Document: 347 U.S. 239 74 S.Ct. 487 98 L.Ed. 666 FEDERAL POWER COMMISSIONv.NIAGARA MOHAWK CORP. No. 28. Argued Oct. 15 and 16, 1953. Decided March 15, 1954. Mr. [Syllabus from pages 239-240 intentionally omitted] Willard W. Gatchell, Washington, D.C., for petitioner. John Davis, New York City, respondent. Justice BURTON delivered the opinion of Court. 1 The most significant issue raised by this case is whether Federal Water Power Act 19201 has abolished private proprietary rights, existing under state law, to use waters a navigable stream power purposes. We agree with Court Appeals that it not. also in computing federal licensee's amortization reserve, required § 10(d) Act, as amended,2 Commission was not justified disallowing expenses paid or incurred licensee such rights. 2 2, 1921, Niagara Falls Company, corporation, predecessor interest Mohawk Corporation, respondent herein, secured license which we are concerned. It first issued 1920. Its term 50 years. authorized diversion water purposes River, above Falls, return below all York. daily diversion, aggregate, could exceed 19,500 cubic feet per second (c.f.s.).3 3 Section requires each licensee, after 20 years operation license, establish maintain reserves out any surplus thereafter earned accumulated excess reasonable upon net investment. 14 makes investment, plus severance damages, principal measure price Government pay when if takes over part property.4 In 1942, expressly held applied licensee.5 4 1947, Article 11 amended so specify 6% rate require 50% earnings be into its reserves. As amended, article read: 5 'After twenty (20) project namely 1, 1941, six (6) cent annum shall specified on investment determining accordance provisions establishment maintenance until termination discretion Commission, time reduction project, one-half received calendar year reserves.'6 6 1948, began proceeding determine reserve liability. Commission's effort 10(d). 1949, pursuant revised staff report, directed holder show cause why through December 31, 1946, amount $994,521.33, should set aside an like proportion subsequent annually comparable basis. 1950, presiding examiner recommended initial $914,432.04, approved figure preference $515,432.04 proposed licensee. One Commissioner filed concurring statement one dissented. 9 F.P.C. 228. However, District Columbia Circuit, judge dissenting, upheld remanded instructions modify order accordingly. 91 U.S.App.D.C. 395, 202 F.2d 190.7 decision turned primarily court's conclusion neither nor issuance thereunder had rights River That inescapable because found certain annual payments discounts made along were allowable reason considered those no longer existent. precisely contrary granted certiorari important bearing Act. 345 955, 73 939, 97 1376. 7 immediate thus presented 10(d), period $914,432.04 $515,432.04.8 difference $399,000 $798,000 believes included period. consists of— 8 1. $577,500 at $99,000 year, use, purposes, 730 c.f.s. 'International Paper rights,' 2. $220,500 allowed discount, $37,800 sales electric consideration permission 262.6 'Pettebone-Cataract rights.' 10 although respondent's predecessor, nevertheless continuing meet financial obligations assumed originally still law court, accordingly, foregoing items expense fixed $515,432.04. questioned here acquired, above-stated discounts, some kind degree Accordingly, do consider necessary review intricate transactions resulted above-described discounts. accept 'that International Pettebone-Cataract valid York.' page 202.9 For further recognition these see & Control v. Co., 262 App.Div. 460, 30 N.Y.S.2d 371, affirmed, 289 N.Y. 353, 45 N.E.2d 907; Co. Duryea, 185 Misc. 696, 57 777. 12 Neither us discuss 1947 thereafter. They must treated same way mentioned, except note ceased purchase 1947. See 196. 13 nature claimed recognize they usufructuary generation power, distinguished claims legal ownership running itself. force fall water, coupled obligation river conditions.10 attached riparian lands Falls. long have been separated and, separated, transferred leased Under York, constitute form real estate known corporated hereditaments.11 does how contest prices present objection limited deduction, computation reserves, proposes make contends (1) Congress only may constitutionally abolish local without compensation but already done so, (2) that, contested expenditures lawful, even obligatory, between parties, disallowed conclude, did Appeals, though within scope Government's dominant servitude, exercised them.12 While favor United States, persons hold physical properties obstructing States streams,13 exercise making allowances preexisting clear authorization. A classic example authorization appears Chandler-Dunbar 229 53, 33 667, 669, 1063. 3, 1909, there right take river's flow interstate commerce. explicit terms. said: 16 'Sec. 11. * fee simple absolute property every description north Saint Marys Ship Canal throughout entire length lying said ship canal international boundary line Sault Sainte Marie, State Michigan, navigation connected therewith. 17 'The Secretary War hereby proceedings immediately acquisition condemnation otherwise description, absolute. 18 'Every permit, authority kind, nature, heretofore official thereof, Company cease become null void January first, nineteen hundred eleven *.' 35 Stat. 820, 821. 19 took exclusively accordingly recognized right, bed stream, flowing commerce, compensating anyone waters.14 applicable here. much more general regulatory language given drastic effect 1909. find nothing justifying interpretation. it, abolishes River. Unlike statute case, mentions specific properties. express assertion paramount other exclusion users. On contrary, plan regulation waters, encouragement their development projects parties.15 21 Act— 22 'discloses both vigorous determination progress idle resources nation avoid unconstitutional invasion jurisdiction states. 23 leaves states traditional subject admittedly superior Government, Congress, regulate foreign commerce First Iowa Hydro-Electric Cooperative 328 152, 171, 66 906, 915, 90 1143. 24 treats leaving open servitude condemnation, purpose expressed seize, eliminate merely itself.16 25 references carry natural implication survive, least taken otherwise.17 Riparian determined law. Title them acquired conformity imposes owners additional using compliance 26 legislative history discloses substantial support policy seeks read it. To convert automatically abolishing nationwide scale calls convincing explanation purpose. none. fact, points way. Representative William L. La Follette, member House Special Committee reported substantially bill 1920 became 1918: 27 'This based either sovereign authority, hypothesis representatives act matters character pass laws good, trusteeship commission composed officials administer infringe impede restrict navigation, rather benefit allow supervisory functions entirely State's covered having advance issue.' 56 Cong.Rec. 9110. Shortly he added: 28 'If put (of 9(b)), practically Supreme (United Cress, 243 316, 37 380, 61 746), banks then sure infringed respect, rules property. earnestly trying States.' Id., 9810.18 29 1930, passed basic question now before came different connection. Henry Ford Son Little Fibre 280 369, 140, 483, Stone, writing unanimous Court, owner State, entitled injunction against uncompensated destruction awarded damages. This affirmed decision, raise Hudson extent would destroy value owner's tributary complainant's purposes.19 '(E)ven respondents (the owners) assert deemed subordinate national government control legislation purport authorize impair compensation.' 377, 141. 31 After quoting §§ 10(c) (liability damages caused licensed project), (saving clause law), (condemnation rights) (licensee's acceptance conditions Act), 32 'While sections consistent affecting distribution derived them, powers conferred extend impairment extinguishment remuneration. think asserted respondents, far concerned, vested laws, saved section appropriation licensees compensation, petitioner licensee), 6, agreed protect.' 378—379, 142. Parallel reasoning involving conflict state-recognized irrigation Gerlach Live Stock 339 725, 734, 70 960, 94 1231. also, state-created Grand Dam Authority Grand-Hydro, 335 359, 372, 69 114, 120, 93 64; Pike Rapids Minneapolis, St. P. S.S.M.R. Cir., 99 902; Central Stockholders' Corp., 52 322; Rank Krug, F.Supp. 773, 793; Great Northern R. Washington Electric 197 Wash. 627, 86 P.2d 208. 34 175—176, 916—917, 1143, discussed relation controlling approval projects. used well uses. statements Alabama Gulf 283 F. 606, cited indicate interpretation, controlling. Respondent's rooted Nation. instant Nation assertions rental charges license. Neither, however, laid claim exclusive eliminates them. 36 findings action disclose sufficient circumstances demonstrating unreasonableness question.20 judgment affirmed. 38 Affirmed. 39 REED withdrew case. 40 JACKSON 41 Appendix.—The computation, F.P.C., 258, reached follows: 42 "Period Base Earnings Specified Surplus Amortization Return 43 (6 percent) credits Mar. 1941 44 Dec. 1941. $36,101.556.74 $2,480,131.61 $1,805,077.84 $675,053.77. $337,526.88 Year 1942. 35,817,450.85 2,600,032.64 2,149,047.05 450,985.59. 225,492.80 46 1943. 35,464,320.95 2,298,684.44 2,127,859.26 170,825.18. 85,412.59 47 1944. 34,925,610.46 1,952,641.25 2,095,536.63 (142,895.38) 48 1945. 34,076,789.61 2,027,324.21 2,044,607.38 (17,283.17) 49 1946. 33,286,819.28 2,689,387.25 1,997,209.16 692,178.09 . 265,999.77 1946.. 14,048,210.40 12,219,337.32 1,828,864.08 914,432.04" 51 offsets deficits 1944 1945 1946 reduces total Commission. id., 248-250. 53 54 55 $36,101,556.74 $2,366,131.61 $561,053.77. $280,526.89 2,463,232.64 314,185.59. 157,092.79 2,161,884.44 34,025.18 17,012.59 58 1,815,841.25 (279,695.38) 59 1,890,524.21 (154,083.17) 60 1946.33,286,819.28 2,552,587.25 555,378.09 60,799.77 -------- $13,250,201.40 $12,219,337.32 $1,030,864.08 62 deducting controversy. 193. 63 DOUGLAS, whom BLACK MINTON concur, dissenting. 64 1069, U.S.C. 803(d), U.S.C.A. up earnings. enforced requirement ordering book transfer account. available refused water-right expenses. lawfully disregard Niagara's 65 serves function reducing 3(13). decides recapture plant Act.1 By allowing increases ultimate States. duty And I intended interfere created But true can pay, directly indirectly, stream. settled since 1063.2 'Ownership wholly individual conceivable; great capable inconceivable.' 69, 674. If being reimbursed Appalachian 311 291, 85 243; cf. Regents University System Georgia Carroll, 338 586, 370, 363. construed requiring something owns.3 what today. 1920, 1063, Part 838, 791a—825r, 791a—825r. 10. All licenses following conditions: '(d) operation, thereafter, any, shall, Such forth *' 842, 843, 803(d). limit soon increased 19,725 c.f.s., 184, 185, later 20,000 228, 244, n. Treaty Britain relating Canada, proclaimed, May 13, 1910, side Canadian 36,000 2448, 2450. emergency temporary diversions, 1276, 1380; Treaties Other Agreements 694. 844—845, 807, 807. 1072, 809, 809; fixing, 1073—1074, 813, 813; judicial sale, 1076, 820. 'Net investment' defined '(13) 'net means actual legitimate original cost thereof interpreted 'classification road equipment steam roads, 1914, Interstate Commerce Commission', similar costs additions thereto betterments minus sum allocated thereto, during fair investment: (a) Unappropriated surplus, (b) aggregate credit balances current depreciation accounts, (c) appropriations income amortization, sinking fund, expended created. 839, 796(13), 796(13). explains that— 'Section larger pattern fairness induce water-power development. Licensees assured 'fair return,' public safeguarded profiteering profits beyond return. At end 'recapture' tested standard 3(13).' 248. value' 23(a), 846, 816, previously permits whereas prior arise re 206, Second Circuit 137 787. seeking amendment consolidated show-cause response, ordered percent act; established, maintained disposed terms rules, regulations orders adopted thereto.' 259. amendment, method setting prescribed 232—233, 239. Per curiam. Kimbrough Judge, retired, Eighth sitting designation; Wilbur K. Miller, Judge. Dissenting, Bazelon, computations, Appendix, infra, p. 497. corporate devolution title described 191, 194—197, 198—202. detailed examination facts issues Schwartz, FPC: Have Private Rights Been Destroyed Act?, 102 U. Pa.L.Rev. 31. '* flows body, yet itself, corpus never becomes or, things, become, dominion, sense itself transmission another. acquire anything than mere therein, acquire, aggregated drops mass lake outlet, use.' Sweet City Syracuse, 129 335, N.E. 1081, 1084, 289. abutting his estate. Board Iroquois Pulp 226 38, 123 200; Waterford Light, Heat 208 273, 203 N.Y.S. 858, 629, 147 225. Recovery deprivation 1917 1931. Referring us, Holmes Court: 'From petitioner, entitled, conveyance lease, draw drawing second,—a corporeal hereditament estate.' 282 399, 405, 176, 75 410. obliged taking diversionary ones paying $99,000. deprivation, therefore, compensable paper company's water. '(T)he owned fully residue canal.' 408, 178. Van Etten 124 201, People ex rel. Hydraulic Mfg. Smith, 543, 546, 1100, 1101, opinion, 175 469, 67 1088. existence courts state. Pettibone Cataract 112 528, 183 373, 198 644, 191 12. Furthermore, recognizes possibility survival provides event new 'Such Milling withdraw exceeding 265 Basin Licensee, Company.' 185. Public Service Securities Exchange (under 12(d) Utility Holding 1935, 824, 79l(d), 79l(d)) parent corporation $728,415.48. Having completed purchase, petitioned amend striking italicized reference declined remains denial requested ground consent omission equivocal 'might recognizing alleged another company.' 188. position enactment regards controlled reasoning. 252, 258—259. action, dispositive binding us. Willow 324 499, 761, 89 1101; Chicago, M., P.R. 312 592, 313 772, 1064; 243. Kansas Life Ins. 799, 885, 1277. connection pointed inconceivability streams U.S., 70, 674—675, Chapman 153, 167—168, 609, 617—618, 918; 180—181, 919—920, dedicated 'encouraging enterprise capital' basis interest. H.R.Rep.No.61, 66th Cong., 1st Sess. 3. provide 'a country, wherever located, developed agencies will give security capital invested protect preserve interest.' Statement David Houston, Agriculture. 5. provides: 'nor values rights-of-way, lands, (used investment) licensee: (Emphasis supplied.) 3(11) 'project' include 'all water-rights appropriate unit', 839; 4(b) empowers 'the rights' 9(b) applicant submit evidence whatever requirements respect appropriation, purposes', 1068; requires, 'values 'in licensee' (Commissioner Smith emphasized significance clause, 261), 844—845; 23(b) application where reservations affected, 846; 'nothing herein contained intending affect respective control, municipal uses, therein', 1077. 796—821, 796—821. 1917, Senate framed constitutional streams, sovereignty proprietors beds full enjoyment latter, purposes.' S.Rep.No.179, 65th 2d 4, S. 1419. congressional debates hearings, Kerwin, Water-Power Legislation (1926). refrained eminent domain, gave condemn 379, Claims own favor, suggested brief oral argument amicus curiae, moves sale. Commodore Park, Inc., 386, 803, 1017; 1101. command otherwise. excludes investment,' ercapture Act'.

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