347 U.S.

Opinion of the Court.

We

transportation as to be practically a part of it." are therefore of the opinion that the taking of the gas here is essentially a part of interstate commerce itself.

The Court of Civil Appeals, as we have stated, relied largely on Utah Power & Light Co. v. Pfost, supra. But that case involved a license tax on the generation of electricity produced in a hydraulic power plant within the State of Idaho and transmitted to Utah. The question the Court was called upon to solve was whether "the generation of electrical energy, like manufacture or production generally, [is] a process essentially local in character and complete in itself; or is it so linked with the transmission as to make it an inseparable part of a transaction in interstate commerce?" The Court thought it inaccurate to say that the entire system was purely a transferring device. "On the contrary," it said, "the generator and the transmission lines perform different functions, with a result comparable, so far as the question here under consideration is concerned, to the manufacture of physical articles of trade and their subsequent shipment and transportation in commerce.' Cited to support this principle was Oliver Iron Mining Co. v. Lord, 262 U. S.

5 Baltimore & Ohio S. W. R. Co. v. Burtch, 263 U. S. 540, 544 (1924) ("loading or unloading of a shipment"); also see Telegraph Co. v. Texas, 105 U. S. 460, 466 (1882) (tax on "sending" of messages outside state is a regulation of interstate commerce); Puget Sound Stevedoring Co. v. State Tax Commission, 302 U. S. 90, 92 (1937) ("loading and discharge of cargoes" is interstate operation); Richfield Oil Corp. v. State Board, 329 U. S. 69, 83 (1946) (commerce begins "no later than the delivery of the oil into the vessel").

6286 U. S., at 180-181. The Court found that in the operation there involved it was necessary to convert the mechanical energy into electrical energy before it could be transmitted and that this transformation was completed at the generator where the interstate movement began. This is analogous to the situation here where the gas is prepared by Phillips for transmission and is then fed into appellants' lines.

157

Opinion of the Court.

172 (1923), where a state tax levied on all "engaged in the business of mining or producing iron ore or other ores" was upheld since the "ore does not enter interstate commerce until after the mining is done, and the tax is imposed only in respect of the mining" (at 179); and Hope Natural Gas Co. v. Hall, supra, which upheld a tax on "producers of natural gas reckoned according to the value of that commodity at the well." But the tax here is not levied on the capture or production of the gas, but rather on its taking into interstate commerce after production, gathering and processing.

The State Appellate Court recognized that nothing was done to the gas at the point of "taking"; its form was not changed in any way; it merely continued its journey. However, the court thought that it would be unfair to base a decision on the fluid nature of natural gas, and that there was in fact a two-step process, taking and transmission, with interference in between found in title passing and processing. But the processing, on which this tax is not imposed, was done by Phillips and took place prior to the taxable event of "taking." As for the interference of title passing, appellees readily admit this levy was designed to avoid taxing the sale; and we think that, as a basis for finding a separate local activity, the incidence must be a more substantial economic factor than the movement of the gas from a local outlet of one owner into the connecting interstate pipeline of another. Such an aspect of interstate transportation cannot be "carve[d] out from what is an entire or integral economic process," Nippert v. Richmond, supra, at 423, by legislative whimsy and segregated as a basis for the tax. The separation must be realistic."

'Appellees also rely on Memphis Natural Gas Co. v. Stone, supra; Western Live Stock v. Bureau of Revenue, supra; Edelman v. Boeing Air Transport, 289 U. S. 249 (1933); Chassaniol v. Greenwood, 291 U.S. 584 (1934); Coverdale v. Arkansas-Louisiana Pipe Line Co., 303

Opinion of the Court.

347 U.S.

Here it is perhaps sufficient that the privilege taxed, namely the taking of the gas, is not so separate and distinct from interstate transportation as to support the tax. But additional objection is present if the tax be upheld. It would "permit a multiple burden upon that commerce," Joseph v. Carter & Weekes Stevedoring Co., supra, at 429, for if Texas may impose this "first taking" tax measured by the total volume of gas so taken, then Michigan and the other recipient states have at least equal right to tax the first taking or "unloading" from the pipeline of the same gas when it arrives for distribution. Oklahoma might then seek to tax the first taking of the gas as it crossed into that State. The net effect would be substantially to resurrect the customs barriers which the Commerce Clause was designed to eliminate. "The very purpose of the Commerce Clause was to create an area of free trade among the several States. That clause vested the power of taxing a transaction forming an unbroken process of interstate commerce in the Congress, not in the States." McLeod v. Dilworth Co., 322 U. S. 327, 330-331 (1944).

Reversed.

U. S. 604 (1938). We think these cases are distinguishable from the present one in that in each of them the tax was imposed on a less integral part of the commerce process involved. Also distinguishable is McGoldrick v. Berwind-White Coal Mining Co., 309 U. S. 33 (1940), involving a tax on the sale of goods for consumption, imposed by the city in which the goods had come to rest. The Court there found that commerce, as to the goods, had ended prior to the taxable event, and likened the tax to an ad valorem one on property.

Syllabus.

UNITED STATES v. BINGHAMTON

CONSTRUCTION CO., INC.

CERTIORARI TO THE UNITED STATES COURT OF CLAIMS.

No. 65. Argued December 1, 1953. Decided March 8, 1954.

The schedule of minimum wage rates included in a government construction contract, as required by the Davis-Bacon Act, 40 U. S. C. (1946 ed.) § 276a, is not a representation or warranty by the Government to the contractor as to the wage rates prevailing in the contract area; and the Secretary of Labor's action in prescribing minimum wage rates lower than those actually prevailing in the area when bids were invited on a construction project does not give the contractor a valid claim against the Government. Pp. 172-178.

(a) The purpose of the Act was not to benefit contractors but to protect their employees from substandard earnings by fixing a floor under wages on government projects. Pp. 176-177.

(b) The requirement of the Act and the contract thereunder that the contractors pay wages at rates "not less than" those specified is no assurance that they will not have to pay more. Pp. 177–178.

(c) That the Act requires the minimum wage rates specified in government contracts to be "based upon . . . the wages . . . determined by the Secretary of Labor to be prevailing" in the area where the work is to be performed does not require a different result. Pp. 177-178.

123 Ct. Cl. 804, 107 F. Supp. 712, reversed in part.

The Court of Claims awarded respondent a recovery based on the difference between the minimum wage rates specified under 40 U. S. C. (1946 ed.) § 276a in respondent's contract with the Government and higher rates specified in a determination by the Secretary of Labor for the Federal Works Agency. 123 Ct. Cl. 804, 107 F. Supp. 712. This Court granted certiorari. 346 U. S. 809. Reversed as to this point, p. 178.

Opinion of the Court.

347 U.S.

Assistant Attorney General Burger argued the cause for the United States. With him on the brief were Acting Solicitor General Stern, Paul A. Sweeney and Hubert H. Margolies.

Jerome Beaudrias argued the cause for respondent. With him on the brief was Malcolm A. MacIntyre.

MR. CHIEF JUSTICE WARREN delivered the opinion of the Court.

This case is before us on writ of certiorari to the Court of Claims. The question presented is whether the schedule of minimum wage rates included in a Government construction contract, as required by the Davis-Bacon Act,' is a representation or warranty as to the prevailing wage rates in the contract area. We hold that it is not.

The Davis-Bacon Act requires that the wages of workmen on a Government construction project shall be "not less" than the "minimum wages" specified in a schedule furnished by the Secretary of Labor. The schedule "shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing" for corresponding work on similar projects in the area. The Act also pro

2

1 Act of March 3, 1931, c. 411, § 1, 46 Stat. 1494, as amended by the Act of August 30, 1935, c. 825, 49 Stat. 1011, 40 U. S. C. §§ 276a-276a-5.

2 49 Stat. 1011, 40 U. S. C. § 276a:

"... That the advertised specifications for every contract in excess of $2,000, to which the United States or the District of Columbia is a party, for construction, . . . of public buildings or public works of the United States . . . which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of