Opposition Brief — Federal Power Commission v. Niagara Mohawk Power Corp.

MAY + i

HAROLD B. Wily, §

IN THE

Supreme Court of the United States

OcToBer TERM, 1952

No. or 2 8

FEDERAL POWER COMMISSION,

Petitioner,

or

Ue

~ NIAGARA MOHAWK POWER CORPORATION,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CiRCUIT COURT OF APPEALS FOR THE

District oF COLUMBIA

BRIEF FOR RESPONDENT IN OPPOSITION

. Joun W. Davis

¥Y Ranpace J. LEBoevr, Jr.

Attorneys for Respondent

~~‘ Lauman Martin

3 “TAGGART WHIPPLE

y Cuauncey P. WiLtiams, Jr.

| C. Payson CoLEMAN

Of Counsel

PAGE

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TABLE OF CASES CITED

Danciger v. Cooley, FAB U.S. DUD. cc acccscccsess 10

First Iowa Coop. v. Federal Power Commission, 328

ME a Soe oa kee br oe OOK ORR Oe Rees 5, 6,9

Ford & Son Inc. v. Little Falls Fibre Co., 280 U. S.

re ee ee ar rer ee ee rrr 7

Grand River Dam Authority v. Grand-Hydro, 335

FS SE re ror re Sear re ere 3,5, 14

Hydraulic Power Co. of Niagara Falls v. Pettebone-

Cataract Paper Co., 198 App. Div. 644 .......... 4

International Paper Company v. United States, 282

Ad a a di a oe

TRL nt aes CORR

Dowie Soi ae

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ii

PAGE

Lewis Blue Point Oyster Cultivation Co. v. Briggs, |

Ss DOE Schon whee ids nee éwecdseacaes 7

Mason v. United States, 260 U.S. 545 ............ 10

New Jersey v. Sargent, 269 U.S. 328 ............. g

Niagara Falls Power Company v. Federal Power Com-

mission, 137 F. 2d 787, cert. denied 320 U. S. 792,

pencaring dented S20 U.S. S15 .........2.0.0----d Ed |

Regents of the University System of Georgia v. Car-

OO Bes Oe OE bees SUN ah Chea gree viaen 13, 14

Texas v. United States, 292 U.S. 522 ..........2..- 10

United States ex rel. Chapman vy. Federal Power

Commission ct al., Nos. 28 and 29, this Term, decided

March 16, 1953, slip opinion, p. 15 ..........5,7,8,14

United States v. Alpers, 338 U. S. 680 ............ 9

United States v. Appalachian Power Co., 311 U. S.

gE be tet a a ME pie rE gee parr ee mein g

United States v. Chandler-Dunbar Co., 229 U. S. 53..7,14

United States v. Chicago, M., St. P. & P. R. Co., 312

7 A BARR eipegingony amb ge sabe, ag Mi tee ee Sy pet > Sem

United States v. Commodore Park, 324 U.S. 386.... 7

United States v. Gerlach Live Stock Co.,339U.S.725 8

United States v. The Public Utilitigs Commission of

California et al., Nos. 205 and 206, this Term, de-

“I

cided April 6, 1953, slip opinion, p. 19 ........... 10, 11

United States v. Willow River Power Co., 324 U. S.

Oe 4 bp ede es ec dhe ke sis tone eee te Lee ao 7

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TREATIES AND STATUTES CITED

International Boundary Waters Treaty of 1910, 36

ee Peerrrrrrrrrerrirrrr 13

U. S. Statutes

Federal Power Act

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na) ) eee 6, 11

Ge OE Co ccktesececdseuseeceesteneseaness 6

Se OL okcehntesesecesenteeeunevoeese? 15

ON Peer error rerreyr sy rere tr 6

Sec, 23(8) ..ccccccccccccrsccvscccesercoes 13

SS ep ey ere errr rer Te ty 6, 8, 11, 12

Sec. 313(b) ....-- cee cece ccc cccccecereees 1

28 U.S. C., §1254(1) «2. eee eee eee eee eee eee 1

MISCELLANEOUS CITATIONS

Congressional Record Vol. ce ls eat ho eales 10, 11, 12

Congressional Record Vol. 59 .....--++++++ee+e55> 7

H. R. Report No. 61, 66th Congress, Ist Session .... 10

Senate Report No. 180, 66th Congress, Ist Session ... 10

Hearings before House Committee on Water Power,

65th Congress, 2d Session .........++++eeeeees 12

Supreme Court Rule 38(5)(b) ....----2--eeee eee 3

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IN THE

Supreme Court of the United States

OcToBER TERM, 1952

FEDERAL PowER CoMMISSION,

Petitioner,

” No. 691

N1AGARA MonHAwk POWER CORPORATION,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES CircuIT Court OF APPEALS FOR THE

District oF COLUMBIA

BRIEF FOR RESPONDENT IN OPPOSITION

Opinions Below

The opinion of the United States Court of Appeals for

the District of Columbia Circuit (R. 585) is reported in 202

F. 2d 190; the Commission’s (R. 105) appears in 9 F. P. C.

228.

Jurisdiction

The order of the Court of Appeals was entered Decem-

ber 31, 1952 (R. 614). The jurisdiction of this Court

_ _ is invoked under Section 313 (b) of the Federal Power Act

and 28 U. S. C. § 1254 (1).

Se ts.

kek oe re ae & POA 3.

IN THE

Supreme Court of the United States

OcToBER TERM, 1952

FEDERAL PowER CoMMISSION,

Petitioner,

™ No. 691

NraGARA MoHAWK POWER CORPORATION,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

StaTEs Circu1It Court oF APPEALS FOR THE

District oF COLUMBIA

BRIEF FOR RESPONDENT IN OPPOSITION

Opinions Below

The opinion of the United States Court of Appeals for

the District of Columbia Circuit (R. 585) is reported in 202

F. 2d 190; the Commission’s (R. 105) appears in 9 F. P. C.

228.

Jurisdictior

The order of the Court of Appeals was entered Decem-

ber 31, 1952 (R. 614). The jurisdiction of this Court

is invoked under Section 313 (b) of the Federal Power Act

and 28 U. S. C. § 1254 (1).

Rey weescceeed

eA Na SPS ALA RS a EN SAR ea CRA

et

Questions Presented

1. Did the Federal Power Act abolish private pro. ,

prietary rights to use waters from a navigable river?

2. Is the Federal Power Commission empowered

to disregard arbitrarily payments made and obligations

incurred by a licensee pursuant to long-standing contracts ,

made at arm’s length in acquiring water rights existing

long prior to the passage of the Federal Power Act?

Statutes Involved

The statutes involved are adequately set torth in the

Appendix to the Petition.

Statement

The Petition squarely raises the effect of the Federal }

Power Act on water rights validly existing under state law.

The validity of the “International Paper Company rights” |

has been recognized by this Court in /nternational Paper

Company v. U. S., 282 U. S. 399, and the “Pettebone-

Cataract rights” by the courts of New York.

The fundamental error of the Petition lies in constru-

ing a regulatory statute as a confiscatory enactment.

Summary of Argument ’

1. The decision below is in accord with well recognized

long standing principles laid down by this Court. The court

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below decided no question left open in Grand River Dam

Authority Vv. Grand-H ydro, 335 U. 5. 359, 373, in a manner

inconsistent with the interpretation of the Act in prior

decisions of this Court. Nor is the decision below in sub-

stantial conflict with “the reasoning’ —and certainly not

with the decision—of the Court of Appeals for the Second

Circuit in Niagara Falls Power Co. v. Federal Power Com-

mission, 137 F. 2d 787, cert. denied 320 U. S. 792, rehearing

denied 320 U. S. 815. Moreover, even if such a conflict in

“reasoning” existed, it would be of no moment in view of

Rule 38(5) (b) of this Court which sets forth, as a possible

ground for granting certiorari, a conflict between “deci-

sions” of the Courts of Appeals. Surely this Court will

not concern itself with composing the different facets of

reasoning among Courts of Appeals in the absence of a

conflict between decisions. Furthermore, the language in

Niagara Falls relied on by Petitioner is no more than dictum.

2. The court below correctly rejected a contention that

the Federal Power Act abolished all private proprietary

rights to use water from a navigable river for power pur-

poses. The express terms of the Act itself, its legislative

history, and the authorities construing it demonstrate be-

yond cavil that the Act was designed as a regulatory

measure—to control but not to confiscate. The Act, while

protecting the public interest by regulation, was also de-

signed to encourage private investment in water power

development ; and to this end the Act recognizes the existence

and validity of private water rights, simply subjecting such

rights to the condition that their use for power purposes be

subject to license by a regulatory commission.

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Argument

We join issue with the contentions that private parties

are not authorized under the Act to own water rights ( Pet.

Br. 13), that the United States has “the exclusive propri-

etary interest” in a navigable stream (Pet. Br. 14) and

“the complete ownership” of its flow (Pet. Br. 15), that

the Act effectively abolished private rights to use waters

from a navigable stream (Pet. Br. 16, 23, 28) and that the

United States is ‘“concededly the ultimate owner of all water

rights in navigable streams” (Pet. Br. 28). All these

propositions we deny.

As background for our argument, we stand on the fol-

lowing propositions correctly decided by the court below.

The water rights in question do not rest upon a claim of

ownership of the running waters of the Niagara River, but

rather upon a usufructuary property right recognized at

common law and confirmed by judicial decisions (R. 594).

The question whether the New York corporations here in-

volved have a usufructuary right in the waters of the

Niagara River depends upon New York law (R. 595).

Under New York law a riparian owner’s right to use the

waters of a stream for power purposes is a part of his estate

and a corporeal hereditament (R. 595). The courts of New

York have upheld the validity of the Pettebone-Cataract

rights in Hydraulic Power Co. of Niagara Falls v. Pette-

bone-Cataract Paper Co., 198 App. Div. 644 (R. 597);

and the validity of the International Paper water rights

under state law has been recognized by this Court

in International Paper Co. v. U. S., 282 U. S. 399 (R. 597).

It follows that the Pettebone-Cataract and the International

Paper water rights are valid under the law of New York

(R. 600). We do not understand that Petitioner here ques-

tions these propositions.

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Petitioner argues that Congress by the Act “and its

predecessor statutes asserted its dominant authority” (Pet.

Br. 9-10) over navigable waters of the United States so as to

wipe out all private water rights valid under state law.

We admit the existence of Congressional authority over

navigable waters and that the Act delegated to the Com-

mission regulatory powers over the use of private water

rights for power purposes. But we strenuously deny that

the Act abolished all private water rights.

Control, not confiscation, is the keynote of the Act. As

this Court recently said, the objective of the Act was “the

creation of a commission with functions and powers com-

parable to those of the Interstate Commerce Commission in

the field of transportation.” U. S. ex rel. Chapman v.

Federal Power Commission, et al., Nos. 28 and 29, this

Term, decided March 16, 1953, slip opinion, p. 15. See also

the statements as to the purposes of the Act in Grand River

Dam Authority v. Grand-Hydro, supra, at 372, and in First

lowa Coop. v. Federal Power Commission, 328 U. S. 152,

171. Would Petitioner have it that the Interstate Commerce

Act wiped out all private rights in property used for rail-

road purposes? To ask the question is to point its absurdity ;

yet that would be the analogue of Petitioner’s position here.

The views of this Court, in recognizing the regulatory

character of the Act, were correctly applied by the court

below. That court observed that much of the difficulty in

this case arose from a misconception of the Act, and char-

acterized the Act as “purely a regulatory measure. A Fed-

eral license is not an original grant of authority but a per-

mission to use a state’s grant of authority” (R. 607). When

state regulation conflicts with lawful Federal regulatory

6

action, state authority must yield to Federal, as held in

First Iowa; but it by no means follows that the Act and a

license thereunder constitute the source from which all]

water rights flow (R. 607).

The soundness of these judicial views is emphasized by

the provisions of the Act itself. Read as a whole, it dis-

closes an intent to provide a comprehensive scheme of Fed-

eral regulation governing the use of water rights for power

purposes. But, at the same time, it repeatedly recognizes

the existence of water rights rather than proclaiming their

non-existence, which would be the case had the Act been

designed to abolish them.’ Indeed, the license constitutes

merely a certificate that the exercise of water rights—valid

under state law—does not interfere with legitimate Fed-

1Section 3(11) defines “project” as including “water rights”.

Section 4(b) empowers the Commission, in determining original

cost of and net investment in a project, to require licensees to file a

statement showing “the price paid for water rights” as well as lands

and interests therein.

Section 9(b) requires that each applicant for a license submit

evidence that it has complied with the requirements of state law “with

respect to bed and banks and to the appropriation, diversion, and

use of water for power purposes”.

Under Section 14 it is provided that for purposes of determina-

tion of the amount to be paid by the United States in the event of

taking over of a licensed project after the expiration of the license,

“the values allowed for water rights * * *” shail not be “in excess

of the actual reasonable cost thereof at the time of acquisition by the

licensee” —thus evidencing a clear intendment that the payment then

to be made shall allow a vaiie for water rights.

Again, Section 21 provides that when any licensee can not acquire

by contract the property of others necessary to a power project, it

may acquire the same by the exercise of the right of eminent domain—

thus recognizing the necessity of a licensee acquiring adverse property

rights such as water rights, by condemnation (which imports com-

pensatory payment) if not by contract.

Finally, Section 27 provides that “nothing herein contained shall

be construed as affecting or intending to affect or in any way to

interfere with the laws of the respective States relating to the control,

appropriation, use or distribution of water used in irrigation or for

municipal or other uses, or any vested right acquired therein.”

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eral purposes, as the court below correctly observed

(R. 607).

This Court has expressly held that the Act was not

intended to interfere with the validity of water rights exist-

ing under the law of New York, and that a licensee of the

Commission may not impair such rights without paying

compensation therefor. Ford & Son Inc. v. Little Falls Fibre

Co., 280 U. S. 369, 377-9.

The regulatory character of the Act distinguishes it

entirely from the type of statute involved in U. S. v.

Chandler-Dunbar Co., 229 U. S. 53, on which Petitioner

: relies. That statute specifically asserted that the ownership

in fee simple absolute by the United States of certain prop-

erty was necessary for the purposes of navigation (R. 600)

—a legitimate Federal purpose. In contrast, the Federal

Power Act is bare of any such assertion; rather, it “ex-

pressed general policies and granted broad administrative

and investigative power, making the Commission the per-

manent disinterested expert agency of Congress to carry

out these policies”. U.S. ex rel Chapman v. Federal Power

Commission, et al., supra, at p. 15. The essential differ-

ence between the character of the statutes was properly

stressed by the court below as the basis for its conclusion

that Chandler-Dunbar is not authority for the Commission’s

position (R. 602).”

None of the cases cited by Petitioner at pages 14-15

detracts from the foregoing analysis. Lewis Blue Point

Oyster, Chicago etc. R. Co., Commodore Park and Willow

7

_ *Congress knew of the Chandler-Dunbar situation at the time of

its debates on the Act, and the managers of the bill were at pains

to assure their colleagues that the bill was not designed to accomplish

a specific taking as was the statute in Chandler-Dunbar. (59 Cong.

Rec. 1040, 1431).

8

River all involved takings of a riparian owner’s property

by the United States acting in the specific exercise of its

power to improve navigable waters; and Sargent in fact

supports our view by acknowledging that the Act recog-

nizes pre-existing water rights (269 U. S. at 338-9). Appa-

lachian Power did not overrule Ford, as Petitioner implies

at page 14, for subsequent to Appalachian Power, this Court

expressly cited Ford with approval in U. S. v. Gerlach Live

Stock Co., 339 U.S. 725, 734. Finally, this Court’s recent

opinion in U. S. ex rel. Chapman v. Federal Power Com-

mission, et al., supra, confirms Respondent’s position; Peti-

tioner’s reliance on the dissent there can carry no weight

against the clear holding of the majority.

Despite the evident regulatory character of the Act,

Petitioner advances the extraordinary contention that noth-

ing in the Act indicates that private water rights in navigable

waters were to be recognized by the Commission (Pet.

Br. 16), and that it would require clear and unequivocal

language in the statute to warrant holding that water rights

used for power purposes were among the rights “saved”

by the Act (Pet. Br. 23). To the contrary, we assert that

there should never be imputed to Congress so drastic a step

as abolishing all private water rights, country wide, in the

absence of plain and unmistakable Congressional intent

evidenced in the language of the statute or in its legislative

background, or both. The fact is that this regulatory Act

abolished no rights; therefore, there is no need for any

language designed to save rights.

Nevertheless, Petitioner’s misconception of the Act as

confiscatory leads Petitioner to view as crucial Section 27

of the Act which reads:

SME IEA Sag APONE TEN GC RNR SOE AE Re A EILEEN TAP RRL GRATIOT OE PELE NALLY ERA

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“That nothing herein contained shall be con-

strued as affecting or intending to affect or in any

way to interfere with the laws of the respective

States relating to the control, appropriation, use, or

distribution of water used in irrigation or for muni-

cipal or other uses, or any vested right acquired

therein.”

On the basis of certain language in this Court’s opinion

in First Jowa, Petitioner asserts that the words “other uses”

in Section 27 must be confined to rights of the same nature

as those relating to the use of water in irrigation or for

municipal purposes (Pet. Br. 18). First Iowa merely held

that when a state law as to the form of a power develop-

ment conflicts with the Act, state law must yield to Federal ;

and it was only in this context—the clash of state and

Federal regulation—that the Court had occasion to con-

sider Section 27. First Iowa presented no issue as to the

effect of the Act on the existence of property rights to use

water; indeed, this Court recognized that the regulatory

nature of the Act still left to the states their constitutional

jurisdiction over such questions as the sufficiency of the

legal title of an applicant to its property rights. 328 U. S.

at 174, 178.

Moreover, Petitioner’s misconstruction of Section 27

would make a strait jacket of its terms, by arbitrarily

applying the rule of ejusdem generis and so subverting

Congressional intent underlying the Act. That so-called

rule is no more than a canon of construction to be resorted

to in the absence of other evidence as to the meaning in-

tended. Particularly, it should never be invoked to sub-

vert the intention of the legislature. U. S. v. Alpers, 338

— Ee ares

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U. S. 680, 682; Texas v. U. S.,292 U.S. 522, 534; Mason

v. U. S., 260 U. S. 545, 554; Danciger v. Cooley, 248 U. S.

319, 326.

Furthermore, where the literal words would bring about

an end completely at variance with the purpose of a statute,

the judiciary may properly use the legislative history to

reach aconclusion. U.S. v. The Public Utilities Commission

of California, et al., Nos. 205 and 206, this Term, decided

April 6, 1953, slip opinion, p. 19. The legislative background

of the Act demonstrates a clear Congressional intent of

“encouraging private enterprise and the investment of

private capital” in power projects, consistent with the public

interest. H.R. Rep. No. 61, 66th Cong., Ist Sess., p. 3

(1919); Sen. Rep. 180, 66th Cong., Ist Sess., passim

(1919). In reliance on this Congressional purpose, many

millions of dollars have been invested in property used for

power purposes, including water rights. That the Act was

not intended to disturb such rights was emphasized by Rep-

resentative LaFollette, a member of the House Committee

on Water Power which reported the bill. He asserted that

the bill only allowed the Commission a supervisory power

over those functions entirely within the states’ jurisdiction,

and that the bill was not designed to infringe any of the

property rights of the states as to the bed and banks and to

diversions of waters or any of the states’ rules of property

(56 Cong. Rec. 9109, 9810).

Indeed, diligent research into the extensive legislative

background of the bill has failed to unearth any evidence

that Congress intended the statute as a confiscatory meas-

ure designed to abolish with one sweep private water rights

throughout the country. Had such a purpose been intended,

would there not have been full debate of this issue in Con-

PFD RIOR 9 PPE PN ACPO eT Re oluee

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gress and extensive hearings in Committee? Petitioner’s

construction of the Act cannot be assumed by innuendo,

especially “in view of the dearth of legislative discussion of

the matter.” See U. S. v. The Public Utilities Commission

of California, supra, at p. 14. This dearth is doubtless ex-

plained by the provisions of Section 9(b) of the Act condi-

tioning the issuance of a license upon a showing that the

applicant has complied with the requirements of state law

with respect to the use of water for power purposes.

Moreover, Congressional history reveals that Section 27

appears to have been added as a disclaimer in the excess of

caution often displayed by lawyers and lawmakers. Repre-

sentative Taylor, a member of the House Committee on

Water Power, was responsible for the addition of Section

27 to the Act (56 Cong. Rec. 9115). Of Section 27 he

commented :

“That section not only recognizes and protects

our plain constitutional vested water rights, but it is

fair and honest, * * *” (56 Cong. Rec. 9912).

And later:

“This special water power committee feel that where

people now have legally recognized rights of various

kinds, we did not want to rip them up.

* * * * *

That is one of the things that all of the western

Members have earnestly and jealously guarded

against—not to legislate a man out of his existing

12

rights, either in agricultural claims or water rights

or coal or oil * * *.” (56 Cong. Rec. 10033-4).3

Thus the Act and its background demonstrate beyond

peradventure the Congressional design to formulate a sys-

tem of Federal regulation over the use of water for power

purposes. This is far short of Petitioner’s view that the

Act wiped out all private water rights by Sections 1 through

26, except those expressly “‘saved” by Section 27.

The decision of the court below correctly interpreted the

Act as an instrument of control, not of confiscation. The

court went to the heart of the matter when it referred to

the Commission’s misconception of the Act (R. 607), a

misconception repeated in Petitioner’s brief. And the court

correctly disposed of Petitioner’s reliance on Niagara Falls

Power Co. v. Federal Power Commission, 137 F. 2d 787,

3And see the following remarks by Representative Mondell during

the Congressional hearings :

“This act should contain * * * some such provision as this:

‘That nothing in this act shall be construed as affecting or

intended to affect or to in any way interfere with the laws

of any State relating to the control, appropriation, use, or dis-

tribution of water’. * * *

That is simply a statement of facts. It is not a new law. It is

simply a recognition of the situation as a guide to administra-

tive officers who sometimes forget very basic and fundamental

things.” (Hearings before House Committee on Water Power,

65th Cong., 2nd Sess. pp. 619-20).

After Section 27 was appended to the bill, Representative Mondell

remarked :

“T am glad the provision the gentleman [Representa-

tive Taylor] urged, and which I also urged in my _ hear-

ing before the committee, is in the bill. It is highly important,

and yet the gentleman knows that it is simply a declaration of

fact; it is simply the recognition of a fact; but it is important

to have it in the bill.” (56 Cong. Rec. 9115).

EL Re NOES ROIS LEI IN TNE! Sali 5 ASAI Pe Amal ii

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cert. denied 320 U. S. 792, rehearing denied 320 U. S. 815.

That case decided only that Section 23(a) of the Act, in

providing for a fair value license for projects operated under

a permit existing at the date the Act became effective, had

application only to projects then operating under continuing

Federal permit; and that the Power Company had no such

permit and therefore was not entitled to a fair value license.

The “reasoning” in that case relied on in Petitioner’s brief

was in fact, as the court below correctly held, not necessary

to the decision and premised on the erroneous assumption

that the International Boundary Waters Treaty of 1910 had

the effect of destroying all diversionary water rights under

New York law and converting the United States into the

fountainhead of any subsequent private right to use the

amount of water allotted to the United States by the Treaty

(R. 606-7). Petitioner in this Court expressly disavows the

Second Circuit’s analysis of the Treaty, deleting all refer-

ence to the Treaty from the quotation from the Second

Circuit’s opinion (Pet. Br. 24-5) and claiming that the

Treaty has no relevance (Pet. Br. fn. 17). But the Treaty

was an essential ingredient in the reasoning of the Second

Circuit; and by rejecting the Treaty here, Petitioner rejects

the fundamental basis of the “reasoning” of the Second

Circuit.

In closing, Petitioner attempts a distinction between the

relationship of the Commission to a licensee and of a licensee

to private parties (Pet. Br. 25-28). But the attempted dis-

tinction evades the fundamental point at issue: the only

basis in law for disallowing Respondent’s payments for

water rights must be that all such rights were abolished by

the Act. Regents of the University System of Georgia v.

Carroll, 338 U. S. 586, has no bearing, because it presented

14

no question of abolishing rights between a licensee and a

regulatory agency. There this Court held that the Federal

Communications Commission had no authority to determine

the validity of a contract between a licensee and a third

party; and that therefore the fact that the Commission had

required disaffirmance of such a contract, as a condition

to the grant of a license, did not constitute a defense inan

action for breach of the contract against the licensee. The

case does not support Petitioner’s alleged power to arbi-

trarily require Respondent to disaffirm its long standing con-

tracts since in Regents this Court expressly assumed the

validity of the action of the regulatory Commission, the very

point at issue here.

In any event, whatever comfort Petitioner attempts to

derive from /egents is short lived, for immediately there-

after its argument reverts to its favorite contention that

the United States is the ultimate owner of all water rights,

and that the court below in recognizing the existence of

private water rights failed to follow the “principles” pur-

portedly set forth by this Court in Chandler-Dunbar ( Pet.

Br. 28-9). However, no amount of strained argument can |

obscure the fundamental proposition that the Act isa meas- }

ure of control, not confiscation.

4

act tee a

Thus the court below decided no question left open in

Grand River Dam Authority v. Grand-Hydro, supra, ina

manner inconsistent with the interpretation of the Act in

prior decisions of this Court. Petitioner’s attempt to |

invoke the dissent there (Pet. Br. 26-7) is as misguided as |

its endeavor to call up the dissent in U. S. ex rel Chap- 3

man Vv. Federal Power Commission et al., supra (Pet. Br. k

15). As shown above, the decision of the court below

properly interprets the statute as a regulatory measure,

SEP EA ARRON, DEL AYALA DENY OIG OEM CLITA SIEM ALE LRG NEMO GRE LANA SEALED SEMI *

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: and this interpretation is consistent both with prior decisions

of this Court and with the Congressional purpose underly-

ing the Act.

Finally, as to Petitioner’s apparent attempt to show that

the decision below will prejudice the interests of the United

States (Pet. Br. 11-13). The argument is erroneous to

the extent that it asserts that the Federal Power Commission

fixes rates charged by the licensee, for those are fixed by the

New York State Public Service Commission and Section

19 of the Act expressly denies to the Federal Power Com-

mission jurisdiction over such matters. But more im-

portant, Petitioner’s theory of abolishment is totally incon-

sistent with the Congressional intent of encouraging private

investment. For if Petitioner’s theory were to prevail,

“original cost” and “net investment” would be reduced be-

cause the dollar values of water rights would be eliminated,

and hence the capital value of the project property of many

licensees would be slashed. Also it is clear that to the extent

that Respondent would be required to transfer sums to

amortization reserve account, Respondent’s surplus and its

earnings available for dividends and other corporate pur-

} poses would be correspondingly reduced; and if the United

States were to exercise its right to take over licensee’s

project at the expiration of its license, the amount re-

ceived at that time by Respondent and those who had in-

vested in its project would be correspondingly reduced.

t These adverse effects, scarcely designed to further the Con-

gressional intent of encouraging private investment in

power projects, are the necessary consequence of Petitioner’s

position.

15

16

CONCLUSION

For the above reasons, the Petition for Writ of Cer-

tiorari should be denied.

Respectfully submitted,

Joun W. Davis

RANDALL J. LEBoEvF, Jr.

Attorneys for Respondent

LAUMAN MARTIN

TAGGART WHIPPLE

CuHauncey P. WILLIAMs, Jr.

C. Payson CoLEMAN

Of Counsel

May 1953.

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