Georgia Power Co. v. 54.20 Acres of Land, Land Lots 315 and 326 of 3rd Land Dist.

• Decision Date: 28 November 1977
• Docket Number: Nos. 75-4448 and 77-1327,s. 75-4448 and 77-1327
• Citation: 563 F.2d 1178
• Parties: GEORGIA POWER COMPANY, Plaintiff-Appellee, v. 54.20 ACRES OF LAND, situated lying and being LAND LOTS 315 AND 326 OF the 3RD LAND DISTRICT, etc., et al., Defendants, Jim Dodson and Patricia W. Womack, Defendants-Appellants. J. C. HILSMAN et al., Plaintiffs-Appellants, v. GEORGIA POWER COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1178

563 F.2d 1178

GEORGIA POWER COMPANY, Plaintiff-Appellee, v. 54.20 ACRES OF LAND, situated lying and being LAND LOTS 315 AND 326 OF the 3RD LAND DISTRICT, etc., et al., Defendants, Jim Dodson and Patricia W. Womack, Defendants-Appellants.

J. C. HILSMAN et al., Plaintiffs-Appellants, v. GEORGIA POWER COMPANY, Defendant-Appellee.

Nos. 75-4448 and 77-1327.

United States Court of Appeals, Fifth Circuit.

Nov. 28, 1977.

Denmark Groover, Jr., Macon, Ga., for defendants-appellants in 75-4448.

George D. Lawrence, Eatonton, Ga., Warren C. Fortson, Atlanta, Ga., amicus curiae, for defendants-appellants in 75-4448.

Wallace Miller, Jr., W. Warren Plowden, Jr., Macon, Ga., amicus curiae, for plaintiff-appellee in 75-4448.

Allan Abbot Tuttle, Sol., Federal Power Commission, Allan M. Garten, Washington, D. C., amicus curiae, for plaintiff-appellee in 75-4448.

George D. Lawrence, Jr., Eatonton, Ga., for Hilsman, et al.

Charles H. Ivy, Atlanta, Ga., for Elliott, et al.

James H. Rollins, W. Dan Greer, Atlanta, Ga., for Boswell, et al.

Ronald Montalto, Atlanta, Ga., Howard T. Oliver, Jr., Gainesville, Ga., for Askew.

Appeals from the United States District Court for the Middle District of Georgia.

Before WISDOM, SIMPSON, and TJOFLAT, Circuit Judges.

WISDOM, Circuit Judge:

These condemnation cases present the issue whether compensation should be determined under federal law or under the law of the state where the condemned property is located when a licensee of the Federal Power Commission exercises the power of eminent domain in federal court as authorized by Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970). We reserved this question in Louisiana v. Lindsey, 5 Cir. 1975, 524 F.2d 934, as did the Supreme Court in Grand River Dam Authority v. Grand-Hydro, Inc., 1948, 335 U.S. 359, 69 S.Ct. 114, 93 L.Ed. 64. We now hold that federal law controls.

I.

The plaintiff-appellee, Georgia Power Company, is a privately owned Georgia utility. It intends to operate a hydroelectric power generating facility with a dam across the Oconee River in Hancock and Putnam Counties, Georgia, at a point known as Laurens Shoals. The dam will produce a lake to be known as Lake Wallace. The appellants are Georgia landowners with property which will be inundated by Lake Wallace. ¹ Under the Federal Power Act, 16 U.S.C. §§ 791a, et seq. (1970), the Federal Power Commission may issue licenses to certain persons or entities to construct, operate, or maintain various hydroelectric generating facilities. 16 U.S.C. § 797(e). The F.P.C. issued a license to Georgia Power on August 6, 1969, for the Lake Wallace Project. ² As a licensee, Georgia Power may exercise the right of eminent domain under Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970), which provides:

When any licensee cannot acquire by contract or pledges an unimproved dam site or the right to use or damage the lands or property of others necessary to the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or accessory thereto . . . it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such land or other property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

Exercising this right, Georgia Power brought actions in the District Court for the Middle District of Georgia. Senior Judge W. A. Bootle appointed a three-member Commission, see Fed.R.Civ.Proc. 71A, to determine the amount of compensation due the condemnees. In his instructions to the Commissioners, Judge Bootle set out the federal law of compensation. These rules differ from Georgia law. Instruction No. 20 directs the Commissioners to ignore an increase in value which the Georgia Power project has created in the condemned property; a Georgia court might recognize such value. See Hard v. Housing Authority, Ga.1963, 219 Ga. 74, 132 S.E.2d 25. Instruction No. 21 allows the Commissioners to offset any recovery for land actually taken with benefits to any remaining property caused by the project; Georgia law prohibits such a set-off. See Ga.Code Ann. § 36-504 (1970). The district court declined to instruct the Commissioners to include a reasonable attorneys' fee in their award; in a Georgia proceeding a reasonable attorneys' fee would be allowed. See White v. Georgia Power Company, Ga.1976, 237 Ga. 341, 227 S.E.2d 385.

After these instructions were first made in 1975 several condemnees in cases other than No. 75-4448 filed motions and objections opposing the use of federal law. The district court held a pre-trial hearing on the objections. Judge Bootle made several changes in the phrasing of his instructions, but he regarded federal law as controlling. ³ The Commission then heard evidence in No. 75-4448. Its report concluded that the benefits accruing to the land remaining with the landowners exceeded the value of the property taken. As a result, the Commission awarded no monetary compensation. The landowners opposed Georgia Power's motion to confirm the report on the ground that the offset of benefits was improper. The court overruled these objections and the condemnees appealed. ⁴

No. 77-1327 began after Judge Bootle's decision in No. 75-4448 to apply federal law. The condemnees in No. 77-1327 nevertheless moved that the court incorporate Georgia law into its instructions. ⁵ The judge conducted a pre-trial conference and heard argument on the question. He then denied the motion and adhered to his previous order that federal law applies. Judge Bootle certified the question for immediate review under 28 U.S.C. § 1292(b) (1970). This Court allowed the appeal, and consolidated it with No. 75-4448.

II.

Before a federal court may reach the question of applying state or federal common law to an issue before it, the court must determine that the source of the right or authority in question is federal. If the source is not federal, Erie Railroad Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and the Rules of Decision Act ⁶ direct that state law apply of its own force. Even if the source is federal, the court must follow any congressional directions about the proper law to apply. See Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 826 (1976).

We find that the source of the power to condemn property contained in Section 21 is federal. Eminent domain inheres in sovereignty. See Kohl v. United States, 1876, 91 U.S. 367, 23 L.Ed. 449. Within our federal system the states and the federal government exercise independent powers of eminent domain, and neither can delegate the use of the other's authority. 91 U.S. at 372-73, 23 L.Ed. 449; Latinette v. City of St. Louis, 7 Cir. 1912, 201 F. 676, 678. Thus, when Congress provided that licensees could exercise "the" power of eminent domain, it was referring to the federal power. Both courts and commentators have described the eminent domain power delegated in Section 21 as the federal power. Federal Power Commission v. Tuscarora Indian Nation, 1960, 362 U.S. 99, 120, 80 S.Ct. 543, 4 L.Ed.2d 584; City of Tacoma v. Taxpayers of Tacoma, 1958, 357 U.S. 320, 340, 78 S.Ct. 1209, 2 L.Ed.2d 1345; Chapman v. Public Utility District No. 1, 9 Cir. 1966, 367 F.2d 163, 167; 7 Moore's Federal Practice P 71A.10(2). When it condemns land under Section 21, a licensee acts as the agent of the United States government. Tuscarora Nation of Indians v. Power Authority, 2 Cir. 1958, 257 F.2d 885, 894, vacated as moot sub nom, McMorran v. Tuscarora Nation of Indians, 362 U.S. 608, 80 S.Ct. 960, 4 L.Ed.2d 1009. This delegation of federal power is constitutional. Missouri v. Union Electric Light & Power Co., C.D.Mo.1930, 42 F.2d 692; see Thatcher v. Tennessee Gas Transmission Co., 5 Cir. 1950, 180 F.2d 644, cert. denied, 340 U.S. 829, 71 S.Ct. 66, 95 L.Ed. 609 (upholding identical delegation in the Natural Gas Act, 15 U.S.C. § 717(b) (1970)).

Appellants argue that Section 21 does not delegate federal authority, but merely provides a federal forum for exercise of a state created eminent domain power. Such an interpretation does not accord with decisions upholding the right of a licensee to condemn property that it could not obtain under the applicable state statute. E. g., City of Tacoma v. Taxpayers of Tacoma, 1958, 357 U.S. 320, 78 S.Ct. 1209, 2 L.Ed.2d 1345; First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 1946, 328 U.S. 152, 66 S.Ct. 906, 90 L.Ed. 1143. There is no suggestion in the statute that Congress intended to create an interstitial power of eminent domain that would function only when state powers were inadequate. In contrast, Section 19, 16 U.S.C. § 812 (1970) expressly limits the FPC's authority to regulate rates to situations where a state does not have its own regulations. Section 20, 16 U.S.C. § 813 (1970) places similar limits on other powers of regulation.

We are not persuaded by the argument that the $3,000 in controversy requirement shows that Section 21 is a jurisdictional provision. It is true that this requirement parallels the amount in controversy requirement for diversity cases at the time the Federal Power Act was enacted. Congress, however, added the $3,000 requirement late in the consideration of the Federal Power Act. Compare H.R.Rep.No.715, 65th Cong., 2d Sess. 27, H.R.Rep.No.1147, 65th Cong., 3d Sess. 13, and H.R.Rep.No.61, 66th Cong., 1st Sess. 10 (original versions without the $3,000 amount in controversy...