Opinion ID: 673834
Heading Depth: 2
Heading Rank: 2

Heading: Standard for Determining Damages.

Text: 13 The district court concluded the Utility flooded approximately 186.7 acres of Reservation land for 30 years without an easement or court order, and awarded damages totalling $46,231. The court apparently concluded Washington law controlled and under that law the Tribe was entitled to recover only the rental value of the land for grazing. 14 The Tribe and the United States argue damages for trespass on Indian lands are controlled by federal law and the damage award was inadequate under federal law because it did not reflect the value of the land as a part of the Box Canyon Dam project. 8 They reason that if inclusion of tribal lands within the Reservation had been anticipated, the Commission, in compliance with Sec. 10(e) of the Power Act, would have included in the project license a provision fixing an annual charge for use of the lands and the annual charge would have been calculated on the basis of the value of the use of the land as part of the project. Since operation of the project in fact affected such lands, and since the Utility circumvented the provisions of Sec. 4(e) and Sec. 10(e) and preempted the fixing of an annual charge by flooding the lands without first securing a license to do so, the Tribe and the United States reason the Utility must pay the Tribe what the Tribe lost--the annual charge that would have been imposed if Sec. 10(e) procedures had been implemented. 15 Whether the Commission would have determined the annual charge for use of tribal lands on this basis when the Utility's license was issued in 1952 is a matter of conjecture. Clearly Sec. 10(e) did not require the Commission to do so. The Commission's discretion in determining appropriate annual charges was limited only by the requirement that the charges be reasonable. City of Vanceburg v. FERC, 571 F.2d 630, 647 (D.C.Cir.1977) ([T]he Commission has a discretion within the statute in fixing 'reasonable annual charges', and thus conceivably might use any one of several methods in calculating the charge....); Montana Power Co. v. FPC, 298 F.2d 335, 340 (D.C.Cir.1962) (holding that the only question is whether the end result is a reasonable one as the statute requires it to be). 16 In 1952, the regulations implementing Sec. 10(e) specified the annual charge for use of government lands will be based on the estimated value for power purposes. As to tribal lands, however, the regulations provided only that the Commission should determine the annual charge on a case-by-case basis under Sec. 10(e) of the Federal Power Act. 9 The Commission considered adopting a general rule for determining annual charges for a licensee's use of tribal lands, but declined to do so, preferring instead to set annual charges according to the facts of each case. Escondido Mut. Water Co., FERC Opinion No. 36-A, 6 F.E.R.C. (CCH) p 61,189 (1979), 1979 WL 19964,  48, 1979 FERC LEXIS 1470,  172. 10 17 The Tribe and the United States cite several cases for the proposition that under the regulations applicable in 1952, the annual charge fixed by the Commission for the use of tribal lands within the Reservation would have included the power site or shared benefits value of the land. In each of the cases cited, however, the license itself specified the charge fixed should be based upon the commercial value of the tribal lands involved, for the most profitable purpose for which suitable, including power development. Montana Power Co. v. FPC, 459 F.2d 863, 869 (D.C.Cir.1972); Confederated Salish and Kootenai Tribes v. United States, 181 Ct.Cl. 739, 747, 1967 WL 8892 (1967); see also Escondido Mut. Water Co. v. FERC, 692 F.2d 1223, 1228 (9th Cir.1982), amended, 701 F.2d 826 (9th Cir.1983), rev'd in part, 466 U.S. 765, 104 S.Ct. 2105, 80 L.Ed.2d 753 (1984). Moreover, the language of the licenses at issue in Montana Power and Confederated Salish was taken directly from Commission regulation 14, section 5, which was superceded in 1938, before the license for the Box Canyon Dam project was issued. 11 18 Although use of the value of the tribal lands as part of the power project in calculating the annual charge is not compelled by regulation or case law, we nevertheless conclude it is the most acceptable measure of damages for the Utility's trespass. As noted, the power site formula was reflected in the governing regulation prior to 1938, and the United States has advised the court this is the formulation now applied by the Commission in fixing annual charges for use of tribal lands on all power projects. Its use will also assure the Tribe will not suffer an uncompensated loss from the Utility's past failure to comply with the Power Act and will encourage future compliance. 19 The damage calculation urged by the Utility would encourage others to use Indian reservation lands for power production without complying with the Power Act. Applicants for licenses would be motivated to deny or minimize the anticipated effect of their project on Indian reservation lands (as the Utility did in this case) to avoid the risk that the Secretary and Commission might deny them use of the lands under Sec. 4(e), or the Commission might require them to pay annual charges that included the power site value of the tribal lands under Sec. 10(e). The Secretary and Commission cannot fulfill their respective obligations under Sec. 4(e) and Sec. 10(e) when applicants for Power Act licenses deny or understate the effect their projects will have on Indian reservation lands, or do not seek approval to use Indian reservation lands after they discover their projects include such lands. 12 Moreover, circumventing the Act would deprive the Indians of their right, granted under Sec. 4(e) and Sec. 10(e), to influence the terms upon which the licensee uses reservation land. Requiring the Utility to reimburse the Tribe for the most profitable use of its land will encourage future applicants for licenses to fully disclose the effect of their projects on Indian reservation lands and current licensees to seek approval to use such lands from the Secretary and Commission.