance of securities. Pp.
331 U. S.
236-237.
156 F.2d 33, affirmed in part, reversed in part.
A district court dismissed suits brought by a warehouseman
licensed under the United States Warehouse Act to enjoin further
proceedings on a complaint filed by one of his customers with the
Illinois Commerce Commission alleging violations of the Illinois
Public Utilities Act, Ill.Rev. Stats.1945, ch. 111 2/3, the
Illinois Grain Warehouse Act, Ill.Rev. Stats.1945, ch. 114, §§ 189
et seq., and Art. XIII of the Illinois Constitution, and
to enjoin the Attorney General of Illinois from instituting
proceedings against the warehouseman to enforce any order of the
Commission in the matter. The Circuit Court of Appeals reversed, on
the ground that the United States Warehouse Act superseded state
regulation of warehousemen licensed thereunder as to the matters
presented in the complaint. 156 F.2d 33. This Court granted
certiorari. 329 U.S. 701. The writs were dismissed as to certain
parties, including the Great Lakes Elevator Corporation. 330 U.S.
810.
Affirmed in part, reversed in part, and remanded, p.
331 U. S.
238.
Page 331 U. S. 220
Opinion of the Court by MR. JUSTICE DOUGLAS, announced by MR.
JUSTICE BLACK.
Respondents in these two cases are warehousemen engaged in the
business of operating public warehouses for the storage of grain in
Illinois. Their warehouses are operated under licenses issued by
the Secretary of Agriculture pursuant to the United States
Warehouse Act, 39 Stat. 486, as amended, 7 U.S.C. § 241
et
seq. The Rice partnership, one of the petitioners, is an
owner, shipper, and dealer in grain, and is a customer of
respondents. The Illinois Commerce Commission, another petitioner,
has certain regulatory jurisdiction, to which we will later refer,
over public grain warehouses and other public utility
companies.
In 1944, Rice filed a complaint with the Commission, charging
respondents [
Footnote 1] with
maintaining unjust, unreasonable,
Page 331 U. S. 221
and excessive rates and charges contrary to the Illinois Public
Utilities Act, Ill.Rev. Stats. 1945, ch. 111 2/3. It charged them
with discrimination in storage rates in favor of the Federal
Government and its agencies and against other customers, contrary
to the Public Utilities Act and the Illinois Grain Warehouse Act,
Ill.Rev. Stats.1945, ch. 114, § 189
et seq. It alleged
that respondents were both warehousemen and dealers in grain, and,
by reason of those dual and conflicting positions, had received
undue preferences and advantages to the detriment of and in
discrimination against petitioners and other customers of
respondents, [
Footnote 2] all
in violation of provisions of the Public Utilities Act, the Grain
Warehouse Act, or the Illinois Constitution of 1870, Article XIII.
It charged respondents with having failed to provide reasonable,
safe, and adequate public grain warehouse service and facilities,
with issuing securities, with abandoning service, and with entering
into various contracts with
Page 331 U. S. 222
their affiliates without prior approval of the Commission; with
rendering storage and warehousing services without having filed and
published their rates; with operating without a state license, and
with mixing public grain with grains of different grades -- all in
violation of provisions of the Public Utilities Act or the Grain
Warehouse Act. Among the remedies sought were the fixing of just,
reasonable, and nondiscriminatory rates, the prohibition of
unlawful discriminatory practices, the establishment of reasonable,
safe and adequate storage and warehousing service, and the
assessment of penalties for violations of Illinois law, including
the cancellation of grain warehouse licenses.
Respondents moved to dismiss on the ground that the United
States Warehouse Act superseded the authority of the Commission to
regulate in the manner sought by the complaint. The Commission
denied the motion and set the cause for a hearing on the merits.
Thereupon respondents brought these suits in the District Court to
enjoin further proceedings before the Commission and to enjoin the
Attorney General of Illinois from instituting any proceedings
against respondents to enforce any order of the Commission in the
matter. Motions of petitioners to dismiss were granted. On appeal,
the Circuit Court of Appeals reversed, holding that the United
States Warehouse Act superseded state regulation of respondents as
to the matters presented in petitioners' complaint. [
Footnote 3] 156 F.2d 33. The cases are here
on petitions for writs of certiorari which we granted because of
the public importance of the questions presented.
The United States Warehouse Act, as originally enacted in 1916
(39 Stat. 486), made federal regulation in this field subservient
to state regulation. It provided in § 29 that "nothing in this Act
shall be construed to conflict
Page 331 U. S. 223
with, or to authorize any conflict with, or in any way to impair
or limit the effect or operation of the laws of any State relating
to warehouses, warehousemen . . ." And § 6 required an applicant
for a federal warehouse license to provide a bond "to secure the
faithful performance of his obligations as a warehouseman" under
state, as well as under federal, law.
In 1931 Congress amended the Act. 46 Stat. 1463. Section 29 was
amended [
Footnote 4] to provide
that, although the
Page 331 U. S. 224
Secretary of Agriculture "is authorized to cooperate with State
officials charged with the enforcement of State laws relating to
warehouses, warehousemen," and their personnel,
"the power, jurisdiction, and authority conferred upon the
Secretary of Agriculture under this Act shall be exclusive with
respect to all persons securing a license hereunder so long as said
license remains in effect."
Section 6 was amended to omit the requirement that the bond be
conditioned on compliance with requirements of state law.
First. The chief matters which are the basis of the
complaint before the Commission are treated as follows by the
Illinois law and by the Federal Act:
(1) Just and reasonable rates. The complaint charges that
respondents' rates are unjust and unreasonable. Under the Illinois
statute, public utility rates must be just and reasonable, and the
Commission, after a hearing, may fix rates which meet that
standard. §§ 32, 36, 41, Public Utilities Act. The Secretary of
Agriculture is authorized by the Federal Act to license
warehousemen [
Footnote 5] on
condition that they conform to the requirements of the Act and the
rules and regulations prescribed thereunder. [
Footnote 6] §§ 4, 9. Every receipt of a licensed
warehouse must disclose "the rate of storage charges." § 18(e).
Before a license is granted, the applicant must file his proposed
rates with the Secretary. Reg. 5, § 3. He must also file
Page 331 U. S. 225
any proposed changes in rates before making them effective.
Id. Rates which are "unreasonable or exorbitant" are
prohibited.
Id. And the Secretary may, after hearing,
suspend or revoke the license if "unreasonable or exorbitant
charges have been made for services rendered." § 25; Reg. 2, §
7.
(2) Discrimination. The complaint alleges that respondents
discriminate against the public and in favor of the Federal
Government and its agencies by granting the latter preferential
storage rates. The power of the Illinois Commission to fix rates,
to which we have referred, includes the power to eliminate
discriminatory rates.
And see Grain Warehouse Act § 15.
The Federal Act requires the publication and disclosure of licensed
warehousemen's rates, as we have seen. Section 13 of the Federal
Act makes it the duty of a licensed warehouseman to receive
agricultural products for storage
"in the usual manner in the ordinary and usual course of
business, without making any discrimination between persons
desiring to avail themselves of warehouse facilities."
And, by § 25, the Secretary is granted authority to suspend or
revoke any license of a warehouseman "for any violation of or
failure to comply with any provision of this Act. . . ."
(3) Dual position of warehousemen. The complaint charged
violations of Illinois law by acts of respondents in storing and
dealing in their own grain while storing grain for the public.
See Hannah v. People, 198 Ill. 77, 64 N.E. 776. The
Federal Act requires every receipt issued for agricultural products
by a licensed warehouseman to disclose
"if the receipt be issued for agricultural products of which the
warehouseman is owner, either solely or jointly or in common with
others, the fact of such ownership. . . ."
§ 18(i). In addition, the receipts for grain must contain
"in event the relationship existing between the warehouseman and
any depositor is not that of strictly disinterested custodianship,
a statement setting forth the
Page 331 U. S. 226
actual relationship. . . ."
Reg. 4, § 1(a)(3). Moreover, § 5a(7) of the Commodity Exchange
Act, 49 Stat. 1491, 1498, 7 U.S.C. § 7a(7) provides that receipts
issued under the United States Warehouse Act
"shall be accepted in satisfaction of any futures contract . . .
without discrimination and notwithstanding that the warehouseman
issuing such receipts is not also licensed as a warehouseman under
the laws of any State or enjoys other or different privileges than
under State law. . . ."
(4) Mixing high quality public grain with inferior grain owned
by respondents, delay in loading grain. The complaint charges that
these practices [
Footnote 7]
are part of the abuses flowing from the conflicting positions of
respondents as public grain warehousemen and dealers in grain. They
are alleged to violate the rule of
Hannah v. People,
supra, and provisions of the Public Utilities Act which
prohibit any preference or advantage to any person and which
disallow any act of prejudice or disadvantage to any person. § 38.
And see Grain Warehouse Act § 17. Section 13 of the
Federal Act, as we have seen, provides that every licensed
warehouseman "shall receive for storage" any agricultural product
"without making any discrimination between persons desiring to
avail themselves of warehouse facilities." Section 15 provides for
the inspection and grading of fungible agricultural products by
federal inspectors. Section 16 permits licensed warehousemen "if
authorized by agreement or by custom" to mingle fungible products
with other products "of the same kind and grade." Section 16
likewise prohibits the mixing of fungible products "of different
grades." [
Footnote 8] Section
30 provides fine and imprisonment for any person who
fraudulently
Page 331 U. S. 227
classifies, grades, or weighs any agricultural product stored
under the provisions of the Act. Section 21 provides that a
warehouseman, in absence of some lawful excuse, shall deliver
"without unnecessary delay" the stored products on proper
demand.
(5) Sacrificing or rebating storage charges, retaining desirable
transit tonnage, utilizing preferred storage space. These
practices, charged in the complaint, [
Footnote 9] are alleged to be other manifestations of the
evils of a public warehouseman's also being a dealer in grain. They
are said to be violative of the principles announced in
Central
Elevator Co. v. People, 174 Ill. 203, 208-209, 51 N.E. 254,
256. And these practices are said to be acts of prejudice or
disadvantage outlawed by § 38 of the Public Utilities Act which we
have already mentioned. On the other hand, the Federal Act, as we
have seen, requires every licensed warehouseman to "receive for
storage" any agricultural product "without making any
discrimination between persons desiring to avail themselves of
warehouse facilities." § 13.
(6) Maintenance of unsafe and inadequate elevators; inadequate
and inefficient warehouse service. The complaint alleges that, as a
result of these practices, fire insurance premiums have become
exorbitant and prohibitive; that owners of grain have suffered
damages due to the deterioration of grain. The Illinois Commission
is granted broad powers over the maintenance of facilities which
are adequate and efficient (§§ 32, 49, Public Utilities Act)
including the power to order the making of additions,
extensions,
Page 331 U. S. 228
repairs, improvements, or changes.
Id., § 50. By § 3 of
the Federal Act, the Secretary of Agriculture is authorized
"to determine whether warehouses for which licenses are applied
for or have been issued under this Act are suitable for the proper
storage of any agricultural product. . . ."
Section 3 also grants the Secretary authority to prescribe the
duties of warehousemen "with respect to their care of and
responsibility for agricultural products stored" in licensed
warehouses. [
Footnote 10] No
license will be granted if the warehouse is found "not suitable for
the proper storage of grain." Reg. 2, § 5. Every warehouseman must
exercise "such care in regard to grain in his custody as a
reasonably careful owner would exercise under the same
circumstances and conditions." Reg. 5, § 8. Every warehouseman must
keep
"his warehouse reasonably clean at all times and free from
straw, rubbish, or accumulations of materials that will increase
the fire hazard or interfere with the handling of grain."
Reg. 5, § 15.
(7) Operating without a state license. The complaint charges
that respondents may not lawfully operate without a license from
Illinois.
See Grain Warehouse Act § 3. The Federal Act
gives the Secretary of Agriculture authority to issue licenses on
terms and conditions specified. §§ 3, 4, 5.
(8) Abandonment of warehousing service. The complaint alleges
that respondents have abandoned services without consent of the
Illinois commission. Approval of the Commission to abandon or
discontinue service is required. § 49a, Public Utilities Act.
Licenses issued under the Federal Act "shall terminate as therein
[§§ 4, 9]
Page 331 U. S. 229
provided, or in accordance with the terms of this Act and the
regulations thereunder. . . ." § 5. By § 25, the Secretary is
authorized to suspend or revoke a license for any violation of the
Act or the regulations. Among the grounds for revocation specified
in the regulations is ceasing to conduct the licensed warehouse.
Reg. 2, § 7.
(9) Failure to file and publish rate schedules; rendering
warehousing service without filing and publishing schedules. These
matters, charged in the complaint, are regulated by §§ 33 and 35 of
the Public Utilities Act. Under the Federal Act, a warehouseman
must file his rate schedules before a license issues; proposed
changes in them must be filed before made; the current schedule of
charges must be posted in a conspicuous place in the principal
office where receipts issued by the warehouseman are delivered to
the public. Reg. 5, § 3; Reg. 2, § 6.
As we have seen, Congress in 1931 made the "power, jurisdiction,
and authority" of the Secretary of Agriculture conferred by the Act
"exclusive with respect to all persons securing a license" under
the Act, so long as the license remains in effect. It is argued by
respondents that § 29 should be construed to mean that the subjects
which the Secretary's authority touches may not be regulated in any
way by any state agency, though the scope of federal regulation is
not as broad as the regulatory scheme of the State and even though
there is or may be no necessary conflict between what the state
agency and the federal agency do. On the other hand, petitioners
argue that, since the area taken over by the Federal Government is
limited, the rest may be occupied by the States; that state
regulation should not give way unless there is a precise
coincidence of regulation or an irreconcilable conflict between the
two.
It is clear that, since warehouses engaged in the storage of
grain for interstate or foreign commerce are in the federal domain,
United States v. Hastings, 296 U.
S. 188,
Page 331 U. S. 230
Congress may, if it chooses, take unto itself all regulatory
authority over them (
see New York Central R. Co. v. New York
& Pa. Co., 271 U. S. 124),
share the task with the States, or adopt as federal policy the
state scheme of regulation.
See Prudential Ins. Co. v.
Benjamin, 328 U. S. 408,
328 U. S.
430-436. The question in each case is what the purpose
of Congress was.
Congress legislated here in a field which the States have
traditionally occupied.
See Munn v. Illinois, 94 U. S.
113;
Davies Warehouse Co. v. Bowles,
321 U. S. 144,
321 U. S.
148-149. So we start with the assumption that the
historic police powers of the States were not to be superseded by
the Federal Act unless that was the clear and manifest purpose of
Congress.
Napier v. Atlantic Coast Line R. Co.,
272 U. S. 605,
272 U. S. 611;
Allen-Bradley Local v. Wisconsin Employment Board,
315 U. S. 740,
315 U. S. 749.
Such a purpose may be evidenced in several ways. The scheme of
federal regulation may be so pervasive as to make reasonable the
inference that Congress left no room for the States to supplement
it.
Pennsylvania R. Co. v. Public Service Comm'n,
250 U. S. 566,
250 U. S. 569;
Cloverleaf Butter Co. v. Patterson, 315 U.
S. 148. Or the Act of Congress may touch a field in
which the federal interest is so dominant that the federal system
will be assumed to preclude enforcement of state laws on the same
subject.
Hines v. Davidowitz, 312 U. S.
52. Likewise, the object sought to be obtained by the
federal law and the character of obligations imposed by it may
reveal the same purpose.
Southern R. Co. v. Railroad
Commission, 236 U. S. 439;
Charleston & W. C. R. Co. v. Varnville Co.,
237 U. S. 597;
New York Central R. Co. v. Winfield, 244 U.
S. 147;
Napier v. Atlantic Coast Line R. Co.,
supra. Or the state policy may produce a result inconsistent
with the objective of the federal statute.
Hill v.
Florida, 325 U. S. 538. It
is often a perplexing question whether Congress has precluded state
action or, by the choice of selective regulatory
Page 331 U. S. 231
measures, has left the police power of the States undisturbed
except as the state and federal regulations collide.
Townsend
v. Yeomans, 301 U. S. 441;
Kelly v. Washington, 302 U.S. l;
South Carolina
Highway Dept. v. Barnwell Bros., 303 U.
S. 177;
Union Brokerage Co. v. Jensen,
322 U. S. 202.
A forceful argument is made here for the view that the Illinois
regulatory scheme should be allowed to supplement the Federal Act
and that the Illinois Commission should not be prevented from
acting on any of the matters covered by Rice's complaint unless
what the Commission does runs counter, in fact, to the federal
policy. That is to say, the actual operation of the state system
may be harmonious with the "measure of control" over warehousemen
which the Federal Act imposes.
Federal Compress Co. v.
McLean, 291 U. S. 17,
291 U. S. 23.
That, it is said, can only be determined after the Illinois
Commission has acted.
That argument is illustrated in several ways. The Illinois
Commission may fix rates; the Secretary of Agriculture cannot. He
may, to be sure, suspend or revoke licenses if unreasonable or
exorbitant charges are made. If the Commission fixes unreasonable
or exorbitant rates, there will be a conflict with the Federal Act,
and the state rate order must fall. But until it is known what the
Commission will do, no conflict with the Federal Act can be shown.
If indeed it reduces rates, as may be presumed, no conflict with
the Federal Act will likely exist. Another illustration concerns
the dual position of the warehousemen. It is pointed out that all
the Federal Act requires is disclosure; that the more basic state
policy of uprooting the practice of public warehousemen storing and
dealing in their own grain is not inconsistent with the federal
policy of disclosure. Another illustration relates to the
preferential and discriminatory practices in connection with the
rebate of storage charges, retention of desirable
Page 331 U. S. 232
transit tonnage, and the utilization of preferred storage space.
All the Federal Act requires is that warehousemen receive products
for storage without making discriminations between persons. What
the Illinois Commission promulgates or requires, if the proceedings
before it are allowed to go ahead, might indeed strengthen and
bolster the federal regulatory scheme, and in no way dilute, impair
or oppose it. Such reasoning could be applied to each of the nine
charges which we have summarized, even including, perhaps, the
requirements for a state license and the filing and publishing of
rate schedules.
See Union Brokerage Co. v. Jensen,
supra.
At first blush, that construction of the Federal Act has great
plausibility. It preserves intact the federal system of warehouse
regulation, leaves the State free to protect local interests, and
strikes down state power only in case what the State does, in fact,
dilutes or diminishes the federal program.
But the special and peculiar history of the Warehouse Act
indicates to us that such a construction would thwart the federal
policy which Congress adopted when it amended the Act in 1931.
Prior to that time, as we have pointed out, the Federal Act, by
reason of its express terms, had been subservient to state laws
relating to warehouses and warehousemen. Congress in 1931 found
that condition unfavorable, and undertook to change it. If Congress
had done no more than to eliminate from § 29 the language which
resulted in the Act's subservience, there would be a strong case
for holding that state regulatory systems were not to be affected
unless they collided with the Act. That construction would receive
reinforcement from the provision in § 29 that the Secretary "is
authorized to cooperate with State officials charged with the
enforcement of State laws" relating to warehouse and warehousemen.
Cf. Union Brokerage Co. v. Jensen,
Page 331 U. S. 233
supra, p.
322 U. S. 209.
But Congress did not choose that simple expedient. It went further
and added to § 29 the mandatory words "the power, jurisdiction, and
authority" of the Secretary conferred under the Act "shall be
exclusive with respect to all persons" licensed under the Act. And
the original provisions of § 6 requiring a bond from licensees
securing the faithful performance of their obligations as
warehousemen under state law were deleted.
These actions were explained in the Committee Reports.
The previous subservience of the Act to state law was said to
have militated "against the full value of Federal warehouse
receipts for collateral purposes." [
Footnote 11] S.Rep. No. 1775, 71st Cong., 3d Sess., p. 2.
The amendment to § 6 followed "naturally" the revision of § 29.
Id. The amendment to § 29 was designed to make "the
Federal act independent of State laws" and to "place the Federal
act on its own bottom."
Id. While a warehouseman need not
operate under the Act, if he chose to be licensed under it, he
would then "be authorized to operate without regard to State acts
and be solely responsible to the Federal act."
Id.
Warehousemen, having made their choice
Page 331 U. S. 234
to operate under state or federal law, should "then be permitted
to operate without interference on the part of any agency."
Id., pp. 2-3. Or, as stated by the House Committee, the
purpose of the amendment to § 29 was to make the Act "independent
of any State legislation on the subject." H.R.Rep. No. 2314, 70th
Cong., 2d Sess., p. 4.
That is strong language. It makes unambiguous what was meant by
the deletion from § 6 of any requirement that federal licensees
comply with state laws regulating warehousemen. It makes clear the
significance to be attached to the special wording of § 29. The
amendments to § 6 and § 29, read in light of the Committee Reports,
say to us in plain terms that a licensee under the Federal Act can
do business "without regard to State acts"; that the matters
regulated by the Federal Act cannot be regulated by the States;
that, on those matters, a federal licensee (so far as his
interstate or foreign commerce activities are concerned) is subject
to regulation by one agency and by one agency alone. [
Footnote 12] That is to say,
Congress did more than make the Federal Act paramount over state
law in the event of conflict. It remedied the difficulties which
had been encountered in the Act's administration by terminating the
dual system of regulation.
Cf. First Iowa Hydro-Electric Coop.
v. Federal Power Commission, 328 U. S. 152. As
stated by the Supreme Court of South Dakota, warehousemen electing
to come under the Federal Act need serve but one master, and that
one the federal agency.
In re Farmers Cooperative Assn.,
69 S.D. p. 202, 8 N.W.2d p. 562. The cooperation which the
Secretary was authorized to undertake with state officials was
cooperation in harmonizing the exclusively federal and the
exclusively state systems of regulation.
Page 331 U. S. 235
In this view of the Act, Congress formulated a policy on
numerous phases of the warehouse business. [
Footnote 13] The policy on rates was not the
fixing of them, but control over them through issuance, suspension,
or revocation of licenses. Dual or conflicting positions of
warehousemen were regulated by disclosure, by general prohibitions
against discrimination between customers, by control over the
license. Unsafe and inadequate warehouses were protected by the
power of the Secretary to determine whether the warehouses of
applicants or licensees were suitable. Mixing of grain was
authorized under specified conditions and prohibited under others.
On each of the nine matters charged in the complaint and listed
above, Congress legislated. And as we read the Act, Congress in
effect said that the policy which it adopted in each of the nine
was exclusive
Page 331 U. S. 236
of all others, and that, if a licensed warehouseman complied
with each requirement, he did all that he need do. He could not be
required by a State to do more or additional things or conform to
added regulations, even though they in no way conflicted with what
was demanded of him under the Federal Act. We recently noted that
Congress can act so unequivocally as to make clear that it intends
no regulation except its own.
Bethlehem Steel Co. v. New York
State Labor Relations Board, 330 U. S. 767. In
these fields Congress has done just that, by the 1931
amendments.
Thus, by eliminating dual regulation and substituting regulation
by one agency, Congress sought to achieve "fair and uniform
business practices" which, as noted in
Federal Compress Co. v.
McLean, supra, p.
291 U. S. 23,
was the purpose of the amended Act.
The test, therefore, is whether the matter on which the State
asserts the right to act is in any way regulated by the Federal
Act. If it is, the federal scheme prevails though it is a more
modest, less pervasive regulatory plan than that of the State. By
that test, each of the nine matters we have listed is beyond the
reach of the Illinois Commission, since, on each one, Congress has
declared its policy in the Warehouse Act. The provisions of
Illinois law on those subjects must therefore give way by virtue of
the Supremacy Clause. U.S.Const., Art. VI, cl. 2.
Second. There were matters, other than those we have
mentioned, which were charged in the complaint before the
Commission.
(1) Failure to secure prior approval of the Illinois Commission
for management, construction, engineering, supply, financial and
other contracts between respondents and affiliates. Such approval
is said to be required by § 8(a)(3) of the Public Utilities
Act.
Page 331 U. S. 237
(2) Failure to secure prior approval of contracts and leases
between respondents and other public utilities. Such approval is
said to be required by § 27 of the Public Utilities Act.
(3) Failure to secure approval of issuance of securities payable
at periods of more than twelve months after date. Such approval is
said to be required by § 21 of the Public Utilities Act.
These regulatory measures, it is said, are designed to prevent
unwarranted drains on utility funds or the creation of unsound
financial structures which would affect the ability of warehousemen
to render adequate service at reasonable rates.
The United States Warehouse Act contains no provisions relating
expressly to these three matters. And we are told that the
Secretary of Agriculture has made no attempt to exercise any
jurisdiction over them. But possibilities of conflict and
repugnancy are conjured up. It is stated, for example, that the
Secretary might determine that a warehouseman could not offer
suitable warehouse service without an addition to his warehouse,
that the financing of an addition might require the warehouseman to
issue securities, that state disapproval of the issue might prevent
the licensee from making the required additions. But it will be
time to consider such asserted conflicts between the State and
Federal Acts when and if they arise. Any such objections are, at
this stage, premature. Congress has not foreclosed state action by
adopting a policy of its own on these matters. Into these fields it
has not moved. By nothing that it has done has it preempted those
areas.
And see Federal Compress Co. v. McLean, supra, p.
291 U. S. 23. In
more ambiguous situations than this, we have refused to hold that
state regulation was superseded by a federal law.
Penn Dairies,
Inc. v. Milk Control Commission, 318 U.
S. 261.
Page 331 U. S. 238
We accordingly affirm in part and reverse in part the judgment
of the Circuit Court of Appeals, and remand the cause to the
District Court for proceedings in conformity with this opinion.
So ordered.
* Together with No. 472,
Illinois Commerce Commission et al.
v. Santa Fe Elevator Corp. et al., also on certiorari to the
same Court.
[
Footnote 1]
The Chicago Board of Trade was also joined as a defendant in the
proceedings before the Illinois Commerce Commission. The issues
raised concerning it are considered in the companion cases decided
this day,
Rice v. Board of Trade and
Illinois Commerce
Commission v. Board of Trade, post, p.
331 U. S. 247.
[
Footnote 2]
The preferences were alleged to have arisen from the practice of
respondents in
"(a) Mixing high quality public grain with inferior grain owned
or acquired by the defendant warehouseman to reduce grain delivered
to the point of minimum quality within the established grain trade
[
sic]. (b) Sacrificing part of storage charges to offset
purchases and sales of grain and otherwise manipulating and
rebating storage charges on grain stored in private warehouse
space. (c) Furnishing transit tonnage to owners of public grain of
the most undesirable type, while withholding for their own use the
most desirable transit tonnage, thereby placing the owners of
public grain at a distinct disadvantage in merchandising grain in
storage. (d) Providing for storage of public grain in old wooden
warehouses carrying exorbitant insurance premium rates, while
storing the warehousemen's own grain in modern warehouses with
reasonable insurance premium rates. (e) Unduly and imprudently
delaying loading of grain after return of warehouse receipt issued
by the particular warehouseman, the tender of proper charges and
the receipt of instructions to load grain for delivery."
[
Footnote 3]
Accord: In re Farmers Co-op. Assn., 69 S.D.191, 8
N.W.2d 557.
[
Footnote 4]
The Secretary of Agriculture who recommended the 1931 amendment
to § 29 gave the following reasons:
"The amendment suggested relative to section 29 aims to make the
Federal warehouse act independent of any State legislation on the
subject. As the law now reads, it can be nullified by State
legislation. There are conflicts at present between the State laws
and the Federal act. For instance, under certain State laws,
warehousemen are permitted to ship the products from their
warehouses to a terminal or other warehouse while the receipts are
outstanding. The prime purpose of the Federal warehouse act is to
make it possible to finance, properly, agricultural products while
in storage. No banker can safely loan on a warehouse receipt
representing a product to be in a certain warehouse when, as a
matter of fact, it may be moved under authority of State law to
some other and distant warehouse. The Federal warehouse act, as now
worded, specifically prohibits removal of the product prior to the
return of the receipts. This department emphatically believes that
this requirement of the Federal act is sound, and the banking
fraternity generally shares that same feeling. It is at once
apparent to you, of course, that, if the Federal act may be
nullified by State laws with respect to a feature as important as
this, that the value of Federal warehouse receipts might be
destroyed. For that reason, then, we have suggested amending
section 29 so as to make the Federal warehouse act independent of
any State legislation on warehousing."
Hearing before Senate Committee on Agriculture and Forestry on
H.R. 7, 71st Cong., 3d Sess., p. 10.
And see id., pp.
22-26.
Independent Gin & W. Co. v. Dunwoody, 40 F.2d 1,
arose under the law as originally enacted. It was a suit brought by
warehousemen, who were licensed under the Federal Act, to enjoin
officials of Alabama from enforcing provisions of Alabama warehouse
law. These were provisions requiring payment of a graduated license
or privilege tax, for the giving of a bond, for the obtaining of a
license, and for submission to state regulation concerning the
suitability and adequacy of the warehouse structure, the character
of records to be kept, the inspection. of the warehouse buildings,
and the audit of the books. Agr.Code Ala.1927, §§ 388-407. The
Federal Act was construed not to exclude such state regulation.
[
Footnote 5]
Section 2 of the Act includes in the definition of "warehouse"
every building "in which any agricultural product is or may be
stored for interstate or foreign commerce. . . ."
[
Footnote 6]
The regulations are contained in 7 C.F.R., Part 102.
[
Footnote 7]
See note 2
supra.
[
Footnote 8]
The regulations promulgated under the Federal Act implement
these provisions. Reg. 5, § 12 provides that licensed warehousemen
shall accept grain for storage and deliver grain out of storage in
accordance with the grades of such grain determined by a federal
inspector. Reg. 5, § 16 provides that such warehousemen shall
deliver to the lawful holder of a receipt grain of the grade and
quantity named in the receipt. Reg. 5, § 18 provides that grain of
different grades may not be mixed except,
inter alia, when
the identity of the grain to be stored is to be preserved.
[
Footnote 9]
See note 2
supra.
[
Footnote 10]
And see § 23, requiring reports to the Secretary
"concerning such warehouse and the condition, contents, operation,
and business thereof," and providing that the licensee "shall
conduct said warehouse in all other respects in compliance with
this Act and the rules and regulations made hereunder."
[
Footnote 11]
The Senate Report also stated, p. 2:
"Bankers have repeatedly pointed out that this section of the
warehouse act is its weakest feature. This amendment will clarify
and remove many uncertainties from the credit man's viewpoint. As
the law now reads, for fear the Federal act may be negatived by
State legislation or regulation, a banker is obliged to follow
closely the laws of the 48 different States, the regulations
thereunder, and the administrative rulings thereunder. This is an
impossible task. The suggested amendment will place the Federal act
independent of State acts, and should enhance the value of receipts
for collateral purposes."
And see H.R. Rep. No. 4, 71st Cong., 1st Sess. As
stated in
note 4
supra, the amendment was recommended by the Secretary of
Agriculture "so as to make the Federal warehouse act independent of
any State legislation on warehousing."
[
Footnote 12]
That is, of course, subject to those express exceptions in the
Warehouse Act which subject phases of the business to state law.
See, e.g., §§ 18 and 20.
[
Footnote 13]
The basic program reflected in the Act was described in H.R.Rep.
No. 60, 64th Cong., 1st Sess., p. 1, as follows:
"The outbreak of the European war emphasized the fact that the
farm marketing machinery of this country is seriously weak,
insufficient, and inadequate -- a condition which already had been
more or less recognized by students of farm economics. From a very
thorough study of our system of marketing, there will appear: (1) a
lack of adequate storage facilities; (2) a lack of proper control
and regulation of such storage systems as exist; (3) an absence of
uniformity in their methods of operation and the form of receipts
issued; (4) a multiplicity of standards for grading and
classification, or in some cases an entire absence of such
standards for grading and classification; (5) a lack of
disinterested graders, classifiers, and weighers; (6) a lack of
proper relationship between the storage and banking systems of the
country."
"The inauguration under this bill of a permissive system of
warehouses licensed and bonded under authority of the Federal
Government for the storage of staple and nonperishable agricultural
products upon which uniform receipts may be issued, the weights and
grades of the products specified therein having been previously
determined by licensed weighers and graders in accordance with
Government standards, would go far in the direction of
standardizing warehouse construction, storage conditions,
insurance, accounting, financing, and the handling and marketing of
farm products."
MR. JUSTICE FRANKFURTER, with whom MR. JUSTICE RUTLEDGE concurs,
dissenting.
More than seventy years ago, this Court upheld the regulation of
grain warehousing rates by Illinois, and did so despite the
relation of the great grain elevators to interstate commerce.
Munn v. Illinois, 94 U. S. 113,
and see Budd v. New York, 143 U.
S. 517. State regulation of grain elevators had become
so much part of our economic and political fabric, and so important
was it deemed that the State laws remain in full force, that, when
Congress, in 1916, passed the first Warehouse Act (Part C of the
Act of August 11, 1916, 39 Stat. 446, 486), it made that Act
subordinate to the requirements of State laws. The Court now holds
that, by the 1931 Amendment to that Act, 46 Stat. 1463, Congress
not only made the federal legislation independent of State law to
the full scope of federal regulation, but also nullified the
extensive network of State laws regulating warehouses, even though
such laws, in their actual operation, in nowise conflict with the
operation of the federal law. The Court thereby uproots a vast body
of State enactments which, in themselves, do not collide with the
licensing powers of the Secretary of Agriculture. It does so on the
ground that Congress, by the 1931 Amendment, provided that
"the power, jurisdiction, and authority conferred upon the
Secretary of Agriculture under this Act shall be exclusive with
respect to all persons securing a license hereunder so long as said
license remains in effect. "
Page 331 U. S. 239
The decision of the case turns on the "power, jurisdiction, and
authority" that Congress has deposited with the Secretary of
Agriculture to the exclusion of action by a State. I could
understand, though that is not my view, a holding that, once a
warehouseman chooses to obtain a federal license, he is quit of
amenability to State law relating to the business of warehousing as
such. On the other hand, the Amendment of 1931 may be read, without
violence to its language, as designed not to displace all State
regulation of warehousing, but merely to prevent conflict or even
concurrence as to the very matters with which the Secretary of
Agriculture can deal. This would leave State law to operate where
it could without impinging on the limited regulatory functions
assumed by the Federal Government. Such is my view. The Court's
conclusion is a kind of admixture of these two views. Today's
decision, apparently, does not altogether free federally licensed
warehouses from State warehouse regulation, nor yet subject them to
State laws, even though these State laws may harmoniously function
without impinging on the licensing powers of the Secretary. To my
way of thinking, the justification for conceding an undefined area
to the States equally justifies leaving to the States all that is
not irreconcilable with the full exercise of the licensing
authority given to the Secretary of Agriculture.
The facts of the case are not in dispute. Rice, an owner and
shipper of grain, filed with the Illinois Commerce Commission a
complaint charging respondent warehouse owners with violations of
the Illinois Public Utility Act (Ill.Rev. Stats.1945, c. 111 2/3),
the Illinois Grain Warehouse Act (Ill.Rev. Stats.1945, c. 114 §§
293-326(a)), and Art. XIII of the Illinois Constitution. The
violations charged include operation without a State license,
exaction of unreasonable rates, failure to publish rates, failure
to provide appropriate facilities, improper
Page 331 U. S. 240
mixing of grades, discrimination in rates, and conflict of
interests as grain dealer and warehouseman. The respondents moved
to dismiss the complaint on the ground that federal license placed
them under the exclusive jurisdiction of the United States
Warehouse Act, and the State's authority was entirely superseded.
Upon denial of this motion by the Illinois Commerce Commission,
respondents applied to the United States District Court for an
injunction against further State proceedings. What is before us is
the ruling of the Circuit Court of Appeals that the District Court
had erred in not granting the injunction.
This Court now orders the proceedings before the Illinois
Commerce Commission to be enjoined, without knowledge on our part
what it is that Illinois would exact of respondents. It has not yet
been decided by the authoritative voice of Illinois law, the
Supreme Court of Illinois, which of her regulatory requirements
would survive respect by that Court for the controlling federal
Act. This Court has heretofore acted on the wise rule that it will
not "assume in advance that a State will so construe its law as to
bring it into conflict with the federal Constitution or an act of
Congress."
Allen-Bradley Local v. Board, 315 U.
S. 740,
315 U. S. 746.
The suit in the District Court was, in any event, premature. It
should, on familiar principles, be ordered held in the District
Court until the claim of Illinois may be authoritatively
ascertained in the State courts, thereby perhaps avoiding a claim
of conflict between State and federal legislation.
Compare
the series of cases from
Thompson v. Magnolia Petroleum
Co., 309 U. S. 478, to
Spector Motor Co. v. McLaughlin, 323 U.
S. 101.
On the merits of the controversy, our problem is to determine
what freedom to regulate its grain warehouses has been left to
Illinois, after Congress exercised its constitutional
Page 331 U. S. 241
power over such warehouses by adopting a licensing system to be
administered by the Secretary of Agriculture under closely defined
authority. Underlying the problem is the important fact that we are
concerned with an economic enterprise which, while it has important
radiations beyond State bounds, does not thereby lose special
relations to the State in which it is conducted. And so we have
once more the duty of judicially adjusting the interests of both
the Nation and the State, where Congress has not clearly asserted
its power of preemption so as to leave no doubt that the separate
interests of the States are left wholly to national protection.
The general considerations to be taken into account in striking
a balance, and not to be acknowledged merely platonically, have
been indicated in my opinion in
Bethlehem Steel Co. v. New York
State Labor Relations Board, 330 U. S. 767.
Suffice it to say that due regard for our federalism, in its
practical operation, favors survival of the reserved authority of a
State over matters that are the intimate concern of the State
unless Congress has clearly swept the boards of all State authority
or the State's claim is in unmistakable conflict with what Congress
has ordered.
Assuming that the undefined scope of Illinois law covers all the
relief sought before the Illinois Commission, it is not suggested
that there is actual conflict between the limited federal control
through the licensing device and the policy of Illinois. Indeed, it
seems to be admitted that the enforcement of the State Act might
well effectuate, at least in some aspects, the policy of the
federal statute. Moreover, despite a statement in the House Report
that the purpose of the 1931 Amendment was to make the Act
"independent of any State legislation on the subject" (H.Rep. No.
2314, 70th Cong., 2d Sess., p. 4), the Court does not find that, in
making
"the power,
Page 331 U. S. 242
jurisdiction, and authority conferred upon the Secretary of
Agriculture . . . exclusive with respect to all persons securing a
license,"
Congress insulated such licensed warehousemen from further
regulation by a State. What the Court holds is that, if Congress
has touched a subject matter, it becomes untouchable by the State,
though there is neither paper nor operating conflict between
federal and State spheres of authority. Thus, while Congress has
not given to the Secretary of Agriculture rate-fixing power,
Congress, it is said, has inferentially deprived Illinois of the
power she has exercised for seventy years to fix grain warehouse
rates.
I cannot agree. As to rates, for example, Congress has merely
given the Secretary power to revoke a license if its holder charges
"unreasonable or exorbitant" rates. The practical assumption, I
submit, is not that Congress has put an end to the tried machinery
for rate-fixing by the States without putting another in its place.
It is, rather, that it would permit its licensing authority to
avail itself of the facilities of the established rate-fixing
agencies of the States and cooperate with them in ascertaining
whether Illinois licensees are charging "unreasonable and
exorbitant" rates. Such would be the practicalities of government
where both State and Nation have converging yet separate interests,
and such authorized collaboration between national and State
governments should be the assumption in construing the Act unless
Congress has left no doubt that it was so bent on avoidance of all
possible conflict that it left no room for concert. Indeed, the
very section which confers "exclusive" authority upon the Secretary
of Agriculture authorizes him "to cooperate with State officials
charged with the enforcement of State laws relating to warehouses.
. . ." 46 Stat. 1465.
By the United States Warehouse Act, Congress did not undertake a
general, affirmative regulation of warehouses,
Page 331 U. S. 243
even remotely comparable to its regulation of other public
utilities. The Act was initiated as warehouse receipts legislation,
written with the Uniform Warehouse Receipts Act in mind. Neither
the language nor the history of the 1931 Amendment marks a
departure from the basic design and policy of the legislation.
Congress did not see fit to establish a compulsory, uniform,
nationwide system for the regulation of grain warehouses, essential
links though they be in the chain of interstate commerce. Nor did
Congress authorize the Secretary of Agriculture to formulate and
enforce such a system. Even in its limited aspect, the Act. does
not apply to all warehouses affecting interstate commerce. Indeed,
Congress exercised no compulsion over any warehouse. Congress
merely offered to those who desired it the privilege of being a
federal licensee. Anyone who wished might continue to operate as a
warehouseman without a federal license. As to these, there is no
question but that State law controls. And even those who obtain a
federal license cannot be compelled to perform any positive duties.
Except for certain penalties for fraud, the only sanction for
disobedience of the few duties imposed is loss of the license.
Congress was content to allow two warehousemen in similar
circumstances to operate under different rules if one chose to seek
a federal license and the other did not. It offered perquisites
incident to such a license to a warehouseman who wanted them. Such
a scheme does not persuasively indicate a purpose to free such a
federal licensee from regulations to which others are subject and
which are not in practical conflict with the requirements of the
federal law. For instance, has Congress really expressed with
reasonable clarity its purpose to forbid to the States the fixing
of warehouse rates, and thus deprive the States of a longstanding
regulatory power which the United States chose not to assume? Is it
not more consistent
Page 331 U. S. 244
with a proper regard for the interplay of State and national
interests to assume that Congress was imposing a minimum of
regulation for those who accepted federal licenses, rather than to
assume that, by inferential sterilization of State laws Congress
meant to make its optional and restricted requirements the maximum?
The "power, jurisdiction, and authority" of the Secretary of
Agriculture which, after 1931, was to be "exclusive" are given full
and fair scope if made to refer only to powers that the Secretary
can effectively exercise. There is exclusion of State power as to
what the Act, substantively speaking, includes, but not exclusion
of a vast potential field of warehouse regulation, not within the
active range of federal administration, simply because Congress
dealt with a small part of it, and that only conditionally.
Nor is there anything in the history of the federal Act which
requires such destructive consequences to a longstanding body of
State enactments. When the 1916 Act was passed, Congress emphasized
the need for State regulation by subordinating federal action to
such regulation. By 1931, forty States had laws regulating
warehouses, laws which, at least in some aspect, did not conflict
with the powers vested in the Secretary of Agriculture. An
impressively large number of States fixed warehouse rates. The
Court now finds in the legislative history of the 1931 Amendment a
purpose to wipe out all these regulations as to the holders of
federal licenses.
That Amendment eliminated the subservience of the federal Act to
the laws of the States, for such subservience really nullified the
practical purposes at which Congress aimed in 1916 by a voluntary
federal licensing system. The purpose was to make "the Federal act
independent of State laws," and to "place the Federal act on its
own bottom." While such language in a Committee Report, treated
merely as words, might be interpreted as an implicit,
Page 331 U. S. 245
roughshod decimation of State authority over any aspect of
warehousing which the federal licensing system touched, howsoever
meagerly and indirectly, it is more consonant with a due regard for
federal State relations to find that the dominating object of the
legislation controls what was meant by "independent of State laws."
For the dominant object was removal of those matters which were
entrusted to the Secretary of Agriculture from subordination to
State action. By saving the authority which it had given to the
Secretary of Agriculture from being rendered futile by State laws,
Congress ought not to be held to have nullified State laws whose
continuing force would not hamper the Secretary of Agriculture in
exercising the powers that Congress gave him. Evidence is lacking
that Congress felt that the correction of the inadequacy which had
revealed itself regarding the 1916 Act required withdrawal of
federal license holders from the requirements of nonconflicting
State regulation. So long as full scope can be given to the
amendatory legislation without undermining nonconflicting State
laws, nothing but the clearest expression should persuade us that
the federal Act wiped out State fixation of rates and other State
requirements deeply rooted in their laws. When neither the mischief
at which the 1931 Amendment was directed nor the policy, terms and
structure of warehousing legislation by Congress in its entirety
necessitate it, disregard of the delicate balance of Federal-State
relations ought not to be attributed to Congress.
If so fundamental a change were designed, it would normally be
reflected in the financial provisions made by Congress and in the
reports on the administration of the Act. The appropriations for
administering the United States Warehouse Act show no substantial
increase as a consequence of the 1931 Amendment. For the years
preceding
Page 331 U. S. 246
and those immediately following the Amendment, the
appropriations were:
1929 (45 Stat. 539, 563) . . . . $ 240,320
1930 (45 Stat. 1189, 1214) . . . 256,000
1931 (46 Stat. 392, 419) . . . . 241,000
1932 (46 Stat. 1242, 1270) . . . 312,200
1933 (47 Stat. 609, 638) . . . . 313,020
1934 (47 Stat. 1432, 1460) . . . 296,220
1935 (48 Stat. 467, 494) . . . . 271,383*
Moreover, those charged with the enforcement of the Act seem to
have been unmindful of the far-reaching consequences now imputed to
it. The reports of the Secretary of Agriculture, of the Chief of
the Bureau of Agricultural Economics, and of the Chief of
Agricultural Marketing Service, for the years after 1931, disclose
administrative attitudes and practices no different from those of
preceding years. No mention is made of the State laws which the
Court now holds were superseded though not conflicting with federal
administration. In citing the advantages incident to a federal
license, no mention appears of so important an item as relief from
existing State regulations.
The history of the federal act shows that at no time has
Congress deemed it desirable to introduce compulsory uniformity of
warehouse regulation. By freeing federal licensees from overriding
State regulation Congress was not by indirection seeking to create
such a uniform system. But the effect of the interpretation now
given to the 1931 Amendment is the establishment of uniformity of
nonregulation, in that it introduces
laissez faire outside
the very narrow scope of the Secretary's powers. It is easy to
exaggerate the danger of undesirable consequences flowing
Page 331 U. S. 247
from a rejected construction. But surely one does not draw on
idle fears in suggesting that, as a result of today's decision, the
gates of escape from deeply rooted State requirements will be open,
although Congress itself has not authorized federal authority to
take over the regulation of such activities and though their State
enforcement does not at all conflict with, but rather promotes, the
limited oversight of warehouses thus far assumed by the Federal
Government. The Court displaces settled and fruitful State
authority, though it cannot replace it with federal authority.
* The more substantial increases in appropriation after 1935
seem to be due to an increase in the volume of licensing, not to an
extension of the fields of supervision.