Amendment 5 — Congressional Regulation Of Public Utilities And Substantive Due Process

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Fifth Amendment :

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

When Congress has granted federal agencies jurisdiction over various public utilities, it has typically prescribed standards for fixing utility rates that are substantially identical to the constitutional standards by which the Supreme Court has tested the validity of state action. Consequently, the review of such agencies’ orders has seldom turned on constitutional issues. In two cases, however, the Court sustained maximum rates that the Secretary of Agriculture prescribed for stockyard companies only after detailed consideration of numerous items excluded from the rate base or from operating expenses, apparently on the assumption that error with respect to any such item would render the rates confiscatory and void.[1](https://www.law.cornell.edu/constitution-conan/amendment-5/congressional-regulation-of-public-utilities-and-substantive-due-process#fn1amd5 " St. Joseph Stock Yards Co. v. United States, 298 U.S. 38 (1936); Denver Union Stock Yards Co. v. United States, 304 U.S. 470 (1938). ") A few years later, in FPC v. Hope Natural Gas Co.,[2](https://www.law.cornell.edu/constitution-conan/amendment-5/congressional-regulation-of-public-utilities-and-substantive-due-process#fn2amd5 " 320 U.S. 591 (1944). The result of this case had been foreshadowed by the opinion of Chief Justice Harlan Stone in FPC v. Nat. Gas Pipeline Co., 315 U.S. 575, 586 (1942), to the effect that the Commission was not bound to use any single formula or combination of formulas when determining rates. ") the Court adopted an entirely different approach. It held that the validity of the Federal Power Commission’s order depended upon whether the impact or total effect of the order was just and reasonable, rather than upon the method of computing the rate base. Rates that enable a company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed cannot be condemned as unjust and unreasonable even though they might produce only a meager return in a rate base computed by the “present fair value” method.

Orders prescribing the form and contents of accounts that public utility companies keep[3](https://www.law.cornell.edu/constitution-conan/amendment-5/congressional-regulation-of-public-utilities-and-substantive-due-process#fn3amd5 " Am. Tel. & Tel. Co. v. United States, 299 U.S. 232 (1936); United States v. N.Y. Tel. Co., 326 U.S. 638 (1946); Northwestern Co. v. FPC, 321 U.S. 119 (1944). ") —and statutes requiring a private carrier to furnish the Interstate Commerce Commission with information for valuing its property[4](https://www.law.cornell.edu/constitution-conan/amendment-5/congressional-regulation-of-public-utilities-and-substantive-due-process#fn4amd5 " Valvoline Oil Co. v. United States, 308 U.S. 141 (1939); Champlin Rfg. Co. v. United States, 329 U.S. 29 (1946). ") —have been sustained against the objection that they were arbitrary and invalid. An order of the Secretary of Commerce directing a single common carrier by water to file a summary of its books and records pertaining to its rates was also held not to violate the Fifth Amendment .[5](https://www.law.cornell.edu/constitution-conan/amendment-5/congressional-regulation-of-public-utilities-and-substantive-due-process#fn5amd5 " Isbrandtsen-Moller Co. v. United States, 300 U.S. 146 (1937). ")

Footnotes

1

St. Joseph Stock Yards Co. v. United States, 298 U.S. 38 (1936) ; Denver Union Stock Yards Co. v. United States, 304 U.S. 470 (1938) .

2

320 U.S. 591 (1944) . The result of this case had been foreshadowed by the opinion of Chief Justice Harlan Stone in FPC v. Nat. Gas Pipeline Co., 315 U.S. 575 , 586 (1942), to the effect that the Commission was not bound to use any single formula or combination of formulas when determining rates.

3

Am. Tel. & Tel. Co. v. United States, 299 U.S. 232 (1936) ; United States v. N.Y. Tel. Co., 326 U.S. 638 (1946) ; Northwestern Co. v. FPC, 321 U.S. 119 (1944) .

4

Valvoline Oil Co. v. United States, 308 U.S. 141 (1939) ; Champlin Rfg. Co. v. United States, 329 U.S. 29 (1946) .

5

Isbrandtsen-Moller Co. v. United States, 300 U.S. 146 (1937) .