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A court may invalidate legislation enacted under the Commerce Clause only if it is clear that there is no rational basis for a congressional finding that the regulated activity affects interstate commerce, or that there is no reasonable connection between the regulatory means selected and the asserted ends.
The Public Utility Regulatory Policies Act of 1978 (PURPA) was enacted as part of a legislative package designed to combat the nationwide energy crisis. To further this effort, Titles I and III of PURPA direct state utility regulatory commissions and nonregulated utilities to "consider" the adoption and implementation of specific "rate design" and regulatory standards, and require state commissions to follow certain notice and comment procedures when acting on proposed federal standards. Section 210 of PURPA's Title II seeks to encourage the development of cogeneration and small power facilities, and directs the Federal Energy Regulatory Commission (FERC), in consultation with state regulatory authorities, to promulgate rules to carry out this goal. Section 210 then requires the state authorities, after notice and hearing, to implement such rules, and authorizes the FERC to exempt cogeneration and small power facilities from certain state and federal regulations. The State of Mississippi and the Mississippi Public Service Commission (appellees) brought an action in Federal District Court against the FERC and the Secretary of Energy (appellants), seeking a declaratory judgment that Titles I and III and § 210 are unconstitutional because they exceed congressional power under the Commerce Clause and constitute an invasion of state sovereignty in violation of the Tenth Amendment. The District Court so held and pronounced the challenged provisions void.
Were the provisions of PURPA (15 USCS 3201 et seq.; 16 USCS 824a-3, 2611 et seq.) violative of commerce clause (Art I, 8, cl 3) and Tenth Amendment?
The court held that Titles I and III and 210 of PURPA were within Congress' power under the commerce clause, Congress' specific finding that the regulated activities have an immediate effect on interstate commerce having a rational basis. 210 of the Act did not trench on state sovereignty in violation of the Tenth Amendment, 210's authorization of the Federal Energy Regulatory Commission to exempt qualified power facilities from state laws and regulations doing nothing more than preempting conflicting state enactments in the traditional way, and 210's requirement that state authorities implement the Commission's rules simply requiring state authorities to adjudicate disputes under the statute, the very type of activity customarily engaged in by these authorities. Titles I and III of the Act did not trench on state sovereignty in violation of the Tenth Amendment, the provisions of these titles requiring state utility regulatory commissions to consider federal standards not invoking the compelled exercise of a state's sovereign powers nor setting a mandatory agenda to be considered in all events by state legislative or administrative decisionmakers, but simply establishing requirements for continued state activity in an otherwise preemptible field, and the provisions requiring state commissions to adopt certain procedures also not compelling the exercise of a state's sovereign power and not purporting to set standards to be followed in all areas of the state commission's endeavors.