Opposition — Utah Power & Light Co. v. Federal Energy Regulatory Commission

[or 68: Supreme Court vs |

FILED

MAY 18 196:

Nos. 82-1312, 82-1345, 82-1346 L. STEVAS,

IN THE Neo

Supreme Court of the Gnited_ States

OCTOBER TERM, 1982

UTAH Power & Licut Company, et al., Petitioners,

va

FEDERAL ENERGY REGULATORY COMMISSION, et al.,

Respondents.

ALABAMA PoWER ComPany, et al., Petitioners,

V.

FEDERAL ENERGY REGULATORY CoMMIsSION, Respondent.

PaciFic GAS AND ELEcTRIC ComPANY, et al., Petitioners,

Vv.

FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

On Petitions For A Writ Of Certiorari To The

United States Court Of Appeals For The Eleventh Circuit

BRIEF OF RESPONDENT CLARK-COWLITZ

JOINT OPERATING AGENCY IN OPPOSITION

Of Counsel: Counsel of Record

CHARLES T. MERTSCHING CuristorpHer D. WILLIAMS

WALSTEAD, MERTSCHING, HUsemoeN, Ropert L. McCarty

DonaLpson & BARLOW McCarty, Noone & WILLIAMS

P.O. Box 1174 Professional Corporation

Longview, WA 98632 490 L’Enfant Plaza, East

(206) 423-5220 Suite 3306

JOHN F. WYNNE Washington, D.C. 20024

Bair, SCHAEFER, HUTCHISON, (202) 554-2955

Wynne, Porrer, Horton & Attorneys for the Clark-Cowlitz

JOHNSON Joint Operating Agency

P.O. Box 1148

Vancouver, WA 98666

(206) 693-5883

PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.

QUESTION PRESENTED

Whether the court of appeals correctly affirmed the

Federal Energy Regulatory Commission's construction

of the Federal Power Act that in issuing new hydroelec-

tric project licenses after the expiration of an initial

license term, the Commission must apply the state and

municipal preference specified by section 7(a) of the Act

in all cases in which it determines that the state or muni-

cipal license application is as equally well adapted in the

public interest as the competing applications.

TABLE OF CONTENTS

Page

Te NED 6.6 600506506n800s26ec0cecseanees 2

RET, dc beéncecoccneaccdavesaveccccsocesecss 3

L, Bhatetery FYOMGWOEM 2c ccccccccccccccevcsccces 3

2. Proceeding Before The Commission ............ 4

3. The Court Of Appeals’ Decision ................ 5

4, BURORNMOME TEVOMES cc cccccccccccccccscesssces 6

REASONS FOR DENYING THE WRIT ........-eeeeeeccees 7

1. The Court Of Appeals Employed Settled Principles

4 — Construction In Correctly Interpreting .

WA cccccccccccccccccccccccccscceccensece

2. The Court Of “pee Decision Is Consistent With

The Decisions Of This Court And The Only Other

Court To Have Previously Addressed The Language

Ce ROD Fe Oe BD nsec ccccvaccscsévcesccuses 15

3. The Declaratory Question Decided Below Is Not An

Appropriate Cause For This Court’s Attention .. 17

a. Petitioners overstate the consequences of the

court of appeals’ decision ..........0000e0es 17

b. The reversal of position by the new Commis-

sioners offers no legitimate basis for this

Court's intervention ..cccccccccccccccceess 20

hs coe eens ee wad ee we eeeh ee 23

iii

TABLE OF AUTHORITIES

Page

CASES:

Alabama Power Co. v. Gulf Power Co. , 283 F. 606 (M.D.

Sm, DOD oa 0.0 6.000k0san0cencenenuneswneeeee 16

American Textile Manufacturers Inst. v. Donovan, 452

Uke GIO CIREE) occ ccsncccensscevesestanceseues 22

Chemehuevi Tribe of Indians v. FPC, 420 U.S. 395

CHPOND ckbe cucadesddcesscscevdsaanuenn 13, 15, 20, 21

Colautti v. Franklin, 439 U.S. 379 (A979) oo... eee ll

First lowa Hydro-Electric Coop. v. FPC, 32% U.S. 152

CIOGDD ob vdicnceces00dsee0e04s0 cade 14, 15

FPC v. Niagara Mohawk Corp., 3A7 U.S. 239 (1954) . 16

FPC v. Union Electric Co., 381 U.S. 90 (1965) ...... 15

FTC v. Colgate-Palmolive Co., 380 U.S. 374 1965) .. 21

ovens ouney Planning Board v. FERC, 434 U.S. 1086

D cccccccccccnsecccccncccseeuesesceseesess

United States v. FPC, 345 U.S. 153 (1953) .......... 15

United States v. Powers, 307 U.S. 214 (1939) ........ ll

United States v. Public Utility Commission of Califor-

wit, 36 UB. BES CGD ciccvcscsvetacesageanal 10

United States v. Turkette, 452 U.S. 576 (1981) ....... 12

STATUTES:

sis," tapatad Act, 26 U.S.C. § 791 (1976 & Supp. V

Section 2(7), 16 U.S.C. § TOG(T) ...cccccccccccceees 2,4

Section 6, 36 U.E.C. 8 TED icc ccccvcccecnsncsvaves 4, 15

Section 7(a), 16 U.S.C. § 800(a) ....ccccccccccccees 2,4

Section 36, 06 U.B.0. GOS ccccncvescconcsssesees 4, 15

Sootion 24, 96 UB. BOF oc vccctccdccacsavecun 4, 15

Bestten 15, 16 UG. GG coc ccsvcccdensdedeuses 4, 15

Wash. Rev. Code § 43.52 (1974) .......ccceeeceeeees 1

iv

Table of Authorities Continued

Page

MISCELLANEOUS:

Pinchot, r Leptotetion tA le as ective Federal Water

Power ation, Y ash. L. Rev. (1945) . 15

H.R. Rep. No. 715, 65th Cane, 2d Sess. (1918) .... 12, 13

Hearings on H.R. 8176 before the House Commitien on

Water Power, 65th Cong., 2d Sess. (191%) ....... 16

Pacific Power & Light Co. and Clark-Cowlitz Joint

Operating Agency, 23 FERC (CCH) © 63,037 (April

p EE SN osdsetestarcncdancdoucwcedsnyeraiona 6

Initial Brief of Oregon Public Utility Commissioner at 3,

Pacific Power & Light Co. and Clark-Cowlitz Joint

Operating Agency, 23 FERC (CCH) © 63,037 (April

MEE Gv sdndovceddeddbesessdecvessaneueeeee 17

S. 1419, 65th Cong., 2d Sess. § 6,56 Cong. Rec. 225(1917) 14

BO Come, Mec. SEPGRCIGET) iccccvcscccccsvevesezess 14

56 Cong. Rec. 9775 and 9804 (1918) .............405. 12

Se SAE, COR, See GON ccc savinccccevcssesecess 12

Pe, TOD: DOs (OUND cecccdedcccevccacheveneses 13

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

Nos. 82-1312, 82-1345, 82-1346

UTAH Power & LIGHT Company, et al., Petitioners,

Vv.

FEDERAL ENERGY REGULATORY COMMISSION, ef al.,'

Respondents.

ALABAMA PoWER ComPANY, et al., Petitioners,

V.

FEDERAL ENERGY REGULATORY CoMMISSION, Respondent.

PaciFic GAS AND ELEcTRIC ComMPANY, et al., Petitioners,

Vv.

FEDERAL ENERGY REGULATORY CoMMISSION, Respondent.

On Petitions For A Writ Of Certiorari To The

United States Court Of Appeals For The Eleventh Circuit

BRIEF OF RESPONDENT CLARK-COWLITZ

JOINT OPERATING AGENCY IN OPPOSITION

Respondent Clark-Cowlitz Joint Operating Agency

(CCJOA) respectfully requests that this Court deny the

'The American Public Power Association, the Clark-Cowlitz Joint

Operating Agency, the City of Bountiful, Utah, and the City of Santa

Clara, California, were intervenors in the court of appeals.

? The CCJOA is a municipal corporation under the laws of the State

of Washington (Wash. Rev. Code § 43.52 (1974)), formed jointly by

2

petitions for a writ of certiorari,’ seeking review of the

Eleventh Circuit’s opinion in this case.

STATUTE INVOLVED

The case involves an interpretation of certain language

in Part I of the Federal Power Act (the Act), formerly

known as the Federal Water Power Act, 16 U.S.C. § 791.

Portions of the Act are reprinted in Utah Power App.

101la-117a. The specific language in question appears in

section 7(a) of the Act, 16 U.S.C. § 800(a), set forth in full

below:

In issuing preliminary permits hereunder or

licenses where no _heemenp td permit has been

issued and in issuing licenses to new licensees under

section [15] the Commission shall give preference to

applications therefor by States and municipalities,

giao the plans for the same are deemed by the

ommission equally well adapted, or shall within a

reasonable time to be fixed by the Commission be

made ompad well adapted, to conserve and utilize in

the public interest the water resources of the region;

and as between other sa the Commission

may give preference to the applicant the plans of

which it finds and determines are best adapted to

Public Utility District No. 1 of Clark County, Washington, and

Public Utility District No. 1 of Cowlitz County, Washington. The

CCJOA is a municipality within the meaning of section 3(7) of the

Federal Power Act, 16 U.S.C. §§ 791, 796(7) (1976 & Supp. V 1981).

* Petitions have been filed by Utah Power and Light Company, et

al. (Utah Power), Alabama Power Company, et al. (Alabama Power)

and Pacific Gas & Electric Company et a/. (PG&E). In addition, a

brief for respondent Federal Energy Regulatory Commission

(FERC) has been filed which recommends grant of the petitions for

the limited purpose of remand. Our references in this brief to the

petitioner’s appendix shall be to that of Utah Power, which was the

first to be filed in this case.

3

develop, conserve, and utilize in the public interest

the water resources of the region, if it be satisfied as

to the ability of the applicant to carry out such plans.

STATEMENT

The delay in filing this opposition has been occasioned

by two extensions of time requested by the Commission,

during which it decided in executive session to ask the

Solicitor General to request this Court to grant certiorari

for the purpose of remanding the case to the Commission.

The Solicitor General acceded, but only in part, and is

suggesting remand to the Eleventh Circuit. We oppose

certiorari and remand of any description. The Commis-

sion correctly decided the reach of the statute three years

ago. It argued that construction vigorously in the court of

appeals and was upheld in a unanimous opinion. Sub-

stantial and expensive action in reliance on the Commis-

sion opinion has been taken by several entities, including

CCJOA and the Commission itself.

We think a brief reference to the framework below will

assist the Court in its consideration of the unusual, and

we think totally inappropriate request for remand. We

turn first to that framework, and then to the reasons for

denying the writ.

1. Statutory Framework

Under Part I of the Act Congress has vested in the

Federal Energy Regulatory Commission (successor to

the Federal Power Commission) the authority to license

the development of water power projects on waters or

lands over which the federal government has jurisdiction.

The statutory scheme governing that agency function is

straightforward.

The statute provides certain minimum standards

against which the Commission, in issuing licenses, must

4

assess all applications. 16 U.S.C. § 803. The statute fur-

ther provides guidelines governing the Commission's

choice of a licensee where there are competing applica-

tions for the same license. 16 U.S.C. § 800. In particular,

section 7(a) directs that applications by states and munici-

palities shall be preferred if they are otherwise equally

well adapted, in the Commission’s judgment, to serve the

public interest. Jd.

The Commission may issue a license only for a limited

term (up to 50 years). 16 U.S.C. § 799. Upon expiration of

a license the Federal government may take over a project

for its own use, 16 U.S.C. § 807, or through the Commis-

sion, may issue a new limited term license—either to the

original licensee or to a new one. 16 U.S.C. § 808.

This case involves the statutory criteria governing the

selection among competing applicants for a new license at

the expiration of the old. The question is whether the

Commission is to apply the preference in favor of states

and municipalities in every case where there are compet-

ing applicants for a new license, or whether, as petition-

ers contend, that preference applies only in limited cir-

cumstances, namely when the original licensee is not

seeking a renewal.

2. Proceeding Before The Commission

Upon expiration of a hydroelectric project license origi-

nally issued to Utah Power & Light Company, the City of

Bountiful, Utah, and UP&L filed competing applications

for the new license. Bountiful, a publicly-owned utility or

“municipality” within the meaning of the Act, 16 U.S.C.

§ 796(7), asked the Commission to issue a declaratory

order clarifying its entitlement to the statutory prefer-

ence.

5

The Commission initiated a generic proceeding, ex-

pressly limiting its inquiry to the legal issue of statutory

construction. As the Commission stated (Utah Power

App. 24a):

[T]he principal question to be decided is not the

policy issue of whether it is factually or politically

wise for States and municipalities to have a relicens-

ing preference ... but the legal issue of whether

Congress included such a preference in Section 7

when it enacted the FWPA in 1920.

After extensive briefing and oral argument, the Com-

mission issued its Opinion No. 88 declaring that in issuing

new licenses the preference applied in favor of states and

municipalities whether or not the original licensee was

among the competitors. Jd. The Commission further

found that the state or municipal applicant competing for

a new license was entitled to a preference only after the

Commission determines that the plans of the state or

municipality are, in the language of section 7(a), “equally

well adapted.” Jd. The Commission characterized the

preference as a “tie-breaker rule.” Jd. at 74a.

3. The Court Of Appeals’ Decision

The court of appeals affirmed, holding that the prefer-

ence “applies in all competitive relicensing cases, not just

those where the original licensee is not an applicant.” Jd.

at 13a. The court found the Commission’s construction

“consistent with the statute’s language, structure,

scheme, and available legislative history,” and gave de-

ference to the agency’s statutory interpretation absent

“compelling indications that it is wrong.” Jd.

The court further held that the preference only applies

“in a tie-breaker-situation” (id.), a fact considered by the

court before it concluded that this case was ripe for re-

view. /d. at 6a. The court went on to resolve the legal

6

issue because, consistent with the Commission’s

representations, such resolution would “foster effective

enforcement and administration by the agency.” Utah

Power App. 7a.

Rehearing was denied by a unanimous court. /d. at 83a.

4. Subsequent Events

The Commission has proceeded toward assessing the

merits of competitive relicensing cases consistent with its

directive in Opinion No. 88 that “(t]he processing and

consideration of the pending applications [competing for

new licenses] should go forward in light of this declara-

tory order.” Jd. at 78a. Thus far one such case, involving

the competing new license applications of the Clark-Cow-

litz Joint Operating Agency and Pacific Power & Light

Company for Merwin Dam in Washington State, has been

through adjudicatory hearing. That “Merwin” case, set

for hearing by the Commission in September 1981, was

recently decided by an administrative law judge,‘ and is

presently pending before the Commission.

In the past few weeks, “a majority of Commissioners”

decided, in closed session and for reasons not made pub-

lic, toreverse FERC’s posture with respect to the correct

interpretation of the Act. FERC Br. 8. Accordingly, the

Commission asked the Solicitor General to recommend

“that the Court grant the petitions for certiorari, vacate

the judgment of the court of appeals, and remand the case

to that court with instructions to remand to the Commis-

sion for further consideration.” Jd.

‘Pacific Power & Light Co. and Clark-Cowlitz Joint Operating

Agency, 23 FERC (CCH) § 63,037 (April 28, 1983).

7

REASONS FOR DENYING THE WRIT

The question presented is strictly a legal one, posited

by the Commission itself, which was correctly decided.

The decision is not in conflict with any other court hold-

ing. Moreover, the court of appeals’ narrow holding—

affirming the application of a statutory preference which

comes into play only upon the Commission concluding

after adjudication that two competing applications are

equal—does not merit this Court’s attention; nor does the

last-minute reversal of position by the new Commission-

er’s dictate otherwise.

1. The Court Of Appeals Employed Settled Principles Of

Statutory Construction In Correctly Interpreting The Act

The principles invoked to resolve the single question of

statutory construction presented here are not out of the

ordinary. FERC was confronted with two conflicting in-

terpretations of section 7(a) of the Act. The Commission,

construing a statute with which it has had over sixty

years’ experience, chose the interpretation that makes

sense on its face, is consistent with the overall statutory

scheme, avoids absurd results, and is exclusively and

convincingly sustained by the legislative history. The

court of appeals, after independently confirming the

Commission’s conclusion, unanimously affirmed.

a. Petitioners and respondents offered the court of

appeals (and the Commission below) differing interpreta-

tions of the following language of section 7(a):

in issuing licenses to new licensees under Section 15

hereof the Commission shall give preference to appli-

cations therefor by States and mynicipalities. .. .

Respondents urged that the key to understanding the

quoted language lies in its initial phrase—‘“in issuing

licenses”—which means “in determining whether to issue

8

licenses.” Respondents therefore offered the following

construction of the language in question (R.1202):

in determining whether to issue licenses to new licen-

sees under Section 15 hereof the Commission shall

give preference to applications therefor by States

and municipalities.

Under this reading, the preference applies to the de-

cisional process whenever a “new liceisee” is among the

competing applicants; that is, in every competitive

relicensing situation (for every competitive relicensing

case will include a potential new licensee). Thus, in

determining whether to issue a license to a new licensee

under Section 15—a potential inherent in every competi-

tive relicensing situation—the Commission shall give

preference to states and municipalities. The foregoing

argument, specifically made by the Commission itself in

the court of appeals, means in short that upon relicensing,

if there is a competing municipal applicant the preference

must be applied.

Petitioners have differed among themselves as to the

meaning of the language in question. At one point one of

the petitioners urged, consistent with respondents, that

the words, “In issuing licenses to new licensees under

Section 15” meant “In determining whether to issue

licenses to a new applicant under Section 15.” R.1285. At

other points petitioners have simply ignored the phrase

“in issuing licenses” and read section 7(a) as though it

said:

in issuing licenses to new licensees under Section 15

hereof, the Commission shall give preference to appl-

ications therefor by states and municipalities “only

9

against applicants seeking the right to operate an

existing project for the first time.””

Those last fifteen words are not in the Act, and there is no

reason to read them in.

As a general proposition petitioners all read the lan-

guage in question as conferring a preference which ap-

plies “against” a limited class. Thus they view the refer-

ence to “new licensee” as meaning that the preference

applies “solely against applicants other than ‘original

licensees’.” Utah Power Pet. 4.

There is no reason to read the language petitioners’

way, as limiting the entities which the preference would

affect.” We have shown above that the words “in issuing

licenses to new licensees under Section 15 hereof” simply

identify the circumstance in which the preference

applies—i.e., in the process of determining whether to

issue a license to a new licensee. The preference applies

whenever the Commission considers competing applica-

tions under section 15; there is no exception which ipso

facto cancels the preference whenever the origi#ai licen-

see chooses to apply again.

5The portion enclosed in quotations is from Utah Power's initial

brief to the court of appeals (Ct. App. Br.) at page 10. PG&E’s

position was similar. It read the section 7(a) language as saying

(PG&E Ct. App. Br. at 11): “The municipal preference applies only

against new licensees and not against an original licensee.” Alabama

Power reached the same result (Alabama Power Ct. App. Br. at 4):

“the relicensing preference in Section 7(a) does not apply against the

original licensee.”

® Indeed, petitioners’ reading reverses the natural sense of the

word “preference.” By focusing on the object rather than the reci-

pient, petitioners read the statute as if it conferred a narrow preju-

dice or disadvantage against a particular class of applicants rather

than a broad preference in favor of states and municipalities.

10

In these circumstances the court properly found no

basis for petitioners’ claim that the construction of section

7(a) must be resolved their way without resort to any-

thing beyond the face of the statute. See e.g., United

States v. Public Utilities Commission of California, 345

U.S. 295, 312-13 (1953), where this Court looked to the

statutory scheme and the legislative history in construing

a much simpler term (“person”) under the Act. The

propriety of the court’s (and the Commission’s) rejection

of petitioners’ narrow “plain meaning” approach is under-

scored by the fact that the petitioners could not even

agree among themselves on a construction.

b. The court of appeals further found that respon-

dents’ construction is consistent with the statutory

scheme while petitioners’ construction is not. Section 7(a)

lays down the substantive standards governing the Com-

mission’s choice of applicants in three competitive licens-

ing situations. “As to all three, the Act clearly gives two

different preferences” (Utah Power App. 9a): 1) municip-

al applicants are preferred if their plans are found “equal-

ly well adapted” as those of competing private applicants,

and 2) as between other applicants preference may be

given to the applicant whose plans are “best adapted.” /d.

Under the construction of section 7(a) affirmed by the

court of appeals, “those preferences cover all situations

concerning competing applications” (id.), a natural and

logical scheme.

Petitioners’ interpretation distorts that natural

scheme. Under petitioners’ view, the Act’s preferences

apply only when the original licensee is not among the

applicants. The result is that in any case in which the

original licensee decides to compete the Act provides no

standard for choosing among the competing applicants.

The court, rejecting that on-again, off-again application

1]

of the Act’s preferences, properly refused to impute to

Congress “a result which would cause administration of

the Act by the Commission to be confusing and sporadic.”

Id. See United States v. Powers, 307 U.S. 214, 217 (1939)

(“There is a presumption against a construction which

would render a statute ineffective or inefficient . . . .”)

Moreover, petitioners’ interpretation gives the stand-

ards of section 7(a) no practical application. Under their

theory, the only occasion to apply section 7(a)’s standards

on relicensing is when the original licensee chooses not to

reapply. But as a practical matter that will happen only

where the incumbent finds the project not worth operat-

ing further.’ Thus, as the court of appeals concluded,

“states and municipalities realistically would have no pre-

ference at all because a preference to a losing project is

worthless.” Utah Power App. 10a. The court therefore

followed long accepted principles counseling against a

construction which renders inoperative major portions of

the statute’s terms. Colautti v. Franklin, 439 U.S. 379,

392 (1979).

Finally, the court (and Commission) noted that peti-

tioners’ interpretation led to a patent absurdity. Under

petitioners’ theory the preference would operate with full

7One petitioner attempts to illustrate how, notwithstanding its

crabbed reading of the Act, “[t he preference will apply to projects of

‘worth.’” PG&E Pet. 24, n. 36. Two of its illustrations ((1) where the

original licensee is ruled out by the Commission and (2) where the

original licensee refuses to accept the Commission's license terms)

are inapt. These assume the original licensee is an applicant, in which

case section 7(a)’s preferences do not apply according to petitioners’

reading of the Act. The other example (where a non-utility licensee

chooses not to reapply) serves only to illustrate the point that peti-

tioners read the preference as applying only in remote and far-

fetched circumstances—hardly a likely basis for the detailed provi-

sions of section 7(a).

12

force if a state or municipality entered a relicensing

competition in which the original licensee had not applied;

but the state or municipality which had itself been the

original licensee would lose that preference if, as petition-

ers claim, the preference does not operate when the ori-

ginal licensee is involved in the competition. Neither the

court nor the Commission could see any sense to an in-

terpretation in which a state or municipal applicant would

be prejudiced simply because it was the original licensee.

Here again, well settled principles of statutory construc-

tion support the result reached. United States v. Turket-

te, 452 U.S. 576, 580 (1981) (“[A]bsurd results are to be

avoided and internal inconsistencies in the statute must

be dealt with.”)

c. Both the Commission and the court of appeals

found that the legislative history of the Act supports only

one conclusion—that section 7(a)’s preference puts states

and municipalities above a/l competitors for a new

license.

As originally introduced in Congress, the bill provided:

in issuing licenses hereunder, the commission may in

its discretion give preference to applications for

licenses by States and municipalities.

H.R. Rep. No. 715, 65th Cong., 2d Sess. 24 and 33 (1918).*

The preference applied broadly to “licenses” (initial and

new licenses alike), and was unrestricted in terms of its

* Subsequently the language was changed to make the application

of the preference mandatory (“. . . the Commission shall give prefer-

ence... .”) rather than discretionary. 56 Cong. Rec. 9775 and 9804

(1918). Also, language was added to give states and municipalities a

reasonable time to perfect their applications (“. . . or shall within a

reasonable time be made equally well adapted . . .”). 58 Cong. Rec.

2037-38 (1920).

13

application “against” the original license. Mr. O. C. Mer-

rill, a principal draftsman of that bill whose authoritative

position was recognized by the 1918 Congress’ and sub-

sequently by this Court," explained that preference lan-

guage in contemporaneous memoranda. As he put it, “the

order of preference should be as follows: (1) the United

States. . . (2) the State or municipality . . . (3) the origin-

al licensee. . . (4) any other applicant. . . .” Utah Power

App. 10a, n. 7. Moreover, as the court of appeals noted,

testimony during the hearings on the bill confirmed that

the original licensee stood behind states and municipali-

ties in the order of preference. /d. at lla, n. 8.

Following other changes in the bill, noted con-

servationist Gifford Pinchot proposed the language in

issue to assure that section 7 accomplished its “obvious

intention. . . to give preference to States and municipali-

ties.” Utah Power App. 12a, n. 9. Pinchot’s language was

included in the bill. Thereafter, Congressman Lee, a

manager of the House-Senate Conference Committee,

gave the following explanation of section 7(a)’s preference

just. before the bill’s enactment:

In the development of water powers by agencies

other than the United States, the bill gives prefer-

ence to States and municipalities over any other

applicant, both in the case of new developments and

in case of acquiring properties of another licensee at

the end of a license period."

* See H.R. Rep. No. 715, at 14-15.

” See Chemehuevi Tribe of Indians v. FPC, 420 U.S. 395, 418, n.

24 (1975).

59 Cong. Rec. 6527 (1920) and see Utah Power App. 12a, n. 9.

Congressman Lee’s statement followed verbatim a memorandum

prepared for him by O.C. Merrill. Mr. Merrill later prepared another

14

The foregoing represents only a fraction of the legisla-

tive history presented by respondents (including FERC)

to the court of appeals. While it is true that the court said

much of the material was “weak,” it also characterized it

as “helpful” (Utah Power App. 12a), and there is no

legislative history supporting petitioners’ view. The

thousands of pages of bills, testimony, reports and Con-

gressional colloquy contain no mention of the “limited

preference” that petitioners suggest is intended. In fact,

as the court of appeals points out, the “limited prefer-

ence” concept which petitioners contend is embodied in

the Act appeared in a different bill (the Shields bill) that

was rejected by Congress in passing the Act. /d. at lla."

In First lowa Hydro-Electric Coop. v. FPC, 328 U.S.

152, 178-79 (1946), this Court determined that Congress’

rejection of a proposition expressly contained in the

Shields bill was compelling evidence that the same

proposition was not intended under the Act.

memorandum for the President's use, explaining the preference sec-

tion of the bill as follows (Utah Power App. 12a, n. 9):

For development by agencies other than the United States

reference is given to States and municipalities. A similar pre-

erence is given for the acquisition of the properties of other

licensees at the end of a license period.

2 Section 6 of the Shields bill, S. 1419, provided that upon expira-

tion of the permit (i.e. license):

[1] [T)he United States may acquire, take over, and occupy all

the property of the grantee. . . or [2] the Secretary of War may

snd a new — to the original permittee .. . or [3] the

tary of War may grant a permit to another person .. .

subject to the restrictions and preferences herein provided... .

See 56 Cong. Rec. 225-26 (1917) (emphasis added). Shields’ prefer-

ences operated only in the third case, the issuance of a license to

“another person.” The preferences did not operate against the “ori-

ginal” licensee—precisely the sort of limited preference that petition-

ers claim is intended under the Act.

15

2. The Court Of Appeals’ Decision Is Consistent With The

Decisions Of This Court And The Only Other Court To

Have Previously Addressed The Language Of The Act At

Issue

As this Court has found, the Act was the product of

conservationists, First Iowa v. FPC, 328 U.S. at 180;

FPC v. Union Electric Co., 381 U.S. 90, 99 (1965), who

strongly opposed potential monopolistic control over wa-

ter resources by private interests in the form of perpetual

licenses and who supported the preservation of the pub-

lic’s water resources for public control. See Pinchot, The

Long Struggle for Effective Federal Water Power Legis-

lation, 14 Geo. Wash. L. Rev. 9, 12, 16 (1945), cited with

approval in First lowa v. FPC, 328 U.S. at 180, n. 23;

FPC v. Union Electric Co., 381 U.S. at 98, n. 11, and

Chemehuevi v. FPC, 420 U.S. at 405, n. 10. Accordingly,

the Act required limited-term licensing, 16 U.S.C. § 799

and see United States v. F PC, 345 U.S. 153, 169 (1953)

(“Congress was of course aware that, by granting a

license to private enterprise, the Federal Power Commis-

sion would not commit the site permanently to private

development... .”); it established favorable provisions

for public recapture, 16 U.S.C. §§ 807-808; it specifically

outlawed monopolistic activities, 16 U.S.C. § 803h; and it

permitted continuing state control over aspects of the

public water resources “by careful preservation of the

separate interests of the states.” First lowa v. FPC, 328

U.S. at 174, n. 19 (citing section 7(a)’s preference to states

and municipalities as an example of the preservation of

state interests.)

The interpretation of section 7(a) that gives states and

municipalities a meaningful preference on relicensing af-

ter 50 years implements the foregoing general theme

underlying the Act as found by this Court. Conversely,

petitioners’ interpretation is totally at odds; it effectively

16

eliminates the state and municipal preference in any

meaningful sense on relicensing in favor of the perpetual

licensing of the original private licensee."

The only other court to have addressed the language of

section 7(a)—Judge Clayton in Alabama Power Co. v.

Gulf Power Co., 283 F. 606, 617 (M.D. Ala. 1922)—

described the preference from a contemporaneous view in

unrestricted terms wholly consistent with the court of

appeals’ ruling:

In further regard to the scope of the [Act], the na-

tional policy expressed in it is that the United States

may at the expiration of 50 years take over any water

roject constructed under the act, and that if the

nited States does not at the end of such period take

over the project the state or municipality under

section 7 is given the preferential right over the ori-

ginal lessee to a renewal of the license. [Emphasis

added. ]

'3 Petitioners claim that their view of section 7(a) protects the

original licensee’s investment in the project much like the act seeks to

protect the investment of preliminary permit holders. PG&E Pet. 25.

It is true that Congress endeavored to protect preliminary permit-

tees from the operation of the preference during licensing, because

the permittees’ pre-licensing investment would otherwise be jeopar-

dized. See Hearings on H.R. 8176 before the House Committee on

Water Power, 65th Cong., 2d Sess. 54-55 (1918). But the licensee is in

no such jeopardy on relicensing, since it is entitled to a return of all

investment, in addition to its profit, during the entire license term.

See FPC v. Niagara Mohawk Power Corp., 347 U.S. 239, 242-43

(1954). The fact that Congress took the pains that it did to define

compensation upon a license transfer evidences Congressional

predilection in favor of such transfers and against petitioners’ view

that would have the Act perpetuate the original licensee’s hold on the

project. Indeed the legislative history inveighs heavily against any

notion of a perpetual license, which is the end result of petitioners’

position.

17

3. The Declaratory Question Decided Below Is Not An Ap-

propriate Cause For This Court's Attention

a. Petitioners overstate the consequences of the court of

appeals’ decision.

Aside from challenging the accuracy of the court of

appeals’ decision, the petitions are all based on generally

stated claims that the decision “has a significant adverse

impact upon the investor-owned electric utility industry

.... Utah Power Pet. 13." Petitioners misstate the

case.”

Their claims rest on the assumption that “[t]his case

affects. . . every licensed project not already owned by a

municipal electric utility.” Alabama Power Pet. 10, The

claim is vastly exaggerated. The preference issue has not

even arisen in the overwhelming majority of relicensing

cases to date. According to Commission staff figures, of

91 projects which have been relicensed or are presently

'* Another petitioner claims that the decision “places in substantial

jeopardy” the continuing use of hydroelectric resources by privately-

owned utilities. PG&E Pet. 8. And Alabama Power says: “At stake

are billions of dollars of investment and future electric charges... .”

Alabama Power Pet. 11.

' Various amici offer this same overstated argument with form-

letter repetition. For example, the Oregon brief states at page 3: “the

practical economic effects of the lower court's decision are immense

and adverse.” However, in the Merwin proceeding the Oregon Public

Utility Commissioner told a different story (Brief of Oregon Public

Utility Commissioner at 3, Pacific Power & Light Co. and Clark-

Cowlitz Joint Operating Agency, 23 FERC (CCH) © 63,037 (April 28,

1983):

The Commission has held that the preference given to states and

municipalities by Section 7(a) applies in all competitive relicens-

ing cases. However, this preference applies only as a “tie-

breaker.” As to whether there is a tie to be broken, the Commis-

sion must first determine whether the plans of the state or

municipality are “equally well adapted. . . .” [citations omitted]

18

up for relicensing only eight have involved competing

applications by a municipality. See Utah Power App.

123a-124a.

Similarly overstated are the economic consequences

which petitioners assume will result from this decision

based on their theory that each “privately-owned utility

. . . may be forced to replace its project with an expensive

new thermal generating plant.” Utah Power Pet. 15. See

also PG&E Pet. 9. Petitioners fail to point out that there

would be no need to replace capacity where the new

licensee was previously served by the prior licensee or

where, as in the Merwin case, there is a surplus of power

available to that licensee.

In addition, such economic consequences as there may

be were treated by the Commission as irrelevant to the

strict question of statutory construction involved here.

Utah Power App. 77a. For, in the end, no license has

changed hands nor will any license necessarily change

hands strictly as a result of the court of appeals’ decision.

The court of appeals (and the Commission below) made it

clear that the state and municipal preference is to be

applied only after the Commission first decides on the

merits that the competing relicense applications are

othe. wise equal.

One petitioner suggests that application of the prefer-

ence as a “tie-breaker” will nevertheless carry great sig-

nificance because the Commission will “avoid the poten-

tially time-consuming and difficult analysis necessary to

determine if one applicant is better than another.” PG&E

Pet. 10, n. 15. But there is no reason to expect the

Commission will shirk its responsibility urder the Act.

FERC has made no such suggestion; neither has it ex-

pressed any reservations about the difficulty of selecting

a licensee under its view of the statute’s standards. Quite

19

the opposite is true. The Commission pointed out that

petitioners’ interpretation would leave it without any

section 7(a) standards to apply whenever the original

licensee competed in a relicensing case. Utah Power App.

67a.

Far from decrying any administrative difficulty under

its interpretation, FERC represented to the court of

appeals that its resolution of section 7(a)’s meaning fos-

tered administrative efficacy because it enabled potential

relicensing applicants to proceed with some certainty in

deciding whether to make application. FERC Ct. App.

Br. 7, n. 4. Accordingly, the Commission has proceeded

with the processing of the Merwin competitive relicens-

ing case. Commenced in September 1981, that case has

already gone through a complete adjudicatory proceeding

before an administrative law judge, resulting in a very

recent decision. As that decision makes clear, the entire

- case was bottomed on the Commission’s prior interpreta-

tion of the Act and its directions to proceed. In these

circumstances, review by this Court could only upset

what is otherwise a settled administrative course.

Finally, in urging this Court to consider this case peti-

tioners rely heavily on arguments that section 7(a)’s pre-

ference is bad policy. See Utah Power Pet. 13-20; PG&E

Pet. 10." As the Commission made clear at the outset of

this case, all that has been decided is what Congress

established as the controlling policy and enacted into law.

' Petitioners claim the court of appeals’ decision “would give muni-

cipal systems a preference right that would enable them to take

control at relicensing of the nation’s privately operated hydroelectric

projects, without demonstrating that the public interest would

thereby be better served.” PG&E Pet. 10; See also Utah Power Pet.

18. As we already demonstrated, such statements are flatly errone-

ous and plainly misread the opinions below.

20

“Whatever the merits of the [petitioners’] argument as a

matter of policy, it is properly addressed to Congress, not -

to the courts.” Chemehuevi v. FPC, 420 U.S. at 423.

b. The reversal of position by the new Commissioners

offers no legitimate basis for this court’s intervention.

The Commission unexpectedly reversed its position

while the petitions for certiorari were pending, asking the

Solicitor General to recommend that the Court grant

certiorari, “vacate the judgment of the court of appeals,

and remand the case to that court with instructions to

remand to the Commission for further consideration.”

FERC Br. 8. The Solicitor General has not gone that far

but does suggest remand to the circuit court “for such

reconsideration as it deems appropriate in light of the

intervening circumstances.” Jd. at 10. Neither of these

extraordinary requests have substantive basis nor do

they make practical sense.

(i) Significantly, the Solicitor General does not rec-

ommend remand to the Commission” nor does he ever say

that this case was wrongly decided below and for that

reason deserves this Court’s attention on the merits.

Instead the Solicitor General requests this Court to va-

cate summarily the decision below and to remand to the

court of appeals for reconsideration of “intervening cir-

cumstances.” Jd.

'? The Solicitor General exercises commendable discretion separat-

ing himself from the position of the new Commissioners. In view of

the present Commissioners’ obvious predisposition on the question

(“a majority of the Commissioners appear to be ready to overrule

Opinion Nos. 88 and 88A and adopt the contrary position.” FERC Br.

9), a remand to the agency for “further consideration” would be an

empty gesture that we think would serve only to undermine public

confidence in the review process.

21

What intervening circumstances? There has been no

new information discovered to shed new light on the

statutory interpretation question at issue. Indeed, the

government cites nothing in support of a changed result.

Nor has there been any intervening change in the statute,

any new law passed or any recent court holding in-

consistent with the court of appeals’ decision.

The only “intervening circumstances” are that a

“majority” of the present Commissioners want to reach a

different result. But there is nothing to indicate that this

precipitate reaction by some new members is based on

the same serious consideration as was given to Opinion

No. 88." Moreover, as FERC itself makes clear, this case

is still to decide what “the statute requires.” FERC Br. I.

That question of law is not one that depends on the view of

any particular set of Commissioners. Rather, the ques-

tion turns solely on the meaning of the Act and the intent

of Congress in passing that Act. What the new Commis-

sioners may prefe. as a matter of policy can in no way

advance that inquiry. Chemehuevi v. FPC, 420 U.S. at

423. As this Court has held, despite what an administra-

tive agency may decide in interpreting its own statute,

the courts are the final authorities on issues of statutory

construction. FTC v. Colgate-Palmolive Co., 380 U.S.

374, 385 (1965).

In short, nothing of substance has intervened to war-

rant this Court’s review, much less the extraordinary

relief requested. This eleventh-hour maneuver by new

* Opinion No. 88 was the result of months of consideration after

voluminous briefing by the Commission staff, by “virtually all of the

investor-owned utilities” (FERC Br. 8-9), and by the publicly-owned

utilities, and after an extraordinary full day of oral argument before

the entire Commission.

22

members to reverse a holding of law by the Commission,

which it supported and had affirmed in the court of

appeals," casts a cloud over agency decision-making and

is an imposition on the judicial process. Here, as in prior

cases, the effort should not be condoned by this Court.

See American Textile Manufacturers Inst. v. Donovan,

452 U.S. 490, 504, n. 25 (1981); Greene County Planning

Bd. v. FERC, 434 U.S. 1086 (1978) (see brief for respon-

dent FERC).

(ii) Under the Solicitor General’s approach this Court

is asked to take jurisdiction over this case and give it

sufficient consideration in order to determine whether

the opinion should be vacated, only to remand the case so

that the circuit court may consider it for yet a third time.

At the end of that process, whatever the outcome, it may

be assumed that further petitions to this Court would

follow.

That proposal amounts to a senseless waste of time and

resources, which frustrates the purpose underlying the

case—to bring about certainty on the question of public

preference on relicensing. The Solicitor General’s propos-

al is particularly inappropriate in view of the substantial

time and resources already expended in the site-specific

relicensing proceedings, all bottomed on Opinion No. 8&8’s

holdings and directions to proceed.

'* As four of the present Commissioners represented to the court

below (FERC Ct. App. Br. 7, n.4):

There is no reason why the ats f legal question of statutory

interpretation present here would be affected by the facts of a

particular case, nor did the Commission indicate its legal con-

clusion might later change... .

23

CONCLUSION

For these reasons, the petitions for a writ of certiorari

should be denied.

Respectfully submitted,

Counsel of Record

CHRISTOPHER D. WILLIAMS

RoBERT L. McCarty

McCarty, NOONE & WILLIAMS

Professional Corporation

490 L’Enfant Plaza, East

Suite 3306

Washington, D.C. 20024

(202) 554-2955

Attorneys for the Clark-Cowlitz

Joint Operating Agency

Of Counsel:

CHARLES T. MERTSCHING

WALSTEAD, MERTSCHING, HUSEMOEN,

DONALDSON & BARLOW

P.O. Box 1174

Longview, WA 98632

(206) 423-5220

JOHN F. WYNNE

BLAIR, SCHAEFER, HUTCHISON,

WYNNE, POTTER, HORTON & JOHNSON

P.O. Box 1148

Vancouver, WA 98666

(206) 693-5883