# Appendix — Virgin Island Hotel Ass'n (U. S.), Inc. v. Virgin Islands Water & Power Authority > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_1053%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1973 - **Citation:** 414 U.S. 1067 ## Text : — aa, tei . a “ oaaleis atiastieasinitas 4 eee re eee ee er a ‘. q ia Ou ¥ AMBRE pS Be 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 be t FY 3 wt Re r. F i 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. TRENEP PORES) Ph tw Reamer atv sus Me, Alo eee at Ake Make En oat Ad al, ah lke Ae bade ath kai ee PE i ee CY RA a Se REE OS ws TABLE OF CONTENTS Appendix A: BD BS nas bandkcwckedacdnaceesabdecsuuen la 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). ; an i Ae ie sa Shy wie PEE Se Oe ab tes sai b dors tan ANA tt GY Soe tea TD 2111. 112. 113. 114. 115. Glens esse gem ee ese 103. 104. 105. 106. 107. 108. 109. 110. PI Ope is NL OR RL Tia 2a 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. FERTILE EGOS SOLE GONG EWI OO ae a | PRE PAE ME — = 3a 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. (c) The inadequacy of existing water and electric power 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 Riker py LOREEN RENEE S rem ioog a. a a % q 4 _ q 3 - — ewe x. POLITE SO LLL ELA IOP ITED Bly D> eB A ENE ie zi BCA Shel aat ate wale Leva ad ZORA i Mad ot 4a 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. (c) The term ‘‘facility’’ shall mean any one or a combi- 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. 5a (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. 6a (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 te GRY Ta 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: 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. (c) The receiver so appointed shall forthwith, directly or 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, we Wh NeSNS. | ydidlsicah shite wwaceahh edit 2 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 a 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. (c) The Authority shall establish an accounting system 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. (c) For purposes of Social Security coverage, the au- thority shall be deemed as an employing unit following sig- nature of an agreement between the Government of the | § . : ; i 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. i E: i & 5g | E i § é E : 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. » . ee ae aed See ae ESS PY EL LE OES PEE TRAE AERA pra Ct SERA ES POR STE ees bey 7 RR OT es Oe ee J 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. ee So ie al lil RITTER tye rary nee a i is r y aq 4 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- ; a 3 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 5 .: i 3 3 % } : £ & f $ ¢ £ E S q ’ 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 i i ? ee ee a as £5 EDP R ILE IIE ie rs ae eke 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 + ee re eS ASP RP IRTR SEAS OL Et oh * —~ = = ee vo Sheet iil eek BE OPTUS BCS 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 § dol ae asta SRI IOD 2 aS Thm BO EO TE ILE SCTE OA 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 RS a ot Ls 3 Po MINOR LY SONA PORE HI POE Dae oD eats 02 Steed ged Pied OF ae — 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 v. 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 a 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., f for Appellee ; i 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 Aa ren ere eed " ay Nieieas ON I OTE LTO SN FEET CE I OLE OS LT PITT ITE ELE IEE OT Ie re = a NEI. tense Sg BN eee. 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 i ‘ 5 x : ; 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 | ec ema wn a re 72a 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). — ATPL LE OR SI TID AS LPP IY PE TELLIN FYE Nee ASEAN APR A SEE ES TORT EPS = F Ph GO IRIE oer tl ar AOE POCA AE AIRC Get A UL oa Fe ED wt 98 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 —- = cer remenesysts 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: ee 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 hy - ia ‘4 3 ia cs 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 a 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: : bY **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. 5 4 E- 4 4 4 z 7 7 4 3 | 4 4 3 4 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 , _ Ne canes yah Oana SENOS I UAS ERNE pM COME TH Ge 1 1 SAE NEUV EME NAR CDR UREA RTD ENOTES FR a | : ~" wee ihtetmeerebaneteaasieetas 2 - - — — 80a APPENDIX H UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 72-1996 Vircrs Istanps Hore Association, Inc. (U.S.), a Corporation v. 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_1053%3A2. Public record. Not legal advice.