California Oregon Power Co. v. FEDERAL POWER COM'N, 12235 and 12236.

• Citation: 239 F.2d 426,99 US App. DC 263
• Decision Date: 25 October 1956
• Docket Number: No. 12235 and 12236.,12235 and 12236.
• Parties: The CALIFORNIA OREGON POWER COMPANY, a Corporation, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, The State of Oregon, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

99 US App. DC 263, 239 F.2d 426 (1956)

The CALIFORNIA OREGON POWER COMPANY, a Corporation, Petitioner, v. FEDERAL POWER COMMISSION, Respondent, The State of Oregon, Intervenor.

Nos. 12235 and 12236.

United States Court of Appeals District of Columbia Circuit.

Argued December 1, 1954.

Remanded to Commission April 14, 1955, for clarification of orders.

Resubmitted April 28, 1956.

Decided October 25, 1956.

Mr. Malcolm T. Dungan, San Francisco, Cal., with whom Mr. Gregory A. Harrison, San Francisco, Cal., was on the brief, for petitioner. Mr. C. Frank Reifsnyder, Washington, D. C., also entered an appearance for petitioner.

Messrs. Willard W. Gatchell, Gen. Counsel, Federal Power Commission, and John C. Mason, Atty., Federal Power Commission, with whom Messrs. Joseph B. Hobbs and Louis C. Kaplan, Attys., Federal Power Commission, were on the brief, for respondent. Mr. Joseph E. Hayden, Atty., Federal Power Commission, also entered an appearance for respondent.

Mr. Robert Y. Thornton, Salem, Or., entered an appearance for intervenor.

Before WILBUR K. MILLER, BAZELON and WASHINGTON, Circuit Judges.

Resubmitted April 28, 1956, on further findings of the Commission.

WASHINGTON, Circuit Judge.

The California Oregon Power Company (Copco) petitions for review of two orders of the Federal Power Commission, one of which licenses Copco to build a new project called "Big Bend No. 2" and the other of which requires it to file applications for licenses for five existing projects on the Klamath River and Link River.

Section 4(e) of the Federal Power Act, 49 Stat. 840 (1935), 16 U.S.C.A. § 797(e), gives the Federal Power Commission jurisdiction to license power projects in three situations: those constructed in navigable waters of the United States, those constructed on public lands of the United States, and those constructed "for the purpose of utilizing the surplus water or water power from any Government dam".¹ The jurisdictional bases upon which the Commission issued its two orders were "(1) that the proposed Big Bend No. 2 project would be located in navigable waters of the United States and the five existing plants are located in such waters; (2) that the proposed project would occupy lands of the United States; and (3) that the proposed project would utilize, and the five existing plants now utilize, surplus water from a Government dam." (Gov.Br., pp. 1-2.) Petitioner contests, as a matter of law, the findings as to use of surplus water. Whether this court should review those findings is the initial problem in the case.

I.

The background facts must first be stated. The dam involved is the Link River Dam, which was built by Copco pursuant to an agreement with the Department of the Interior entered into in 1917.² Under this agreement Copco built Link River Dam at the outlet of Upper Klamath Lake for the purpose of controlling and regulating the waters of the lake and the flow into Link River (which subsequently becomes the Klamath River), and agreed to convey title to the dam to the United States and to maintain water levels between certain prescribed points so as to provide water for irrigation purposes on a year-round basis. In return, Copco was permitted to maintain and operate the Dam for a 50-year period expiring in 1967 and to use all water not needed for irrigation purposes. The Government's role in regard to irrigation in the Klamath area is based on the Reclamation Act of 1902, 32 Stat. 388, as amended, 43 U.S.C.A. § 371 et seq., and authorizing legislation of the State of Oregon enacted in 1905, Laws 1905, c. 5. The original contract provides, specifically, that at the end of the 50-year period of Copco's control and operation of the Dam, all its rights thereunder shall terminate.

At no time has there been a power plant at the Link River Dam itself, and none is here proposed. Two of Copco's existing plants are located a mile below the Dam, and another is 20 miles downstream from it. Copco's new project (Big Bend No. 2) is to be located 32 miles downstream from the Dam. The two other existing plants are 57 and 59 miles downstream from the Dam.

In April, 1951, Copco applied for a license for Big Bend No. 2 development on the Klamath River in Oregon, which was designated as Project No. 2082. Thereafter in November, 1951, the Commission issued a show cause order, Docket No. E-6390. In reliance on a report of the Corps of Engineers that "Power developments, if properly regulated, might benefit the light draft navigation in the lower river," and on the basis of the license application filed for Project No. 2082, the order directed the company to show cause why it should not file separate applications for licenses for its existing developments on the Klamath River. Copco's answer, inter alia, denied that its projects were utilizing surplus water. On October 2, 1953, the presiding examiner issued his proposed decision on the application for Project No. 2082, and there suggested that the present contract between Copco and the Department of the Interior should be extended for the full period of the proposed Power Commission license for the project, which would run approximately to the year 2006. The opinion of the Power Commission relating both to the proposed and existing projects was issued thereafter on January 28, 1954, with one Commissioner concurring in the result only. The Commission found that Project No. 2082 would occupy navigable waters and land of the United States and would utilize surplus water from a Government dam. Jurisdiction for licensing the five existing projects was found by reason of the occupancy of navigable waters and use of surplus water from a Government dam.³

By order dated January 28, 1954, a license for Project No. 2082 was issued, subject to acceptance by Copco. In paragraph 17 of the order petitioner was granted a license under Section 4(e) of the Federal Power Act, 16 U.S.C.A. § 797(e), for a period of 50 years, and was required to file as a condition of the license a copy of the 1917 agreement with the Department of the Interior, with an amendment covering the 50-year license period on terms similar to those of the original agreement. Under paragraph 17(B) of its order the Commission further directed that the standard conditions governing licenses for unconstructed major projects affecting navigable waters and lands of the United States should have application to Project No. 2082, and that certain additions should be made to these terms. One of these additions was Article 35, providing for annual charges as follows: (a) for reimbursement to the United States of the cost of administration of the Federal Power Act under Part I thereof, 16 U.S. C.A. § 791a et seq., (b) for the use and occupancy of lands belonging to the United States, (c) for the right-of-way of the transmission line, (d) for the purpose of recompensing the United States for the "use, occupancy and enjoyment of Link Dam."

With regard to the amount of the annual charge for item (d), the Commission found that the obligations undertaken by Copco under the 1917 agreement, as extended, would constitute reasonable compensation to the United States. On January 28, 1954, the Commission also issued its order requiring Copco to file applications for its five existing projects.

Thereafter the petitioner filed an application under Section 313(a) of the Federal Power Act, 16 U.S.C.A. § 825l (a), for rehearing and modification of the Commission's opinion and orders, alleging inter alia that the Commission erred when it held that the projects will use surplus water from a Government dam and that the Commission was compelled to assert its jurisdiction on this ground. Rehearing was denied by the Commission's order of March 29, 1954. Thereafter Copco filed its petition for review in this court, requesting deletion, from the order licensing Big Bend No. 2 and the order requiring it to file applications for licenses for the existing projects, of any reference to the utilization of surplus water from a Government dam as a basis for jurisdiction and the requiring of the payment of annual charges by reason thereof.

The basic contention of the petitioner is that the jurisdictional basis of use of surplus water "from" a Government dam means "use of surplus water at a Government dam," and not downstream from it. The Commission urges a literal interpretation of the statutory language. When the matter was argued before us, we had serious doubt whether decision of the question was necessary or proper in the present posture of the case, it being clearly apparent that the Commission had jurisdiction here on other than surplus water grounds. Under the circumstances, we decided to remand the case to the Commission for clarification of its orders and the jurisdictional basis therefor. The remand was directed by our order of April 14, 1955.

The Commission, on February 23, 1956, adopted a supplemental opinion and order, amending and clarifying its prior orders. Among other things, the new order recognized an agreement entered into between Copco and the Secretary of the Interior under date of January 31, 1956 (the new Link Dam Agreement), and found that the annual benefits to be received by the United States thereunder constitute reasonable compensation for the use of Link Dam. The new order also amended Article 35(d) of the order previously entered regarding the Big Bend No. 2 project, in a manner to be described later on in the present opinion. The Commission's supplemental opinion reaffirmed its position that jurisdiction existed in the Commission under the "surplus water" clause. On April 28, 1956, Copco filed with this court a further statement of its views, contesting the Commission's assertion of such jurisdiction.

Throughout the entire sequence of events the Commission has not only claimed that jurisdiction can be asserted on the basis of Copco's claimed use of surplus water, but, in addition, that jurisdiction on this ground ...