ONE of the striking developments in the efforts to control public utilities is the dominant rôle played by the Supreme Court of the United States. Except railroads which are essentially involved in interstate commerce, the utilities which have been subjected to rate control have mostly been intrastate in scope of organization and activities. The companies have been state incorporated; they obtained special franchises and acquired property under state law; and their operations have been confined chiefly within one state. Regulation also is provided by the states, but the legal pattern has been largely fixed by the Supreme Court.
During recent years, particularly in the past decade, there have been rapid consolidations and mergers of intrastate companies. Most of the local properties have come, through stock ownership or otherwise, under control of holding companies which are interstate as to their activities and ramifications. For the most part, however, the companies which directly own and operate utility properties are wholly intrastate in their legal existence and in actual location and operation.
Under the dual system of government the Constitution provided for federal jurisdiction over interstate commerce but left intrastate business to the states. Regulation of railroads, at least so far as their interstate operations are concerned, comes properly under the powers of Congress. The same is true of any utility whose operations are actually interstate, such as interstate telephones or other movement of service between states. For all such activities, efforts at public control inevitably come within federal power, and the legal basis would be subject to judicial determination by the Supreme Court.