Appendix — Virgin Island Hotel Ass'n (U. S.), Inc. v. Virgin Islands Water & Power Authority

Supreme Court brief1973

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IN THE MICHAEL ROBAK, JR.,CLERK

Supreme Court of the United States

Ocroser Term, 1973

No. 73- AR86

Viroin Istanps Hote, Association (U.S.), Ino.,

a corporation, Petitioner

Vv.

Viroin Istanps Water & Power Autuority, Respondent

Petition for a Writ of Certiorari to the United States Court

of Appeals for the Third Circuit

APPENDIX

Evetyn N. Cooper

Caravelle Arcade H

Christiansted, St. Croix

U.S. Virgin Islands 00820

Counsel for Petitioner

Press or Byron S. Apams Printina, Inc., WasHincton, D. C.

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TABLE OF CONTENTS

Appendix A:

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Appendix B:

Virgin Islands Water and Power Authority Resolu-

tion No. 89, Adopted December 3, 1971 .......... 33a

Appendix C:

District Court of the Virgin Islands Opinion, Feb-

SU Glee 56:6 docBecdvecevexsavcavensndeaves 35a

Order Amending Opinion, February 4, 1972 ........ 45a

Findings of Fact and Conclusions of Law, February

SE, Me Kntdnacdesancenssneueuaween suwanes+anes 45a

District Court of the Virgin Islands Judgment, Feb-

CE, FOO ac ctecccceuescssuscseuesesusentdées 49a

Appendix D:

United States Court of Appeals for the Third Cir-

cuit Opinion and Judgment, June 28, 1972 ........ 5la

Appendix E:

Virgin Islands Water and Power Authority Resolu-

tion No. 101, Adopted September 18, 1972 ........ 59a

Appendix F:

District Court of the Virgin Islands Final Order,

Ge Th, TIS ons ca cccesavecccsncncsseveccess 63a

Appendix G:

United States Court of Appeals for the Third Circuit

Opinion and Judgment, April 12, 1973 .......... 65a

Appendix H:

United States Court of Appeals for the Third Cir-

out Order, May 23, 1973 ........ccccccccccccess 77a

IN THE

Supreme Court of the United States

Ocroser Term, 1973

No.

Virctn Istands Horen Association (U.S.), Ivc.,

a corporation, Petitioner

Vv.

Viren Istanps Water & Power Autuortity, Respondent

Petition for a Writ of Certiorari to the United States Court

of Appeals for the Third Circuit

APPENDIX . 3

APPENDIX A

The Statute Involved

The Virgin Islands Water & Power Authority Act (Title

30, Virgin Islands Code, Section 101, e¢ seq.) is set forth :

below in full. The relevant provisions thereof are Sections ;

101, 103, 105(a) and 105(a) (12). ;

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2111.

112.

113.

114.

115.

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103.

104.

105.

106.

107.

108.

109.

110.

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Chapter 5. Virgin Islands Water and Power Systems

Subchapter I. Declaration of Findings and Policy

and Definitions

SECTION ANALYSIS

101.

102. Definitions.

Declarations of findings and policy.

Subchapter II. Virgin Islands Water and Power

Authority

Creation of Virgin Islands Water and Power Author-

ity.

Governing Board and other personnel of Authority.

Powers of Authority.

Subchapter III. Bonds of Authority

Authorization of issuance; security, tax exemption;

terms and conditions; ete.

Powers of Authority with respect to bonds.

Right to receivership upon default.

Remedies of bondholders.

Bonds of Authority legal investments for public or

private funds.

Exemption of Authority from judicial process and

taxes.

Subchapter IV. Assistance of Government of the

Virgin Islands

Financial assistance; guarantees and purchases of

bonds of Authority ; loans and grants.

Authorization of issuance of bonds of the Government

of the Virgin Islands.

Other assistance of Government of the Virgin Islands.

Moneys and accounts of Authority.

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116. Competitive bidding. :

117. Contributions to Employees Retirement System and

Government Insurance Fund; Unemployment Com-

pensation and Social Security Coverage.

118. Reports.

119. Agreements of the Government of the Virgin Islands.

120. Injunctions.

121. Lack of jurisdiction of other agencies.

122. Inconsistent provisions of other Acts superseded.

123. Separability of provisions.

Subchapter I. Declaration of Findings and Policy and

Definitions

§ 101. Declarations of findings and policy

(a) An adequate supply of water and electric power is

essential to the public welfare and the economic health of

the Virgin Islands.

(b) Acute, severe and chronic water and electric power

supply problems afflict the Virgin Islands.

systems in the Virgin Islands constitutes a menace to the

health and safety of its people and is inimical to its eco-

nomic growth.

(d) The development, acquisition, construction, improve-

ment, reconstruction, enlargement, extension, operation,

repair, maintenance and use of water and electric power

systems in the Virgin Islands is necessary to assure ade-

quate water and electric power supplies and will protect

the public health and safety and promote the public interest

by economic development of the Virgin Islands.

(e) The powers conferred by this chapter are for public

uses and purposes and are proper governmental functions

for which public money may be expended, private property

may be acquired, by eminent domain or otherwise, and

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bonds or other obligations may be issued pursuant to sec-

tion 8(b) of the Revised Organic Act of the Virgin Islands,

as amended, or any other such authority as may hereafter

be conferred by Federal law.

(f) The provisions enacted by this chapter are hereby

declared to be necessary in the public interest, and the fa-

cilities herein authorized are declared to be public improve-

ments and public undertakings.—Added Aug. 13, 1964, No.

1248, Sess. L. 1964, p. 378; amended Dee. 3, 1968, No. 2366,

§ la, Sess. L. 1968, Pt. II, p. 372.

§ 102. Definitions

(a) The term ‘‘Authority”’’ shall mean the Virgin Islands

Water and Power Authority created by this chapter.

(b) The term ‘‘Board’’ shall mean the Governing Board

of the Authority.

nation of two or more of the following for supplying water

and electric power in the Virgin Islands, to wit: water

and/or power supply and distribution systems, including

distillation plants, plants for generating electricity by any

means, stations, distribution lines, reservoirs, dams, canals,

tunnels, conduits, wells, intakes, mains, laterals, stand-

pipes, hydrants, meters, valves and other structures and

equipment, and any other words, teg:'her with all parts

thereof and appurtencanes thereto and lands, rights in

lands, and rights and privileges in connection therewith,

which the Authority shall dee mto be necessary, proper,

incidental or convenient in connection with its activities,

and which are customarily used and employed in the pro-

duction, collection, distillation, utilization, transmission,

distribution, sale, exchange, rendering, or other disposition

of water, electric power, electric equipment, supplies, serv-

ices or other activities in which the Authority shall engage

or desire to engage pursuant to its purposes.

(d)-The term ‘‘water and electric power systems”’ shall

mean all the facilities, as herein defined, for developing and

supplying water and electric power.

(ec) The term ‘‘water system’’ shall mean that part of the

facilities, as herein defined, which the Authority shail deem

to be necessary, proper, incidental, or convenient in connec-

tion with the development and supply of water, together

with that part of the facilities for joint use in connection

with the development and supply of water and electric

power which the Authority shall deem to be fairly allocable

to its water system.

(f) The term ‘‘electric power system”’’ shall mean that

part of the facilities, as herein defined, which the Authority

shall deem to be necessary, proper, incidental or convenient

in connection with the development and supply of electric

power, together with that part of the facilities for joint use

in connection with the development and supply of water

and electric power which the Authority shall deem to be

fairly allocable to its electric power system.

(g) The term ‘‘Virgin Islands Water and Power Sys-

tems’’ shall mean the water and power systems developed

or acquired by the Authority under this chapter.

(h) The term ‘‘Electric Power and Water Distillation

Systems of the Virgin Islands Corporation’’ shall mean the

water supply and distillation works, electric generating

works, distribution works and all other facilities, and other

property, rights, franchises, contract, leases, records and

accounts receivable, properly attributable to the water and

power operations of said corporation.

(i) The term ‘‘bonds”’ shall mean the bonds, temporary

bonds, refunding bonds, debentures, notes, interim bonds,

receipts, certificates, or other evidences of indebtedness

or obligations which are authorized to be issued by this

chapter.

(j) The term ‘‘holder of bonds’’ or ‘‘bondholders’’ or

any similar term shall mean any person who shall be the

bearer of any outstanding bond or bonds registered to

bearer, or not registered, or any registered owner of any

outstanding bond or bonds which at the time shall be regis-

tered other than to bearer.

(k) The term ‘‘Federal agency” shall mean the United

States of America, the President or any department there-

of, or any corporation, agency or instrumentality hereto-

fore or hereafter created, designated, or established by the

United States of America.

(1) Words importing the singular number shall include

the plural number and vice versa, and words importing

persons shall include firms, partnerships of all kinds and

corporations.—Added Aug. 13, 1964, No. 1248, Sess. L.

1964, p. 378.

Subchapter II. Virgin Islands Water and Power

Authority

§ 103. Creation of Virgin Islands Water and Power

Authority.

(a) The Governor of the Virgin Islands, the Commis-

sioner of Public Works for the Virgin Islands, the Com-

missioner of Commerce for the Virgin Islands, the Director

of the Budget and five other persons to be appointed by the

Governor with the advice and consent of the Legislature,

are hereby created a body corporate and politic constituting

a public corporation and autonomous governmental instru-

mentality of the Government of the Virgin Islands, by the

name of the ‘‘ Virgin Islands Water and Power Authority’’.

Of the appointed members, two must be residents of St.

Thomas, and two must be residents of St. Croix, and one

must be a resident of St. John, and none may be an em-

ployee of the Government of the Virgin Islands or of the

Government of the United States. Appointed members

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shall be appointed for terms of three years, except that any

person appointed to fill a vacancy occurring prior to the

expiration of the term for which his predecessor was ap-

pointed shall be appointed only for the remainder of such

term. Each appointed member shall serve until the ap-

pointment and qualification of his successor. Governmental

members of the Authority shall be entitled to no compen-

sation for their service as members. Nongovernmental

members shall be entitled to compensation at the rate of

$20.00 a day or fraction thereof spent in the work of the

Authority. All members shall be entitled to reimbursement -

for, or per diem in lieu of, necessary travel expenses.

(b) The Authority hereby created is and shall be a gov-

ernmental i:<trumentality subject, as provided for herein,

to the control of the aforenamed officers of the Government

of the Virgin Islands, acting in their capacity as members

and Governing Board thereof, but it is a corporation hav-

ing legal existence and personality separate and apart from

the Government and the officers controlling it. Subject

to section 112(a) of this title, the debts, obligations, con-

tracts, bonds, notes, debentures, receipts, expenditures, ac-

counts, funds, facilities, and property of the Authority shall

be deemed to be those of said Authority and not to be those

of the Government of the Virgin Islands, or any office,

bureau, department, agency, commission, municipality,

branch, agent, officer or employee thereof.—Added Aug.

13, 1964, No. 1248, Sess. L. 1964, p. 378; amended Dec. 3,

1968, No. 2366, § 1b, Sess. L. 1968, Pt. II, p. 372.

§ 104. Governing Board and other personnel of Authority

(a) The powers of the Authority shall be exercised by a

(Governing Board consisting of the members of the Author-

ity acting as a board. The Governor shall be Chairman of

the Board and the Commissioner of Public Works shall be

Vice-Chairman. Within one hundred and twenty (120)

days after this chapter becomes effective, the Board shall

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meet and organize and, as soon as practicable, shall appoint

an Executive Director of the Authority who shall be au-

thorized to attend all meetings of the Board but shall not

be entitled to vote.

(b) Five members of the Board shall constitute a quorum

for the purpose of organizing Authority and conducting

the business thereof and for all other purposes, and all

action shall be taken by a vote of the majority.

Authority and such officers, agents, or employees, per-

manent or temporary, and by contract or otherwise may

employ such consulting engineers, superintendents, man-

agers, fiscal, legal and other technical experts, as it may

deem necessary, and shall determine their qualifications,

duties, tenure and compensation without regard to chapter

25 of Title 3. The bylaws of the Authority may provide for

the delegation to its Executive Director or its other officers,

agents or employees of such of the powers and duties of the

Authority as the Board may deem proper.

(d) The Executive Director shall be appointed by the

Board exclusively upon the basis of merit as determined

by technical training, skill, experience, and other qualifica-

tions best suited to carrying out the purposes of the Author-

ity. The Executive Director shall be removable by the

Board but only for cause and after notice and an oppor-

tunity to be heard.

(e) All property, personnel, records, contracts, leases,

rights, franchises and unexpended balances of appropria-

tions and funds of the Commissioner of Public Works or

the Department of Public Works, as the case may be, by

virtue of the provisions of chapter 3 of this title, relating

to Water Supply, are hereby transferred to the Authority,

effective at such time as may be determined by statute;

provided, That any personnel so transferred who are found

to be in excess of the personnel required for the efficient

administration of the functions of the Authority, shall be

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.retransferred under existing law to other positions in the

Government of the Virgin Islands. The Governor shall

accompany any future proposal for transfer of the water

distribution system to the Authority with a study and

recommendations as to the terms for such transfer which

will to the maximum extent protect the interest of con-

sumers and further the public interest.

(f) The transfer to the Authority of all personnel of the

Virgin Islands Corporation employed in connection with its

water and power suppiy (including water distillation) and

distribution functions is hereby authorized in the event that

the Authority shall acquire, in accordance with section

105(a)(6) of this title, the Electric Power and Water Dis-

tillation Systems of the Virgin Islands Corporation; Pro-

vided, That any personne! so transferred who are found to

be in excess of the personnel required for the efficient ad-

ministration of the functions of the Authority shall be re-

transferred to other positions in the Government of the

Virgin Islands.

(g) Any employee of the Government of the Virgin

Islands or of the Virgin Islands Corporation transferred

to and retained by the Authority pursuant to subsections

(e) and (f) of this section shall be credited by the Author-

ity with the amount of accumulated and current accrued

annual leave to which he is entitled under local or federal

law, as the case may be, and for which leave such employee

has not received lump-sum payment.

(h) In the establishment of sick leave and other benefits

for officers and employees of the Authority, the Board shall

insofar as practicable and consistent with sound fiscal man-

agement take into account accumulation of such sick leave 4

or other benefits by employees transfe:red pursuant to the

provisions of subsections (e) and (f) of this section, pro-

vided, that any such employee who shall have accumulated q

sick leave in excess of 240 hours, shall be credited by the &

Authority with 240 hours of sick leave.

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10a

(i) No employee transferred pursuant to subsections (e)

and (f) of this section shall be reduced in pay.—Added

Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378; amended Dec.

3, 1968, No. 2366, § 1c, Sess. L. 1968, Pt. II, p. 373.

§ 105. Powers of Authority

(a)! The Authority is created for the purpose of develop-

ing and utilizing and aiding in the development and utiliza-

tion of adequate water and electric .power systems for the

people of the Virgin Islands, and any other service or fa-

cilities incidental or appropriate thereto, and making the

benefits thereof available to the inhabitants of the Virgin

Islands in the widest economic manner consistent with

sound fiscal management, and by this means to promote

the general welfare and increase commerce and prosperity ;

the Authority is granted and shall have and may exercise

all rights and power necessary or desirable for carrying

out said purposes, including, but without limiting the gen-

erality of the foregoing, the following:

(1) to have perpetual existence as a corporation ;

(2) to adopt, alter, and use a corporate seal which shall

be judicially noticed ;

(3) to make, and from time to time modify, and repeal,

bylaws, rules and regulations, not inconsistent with this

chapter, providing for the internal organization and man-

agement of the Authority, for the administration of its

affairs and operations, and for carrying into effect the

powers and purposes of the Authority;

(4) to sue and be sued in its corporate name ;

(5) to make contracts and to execute all instruments

necessary or convenient in the exercise of any of its powers ;

(6) to acquire property, real, personal, or mixed, tan-

gible or intangible, or any interest therein deemed by it to

1 So in original. There are no other lettered subsections.

Se RR.

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be necessary or desirable for carrying out the purposes

of the Authority (including its own securities) by any law-

ful means (including, but without limitation, the exercise

of the power of eminent domain in accordance with chapter

19 of Title 28), and to own, hold, develop, improve, re-

develop, enlarge, extend, repair, maintain, use and operate

said property;

(7) to sell, lease, exchange, transfer, assign, mortgage,

pledge, or otherwise dispose of, or encumber, any real or

personal property, or any interest or estate in such; Pro-

vided, That no provisions of law with respect to the acqui-

sition, operation or disposition of property by other public

agencies shall be applicable to the Authority unless the

Legislature shall specifically so provide; And provided fur-

ther, That except for a sale resulting from mortgage fore-

closure, in no case shall the Authority have the power to

sell any property unless the same, in the judgment of the

Governing Board, is no longer required for carrying out

the business of the Authority or for effectuating the pur-

poses of this chapter;

(8) to borrow money, make and issue bonds of the Au-

thority for any of its corporate purposes, and give security

therefor as provided for in subchapter III of this chapter;

(9) to make and issue bonds for the purpose of funding,

refunding, purchasing, paying, or discharging any of the

outstanding bonds or obligations issued or assumed by it;

(10) to accept grants or loans from, and enter into con-

tracts, leases, agreements, or other transactions with, any

Federal agency, the Government of the Virgin Islands, or

political subdivisions thereof, and to expend the proceeds

of any such grants or loans for any of its corporate

purposes ;

(11) to invest funds in United States obligations or other

securities approved for investment for the Government of

the Virgin Islands;

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12a

(12) to determine, fix, alter, charge, and collect reason-

able rates, fees, and other charges for the use of the facili-

ties of the Authority, or for the services, water, electric

power, or other commodities rendered or furnished by it,

which shall be at least sufficient, together with all other

available moneys, revenues, income and receipts of the

Authority from all sources, for the payment of the expenses

of the Authority incurred in connection with the repair,

maintenance, use and operation of its facilities and prop-

erties, for the payment of the principal of and the interest

on its bonds, and for fulfilling the terms and provisions of

such covenants as may be made with, or for the benefit of,

the purchasers or holders of any bonds of the Authority;

Provided, That in fixing rates, fees, and other charges for

water and electric power, the Authority shall have in view

the encouragement of the widest economically possible use

of water and electric power consistent with sound fiscal

management; and in this connection it is the intention of

the Legislature that in fixing such rates, fees and other

charges the Authority shall take into account the respective

expenses, as hereinbefore enumerated in this subparagraph,

for the water and electric power systems; provided, further,

That initially, the Authority shall adopt the existing rates,

fees and other charges for water and power, and that, there-

after, before changes in such general rate structure for

water or electric power are made, or, in cases where the

Board shall decide to make such changes and deems the im-

mediate effectiveness thereof to be necessary, then within a

reasonable time after such changes are made, a public hear-

ing shall be held with respect thereto before the Board, or

before such hearing officer or officers as the Board may des-

ignate to give interested persons an opportunity to advise

the Board of their views and of evidence in support thereof,

and upon such hearing, the Board, pursuant to the powers,

duties, and obligations vested in it by this chapter, may

alter, suspend, or revoke such changes;

(13) to have complete control and supervision of facili-

ties and properties constructed or acquired by it, including

an a

| 13a

. the power to determine the character of and necessity for

all its expenditures and the manner in which they shall be

incurred, allowed and paid, and such determinations shall

be final and conclusive for all purposes;

(14) to prepare, or cause to be prepared, plans, designs,

specifications and estimates of costs for the acquisition,

construction, reconstruction, extension, improvement, en-

largement, or repair of any facility, and from time to time

to modify such plans, designs, specifications and estimates;

(15) to acquire in accordance with paragraph (6) of this

subsection, produce, impound, develop, treat, hold, use,

transmit, distribute, supply, exchange, sell, rent, and other-

wise dispose of water, electric power, equipment, and/or

such other things, supplies and services as the Authority

shall deem necessary, proper, incidental, or desirable in

connection with its activities under this chapter;

(16) to construct or reconstruct any facility, and any

additions, improvements and extensions thereto by contract

or contracts, and/or under, through, or by means of its

officers, agents, and employees;

(17) to enter on any lands, property or structure after

notifying the owners or holders thereof, or their represen-

tatives, for the purpose of making surveys, appraisals,

soundings, borings, or examinations, and to enforce the

power of such entry by appropriate proceedings in a court

of competent jurisdiction if entry is denied or resisted;

Provided, That the Authority shall restore any such land,

property or structure, insofar as possible to their condition

or state at the time of entry;

(18) to construct or place any facilities and to operate,

maintain, and extend the same, across, in, over, under,

through, or along any street, public highway, or any lands

which may now or hereafter be the property of the Govern-

ment of the Virgin Islands without obtaining any franchise

or other permit therefor; Provided, That the Authority 1

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14a

shall obtain the consent of the Commissioner of Public

Works with respect to construction affecting public lands

and highways; And, provided, That the Authority shall

restore any such street, highway, or lands, insofar as pos-

sible to their condition or state at the beginning of the work

and shall not use the same in a manner unnecessarily to

impair their usefulness ;

(19) subject to the provisions of section 104(e) of this

title, to perform all of the functions, consistent with this

chapter, heretofore vested in the Governor of the Virgin

Islands and the Commissioner of Public Works by chapter

3 of this title;

(20) to do all acts or things necessary or desirable to

carry out the powers granted to it by this chapter or by

any other Act of the Legislature of the Virgin Islands;

(21) to participate in the programs of any Federal agen-

cies in the fields of water and electric power supply (in-

cluding water distillation) and distribution and, consistent

with this chapter, to do any and all things necessary to

secure participation in such programs and the cooperation

of such agencies in achieving the policies and purposes of

this chapter —Added Aug. 13, 1964, No. 1248, Sess. L. 1964,

p. 378; amended Dee. 3, 1968, No. 2366, § 1d, Sess. L. 1968,

Pt. II, p. 373.

Subchapter III. Bonds of Authority

§ 106. Authorization of issuance ; security, tax exemption ;

terms and conditions; etc.

(a) By authority of the Government of the Virgin

Islands under section 8(b) (i) of the Revised Organic Act of

the Virgin Islands, as amended, which is hereby granted,

the Authority may issue and sell bonds from time to time

and have outstanding at any one time, exclusive of bonds

issued solely for the purpose of exchanging the same in

return for the cancellation of bonds either issued by the

= aiahestemeainiiibtaiih isha

15a

Authority or assumed by it, bonds not in excess of twenty-

five million (25,000,000) dollars, in aggregate principal

amount, in addition to all sums that the Legislature of the

Virgin Islands has authorized or may authorize separately

for particular purposes; Provided, however, That refund-

ing bonds of the Authority issued solely for the purpose of

applying the proceeds thereof to the payment for, or pur-

chase of, bonds issued by the Authority or assumed by it,

shall not be included in computing any such limitation until

six (6) months after their sale.

(b) Payment of the bonds of the Authority may ie se-

cured by a pledge or lien on all or any part of its proper-

ties, contracts, gross or net rates, fees, revenues, other

income or bond proceeds to which the rights of the Author-

ity then exist or may thereafter come into existence or by

pledge of or lien on any loan, grant, or contribution, or

parts thereof, from any Federal agency, the Government

of the Virgin Islands (except as provided for in section

112(b) of this chapter) or any other source. It is the in-

tention hereof that any pledge of revenues or other monies,

or of a revenue-producing contract or contracts made by

the Authority shall be valid and binding from the time

when the pledge is made; that the revenues, or other monies

or proceeds of any contract or contracts so pledged and

thereafter received by the Authority shall immediately be

subject to the lien of such pledge without any physical

delivery thereof or further act; and that the lien of any

such pledge shall be valid and binding as against all parties

having claims of any kind in tort, contracts or otherwise

against the Authority irrespective of whether such parties

have notice thereof. Neither the resolution nor any other

instrument by which a pledge is created need be recorded.

ganic Act of the Virgin Islands, as amended, the bonds of

the Authority shall be exempt as to principal and interest

from taxation by the Government of the United States, or

Vere ae ee

16a

by the Government of the Virgin Islands, or by any state,

territory, or possession, or by any political subdivision of

any state, territory or possession, or by the District of

Columbia.

(d) Bonds of the Authority shall be authorized by reso-

lution or resolutions of the Board, and shall comply with

all pertinent provisions of the Revised Organic Act of the

Virgin Islands, as amended, or such other provisions of

applicable Federal law as may be in effect at the time.

Except as otherwise provided for by said Act or other

Federal law, bonds of the Authority may be issued in one

or more series and shall bear such date or dates, mature in

such amounts and at such time or times, bear interest at

such rate or rates, payable semiannually, be in such denom-

ination or denominations, be in such form, either coupon

or registered, carry such conversion or registration privi-

leges, have such rank or priority, be executed by such mem-

bers or officers in such manner, be payable in such medium

of payment, at such place or places, may be declared or

become due at:such time before the maturity date thereof,

may be authenticated in such manner and upon compliance

with such conditions, and may contain such other terms and

covenants as such resolutions or its trust indenture may

provide.

(e) The bonds shall be sold in such manner as permitted

by the Revised Organic Act of the Virgin Islands, as

amended, or other applicable Federal law, at such price as

the Authority may determine.

(f) In case any of the members or officers of the Author-

ity whose signatures appear on any bonds or coupons shall

cease to be such members or officers before the delivery of

such bonds, such signatures shall, nevertheless, be valid and

sufficient for all purposes, the same as if such members or

officers had remained in office until such delivery. Any

provision of any law to the contrary notwithstanding, any

bonds issued by the Authority pursuant to this chapter

17a

“shall be negotiable for all purposes, subject to the provi-

sions of bonds for registration.

(g) Neither the members of the Authority nor any per-

son executing the bonds shall be liable personally on the

bonds or be subject to any liability by reason of the issu-

ance thereof.

(h) In any suit, action or proceeding involving the valid-

ity or enforceability of any bond of the Authority or the

security therefor, any such bond reciting in substance that

it has been issued by the Authority to aid in financing a

facility as defined in this chapter, shall be conclusively

deemed to have been issued for such purpose, and the facil-

ity shall be conclusively deemed to have been undertaken,

constructed or acquired in accordance with the provisions

of this chapter—Added Aug. 13, 1964, No. 1248, Sess. L.

1964, p. 378; amended Dec. 6, 1966, No. 1824, § 1, Sess. L.

1966, p. 535; April 17, 1967, No. 1906, § 1, Sess. L. 1967, p.

91; amended Dee. 3, 1968, No. 2366, § le, f, Sess. L. 1968,

Pt. II, p. 373; Feb. 13, 1970, No. 2625, Sess. L. 1970, p. 14.

§ 107. Powers of Authority with respect to bonds

In any resolution or resolutions authorizing the issuance

of bonds, the Authority may contract with the holders of

the bonds to undertake and obligate itself of such commit-

ments, as long as the bonds are outstanding and unpaid, as

are deemed by the Board to be necessary: and appropriate

for the protection of the bondholders and the marketability

of the bonds, and may specifically in addition to any other

provisions—

(a) covenant as to the disposition of the entire gross or

net revenues and present or future income of the Authority

including the pledging of all or any part thereof to secure

payment of the bonds and the interest thereon;

(b) covenant against making, permitting or suffering

any pledge or other lien on all or any part of its receipts,

18a

revenues or other income, or real or personal property, to

which its right or title then exists or may thereafter come

into existence; covenant with respect to limitations on any

sale, lease or other disposition of the Virgin Islands Water

and Power Systems or any part or parts thereof ; and cove-

nant as to what other or additional debts or obligations may

be incurred by it;

sued as to the issuance of such bonds in escrow or other-

wise, as to the use and disposition of the proceeds thereof,

and as to the limitations on the issuance of additional

bonds; covenant against extending the time for the payment

of its bonds or interest thereon; and covenant for redemp-

tion of the bonds and provide for the terms and conditions

thereof ;

(d) covenant as to the rates, fees, rentals, and other

charges to be fixed and collected, the amount to be raised

each year or other period of time thereby, and as to the use

and disposition to be made thereof ;

(e) create or authorize the creation of special funds or

reserves for moneys held for construction or operating

costs, debt service, “eserves, Or other purposes; and cove-

nant as to the use, disposition and investment of the moneys

held in such funds;

(f) covenant as to the use, maintenance and replacement

of any or all of its real or personal property, the amount

and kind of insurance to be carried thereon and the use and

disposition of insurance moneys;

(g) prescribe the procedure, if any, by which the terms

of the bonds, resolution, or any other contract with the

bondholders may be modified, the amount of bonds, the

holders of which must consent thereto, and the manner in

which such consent may be given;

i (h) covenant as to and prescribe the events of default

4 and terms and conditions upon which any or all of its bonds

19a

shall become or may be declared due before maturity, and

as to the terms and conditions upon which such declaration

and its consequences may be waived;

(i) covenant as to the rights, liabilities, powers and du-

ties arising upon the nonperformance by the Authority of

any of its covenants, conditions, or obligations, including

the right and remedies of bondholders which may be in ad-

dition to remedies specified in this chapter;

(j) vest in a trustee or trustees the right to enforce the

payment of the bonds or any covenants securing or relating

to the bonds and the right, in the event of a default by the

Authority, to take possession of and use, operate and man-

age the Virgin Islands Water and Power Systems or any

part or parts thereof or any funds connected therewith

(except funds loaned or granted to the Authority by the

Government of the Virgin Islands in accordance with sec-

tion 112(b) of this title), and to collect the rates, fees, rev-

enues, or other income arising therefrom and to dispose of

such moneys in accordance with the agreement of the Au-

thority with the holders of the bonds; provide for the pow-

ers and duties of such trustee or trustees which may be a

national banking association or a bank or trust company

organized under the laws of the United States or of the

Virgin Islands or any state, and limit the liabilities thereof ;

and provide the terms and conditions upon which the hold-

ers of the bonds or any proportion of them may enforce

any covenant or rights securing or relating to the bonds;

and

(k) exercise all or any part or combination of the powers

herein granted; make covenants and to do any and all such

acts and things not inconsistent with this chapter as may

be necessary and desirable in order to secure its bonds, or

as may tend to make the bonds more marketable notwith-

standing that such covenants, acts or things may not be

enumerated herein.—Added Aug. 13, 1964, No. 1248, Sess.

L. 1964, p. 378.

Se ea ey JPN eR ere

Pe ees oe

20a

§ 108. Right to receivership upon default

(a) The Authority is authorized to covenant for the right

to receivership upon default as hereinafter set forth in sub-

sections (b) to (f) of this section inclusive, or to limit such

right by definition of default or otherwise, in its agreement

with the bondholders.

(b) In the event that the Authority shall default in the

payment of the principal of, or interest on, any of its bonds

after the same shall become due, whether it be a default in

the payment of the principal and interest or in the pay-

ment of interest only at maturity or upon call for redemp-

tion, and such default shall continue for a period of thirty

(30) days, or in the event that the Authority or the Board,

officers, agents, or employees thereof shall default on any

agreement made with the holders of the bonds, any holder

or holders of the bonds (subject to any contractual limita-

tion as to a specific percentage of such holders), or trustee

therefor, shall have the right to apply in an appropriate

judicial proceedings to any court of competent jurisdiction

in the Virgin Islands for the appointment of a receiver of

the facilities, the income or revenues of which are pledged

to the payment of the bonds so in default, whether or not

all the bonds have been declared due and payable and

whether or not such holder, or trustee therefor, is seeking

| or has sought to enforce any other right or to exercise any

remedy in connection with such bonds. Upon such appli-

; cation and showing the court may appoint, and if the ap-

+ plication is made by the holders of twenty-five (25%) per

> centum in principal amount of such bonds then outstanding,

| or by any trustee for holders of bonds in such principal

4 amount, shall appoint a receiver of such facilities.

by his agents and attorneys, enter into and upon and take

possession of such facilities and may exclude the Authority,

its Board, Officers, agents, and employees and all persons

claiming under them, wholly therefrom and shall have, hold,

Wh NeSNS.

| ydidlsicah shite wwaceahh edit

2la

use, operate, manage, and control the same, and, in the

name of the Authority or otherwise, as the receiver may

deem best, shall exercise all the rights and powers of the

Authority with respect to such facilities as the Authority

itself might do. Such receiver shall maintain, restore, in-

sure, and keep insured, such facilities and from time to time

shall make all repairs necessary or proper for the conserva-

tion of the facilities, shall establish, levy, maintain, and

collect such rates, fees, and other charges in connection

with such facilities as such receiver may deem necessary,

proper and reasonable, consistent. with the purposes of the

receivership and the purposes of this chapter, and shall

collect and receive all income and revenues and deposit the

same in a separate account and apply the income and reve-

nues so collected and received in such manner as the court

shall direct.

(d) Whenever all that is due upon the bonds, and inter-

ests thereon, and under any of the terms of any covenants

or agreements with bondholders shall have been paid or

deposited as provided therein, and all defaults in conse-

quence of which a receiver may be appointed shall have

been cured and made good, the court may, in its discretion

and after such notice and hearing as it deems reasonable

and proper, direct the receiver to surrender possession of

such facilities to the Authority, the same right of the hold-

ers of the bonds to obtain the appointment of a receiver to

exist upon any subsequent default as hereinabove provided.

(e) Such receiver shall act, in the performance of the

powers hereinabove conferred upon him, under the direc-

tion and supervision of the court and shall at all times be

subject to the orders and decrees of the court and may be

removed thereby. Nothing herein contained shall limit or

restrict the jurisdiction of the court to enter such other and

further orders and decrees as such court may deem neces-

sary or appropriate for the exercise by the receiver of any

functions specifically set forth in this chapter.

22a

(f) Notwithstanding anything in this section to the con-

trary, such receiver shall have no power to sell, assign,

mortgage, Or otherwise dispose of any assets of whatever

kind or character belonging to the Authority and useful

for its activities, but the powers of any such receiver shall

@ be limited to the operation and maintenance of the facili-

@ ties of the Authority, and the collection and application of

the income and revenues therefrom, and the court shall not

have jurisdiction to enter any order or decree requiring or

permitting said receiver to sell, mortgage, or otherwise

dispose of any such assets.—Added Aug. 13, 1964, No. 1248,

Sess. L. 1964, p. 378.

§ 109. Remedies of bondholders

(a) Subject to any contractual limitations binding upon

the holders of any issue of bonds, or trustees therefor, in-

cluding but not limited to the restriction of the exercise of

any remedy to a specified proportion or percentage of such

holders, any holder of bonds, or trustee therefor, shall have

the right and power, for the equal benefit and protection of

all holders of bonds similarly situated—

(1) by mandamus or other suit, action, or proceeding at

+ law or in equity to compel the Authority and its Board,

+ officers, agents, or employees to perform and carry out its

and their duties and obligations under this chapter and its

> and their covenants and agreements with bondholders;

(2) by action or suit in equity to require the Authority

and the Board thereof to account as if they were the trus-

tees of an express trust;

(3) by action or suit in equity to enjoin any acts or things

which may be unlawful or in violation of the rights of the

4 bondholders; and

(4) to bring suit upon the bonds.

1 baad el.

3 (b) No remedy conferred by this chapter upon any holder

of the bonds, or any trustee therefor, is intended to be ex-

elusive of any other remedy, but each such remedy is cumu-

23a

lative and in addition to every other remedy, and.may be

exercised without exhausting and without regard to any

other remedy conferred by this chapter or by any other law.

No waiver of any default or breach of duty or contract,

whether by any holder of the bonds, or any trustee there-

for, shall extend to or shall affect any subsequent default

or breach of duty or contract or shall impair any rights or

remedies thereon. No delay or omission of any bondholder

or any trustee therefor to exercise any right or power ac-

eruing upon default shall impair any such right or power

or shall be construed to be a waiver of any such default or

acquiescence therein. Every substantive right and every

remedy, conferred upon the holder of the bonds, may be

enforced and exercised from time to time as often as may

be deemed expedient. In case of any suit, action or pro-

ceeding to enforce any right or exercise any remedy shall

be brought or taken and then discontinued or abandoned,

or shall be determined adversely to the holder of the bonds,

or any trustee therefor, then and in every such case the

Authority and such holder, or such trustee, shall be restored

to their former positions and rights and remedies as if no

such suit, action, or proceeding had been brought or taken.

—Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

§ 110. Bonds of Authority legal investments for public or

private funds

The bonds of the Authority shall be lawful investment,

and may be accepted as security, for all fiduciary, trust and

public funds, the investment or deposit of which shall be

under the authority or control of the Government of the

Virgin Islands or any officer or officers thereof.—Added

Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

§ 111. Exemption of Authority from judicial process and

taxes

(a) All property including funds of the Authority shall

be exempt from levy and sale by virtue of an execution, and

pitt de tnae

Fe el Oa Ul alk te hs ela er Sg ho

24a

no execution or other judicial process shall issue against

the same nor shall any judgment against the Authority be

a charge or lien upon its property; Provided, however,

That this subsection shall not apply to or limit the right of

bondholders to pursue any remedies for the enforcement of

any pledge or lien given by the Authority on its rates, fees,

revenues, or other income or any other funds.

(b) The purpose for which the Authority is created and

shall exercise its powers being public purposes, the prop-

erty of the Authority, its income and its activities shall be

exempt from all taxes and special assessments of the Virgin

Islands or any political subdivision thereof. In lieu of

taxes, the Authority may agree to make such payments to

the Virgin Islands or any political subdivisions thereof as

| if finds consistent with the maintenance of the Virgin

4 Islands Water and Power Systems, the obligations of the

a Authority and the achievement of the purposes of this chap-

1 ter.—Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

Subchapter IV. Assistance of Government of the

Virgin Islands

§ 112. Financial assistance; guarantees and purchases of

bonds of Authority; loans and grants

(a) For the purpose of assisting the Authority with its

financing, the Government of the Virgin Islands, to the

extent permitted by the Revised Organic Act of the Virgin

Islands, as amended, or any other applicable Federal law,

may—

(1) guarantee payment of the bonds of the Authority,

both as to principal and interest;

(2) employ its funds in the purchase of the bonds of the

Authority, notwithstanding any provision of any law to the

contrary.

(b) For the purpose of raising funds to be granted or

loaned to the Authority to construct, improve, extend, bet-

y DK aisha eek eek SES. aero ag NE aa hg AP OI sa dine jt

25a

-ter, repair, reconstruct, acquire and equip any part of the

Authority’s water systems, the Government of the Virgin

Islands may—

(1) borrow money, make and issue bonds or other evi-

dence of indebtedness, and secure such bonds or other obli-

gations by pledge of the Government’s credit and taxing

power, as provided for in section 113 of this title;

(2) make or issue bonds for the purpose of funding,

refunding, purchasing, paying, or discharging any of the

outstanding bonds or obligations issued, guaranteed or as-

sumed by it in pursuance of this section—Added Aug. 13,

1964, No. 1248, Sess. L. 1964, p. 378.

$113. Authorization of issuance of bonds of the Govern-

ment of the Virgin Islands

In pursuance of section 8(b)(ii) of the Revised Organic

Act of the Virgin Islands, as amended, the issuance of gen-

eral obligation bonds or other obligations by the Govern-

ment of the Virgin Islands, not in excess of five million five

hundred thousand dollars ($5,500,000) in aggregate prin-

cipal amount of said bonds outstanding at any one time, is

hereby authorized and approved, as the Governor may deem

necessary and advisable, subject to the same qualifications

upon said limitation as are set forth in section 106(a) of

this title. To the extent consistent with section 8(b) (ii) of

the Revised Organic Act of the Virgin Islands, as amended,

or any other applicable Federal law, the provisions of sub-

sections (c) through (h) of section 106 and of section 110 4

of this title shall apply equally to the bonds of the Govern- }

ment of the Virgin Islands and all powers thereby vested s

in th, Authority, its Board, members, officers and other ;

persons shall apply instead to the Governor of the Virgin 3

Islands and his designee or designees, who shall be officers >

or employees of the Government of the Virgin Islands; ‘

Provided, however, That the bonds of the Government of f

the Virgin Islands shall be issued by a written declaration ©

POTTERY PEER TOE ELT TT TOOT LE TTL TD ete on |

he alakcnsite

or declarations of the Governor which shall provide for

public or private sale of the bonds and for their redemp-

tion with or without premium, and shall contain such other

provisions as may be deemed necessary or desirable for the

protection of the bondholders and the security of the bonds.

—Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378;

amended Nov. 21, 1967, No. 2069, Sess. L. 1967, p. 519.

§ 114. Other assistance of Government of the Virgin Islands

(a) For the purpose of further aiding the Authority in

developing and maintaining the Virgin Islands Water and

Power Systems, the Government of the Virgin Islands or

any political subdivision thereof, may at the request of the

Authority and upon such terms, with or without considera-

tion, as said Government or political subdivision shall de-

termine—

(1) dedicate, sell, convey, or lease any of its interest in

any property or grant easements, licenses or any rights or

privileges therein to the Authority;

(2) cause services of the character which it is otherwise

empowered to render to be furnished to the Authority.

(b) Any sale, conveyance, lease or agreement provided

for a this section may be made without appraisal, public

notices, advertisement or public bidding, notwithstanding

any other laws to the contrary.—Added Aug. 13, 1964, No.

1248, Sess. L. 1964, p. 378.

Subchapter V. Other Purposes

§ 115. Moneys and accounts of Authority

(a) All moneys of the Authority shall be deposited in

qualified depositories for funds of the Government of the

Virgin Islands, but they shall be kept in separate accounts

in the name of the Authority. The disbursements shall be

Ce Ieee

27a

made by it pursuant to regulations and budgets approved

by the Board. Notwithstanding the provisions of this sub-

section the Authority shall have power to contract with the

holders of any of its bonds as to the custody, collection, in-

vestment and payment of any moneys of the Authority, or

any moneys held in trust or otherwise for the payment of

bonds or in any way to secure bonds, and deposits of such

moneys may be secured in the same manner as moneys of

the Authority.

(b) The Authority shall account to the Government of

the Virgin Islands im accordance with applicable law for all

funds which the Government may furnish to the Authority,

by loan or grant. The Authority shall also account to any

Federal agency, if and in the manner required, for any

funds that it may have received from any such agency.

for the proper statistical control and record of all expenses

and income belonging to or managed or controlled by the

Authority. Subject to agreements with bondholders, said

system shall segregate the accounts for water and power

functions, make a reasonable allocation of costs that may

be common to both functions, and insofar as advisable,

otherwise segregate the accounts for different classes of

operations, facilities, and activities of the Authority; Pro-

vided, That from time to time the Authority shall have its

accounts and books, including its receipts, disbursements,

contracts, leases, sinking funds, investments and any other

matters which relate to its financial condition examined by

an independent accountant who shall report thereon to the

Board of the Authority and to the Legislature—Added

Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

§ 116. Competitive bidding

All purchases and contracts for supplies for services,

except for personal services, made by the Authority, includ-

ing contracts for the construction of facilities of the Au-

EE DONORS, bOI i

28a

thortiy, shall be made after advertisement for bids suffi-

ciently in advance of opening bids for the Authority to

secure appropriate notice and opportunity for competition ;

Provided, That where the expense estimated to be neces-

sary in connection with the purchase or work does not ex-

ceed two thousand five hundred (2,500) dollars the same

may be carried out without advertisement for bids. Adver-

tisement for bids shal] not be required, however, when—

(1) an emergency requires immediate delivery of the

materials, supplies, equipment, or performance of the serv-

ices; or

(2) repair parts, accessories, or supplemnetal equipment

or services are required for supplies or services previously

furnished or contracted for; or

(3) professional, financial (including financial printing)

or other expert services or work are required and the Au-

\ thority shall deem it best in the interest of good adminis-

’ tration that contracts therefor be made without such adver-

tisement; or

(4) Prices are noncompetitive because there is only one

source of supply or because regulated under law; in such

) ease the purchase of such materials, supplies, or equipment,

+ or procurement of such services, may be made in the open

market in the manner usual in commercial practice. In the

comparison of bids and the making of awards, due consid-

eration shall be given to such factors (in addition to

whether the bidder has complied with the specifications)

as the bidder’s ability to perform construction work of the

kind involved in the construction contract under considera-

tion; the relative quality and adaptability of materials,

supplies, equipment, or services; and the time of delivery

or performance offered. The Authority may prescribe

rules and regulations for the submission of bids.—Added

Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

(pe rrr oe rere et

- : ool a i —_~ — =

Pere ee

=* ee OE EIEIO 4

29a

$117. Contributions to Employees Retirement System and

Government Insurance Fund; Unemployment Com-

pensation and Social Security Coverage

(a) All officials and employees of the Authority shall be

covered by and subject to the Employees Retirement Sys-

tem of the Virgin Islands and the Workmen[’s] Compen-

sation Act. The Authority shall contribute to the Retire-

ment System of the Government of the Virgin Islands its

share of the cost of the retirement of the officials and em-

ployees on the basis of semiannual billings as determined

by the Division of Personnel, Government of the Virgin

Islands, and the contribution of officials and employees for

retirement shall be deducted from the salaries in the same

manner as in the case of regular employees of the Govern-

ment of the Virgin Islands and shall be paid semiannually

to the Retirement Fund of the Government of the Virgin

Islands. The Authority shall also contribute to the Gov-

ernment Insurance Fund, on the basis of annual billings as

determined by the Commissioner of Finance for the benefit

payments made from such fund on account of the Author-

ity’s employees. The annual billings shall also include a

statement of the fair portion of the cost of the Government

Insurance Fund, which shall be paid by the Authority into

the Treasury of the Virgin Islands as miscellaneous re-

ceipts.

(b) For purposes of unemployment compensation, the

Authority shall be deemed an employing unit as defined in

section 302(j)(i) of Title 24, and the Authority shall make

payments to the Unemployment Compensation Subfund and

the Unemployment Compensation Administration Subfund

in lieu of contributions in the same manner provided for

the Government of the Virgin Islands by section 308(d) of

Title 24.

thority shall be deemed as an employing unit following sig-

nature of an agreement between the Government of the

;

A ELON 2 OUT

eae sb hs

ORO eT SRT a mee

Rh a id

30a

Virgin Islands of the United States and the Socia! Security

Administration; and the Authority shall make appropriate

payroll deductions on the part of employees as well as on

its own behalf as employer, and such deductions shall be

paid to the Social Security Administration in accordance

with existing procedures and in a manner identical with

other covered agencies of the Government of the Virgin

Islands.—Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p.

378; amended March 1, 1965, No. 1317, Sess. L. 1965, Pt. I,

p. 33.

§ 118. Reports

The Authority shall submit to the Legislature and to the

Governor of the Virgin Islands, as soon as practicable after

the close of each fiscal year of the Government of the Virgin

Islands (1) a financial statement and complete report of the

business of the Authority for the preceding fiscal year, and

(2) a complete report on the status and progress of all of

its facilities and activities since the creation of the Author-

ity or the date of its last such report. The Authority shall

also submit to the Legislature and to the Governor, at such

other times as may be required, official reports of its busi-

ness and activities under this chapter—Added Aug. 13,

1964, No. 1248, Sess. L. 1964, p. 378.

§ 119. Agreements of the Government of the Virgin Islands

The Government of the Virgin Islands does hereby pledge

to, contract and agree with, any person, firm or corporation,

or any Federal, Virgin Islands or state agency, subscribing

to or acquiring bonds of the Authority or of the Govern-

ment of the Virgin Islands issued for the purposes of this

chapter, that it obligates itself not to limit or alter the

rights or powers hereby vested in the Authority or the

Government, as the case may be, until all such bonds at any

time issued, together with the interest thereon, are fully

met and discharged. The Government of the Virgin Islands

POM St PEO ere Sy or -

’ Pie Sn FL kere Sr et

3la

does further pledge to, contract and agree with, any Fed-

eral agency that in the event any such agency shall con-

struct, extend, improve, or enlarge or contribute any funds

for the construction, extension, improvement, or enlarge-

ment of, any facilities, the Government of the Virgin

Islands will not alter or limit the rights or powers of the

Authority in any manner which would be inconsistent with

the continued maintenance and operation of such facilities

or the extensions, improvement, or enlargement thereof, or

which would be inconsistent with the due performance of

any agreements between the Authority and any such Fed-

eral agency; and the Authority shall continue to have and

may exercise all rights and powers herein granted so long

as the same shall be necessary or desirable for the carrying

out of the purposes of this chapter and the purpose of any

Federal agency in constructing, extending, improving or

enlarging, or contributing funds for the construction, ex-

tension, improvement or enlargement of, any facilities —

Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

§ 120. Injunctions

An injunction shall not be granted to prevent the applica-

tion of this chapter or any part thereof.—Added Aug. 13,

1964, No. 1248, Sess. L. 1964, p. 378.

§ 121. Lack of jurisdiction of other agencies

No officer, board, commission, department or other

agency or political subdivision of the Virgin Islands shall

have jurisdiction over the Authority in the management and

control of its properties and facilities, or any power over

the regulation of rates, fees, rentals and other charges to

be fixed, revised and collected by the Authority, or any

power to require a certificate of convenience or necessity,

license, consent, or other authorization in order that the

Authority may acquire, lease, own and operate, construct,

maintain, improve, extend or enlarge any facility —Added

Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

32a

§ 122. Inconsistent provisions of other Acts superseded

Insofar as the provisions of this chapter are inconsistent

with the provisions of any other Act of the Legislature of

the Virgin Islands, the provisions of this chapter shall be

controlling and no law heretofore or hereafter passed gov-

erning the administration of the Government of the Virgin

Islands or any parts, office, bureaus, departments, commis-

sions, municipalities, branches, agents, officers or employ-

ees thereof shall be construed to apply to the Authority

unless so specifically provided, but the affairs and business

of the Authority shall be administered as provided herein.

—Added Aug. 13, 1964, No. 1248, Sess. L. 1964, p. 378.

§ 123. Separability of provisions

If any provisions of this chapter or the application of

such provisions to any person or circumstances shall be held

; invalid, the remainder of the chapter and the application

4 of such provisions to persons or circumstances other than

those as to which it shall have been held invalid shall not be

affected thereby.—Added Aug. 13, 1964, No. 1248, Sess. L.

1964, p. 378.

» .

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ESS PY EL LE OES

PEE TRAE AERA

pra Ct SERA ES POR STE ees bey

7 RR OT es Oe

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33a

APPENDIX B

Vircin IsLtanps WatER AND Power AUTHORITY

Vircin IsLANps OF THE UNITED STATEs

St. THomas, Viren Istanps

Reso.ution No. 89

[Adopted December 3, 1971]

Wuereas, the Authority’s power revenues have not kept

pace with ever-increasing costs of operations, especially

fuel costs; and

Wuereas, the Authority must maintain a sound financial

position in order to assure that it can undertake new

borrowings to finance its future construction programs;

and

Wuereas, the Authority’s financial consultants, Wain-

wright & Ramsey, on July 16, 1971 advised that an in-

crease in the Authority’s earnings is required if the Au-

thority is to borrow the monies needed in March 1973; and

Wuereas, the Authority appointed Jackson & Moreland,

consulting engineers, to perform a study of the Authority’s

financial requirements for the purpose of assuring that

an adequate level of earnings is maintained; and

Whereas, Jackson & Moreland, in a report dated October

31, 1971, a copy of which is attached,* has recommended to

the Authority that its rates generally be increased; and

Wuenrsas, pursuant to direction of the Board, the Exec-

utive Director of the Authority conducted public hearings

under the Chairmanship of the Attorney General in order

to permit interested persons an opportunitv to advise the

Board of their views with respect to the proposed rate

increase; and

*The attachments to this resolution are omitted here. They

are included, however, in the record below.

So ie al lil

RITTER

tye

rary nee a

etc Bekah ae TAS

34a

Wueneas, the Board has determined that the proposed

rate increases are still required in order for the Authority

to maintain a sound financial position ;

Now Tuenerore Bz It REsoLveD:

That the proposed rate schedules for Residential Serv-

ice, Commercial and Small Power Service, Large Power

Service, and Security Lights, copies of which are herewith

attached, are to become effective December 1, 1971, for all

meter readings on or after that date.

We ES

SPLINT PI PARI Hie

ia aaa ERE ORe ET

= ax EAL OLS £5 NONE 4, TEU,

35a

APPENDIX C

IN THE DISTRICT COURT-OF THE VIRGIN ISLANDS

DIVISION OF ST. CROIX

Civil No. 499-1971

Action to Engorn Rate Increase

Viren Istanps Horen Association (U.S.) Inc., Plaintiff

vs. ,

Viecin Istanps Water & Power Aurtuority, Defendant

Opinion

This is an action filed by the Virgin Islands Hotel Asso-

ciation (plaintiff herein) to enjoin the Virgin Islands Water

and Power Authority (herein ‘‘the Authority’’) from con-

tinuing to give effect to a change in the electric power rate

structure on grounds that the Authority ‘‘acted in gross

disregard of the V.I.W.A.P. Act and of procedural due

process’’, Motions for a temporary restraining order

and for a preliminary injunction were denied, following

two separate hearings on grounds that plaintiff failed to

show that immediate and irreparable harm would ensue to

plaintiff by denial of such temporary injunctive relief.

By agreement of counsel, an expedited evidentiary hear-

ing was held on the merits of the complaint and answer.

Following that hearing, the Court met with counsel for

both parties and principals of the Authority in an unsuc-

cessful attempt to effect a settlement. The Court must

now face the issues on the merits as to the legality or

illegality of the rate increase.

The Authority argues that the increase in the power

rate (approximately amounting to a 20% overall increase)

was necessitated and compelled by the demands to meet

the bond covenant to maintain a 1.5 ratio of revenues to

Cae ge We POR UME SENSE Ma PTY

ns a ’ .

FE ENEMY BE BOOED

we iat aks ae iad Cdr

36a

the debt service of the Authority’s Series A Bonds. The

Authority has outstanding nineteen million dollars in

Series A Bonds. The bond covenant is in close danger

of being violated (if not, in fact, has been violated) and it

was urged by the Authority ’s consultants in municipal

financing to take positive steps to issue a rate to assure

maintenance of the bond convenant ratio. Furthermore,

the Authority has authorized the issuance of Series B

Bonds in the amount of ten million dollars to cover its

obligation of five million dollars on a bond anticipation

note due March 1, 1972 and another bond anticipation note

of five million dollars due March 17, 1972. In addition, the

Authority has outstanding contract commitments totalling

eight million dollars. Before the Authority can sell the

Series B Bonds (to raise the ten million dollars in March,

1972) and before it can borrow against one or more bond

anticipation notes (to cover the eight million dollars con-

tract obligations), the Authority must obtain a favorable

opinion from bond counsel. The Authority maintains that

so long as the Authority is involved in pending litigation,

bond counsel cannot render a favorable opinion. While

this was a factor which caused me to make extra diligent

efforts to effect a settlement of this litigation, it cannot

serve as a relevant and controlling factor in deciding the

merits of plaintiff’s complaint herein. Furthermore, judi-

cial notice is taken of a pending litigation brought by

Baldwin-Lima-Hamilton suing the Authority for an alleged

debt of $275,000, Baldwin-Lima-Hamilton vs. Virgin Islands

Water & Power Authority, Civil No. 5441971, In the

District Court of the Virgin Islands, Division of St. Thomas

and St. John.

At the second full hearing on plaintiff’s motion for a

preliminary injunction, I stated my concern as to the

standing of plaintiff to bring this suit, even though plain-

tiff’s standing has never been challenged by the Authority.

However, on reflection and on independent research, I am

satisfied as to plaintiff’s standing and the Court’s juris-

weet

Peas

37a

diction herein. It is stated in Data Processing Service v.

Camp 397 U.S. 150, 153, 90 S. Ct. 827, 25 L.Ed. 2d 184

(1970), that ‘‘the interest sought to be protected by the

complainant is arguably within the zone of interest to be

protected or regulated by the statute ...’’ The Court also

went on to point out, at 154, that ‘‘he who is ‘likely to be

financially’ injured, may be a reliable attorney general to

litigate the issues of the public interest in the present

case’’, citing FCC v. Saunders Bros. Radio Station 309 U.S.

470, 477 (1939). See also //arding v. Kentucky Utilities

Company 390 U.S. 1 (1967), and Abbot Laboratories v.

Gardner, 387 U.S. 136 (1967).

It is also to be noted that in Data Processing Service,

supra, at page 154, the Court stated, ‘‘there is no pre-

sumption against judicial review and in favor of adminis-

trative absolutism (Abbot Laboratories v. Gardner 387

U.S. 136 (1967)), unless that presumption is fairly dis-

cernible in the statutory scheme’’.

The Court is further persuaded on the issue of jurisdic-

tion by 4 V.LC., See. 74 that this complaint falls within

the legislative permission therein granted.

- believe that plaintiff would also have standing under

‘hs concept enunciated in Scenic Hudson Preservation Con-

jerence vs. Federal Power Commission, 354 F2d 608 (2d

Cir. 1965), cert. denied, 384 U.S. 941, 86 S. Ct. 1462, 16

L.Ed. 2d 540 (1966), as a ‘‘private attorney general’’, The

Court there with regard to the issue of standing also

pointed out, and with this I wholeheartedly concur, ‘‘our

experience with public actions confirms the view that the

expense and vexation of legal proceedings is not lightly

undertaken’’, Id. at 617. See also Powelton Civic Home

Own. Ass’n v. Department of Housing and Urban Develop-

ment 284 F. Supp. 809, 826 (E.D. Pa. 1968).

As noted before, both parties agree that the issue before

the Court is the legality of the procedure by which the

Authority increased its rates This is important because

ata IR

38a

this is an action to enjoin said rate increase and not an

appeal from an agency decision. The difference is not

merely one of semantics for unlike an appeal the scope of

review for an injunction is broader than that when an

appeal is involved. The interpretation of a statute is a

matter of law and in a suit to enjoin agency action, a

Court is free to substitute its own judgment for that of the

administrator. In other words, ‘‘(i)t is the right to chal-

lenge, not the extent of the remedial power, which must

first be considered: Agnew V. Board of Governors, 153

F2d 785 (D.C. Cir. 1946), rev’d on other grounds 329 US.

441, 67 S CA411, 91 L.Ed. 408 (1946).

The Authority asserts the legality of its procedure based

on its interpretation of the statute which created it. It is

noteworthy that the statute, 30 VIC 101 et seq., makes no

provision for review of the Authority’s actions, but this

cannot mean that affected persons have no redress for

illegal conduct on the Authority’s part. In Agnew the

Board attempted to assert an unchallengable right to its

interpretation .of a statute which was ‘¢administrative

absolutism’’ of a sort the Court could not countenance.

The issue before the Court, therefore, is (1) whether

the proper procedure was employed to arrive at a reason-

able rate and (2) whether plaintiffs were afforded the

hearing they alleged to be required by the Act establish-

ing the Water and Power Authority. They contend in

essence as to the latter that they were denied procedural

due process. The Water and Power Authority Act, Title

30, Sec. 101 et. seq. provides in pertinent part (Sec. 105,

Sub-sec. 12) that the Authority ‘‘shall determine, fix, alter,

charge, and collect reasonable rates, fees... .”’

Sub-section 12 further provides that initially the Author-

ity

‘shall adort the existing rates, fees and other charges

for water and power, and that, thereafter, before

39a

changes in such general structure for water or electri-

cal power are made, or, in cases where the, Board shall

decide to make such charges and deem the immediate

effectiveness thereof to be necessary, then within a rea-

sonable time after such charges are made, a public

hearing shall be held with respect thereto before the

Board, or before such hearing officer or officers as the

Board may designate to give interested persons an

opportunity to advise the Board of their views and of

evidence and support thereof, and upon such a hearing,

the Board, pursuant to the powers, duties and obliga-

tions vested in it by this chapter, may alter, suspend

or revoke such charges.’’

I begin with the proposition enunciated in Price v.

Philadelphia Parking Authority, 221 A.2d 138, 145, 1966,

that there is a

‘recognition of the need to subject the activities of

public authorities to judicial scrutiny. As public

bodies, they exercise public powers and must act

strictly within their legislative mandates. Moreover,

they stand in the fiduciary relationship to the public

which they are created to serve and their conduct must

be guided by good faith and sound judgment. (Cita-

tions omitted). The mushrooming of and the fre-

quent complaint that such bodies act in an arbitrary

and capricious manner, dictate that a check rein be

kept upon them. (Citations omitted). These consid-

erations dictate that the independence of authorities

from some of the usual restrictions on governmental

activity not be extended so as to insulate them from

judicial scrutiny through the medium of taxpayers’

suits.’’?

1 While the language cited deals with the standing of taxpayers

to challenge the validity of the actions of these public authorities,

the language cited is consonant with and relevant to the problem

before the Court.

Me Fa OA

CME IE AERO GI OSG CE ee ae

POST D AGG PE LONG EOLA IN IEA GE PS OEE

40a

I, therefore, reject the suggestion on the part of the

Authority made during the settlement negotiations that the

action of the Authority is not subject to judicial review.

The Court, of course, does not here challenge the author-

ity of the defendant to set rates in accordance with its

legislative mandate. The cases are numerous which sup-

port the proposition that this is a proper legislative dele-

gation of power and so long as the Authority acts within

what has been delegated to it it is beyond judicial review.

I do not accept the proposition, however, that all actions

undertaken by any public authority necessarily comport

with the legislative mandates creating them.

Throughout the proceedings the Authority has con-

stantly implied that it faces a grave crisis and emergency.

While this may be true, and the Court fully agrees that

the Authority does face a grave emergency, it is also true

that this is an emergency which was forseeable and has

been for some time. It is on this basis that the Authority

grounds its decision to make a rate increase and then grant

a hearing to the public as to the reasonableness of those

rates, but it should be noted that an agency may not ‘‘take

precipitate action without a hearing on the ground that it

can always cancel out and reconstruct if so advised after

hearing. To act in haste, repent at leisure, is not a sound

motto for an administrative agency”. Pennsylvania Gas

~ and Water Co. v. Federal Power Commission, 427 F2d 568,

575 (D.C. Cir. 1970). City of Portland, Oregon v. Federal

Maritime Com’n., 433 F.2d 502 (D.C. Cir. 1970).

In this connection it is well to recognize that the Author-

ity by statute is clothed with a public interest. 30 VIC

Sec. 101(f) states ‘‘The provisions enacted by this chapter

are hereby declared to be necsessary in the public inter-

: est....’’ The statement in F./’.C. v. Sierra Pacific Power

Co., 350 US 348, (1955), that ‘‘The purpose of the power

given to the Commission . . . is the protection of the Public

Interest, as distinguished from the private interests of the

utilities, as evidenced by the recital in the Act that the

eon tonchecwlantt cutie ina iar ARN pal tad plinth Sead

Oe he ee ee

2 eee

4la

- scheme of regulation imposed is necessary in the public in-

terests’’, is apropos here. That is, in applying that case

to the one at bar, I am not of the opinion that the pro-

cedure by which the rates were established reflect an appre-

ciation by the Authority of the legislative mandate as to the

public interest.

Title 30 VIC See. 105(12) charges the Authority with

determining reasonable rates. This must be read in con-

junction with the mandate to hold a public hearing in the

event rates are increased pursuant to a determination that

their ‘‘immediate effectiveness’? was necessary. A “‘deter-

mination’’ must be ‘‘the result of a process of reasoning.

It cannot be an arbitrary fiat contrary to the known facts.

This is inherent in the meaning of ‘determination’. It is

implicit in a government of laws and not of men’’. Anti-

Fascist Committee v. McGrath, 341 US 123, 136 (1951).

In the colloquy between Fred Clarke andihe board mem-

bers much was made of the fact that a ‘‘determination’’

rather than a decision had been made (Exhibit J p. 36-43).

But if a determination had been made, on what basis was it

done?

Valentine Lehr, qualified as an expert over defendant’s

objection, testified that in the field of utility services rea-

sonable rates are based on three factors, to wit:

(1) Cost of production (this would include labor and

fuel cost).

(2) Load projections and development of the utility.

(3) Analysis of the type of consumer or consumers

which the utility services.

He testified that a rate schedule should reflect the above

three factors and that the proposed rate schedule, or indeed

the schedule which was in effect as of December 1, 1971, did

not do so and for that reason the rate increase is invalid.

Mr. Lehr testified that the Jackson and Moreland Report,

introduced into evidence as Exhibit B, was not a rate study,

;

42a

but was rather a revenue study and did not therefore con-

tain the kind of information upon which a proper rate

study could be based. Mr. Lehr further testified that he

doubted whether the requisite information needed to make

a rate study was kept or was available and he cited in

support of this failure of the Authority to keep separate

accounts for water and power.

This testimony was supported by defendant’s own wit-

ness, Hans Loeffler. On recross-examination he testified in

essence that the Authority could not determine whether

the ‘‘overall rate structure (was) fair’? for the reason

that a proper rate study had not been made. It is, there-

fore, evident that a proper determination had not been

made. This is the type of administrative determination

condemned in Anti-Facist Committee, supra, where the

Court also held that ‘‘(w)here an act of an official plainly

falls outside of the scope of his Authority, he does not

make that act legal by doing it and then invoking the doc-

trine of administrative construction to cover it”. 341 US

at 136. Nor is it sufficient for a determination that there

had not been an increase in electric rates for the past ten

years. I do not here decide whether this was the best

determination but only whether it was reasonable and per-

missible. Williams v. Robinson, 423 F2d 637 (D.C. Cir.

1970).

I agree with plaintiffs that the hearing denied them

requisite procedural due process safeguards. I am im-

pressed in the first instance with the fact that the hearings

which were held were before the very Authority which has

in the first instance promulgated the increased rates and

the person designated as hearing officer is the Attorney

General of the Virgin Islands, who represents the Author-

ity in these proceedings.

There is authority that a rate-fixing procedure is a legis-

lative or quasi-legislative proceeding and, therefore, no

hearing is constitutionally required. But ‘‘(s)ounder is

43a

the view of the Supreme Court in the Morgan case that

where facts about the companies were in dispute, ‘a pro-

ceeding of a quasi-judicial character’ (Morgan v. United

States, 298 US 468, 480, 56 S. Ct. 906, 80 L.Ed 1288 (1936)

was required, even though rate fixing for the future was

involved and even though it had been clearly established

that rate fixing for the future was ‘legislation, or rule

making’.’’ Davis Administrative Law Treatise, Sec. 29.02,

p. 126.

Once a hearing is granted, those appearing are entitled

to all procedural safeguards to insure that the hearings

are fair and orderly. The type of hearing which insures

the above embraces not only the right to present evidence,

but also ‘‘a reasonable opportunity to know the claims of

the opposing party and to meet them’’. Morgan v. United

States, 304 US 1, 18, 585 S. Ct. 733 (1938).

The hearing provided for must be quasi-judicial and it

is obvious that plaintiff was not afforded ‘‘a reasonable

opportunity to known the claims of the opposing party”’,

and the evidence on which the Authority would rely prior

to the hearing. The only opportunity apparent here was

the somewhat cavalier offer by Mr. Newman to Lon

Southerland at the hearing in Christiansted that he could

come to Newman’s office at any time to inspect his files

(Exhibit J., pg. 26-27). It is important in this respect

to note that the hearings were held one week after the

Authority announced the date of the public hearings.

(Exhibit Q) While this may be sufficient time for other

types of hearings, the issue involved here was so complex

that due process requires a longer period of time for the

public to marshall its forces and to scrutinize the evidence

on which the Authority would rely. Indeed, it appears

that the Jackson and Moreland report, the primary sources

for the determination that a rate increase was necessary,

was only made available to the public at the hearing on

November 18. (Exhibit J). Is it any wonder therefore

that ‘‘the public seemed apathetic’’? (Exhibit K).

44a

I reiterate that I do not decide here that the rates are

unreasonable—it may well be that they are for the reason

that they should be even higher. I merely hold that the

procedure by which they were increased was fatally tainted

because of the violation of very fundamental notions of

fairness.

The prospect of an emergency in electrical service

caused by any default in the convenants of the Series “oa”

Bonds, the unmarketability of Series ‘‘B’’ Bonds and an

inability of the Authority to acquire financing for expan-

sion of services and facilities, poses a realistic consider-

ation for the Court. Therefore, the injunction will issue

but the order will be stayed for a period of eight months.

Testimony given in the hearings herein have indicated that

a proper rate study (and not just a revenue study) will

cost somewhere between $69,000 to $100,000 and will take

from four to six months. A stay period of eight months

' should enable the Authority to make a proper determina-

tion of a rate schedule and to provide proper public hear-

i ings on the proposed rate schedule and the rate study

‘ supporting the proposed schedule . If, within that period,

it shall be determined that the present rates should be

; lower, the Authority will have to take appropriate meas-

ures to reimburse the power consumers or to allow them

a eredit for the difference involved in the present rates

and the ones which will be properly made. On the other

hand, if the determination and subsequent proper public

hearings shall support a finding that the present rates

are reasonable, then the Authority will not have lost the

revenues represented by the recent increase in the rates.

aiarles

ake LGD LA a td eta e 2. aint 9

i Dated: February 2, 1972

ENTER:

/3/ Warren H. Younce

Judge

45a

- Order

Ir Is Orperep that the Opinion heretofore filed be and

the same is amended as follows:

A. The second sentence of the last full paragraph is

deleted and the following substituted therefor:

‘Therefore, the injunction will issue but the order

will be stayed for a period of ten months.”’

B. The fourth sentence of the last full paragraph is

amended by substituting ‘‘ten months’’ in lieu of ‘‘eight

months’’.

Dated: February 4, 1972

ENTER:

/s/ Warren H. Youne

Judge

Mailed This 4th Day of Feb. 1972

Findings of Fact and Conclusions of Law

This matter was heard December 21, 1971 on the merits

with testimony adduced on behalf of both parties. On

December 23, 1971, the Court held a settlement conference

but efforts directed toward a settlement were unsuccess-

ful.

Prior to the evidentiary hearing, two hearings had been

held on plaintiff’s motions for a temporary restraining

order and a preliminary injunction, respectively, both of

which motions were denied for the failure of plaintiff to

show that immediate and irreparable harm would ensue

to plaintiff or to its members by denial uf such temporary

injunctive relief.

46a

Plaintiff appeared at all of the hearings through its

attorneys, Isherwood & Colianni, Vincent A. Colianni, Esq.

of counsel. Defendant appeared through its attorney,

Ronald H. Tonkin, Esq., Attorney General of the Virgin

Islands.

The Court rendered a Memordanum Opinion dated Feb-

ruary 2, 1972. The opinion recites most of the pertinent

findings of facts and conclusions of law. However, this

separate document has been prepared to assure that the

record contains all of the facts upon which the Court based

its opinions.

Finpincs or Fact

1. The plaintiff, Virgin Islands Hotel Association, Inc.,

is a non-profit corporation, duly organized under the laws

of the Virgin Islands, whose membership includes most of

the hotels in the Virgin Islands.

2. Defendant, Virgin Islands Water and Power Author-

ity, is a public corporation created on or about August

21, 1964 by the Legislature of the Virgin Islands with

power to sue and be sued (30 VIC 101 et seq). Defendant

is a municipal utility and is the only electric power utility

in the Virgin Islands.

3. Effective December 1, 1971, defendant increased its

electric power rates by approximately 20% overall.

4. The change in the rate schedule was made after de-

fendant had received and reviewed a revenue study pre-

pared by Jackson and Moreland (Exhibit B) and after

defendant’s municipal bond financing consultant had ad-

vised defendant that its revenues were falling below the 1.5

j ratio of revenues to debt, which defendant was required to

maintain pursuant to a bond covenant.

3. 30 VIC 105(12) charges the Authority with deter-

shee nel

ia Oh AD ate Uta ten abd see, btn al ola hag

de mes tnbateryce >

i mining ‘‘reasonable rates’? and with holding a **public

i hearing with respect thereto . . . to give interested per-

;

Breton sisihee initiaited ies

47a

sons an opportunity to advise . . . of their views and of

evidence and support thereof.’’ y

6. Valentine Lehr, a qualified expert witness, testified

that a determination of reasonable rates in the field of

utility services should be based on three factors, to wit:

(1) cost of production (this would include labor and fuel

cost) ; (2) load projections and development of the utility ;

(3) analysis of the type of consumer or consumers which

the utility services. He also testified that the Jackson and

Moreland Report was not a rate schedule study and that

it was not intended to be anything but a revenue study.

He further expressed doubt that the requisite information

needed to make a rate study was kept by defendant or was

available and cited, in support of this, defendant’s failure

to keep separate accounts for water and power. This

testimony is adopted as a finding of facts.

7. Defendant’s witness, Hans Loeffler, who had been

employed by defendant in a management capacity, testi-

fied, in essence, that defendant could not determine

whether the overail rate structure was fair because a

proper rate study had never been made. This testimony

is adopted herein as a finding of fact.

8. The reference list of statistical, operational and

financial material noted in the back of the Jackson and

Moreland Report was not readily accessible and available

to the public.

9. The Jackson and Moreland Report itself was made

available to the public only at the hearing in Christian-

sted, St. Croix on November 18 (Exhibit J).

10. The public hearings on the increased rates were held

within one week after the increased rate schedule was

announced and within one week after the times and places

were set for the public hearings. The notice of the hear-

ings was a terse press release. No order had been issued

by the Authority decreeing the increase, setting forth

}

’

Z TORY

48a

the specific rate changes for all classes of customers and

stating the findings on which the increase was based.

11. A proper determination of reasonable rates as to a

reasonable classification of consumers was never made by

defendant.

12. The several public hearings conducted by defendant

were legislative in nature and were not evidentiary.

Conciusion oF Law

1. The Court has jurisdiction over the parties and of

the subject matter herein.

2. Plaintiff has standing to bring this suit.

3. The interpretation of the statute creating and regu-

lating defendant is a matter of law and, in a suit to

enjoin agency action, the Court is free to substitute its

own judgment for that of the agency head.

4, The fact that 30 VIC 101 et seq. makes no provision

for review of defendant’s actions, does not mean that

affected persons have no redress for illegal conduct on

defendant’s part. The action of defendant is subject to

judicial review.

5. The public hearings afforded by defendant lacked

procedural due process. The public was not afforded ‘‘a

reasonable opportunity to know the claims of the opposing

party’’ and the evidence upon which the defendant would

rely in support of its increased rates.

6. The week that intervened between defendant’s an-

nouncement of the dates of public hearings and the hear-

ings themselves was an insufficient time by reason of the

complexity of the issues involved. Due process requires a

longer time, in these circumstances, for the public to

ey Ne eee ee

49a

marshall its forces and scrutinize the evidence upon

which the defendant relies.

Dated: February 4, 1972

/s/ Waxrren H. Youne

Warren H. Young

Judge

Judgment

On December 21, 1971 the above captioned matter

came on for trial. Plaintiff appeared through its

attorneys, Isherwood & Colianni, Vincent A. Colianni, Esq.,

of counsel. Defendant appeared through its attorney,

Ronald H. Tonkin, Esq., Attorney General of the Virgin

Islands. The Court heard the testimony of both parties,

entered its Findings of Fact and Conclusions of Law and

rendered a Memorandum Opinion. The premises con-

sidered, it is hereby

ORDERED, ADJUDGED AND DECREED:

(1) that defendant is hereby enjoined from collecting

power charges pursuant to the increased electric power

rate schedule put into effect as of December 1, 1971. How-

ever, such injunction shall be stayed for a period of 10

months;

(2) that if, during said 10 months period, defendant

shall make a proper determination of reasonable electric

power rates based upon an appropriate rate study and

proper public hearings, the injunction herein decreed will

terminate as of the effective date of the said new rate

schedule ;

(3) that if, within said 10 months period, it shall be

determined by appropriate studies and public hearings

that reasonable rates would require a reduction of one

or more of the rates currently in effect, defendant shall

take appropriate measures to reimburse the power con-

sumers or credit them with the difference between its pres-

ent rates and such rates that shall have been properly de-

termined (the reimbursement or credit to be computed from

December 1, 1971 to the date of the new schedule) ;

(4) that if it shall be determined by appropriate studies

and public hearings that the current rate schedule is rea-

sonable, then defendant’s current rate schedule shall be

F continued and be valid retroactively to December 1, 1971;

and

(5) that if it shall be determined that a reasonable

rate schedule would justify an increase of one or more of

the current rates, such increased rates will become effective

at such time that will be designated by defendant in the

notice of the public hearings which may be conducted by

defendant pursuant to the procedure to set a new and rea-

sonable rate schedule.

Dated this 4th day of February, 1972.

/s/ Waxrren H. Youna

Judge

P " AUR WAR Ae a aneten Wm

;

5la

APPENDIX D

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 72-1118

Vircin Istanps Horet Association, Inc.

Vv.

Virain Isutanns Water & Power AUTHORITY,

Appellant.

On Appeal from the District Court of the Virgin Islands

Division of St. Croix, Christiansted Jurisdiction

Arauep May 26, 1972

Before Srauey, Aupisert and Hunrer, Circuit Judges.

Opinion of the Court

(Filed June 28, 1972)

By Srarey, Circuit Judge.

Appellant, Virgin Islands Water & Power Authority,

appeals from a judgment of the District Court of the

Virgin Islands enjoining the collection of electric power

charges pursuant to an increased electric power rate

schedule. The action for the injunction was brought by

appellee, Virgin Islands Hotel Association, Inc., a non-

profit corporation whose membership consists of most of

the hotels located in the Virgin Islands.

The instant litigation was precipitated by a press release

on November 10, 1971, announcing an electric rate in-

gia

ee ee

a as

£5 EDP R ILE IIE ie

rs ae eke < ;. be . = = ss > se <, .

wry SD a TR a ES in re NS se ae

52a

crease approximating 20%.! Public hearings were held on

the several major islands beginning on November 16, 1971.

On December 3, 1971, appellant’s Governing Board heard

the report on the public hearings and voted to place the

new rate schedule into effect. The instant action was

initiated on the same day and resulted in the district

court’s entry of judgment on February 4, 1972, enjoining

the collection of power charges under the new rates but

staying the injunction for a period of ten months. Dur-

ing the ten month period, appellant is to conduct new

hearings and make a new rate study in order to redeter-

mine the propriety of its proposed rates. If the current

increases are determined to be reasonable, they will be

continued. If reductions are required in these rates, the

consumers will be reimbursed or credited with the differ-

ence between the current rates and whatever rates are

determined, to be computed from December 1, 1971. If

the appellant determines that certain rates would require

even a greater increase than was announced on Novem-

ber 10, 1971, then such rates will become effective pursu-

ant to the statutory procedure for setting new rates.

Appellant asserts, inter alia, that appellee has no stand-

ing to challenge the actions of the Authority, that the

actions of the Authority in establishing a general rate

schedule are not subject to judicial review by the District

Court of the Virgin Islands, that the Authority fully

complied with the procedures required by statute in de-

termining the new rate schedule, and that there is no evi-

dence on the record that appellant’s actions were arbitrary

or unreasonable or that the new rate schedule is unreason-

able.

1 At oral argument counsel for appellant stated that the over-all

average increase was 21.2%. Broken down into classes of power

consumers, the increases were as follows: residential, 18.8% ; com-

mercial, 18.8% ; large power, 24.8% ; street lights, 20.2%. Counsel

stated that most of the hotels in the Virgin Islands fall into the

large power class.

53a

‘We must first examine appellant’s argument, that the

district court had no jurisdiction over the subject matter

of this action. This argument begins with the contention

that the appellant is an autonomous governmental instru-

mentality and under the statutes of the Virgin Islands is

vested with exclusive and plenary authority to operate

and manage its utility system. Appellant asserts that this

authority was specifically delegated as a legislative func-

tion of the Virgin Islands Legislature. Appellant argues

that since it is, by law, not subject to the jurisdiction of

other agencies, departments, officers, and persons, and

since it exercises delegated legislative authority, its action

in adopting the rate increase was not subject to judicial re-

view by the District Court of the Virgin Islands.

The applicable statute, 30 V.I.C., § 101 et seqg., makes no

provision for judicial review of the Authority’s actions.

Generally, however, a strong presumption exists in favor

of review which can be overcome only by clear and con-

vineing evidence that the Legislature intended otherwise.

See, e.g., Barlow v. Collins, 397 U.S. 159, 167 (1970);

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967).

In support of its contention, appellant relies on Lange-

vin v. Chenango Court, Inec., 447 F.2d 296 (C.A.2, 1971);

and Hahn v. Gottlieb, 430 F.2d 1248 (C.A.1, 1970), both

dealing with judicial review of FHA approved rent in-

creases. In both Langevin and Hahn the court ruled that

FHA decisions approving rent increases by private cor-

porations receiving Federal subsidies were not subject to

judicial review. We note that in each case the circuit court

was considering a Federal agency action and applying the

Administrative Procedure Act, specifically § 702 of that

Act. (Title 5, United States Code.) Each court held,

based on different rationales, that judicial review was not

available. In the instant case, however, we are confronted

with an administrative arm of a territorial legislature.

It was disputed at oral argument that changes in the

general rate structure could have been made by the Virgin

ete acta de hn eee

wea ase er

54a

Islands Legislature, and it is clear that the Authority ex-

ercised delegated legislative power when it acted to in-

crease the rates. On the basis of the rationale of Judge )

Coffin’s opinion in Hahn v. Gottlieb, supra, we rule that |

the judgment or expertise of the Authority in setting the

electric power rates is a matter committed to its discretion

by law and is not subject to judicial review. See also,

Huntt v. Government of the Virgin Islands, 382 F.2d 38, 44

(C.A.3, 1967).

However, in both Langevin v. Chenango Court, Inc.,

447 F.2d at 304, and Hahn v. Gottlieb, 430 F.2d at 1251, the

court expressly stated that its holding of nonreviewability

did not extend to ‘‘those rare cases where the FHA has

ignored a plain statutory duty, exceeded its jurisdiction,

or committed constiutional error.’’ In the instant case, the

plaintiff alleged and the district court found that appel-

lant had ignored a statutory duty to provide a proper and

meaningful hearing, and that appellant had committed

constitutional error by denying plaintiff due process of

law.

In our view, this appeal involves one of ‘‘those rare

‘eases’? where, because noncompliance with its statutory

duties and constitutional infringement are alleged against

| the Authority, judicial review is available.

Appellant next denies the standing of appellee Hotel

Association to challenge its actions. It contends that the

Association is a nonprofit corporation which does not use

electric power, is not a taxpayer, and in fact conducts

no business in the Virgin Islands. It asserts that the

Hotel Association has failed to establish that it will sus-

tain injury as a result of the electric rate increase and

therefore lacks standing to challenge the increase.

bl Aah Saat Pk Rad Poems Habe sak

Appellant’s argument is without merit. An organiza-

tion whose members are ‘‘injured’’ may represent those

members in a proceeding for judicial review. NAACP v.

Button, 371 U.S. 415, 428 (1963). The complaint in the

ESPOSITO EN IR, PITTA TE OO ASE REO ncemesen en ”

55a

instant case specifically asserted that the individual mem-

ber hotels would suffer irreparable economic injury by

virtue of the electric rate increases. Indeed, in its most

recent opinion on the point at issue, Sierra Club v. Morton,

US. , 40 L.W. 4397 (Apr. 18, 1972), the Supreme

Court made it clear that individual harm to an organiza-

tion’s members would give the organization standing to

challenge an administrative action. In addition, the dis-

trict court found, and we agree, that the interest sought to

be protected here by the Association is within the zone

of interests to be protected or regulated by the statute as

required by Data Processing Service v. Camp, 397 U.S. 150

(1970).

We hold, therefore, that the Hotel Association has

standing to challenge the legality of the Authority’s

action.

Having determined that there exists jurisdiction and

standing, we can turn to an examination of the merits of

this appeal. The essential issue and the crux of this

entire matter involves the hearing mandated by 30 V.L.C.

§ 105(a)(12).2, The Authority is directed to hold a public

* 30 V.I.C. § 105(a)(12) provides the Authority with power :

“*(12) to determine, fix, alter, charge, and collect reason- :

able rates, fees, and other charges for the use of the facilities

of the Authority, or for the services, water, electric power,

or other commodities rendered or furnished by it, which shall

be at least sufficient, together with all other available moneys,

revenues, income and receipts of the Authority from all

sources, for the payment of the expenses of the Authority

incurred in connection with the repair, maintenance, use and

operation of its facilities and properties, for the payment of

the principal of and the interest on its bonds, and for ful-

filling the terms and provisions of such covenants as may

be made with, or for the benefit of, the purchasers or holders

of any bonds of the Authority ; Provided, That in fixing rates, ;

fees, and other charges for water and electric power, the E

Authority shall have in view the encouragement of the widest

5 ARTE NRE NPR IIE EES * RAR RAI

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56a

hearing with respect to any changes in the general rate

structure to give interested persons an opportunity to

advise the Governing Board of their views and of evi-

dence in support thereof. The district court ruled that

such a hearing must of necessity be quasi-judicial, em-

bracing all the procedural safeguards of due process

of law. The Authority has argued vigorously that rate

fixing is a function delegated to it by the Legislature, and

that only a legislative hearing is required to which stand-

ards of due process are inapplicable.

We find it unnecessary to characterize the hearing as

quasi-judicial or quasi-legislative. As Judge Friendly

stated in Langevin v. Chenango Court, Ine., 447 F.2d at

301, such a distinction has long since gone to a deserved

repose. The rate fixing procedure ereated by 30 V.LC.

§ 105(a) (12) contemplates a meaningful public hearing at

which interested persons can present their views and

present evidence in support thereof. Concomitant with

such a hearing are the essential requirements of adequate

economically possible use of water and electric power con-

sistent with sound fiscal management; and in this connection

it is the intention of the Legislature that in fixing such rates,

fees and other charges the Authority shall take into account

the respective expenses, as hereinbefore enumerated in this

subparagraph, for the water and electric power systems; Pro-

vided, further, That initially, the Authority shall adopt the

existing rates, fees and other charges for water and power,

and that, thereafter, before changes in such general rate strue-

ture for water or electric power are made, or, in cases where

the Board shall decide to make such changes and deems the

immediate effectiveness thereof to be necessary, then within

a reasonable time after such changes are made, @ public hear-

ing shall be held with respect thereto before the Board, or

before such hearing officer or officers as the Board may desiq-

nate to give interested persons an opportunity to advise the

Board of their views, and of evidence in support thereof, and

upon such hearing, the Board, pursuant to the powers, duties,

and obligations vested in it by this chapter, may alter, sus-

pend, or revoke such changes;’’ (Emphasis supplied. )

a a cs

De FAP GE OLN OA .

SRE AAT) RFR GIES §

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57a

‘notice, dissemination to the public of the facts, and figures

on which the Authority relies, and an opportunity afforded

to those attending the hearing to rebut such facts and

figures.

These essential requirements were not met in the instant

case. The hearings were begun one week after the press

release regarding the rate increases. The rate study on

which the new rate structure was based was not generally

available.* We agree with the district court’s finding that

the underlying facts involved in the announced increase

were quite complex and that a week was far too little time

for the public to marshall its forces and prepare a case

in opposition to the increase. Moreover, the failure of the

Authority to make generally available the primary source

for its determination that increases were necessary only

underscores the shortcomings of these hearings. It is thus

clear that appellant, Virgin Islands Water & Power

Authority, failed to comply with the statutory procedures

set forth in 30 V.I.C. § 105(a)(12) in acting to change the

general electric power rate schedule.

The district court enjoined the collection of rates under

the new schedule but stayed the injunction for a period of

ten months from February 4, 1972. The district court’s

judgment requires appellant to make ‘‘* * * a proper

determination of reasonable electric power rates based

upon an appropriate rate study and proper public hear-

ings * * *.’’? There is no duty imposed by 30 V.I.C. § 105

(a)(12) to make rate studies as such, and our decision in

this case is limited to the consideration of appellant’s com-

3 Appellant contended at oral argument that the materials were

available to those persons interested in reviewing them had they

requested to see them. It was admitted, however, that the first

actual opportunity to examine the rate study relied on for the in-

creases came at the third hearing. We do not consider such a

belated offer to be within the letter or spirit of the essential

prerequisite for a meaningful hearing.

TELE SE ANE ENN IEE TEP BEMIS TES ONLY TS CATER YEE RIES RRA ITAL IRL BERN tS RIED gate oO

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58a

pliance with its statutory duties. We will affirm the dis-

trict court but direct that its judgment be modified to re-

quire the Authority to conduct public hearings consistent

with this opinion. Following such hearings, the Authority

will be required to reconsider the matter of changes in the

general electric rate schedules in light of the views ex-

pressed and evidence presented at those hearings.

The cause will be remanded to the district court for

further proceedings consistent with this opinion.

To the Clerk:

File the foregoing opinion.

Circuit Judge.

Judgment

This cause came on to be heard on the record from the

District Court of the Virgin Islands, Division of St. Croix,

Christiansted Jurisdiction and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgment of the said

District Court, filed February 4, 1972, be, and the same is

hereby affirmed, but said judgment shall be modified to

require the Authority to conduct public hearings consis-

tent with the opinion of this Court. Following such

hearings the Authority will be required to reconsider the

matter of changes in the general electric rate schedules in

light of the views expressed and evidence presented at

those hearings. This case is remanded to the said District

Court for further proceedings consistent with the opinion

of this Court. Costs taxed against appellant.

ATTEST:

/s/ Tuomas E. Quinn

Clerk

June 28, 1972

59a

Vio Istanps Water ann Powgr AurHoriry

Viroin Isuanps or tHe Unirep Srares

Sr. Tuomas, Vow Istanps

Resolution No. 101

[Adopted September 18, 1972]

Wueneas, the Authority has power pursuant to Title 30

of the Virgin Islands Code, §105(A)(12) to determine,

fix, alter, charge and collect reasonable rates, fees and

other charges for the use of the facilities of the Authority

or for the services, water, electric power or other com-

modities rendered or furnished by it; and

Wuereas, pursuant to said Title 30 of the Virgin

Islands Code, § 105(A)(12) those rates shall be at least

sufficient, together with all other available monies, reve-

nues, income and receipts of the Authority from all sources

for the payment of the expenses of the Authority incurred

in connection with the repair, maintenance, use and opera-

tion of its facilities and property for the payment of the

principal and interest on its bonds and for fulfilling the

terms and provisions of such covenant as may be made

with or for the benefit of the purhasers or holders of any

bond; and

Wniereas, in fixing its rates, fees and other charges for

water and electric power the Authority shall have in view

the encouragement of the widest economical possible usage

of water and electric power with sound fiscal manage-

ment, and shall take into account the respective expenses

for the water and electrical power system; and

Wuenreas, in cases where the Board shall decide that it

is necessary to make changes in the general rate structure

for water or electrical power and deems the immediate

effectiveness thereof to be necessary, then within a reason-

able time after such changes are made a public hearing

_ . een ee ee ee

60a

shall be held with respect thereto before the Board or be-

fore such hearing officer or officers as the Board may desig-

nate to give interested persons an opportunity to advise

the Board of their views and of evidence in support thereof,

and upon such hearing the Board, pursuant to such powers,

duties and obligations vested in it may alter, suspend or

rovoke such changes; and

Wuueneas, the Authority's power revenues have not kept

pace with the ever increasing cost of operations, especially

fuel cost; and

Wuereas, the Authority must maintain a sound financial

position in order to insure that it can undertake new

bonds to finance its necessary growth programs; and

Wuerras, the Authority’s financial consultants, Wain-

wright & Ramsey, on July 16, 1971 advised that an in-

crease in the Authority’s earnings is required if the

Authority is to borrow the monies needed in December

1972; and

Wuenrras, the Authority, on December 3, 1971, approved

the adoption of a Resolution placing a revised rate sched-

ule into effect; and

Wheneas, it was determined that pursuant to Title 30

Virgin Islands Code, § 105(A)(12), public hearings should

be held with respect thereto before the Board; and

Wuersas, notices of public hearings on the said rate

schedule were published in The Home Journal, The Daily

News, St. Croix Avis, West End News, and Virgin Islands

Free Press, on August 12, 15, 19, 22, 26, 29 and September

2, 6, 7, 8, 9, 10, 11, 12 and 13, copy of which is attached

hereto; * and

* The attachments to this resolution are omitted here. They are

included, however, in the record below.

bead NOP IDR OT OT) RTT

6la

’

. Wuergas, hearings on the said rate schedule were held

on September 11, 1972 at the Julius Sprauve School, St.

John, at 7:30 P.M.; on September 12, 1972, at the Senate

Office Building, St. Thomas; and on September 13, 1972,

at the Concordia School Auditorium, Frederiksted, St,

Croix, at 2:00 P.M,, and at the Government House Ball.

room, Christiansted, St, Croix, at 7:30 P.M,; and

Wurnnas, said hearings were attended by a quorum of

the Governing Board of the Authority consisting of Com-

missioner of Public Works, John Harding, Vice-Chair-

man; Budget Direetor Magdalene Bryan, Secretary; and

Members, John P. Scott, David C. Canegata and Raymond

J. Smith; and

Wuereas, Robert E. Bathen, of R. W. Beck Associates,

C. D. Hornburg, of DDS Engineering, Inc., Steven A.

Kokolski, of Jackson and Moreland, and Francis X. Fleis-

chmann, of Wainwright and Ramsey, made statements as

expert witnesses for the Authority; and

Wuerras, such hearings were for the purpose of giving

interested persons an opportunity to advise the Board of

their views and of evidence in support thereof; and

Wuenrnas, the Board reviewed and made available to

the publie the two Jackson and Moreland reports and the

R. W. Bock & Associates report on August 8, 1972, and the

DDS Engineecrings, Inc. report on August 29, 1972, on

which among other factors the Governing Board relied in

determining the reasonableness of the rates to be changed,

and provided an opportunity to those attending the hear-

ing to give testimony and rebut such facts, figures and re-

ports, and to inquire of the parties who made the report to

the Authority as to the basis upon which those reports

were made; and

Wuereas, the Governing Board has thoroughly re-

viewed the reports made to it and all other relevant facts

and figures and the views and evidence presented at the

public hearings; and

Wueneas, the Board had determined that the rates in

effect since December 1, 1971 are fair and reasonable and

are still required in order for the Authority to maintain a

sound financial position and satisfy its statutory obliga-

tions,

Now Tuenerore, Be It Resoiven:

That the electric rate schedule that became effective for

billing after December 1, 1971 for residential service, com-

mercial service, small power service, large power service

and security light, copies of which are a.tached hereto, are

to be effective as of December 1, 1972, for all meter read-

ings on or after that date.

p iueoee nb ciasta snchiiabit ee

i dine Md td CIAL TNT RN ERIS “RAR

63a

APPENDIX F

IN THE DISTRICT COURT OF THE VIRGIN ISLANDS

DIVISION OF ST. CROIX

Civil No. 499/1971

Action to Engorn Rate Increase

Virarn Istanps Horex Association (U.S.), Inc.,

Plaintiff

Vircin IsLAnps Water & Power Avurtnority,

Defendant

Final Order

Defendant’s Motion to Vacate Injunction came on for

hearing before this Court on September 29, 1972. The

Court having received legal memoranda, including evi-

dentiary data pertaining to the scheduling of public hear-

ings, notice thereof, the manner in which the hearings were

conducted, the dissemination of engineering and revenue

studies and reports supporting the proposed rates; and

the Court having heard arguments of counsel and being

otherwise sufficiently informed in the premises, the Court

finds that the Authority has conducted public hearings

consistent with the decree of this Court as modified by the

Court of Appeals for the Third Circuit on June 28, 1972.

Now, THEREFORE, it is j

OrvereD, that the injunction in the above-captioned

action be, and the same hereby is, vacated.

Dated: October 3, 1972.

Enter:

/s/ Warren H. Younea

Warren H. Young

Judge

65a

APPENDIX G

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 72-1996

Vircin Istanps Hore. Association, Ino., (U.S.),

a Corporation, |

Vv.

Vincin Istanps Water & Power AutTuority .

Vinern Istanps Hore Association (U.S.), }

Appellant. .

APPEAL FROM THE DISTRICT COURT OF THE

VIRGIN ISLANDS DIVISION OF ST. CROIX i

alee Ae a

Argued January 19, 1973

Before Van Dusen and Apams, Circuit Judges, and

Bartow, District Judge

Eveuyn N, Cooprr, IsHerwoop

& CoLIANNI

St. Croix, V. I,

for Appellant

Ronautp H, Tonkin, Attorney General

of the Virgin Islands, }

Sipney H. MoKenzm, III, Assistant :

Attorney General of the Virgin

Islands

St. Thomas, V. I. p

Wauuace L. Duncan, Duncan &

Brown, f

Washington, D. C.,

for Appellee

;

Rae RITIUOR M ; A Aah hindi al ' yrvemy —

66a

Opinion of the Court

(Filed April 12, 1973)

Van Dusen, Circuit Judge.

This is the second time that these parties, the Virgin

Islands Hotel Association (the Hotel Association) and

the Virgin Islands Water and Power Authority (the

Authority), are before this court. On the first occasion,

in Virgin Islands Hotel Ass'n v. Virgin Islands Water €

Power Authority, 465 F.2d 1272 (3d Cir. 1972), this court

upheld with modification an injunction the district court

had issued against the Authority. By order of October

3, 1972, the district court vacated that injunction, and the

Hotel Association appeals. We affirm the October 1972

order of the district court.

I. BackcrounD

It is necessary only to summarize the facts stated in our

earlier opinion and in the first opinion of the district

court, reported at 54 F.R.D. 377 (D. V. I. 1972).

In the late fall of 1971, the Authority became worried

that its revenues would soon fail to provide the coverage

over interest required by its outstanding debt instruments,

with devastating impact on its ability to procure additional

needed financing On November 10, 1971, it issued a press

release indicating its intention to raise electric rates by

from about 19% for residential users to about 25% for

large power users. Public hearings were held one week

later, and on December 3 the Authority put the proposed

increases into effect.

The Hotel Association was understandably upset, since

its members are classified as ‘‘large power’’ users. It

immediately sought an injunction against the rate in-

erease. The district court ruled that the Authority had

violated 30 V.I.C. § 105(a) (12) in two ways. First, because

the Authority did not have at its disposal information on

67a

the cost of providing electricity to its various classes of

customers, the Authority had failed ‘‘to determine .. .

reasonable rates.’’ Second, the public hearings held pur-

suant to this section 105(a)(12) were altogether inade-

quate. Among other defects, notice to the public was too

short to allow adequate preparation time and the reports

the Authority relied on were not available publicly until

the first public hearing. The district court, on February

4, 1972, ordered the Authority to rescind the increases, to

have made an appropriate study of costs (called a ‘‘rate’’

study), and to hold proper public hearings on the pro-

posed increases. However, to avoid possible disruption,

the court stayed this injunction for ten months.

By decision of June 28, 1972, this court, although ruling

that the Authority’s determination of rates is not subject

to judicial review, held that review is available when the

Authority has ‘‘ignored a plain statutory duty, exceeded

its jurisdiction, or committed constitutional error.’? 465

F.2d at 1275. ‘‘The rate fixing procedure created by 30

V.I.C. §105(a)(12) contemplates a meaningful public

hearing at which interested persons can present their

views and present evidence in support thereof. Concomi-

tant with such a hearing are the essential requirements of

adequate notice, dissemination to the public of the facts

and figures on which the Authority relies, and an oppor-

tunity afforded to those attending the hearings to rebut

such facts and figures.’’ Jd. at 1276. This court agreed

with the district court that the Authority’s hearings did

not comply with these requirements. This court did not,

however, agree that §105(a)(12) imposed any duty ‘‘to

make rate studies as such,’’ id. at 1276, and modified the

district court injunction accordingly.

To comply with this court’s mandate, the Authority

commissioned new reports from R. W. Beck & Associates

and from D. 8S. S. Engineering, Inc. (hereinafter D. S. S.);

it also had Jackson & Moreland prepare an update of the

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68a

report they had prepared earlier. On July 5, 1972, the

Authority issued a press release stating, infer alia, that

new hearings would be held and that the earlier Jackson

& Moreland study was available to the public. Beginning

on August 12, 1972, the Authority had published in the

local newspapers notices that new public hearings would be

held on September 11, 12 and 13. The Authority made the

Beck and the Jackson & Moreland reports available to the

public on August 8, the D. S.S. report on August 28.

The Authority held these hearings as scheduled. At

each hearing various officials of the Authority commented

on the proposed rate increase, and representatives from

the three engineering firms summarized and discussed the

contents of their reports. In accordance with the proce-

dure announced at the beginning of each meeting, all per-

sons could submit written questions, which would be

answered by either an official of the Authority or a repre-

sentative from one of the firms. In addition, all persons

could submit written statements or, at the conclusion of

the Authority’s presentation, deliver oral statements.

According to an affidavit of the Authority’s Executive

Director, ‘‘ All questions which were asked were responded

to. In addition, any person desiring to make a statement

with regard to the proposed subject rate increases were

[sic] permitted to do so.’’*

The Secretary of the Hotel Association’s St. Thomas-St.

John Chapter testified at the September 12 hearing held

on St. Thomas.? In addition, counsel for the Hotel As-

sociation and an expert the Association had hired, Con-

stance W. Bary, attended the September 13 hearing held at

1 This affidavit was submitted with the Authority’s Motion to

Vacate Injunction. The Hotel Association neither filed a counter-

affidavit nor disputed these assertions at the September 1972 hear-

ings held on the motion.

2 Transcript of September 13 hearing at Christiansted, at 74-75;

September 29 hearing on Motion to Vacate Injunction, at 7-9.

et ee

69a

‘Christiansted on St. Croix. Counsel objected to the testi-

mony not being sworn and not being subject to oral cross-

examination.* Counsel had no written questions to submit,

but was allowed to give orally an ‘‘offer of proof’? of what

the Hotel Association would have established if an oppor-

tunity for cross-examination had been granted.‘ Admit-

ting that Mr. Bary had not been contacted until Septem-

ber 7, such counsel also requested that the hearing be ad-

journed until November 9. This adjournment would give

the Authority time to prepare, and for Mr. Bary to re-

view, data which counsel said were necessary to examine

the reasonability of rates.* Counsel and Mr. Bary then

stated that without such data the Hotel Association was

unable to demonstrate the unreasonableness of the pro-

posed rates.®

Following the hearings, the Authority determined that

the rates it had proposed the previous December were rea-

sonable. The Authority then filed a motion in the district

court to vacate the injunction. The district court, after

considering the Hotel Association’s allegations of sub-

stantive and procedural infirmities, vacated the injunction

by its October 1972 order.

II. Procepurau Issves

The Hotel Association argues either that the September

1972 hearings did not comply with 30 V.I.C. § 105(a) (12)

as interpreted by this court in deciding the previous

appeal or that, assuming compliance, the statute itself

fails to provide the due process of law required by 48

U.S.C. § 1561 (1970). Specifically, the Hotel Association

urges that the notice of the hearings and the prior dis-

3 Transcript of September 13 hearing at Christiansted, at 7-12.

47d. at 51-57.

5 Id. at 59.

® Id. at 63, 67-71.

(elie landed PAM chin Fad

PON ALE MT PAIR LOGIN IND SS ND BAPE eB STILT EN

‘

;

70a

semination of the engineering studies were inadequate;

that these deficiencies were perpetuated by the denial of

the adjournment it requested; that the hearings themselves

should have been trial-type, rather than legislative-type;

that they should have been conducted by an impartial

hearing officer; and that in making its final decision the

Authority improperly relied on evidence not in record.

‘Whether [due process] requires that a particular right

obtain in a specific proceeding depends upon a complexity

of factors. The nature of the alleged right involved, the

nature of the proceeding, and the possible burden on that

proceeding, are all considerations which must be taken

into account.’? Hannah v. Larche, 363 U.S. 420, 442

(1960). ‘Accord, Goldberg v. Kelly, 397 U.S. 254, 263

(1970); Marine Space Enclosures, Inc. v. Federal Marv

time Commission, 420 F.2d 577, 589-90 (D.C. Cir. 1969).

While this court, in its prior opinion, did not state

precisely how many days in advance the schedule of the

new hearings had to be announced or the reports dis-

seminated, it. stressed the importance of notice and dis-

semination adequate under the circumstances. To be con-

sidered, for example, was the complex nature of the data.

The Hotel Association now complains that notice of

about one month was too short. What the Hotel Associa-

tion in effect asks us to ignore is the district court’s in-

junction which had been stayed for only ten months. As

of June 28, when this court handed down its affirmance of

that injunction, it was clear to all concerned that the

7 We note that the Authority’s decision as to rates concerns

rates which the members of the Hotel Association must pay. That

factor distinguishes this case from cases such as Morgan v. United

States, 298 U.S. 468 (1936), where an arm of the Government fixed

prices that regulated persons could charge to customers. The dis-

tinction is that the latter situation is much more fraught with the

potential for taking without just compensation and, consequently,

places heavier demands on procedural due process. We recognize,

however, that there could be such a taking in the present situation.

CPP SAIC YER OA BOBS SIND ess

71la

‘Authority would have to hold new hearings., Moreover,

the July 5th press release was sufficient to warn the Hotel

Association of the need to retain its expert. Thus, the

Hotel Association has only itself to blame for waiting

until the end of August before seeking an expert qualified

to present its case. Similarly, the question whether or

not the public had enough time to evaluate the three engi-

neering studies should be considered in light of the ability

of the public under these circumstances to have been ready

for the reports. We are not prepared to reverse the de-

cision of the district court and rule as a matter of law

that notice and disseminafion were inadequate.

The Hotel Association’s request for a two-month ad-

journment was properly denied, particularly since the

Hotel Association did not make the request sooner, for

example, when the schedule of meetings was announced,

but at the last meeting held. Moreover, the argument the

Authority presented to the district court, that any addi-

tional delay would seriously hamper the sale of new bonds,

is a persuasive factor.®

The Hotel Association’s most telling argument is that

the hearings should have been conducted not as legislative

hearings but as adversary proceedings. The chief differ- ’

ence between the two modes as regards this case is that a 5

trial-type hearing typically permits oral cross-examina- ;

tion of witnesses.® Our earlier opinion did not decide this

question. ;

8 September 29, 1972, hearing on Motion to Vacate Injunction,

at 9. Counsel for the Authority reiterated the desirability of a

prompt resolution in oral argument before this court. Apparently ‘

one practical, and perhaps legal, requirement of selling these

municipal bonds is an opinion letter from counsel that there is 4

no litigation in progress which would materially affect the bonds. :

®The Hotel Association also is dissatisfied with the failure of

the testimony to be sworn. Because the persons who testified did

so in their professional capacities, it does not seem particularly

significant that they were not under oath.

8 ERNE RRO ES

Bt areacoraeer eae pean Se aaa a eee |

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The Administrative Procedure Act, 5 U.S.C. § 551 et seq.

(1970), is instructive. Rulemaking proceedings are con-

trolled by § 533, which requires only that interested par-

ties be given adequate notice of the proposed rule, see

§ 553(b), and ‘‘an opportunity to participate in the rule

making through submission of written data, views or

arguments with or without opportunity for oral presenta-

tion,’ §533(c). The procedure for adjudication is set

out in §§ 554 and 556, under which ‘‘ [a] party is entitled

; to present his case or defense by oral or documentary evi-

dence, to submit rebuttal evidence, and to conduct such

cross-examination as may be required for a full and true

disclosure of the facts,’ §556(d). If the Administrative

Procedure Act governed the Authority’s rate-making, the

j appropriate proceeding would be rulemaking, because the

7 rates in question have only prospective application. § 551

| (4); Law Motor Freight, Inc. v. CAB, 364 F.2d 139, 143-

44 (1st Cir. 1966); see Jones v. District of Columbia, 323

F.2d 306, 308-09 (D.C. Cir. 1963).*°

: A second distinction which has been relied on by the

federal courts is whether the proposed agency action

affects a small or a large number of persons. Compare

Bi-Metallic Investment Co. v. State Board of Equalization,

939 U.S. 441 (1915), with Londoner v. Denver, 210 U.S. 373

(1908). The two rationales underlying this distinction are

that decisions affecting large numbers of persons are

likely to be more concerned with general policies than

with specific facts and that permitting many persons to

cross-examine each witness would make proceedings total-

ly unmanageable. See United States v. Florida East

Coast Railway Co., U.S. —, 41 US.L.W. 4247

10 Law Motor Freight also holds that, as regards setting agency

policy for the future, 5 U.S. C. § 553 provides due process of law.

Accord, NLRB v. Delaware Valley Armaments, Inc., 431 F. 2d

494, 499 (3d Cir. 1970); California Citizens Band Association,

Inc. v. United States, 375 F. 2d 43, 50 (9th Cir. 1967).

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73a

(U.S., Jan. 22, 1973). In the present case, of course, the

proposed increases affected every person in’ the Virgin

Islands. We do not know, however, that there would have

a multitude of cross-examiners at the September hearings

if cross-examination had been available.

A third factor, somewhat overlapping the second, is

whether the facts in question are ‘‘legislative’’ or ‘‘adjudi-

cative.’? See 1 K. C. Davis, Administrative Law Treatise,

§ 702 (1958). That is, will the agency decision depend

chiefly on policy considerations or on specific, especially

historical facts which are provable or disprovable? The

Authority’s decision here appears to have been made, as

30 V.I.C. § 105(a) provides, in reliance on both types of

facts—for example, the costs of providing electric service

to its various classes of customers and ‘‘making the bene-

fits [of water and electric power systems] available to the

inhabitants of the Virgin Islands in the widest economic

manner consistent with sound fiscal management, and by

this means to promote the general welfare and increase

commerce and prosperity ....’? § 105(a).

asa een ee!

While Professor Davis would thus suggest that cross- $

examination would be appropriate at least as to the ad- :

judicative facts, a number of courts have held in cases

which, like the one before us, involved complex and techni-

cal factual controversies, that written submissions, possi-

bly supplemented by oral argument, suffice. United States

v. Florida East Coast Railway Co., supra; Phillips Petrol-

eum Co. v. F.P.C., ——F.24 —— (Nos 71-1659, 71-1739, 72-

1134, 72-1167, 10th Cir., Feb. 20, 1973) ; National Air Car-

riers Association v. CAB, 436 F.2d 185, 191-94 (D.C. Cir.

1970) ; American Airlines, Inc. v. CAB, 359 F.2d 624 (D.C.

Cir. 1966) ; cases cited note 10. One recent case counten-

ances the restriction that questions be submitted in writ-

ing. International Harvester Co. v. Ruckelshaus, No. 72-

1517 (D.C. Cir., Feb. 10, 1973), slip opinion at 18-23. On

the other hand, the absence here of any specific statutory

butt Me cation a so —- =

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git Kase ae

74a

procedures such as the Administrative Procedure Act

necessitates greater leeway than those courts had.

The present case does not compel us to hold that cross-

examination will never be required in hearings under 30

V.1.C. § 105(a)(12).1' Instead, we rely on the failure of

the Hotel Association to have demonstrated the inadequacy

of written questions, which were permitted. The Hotel

Association could easily have informed itself of this aspect

of the Authority’s procedures by attending the September

11 meeting. In fact, a representative of the Hotel Associ-

ation did attend the September 12 meeting on St. Thomas

and no doubt could have told counsel in time to prepare

for the September 13 hearing that questions had to be in

; writing. We have carefully examined the Hotel Associa-

4 tion’s ‘‘offer of proof’’ at the September 13 hearing, and

3 no reason appears to us that the points there raised could

14 not have been formulated in written questions. Conse-

4 quently, we hold that the Hotel Association has not shown

14 that it was prejudiced, and on this basis we decline to re-

4 verse the district court. See Woodbury v. McKinnon, 447

; F.2d 839, 844 (5th Cir. 1971) ; Citizens for Allegan County,

: Inc. v. FPC, 414 F.2d 1125, 1134 (D.C. Cir. 1969).

The Hotel Association’s other two procedural claims

can be quickly disposed of. First, it did not appear that the

officials who conducted the hearings in any way intimi-

dated counsel for the Hotel Association or otherwise de-

11 This court is reluctant to hold that cross-examination is never

needed, since the Authority has such broad discretion not subject

to judicial review, see 465 F.2d at 1274, and since, in the view of

several commentators, cross-examination of experts on technical

matters can contribute significantly to the decision-making process.

Robinson, The Making of Administrative Policy: Another Look at

Rulemaking and Adjudication and Administrative Reform, 118

U. Pa. L. Rev. 485, 521-24 (1970) ; Spritzer, Uses of the Summary

Power to Suspend Rates: An Examination of Federal Regulatory

Agency Practices, 120 U. Pa. L. Rev. 39, 95-97 (1971) ; Comment,

Public Participation in Federal Administrative Proceedings, 120

U. Pa. L. Rev. 702, 743-44 (1972).

However, as noted at page 11 above, several federal cases have

held that cross-examination is not mandated in such a situation.

Geter een TELS IDI Oho ELE SR ITT INES RATES NN RSS MEE TT ERNE:

75a

prived it of privileges available to other participants.

Moreover, because the Board of the Authority had the

responsibility for the final decision on the rate increases,

it is not at all evident how having a trial examiner take

testimony would have altered that decision in any way.

Second, in claiming that the Authority went beyond what

was in the record at the hearings, the Hotel Association

relies on certain language in the resolution in which the

Authority adopted the increases. We find that the Hotel

Association’s interpretation of this language is contrary to

its obvious meaning.

III. Susstantrve Issues

The Hotel Association contends that the Authority did

not have adequate information on which to determine

whether or not the rates were reasonable. The essence of

this argument is that the Authority does not know? how to

allocate various expenses between water and power dis-

tribution and does not know how much it costs it to supply

power to the various types of power users. However, the

three engineering studies introduced at the hearings seem

to provide just this type of information. The Hotel As-

sociation has clearly failed to demonstrate the type of

statutory violation subject to review by this court. See

V. I. Hotel Association v. V. 1. Water & Power Authority,

supra, 465 F.2d at 1274.

Finally, we note that the Hotel Asociation did not at-

tempt to establish in the Authority’s September 1972

hearings or in the subsequent district court proceeding,

and does not now urge, that the increase in electric rates is

confiscatory. At the district court proceeding held on

December 21, 1971, where the Hotel Association challenged

the first set of hearings held by the Authority, there was

uncontradicted testimony by various witnesses that the

electric power bills of Virgin Islands hotels accounted for

between four and eight percent of all operating costs

ESTES IDS EEL ELL IR IIE TL, CA Sidi OES

gener ae

76a

(including debt service). See N. T. 136, 143, 145-46, 153.

With the proposed increase in mind, the district court at

that time computed that the rate increases would increase

overall operating costs by about two percent an amount

which it concluded was not going to put the hotels out of

business. N. T. 175-76."

The October 3, 1972, order of the district court will be

affirmed.

Judgment

This cause came on to be heard on the record from the

District Court of the Virgin Islands, Division of St. Croix,

Christiansted Jurisdiction and was argued by counsel.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgment of the said Dis-

trict Court, entered October 3, 1972, be, and the same is

hereby affirmed, with costs taxed against appellant.

. 4

‘4

ATTEST:

/s/ Tuomas E. Quinn

j Clerk

| April 12, 1973

Concurring Opinion

Apams, Circuit Judge, Concurring

I concur in the result reached by the majority opinion

in this case.

i The appellant raises two contentions in this appeal:

(1) that the procedures are inconsistent with the due

12 The Hotel Association made no attempt to offer similar data at

the September 1972 district court hearing.

"a aahanallal owt ey

77a

process clause of the Constitution, and (2) that the pro-

cedure employed by the Virgin Islands Water & Power

Authority contravenes the statute under which the rate

increases were to be approved.

The opinion in United States v. Florida East Coast

Railway Co.. —— U.S. ——, 41 U.S.L.W. 4247 (US.

Jan. 22, 1973) is the most recent pronouncement by the

Supreme Court on the type of proceeding acceptable when

an administrative agency promulgates a new rate sched-

ule. The opinion makes ciear that, at this time, there is

no requirement of‘a traditional adversary hearing in a

broad rate-making context; such a deficiency is not vio-

lative of due process.’

In the present case, we are dealing with rate-making

proceedings conducted pursuant to a statutory plan of

the legislature of the Virgin Islands, as interpreted by

MIn United States v. Florida East Coast Ry., supra, the rail-

road challenged the establishment by the Interstate Commerce

Commission of incentive per diem rates on freight cars. These

rates were promulgated after a hearing which did not include

several of the elements of an adversary proceeding. Upholding

the implementation of the rates, the Court stated that the Com- q

mission's procedures satisfied the requirements of the Adminis-

trative Procedure Act, 5 U.S.C. $551 ef seq. and were ‘‘not incon-

sistent with prior decisions of this Court.’? 41 U.S.L.W. at 4254.

Several of these earlier decisions, ¢.g. Morgan v. United States, 304 7

U.S. 1 (1938) ; Ohio Bell Telephone Co. v. Public Utilities Commis- :

sion, 301 U.S. 292 (1937); ICC v. Louisville & Nashville R. Co., ‘

227 U.S. 88 (1913), had been thought by some to indicate that due 3

process in rate-making procedures included a requirement of ‘‘trial- i

type’’ hearings. Justice Douglas, dissenting in Florida East Coast :

Ry. Co. asserted: :

**T do not. believe it is within our traditional concepts of due ;

process to allow an administrative agency to saddle anyone ;

with a new rate, charge, or fee without a full hearing that

includes the right to present oral testimony, cross-examine

Witnesses and to present oral argument.”* 41 U.S.LAW. at

4254.

E-

7 Pre ID PLEO CLI, TRGREF

Sp tn aa at eS

78a

this Court. Virgin Islands Hotel Ass’n v. Virgin Islands

Water & Power Authority, 465 F.2d 1272 (3d Cir. 1972).

The import of our earlier decision was that in rate-making

proceedings pursuant to the statute in question a ‘‘mean-

ingful hearing’? must be afforded those who would

challenge the proposed rates. The parameters of such a

hearing have not yet been delineated in any particularity.

Although as stated above, the traditional adversary

‘‘trial-type’’ proceedings do not appear to be mandated

by the Constitution, I believe that in matters as impor-

tant as the establishment of utility rates for large groups

of citizens and businesses, a greater degree of precision

and equity can be established when those opposing the

proposed rates have an adequate opportunity to review

the proposal with its supporting data, and an occasion

to test the proposed rate and its underlying bases through

the medium of cross-examining those responsible for its

promulgation. Perhaps in the context of utility rate-

making these would be central ingredients of a truly

‘‘meaningful’’ hearing.®

Th proper resolution of this case, however, does not

require that we reach the more difficult question, i.e.,

were the proceedings in this case so deficient so as not to

comport with the concept of ‘‘meaningful hearing.’’ As

the majority opinion points out, counsel for the Hotel

Association did not object to the amount of time allotted

2465 F.2d at 1275.

3 An impartial presiding officer at any proceeding would also

appear to be an important element in insuring a ‘‘meaningful’”’

hearing. In the present case the proceedings were chaired by the

Vice-Chairman of the Water & Power Authority with the aid of an

Assistant Attorney-General of the Virgin Islands. Although in

view of the disposition of this case, this factor does not render

these hearings other than a ‘‘meaningful hearing,’’ my concern

with an arrangement that places the control of the meeting in the

hands of the proponent of the rate increase, and the proponent’s

counsel, must be noted.

PE en Tt mn a el

79a

for study of the proposal at the time of its dissemina-

tion. In addition, counsel did not establish, certainly on

the record, the various inquiries or lines of inquiry the

Hotel Association would have propounded had they been

given the opportunity to cross-examine the proponents

of the rate, nor did counsel avail himself of what oppor-

tunity for questioning was afforded him.

For these reasons, I concur in the result reached in

this case.

Stipes , _

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— —

80a

APPENDIX H

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 72-1996

Vircrs Istanps Hore Association, Inc. (U.S.),

a Corporation

Vircrx Istanps Water & Power AvuTHORITY

Vincrx Istanps Horex Association (U.S.),

Appellant

Sur Petition for Rehearing

Present: Serrz, Chief Judge, Vax Dusen, ALpIsERT,

Apams, Gissons, Rosenn, Hunter and Wess, Circuit

Judges, and Bar.ow, District Judge.

The petition for rehearing filed by appellant in the

above entitled case having been submitted to the judges

who participated in the decision of this court and to all the

other available circuit judges of the circuit in regular

active service, and no judge who concurred in the decision

having asked for rehearing, and a majority of the circuit

judges of the circuit in regular active service not having

voted for rehearing by the court in banc, the petition for

rehearing is denied.

By the Court,

/s/ Vax Dusew

Judge

Dated: May 23, 1973

+ eee ae LE a I ah re ee ey oo al

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.