RUMFORD FALLS POWER CO. v. FEDERAL POWER COMM., 355 F.2d 683 (1st Cir. 1966)

No. 6616.United States Court of Appeals, First Circuit.Heard January 3, 1966.
Decided January 28, 1966.

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Randall J. LeBoeuf, Jr., New York City, with whom Daniel T. Drummond, Jr., Portland, Me., Alfred E. Froh, Ronald D. Jones, Charles A. Ehren, Jr., New York City, Drummond, Westcott
Woodsum and LeBoeuf, Lamb Leiby, New York City, were on brief, for petitioner.

Robert A. Jablon, Washington, D.C., Attorney, with whom Richard A. Solomon, Gen. Counsel, Howard E. Wahrenbrock, Solicitor, and Joseph B. Hobbs and Josephine H. Klein, Washington, D.C., Attorneys, were on brief, for respondent.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

ALDRICH, Chief Judge.

Petitioner, Rumford Falls Power Company, a longtime owner and operator of a hydroelectric plant on the Androscoggin River at Rumford, Maine, applied in 1962 to respondent Federal Power Commission

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pursuant to the Federal Power Act, 16 U.S.C. § 791a-823, for a license to operate, the Androscoggin having been determined to be navigable within the meaning of the Act. Because it had made a substantial addition to its plant subsequent to the 1935 amendment to the Act, petitioner finds itself in the same position as Central Maine Power Co., requiring it to take an antedated license. Central Maine Power Co. v. FPC, 1 Cir., 1965, 345 F.2d 875. This, petitioner accepts. Its petition, brought pursuant to 16 U.S.C. § 82 l(b) following denial of its request for reconsideration or a hearing, results from the Commission’s inclusion in its proposed license of a provision known as Article 31. This provision the petitioner says is unreasonable and beyond the Commission’s power.[1]

Commission counsel stated during argument that Article 31 is of recent conception, and is now normal standard procedure for all new licenses. This is, apparently, correct.[2] It follows that if petitioner had filed when it should have done so, no such provision would have been included in its license. In seeking to persuade us, in Central Maine Power Co. v. FPC, supra, that it was fair to antedate Central Maine’s license, the Commission pointed out that had that petitioner filed a declaration of intent under the 1935 amendment when it should have done so, it would have received a license bearing the earlier date, which, by coincidence, was demonstrated as a matter of record by another case. We agreed that it would be unfair for the petitioner to be any better off than it would have been had it filed on time. 345 F.2d at 876-877. Now, the shoe is on the other foot. The present petitioner is demonstrably worse off, since in 1954 Article 31 was not written into licenses.

We adhere to the principle that petitioner should not be better off than other applicants who did file properly at the earlier date when petitioner should have filed; i.e., that there must be antedating. We also agree that petitioner should not be better off than other applicants who made timely filing on the date on which petitioner in fact filed. We do not think the Commission should be required to have two present policies as to what should be in licenses currently issued, favoring those whose applications were overdue. To that extent this petitioner loses by its tardiness. However, the Commission cannot penalize the petitioner, because of its delay, by requiring it to accept a provision which could not properly be demanded of applicants presently applying for prospective construction. Nor do we understand it to contend otherwise.[3] At the same time, we agree with the Commission’s action refusing petitioner’s request for an evidentiary hearing. No adequate grounds were asserted for making it specially exempt from the provisions of Article 31.

For the above reasons, we will consider Article 31 as license “boiler plate,” and not with particular reference to any problems peculiar to this petitioner. The article reads as follows:

“31. On the application of any person, association, corporation, Federal agency, State or municipality, the Licensee shall, after notice and opportunity for hearing, permit such reasonable use of its reservoirs or other project works or parts thereof as may be ordered by the Commission in the interest of comprehensive development of the waterway or waterways involved and the conservation and utilization of water resources of the region for water supply

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for steam-electric, irrigation, industrial, municipal or similar purposes, consistent with the primary objective of the project. The Licensee shall receive such reasonable compensation as may be appropriate for use of its reservoirs or other project works or parts thereof for such purposes, any such compensation to be fixed either by Commission approval of an agreement between the Licensee and the party or parties benefiting or by the Commission in the event the parties are unable to agree. Applications shall contain information in sufficient detail to afford a full understanding of the proposed use, including satisfactory evidence that the application [sic] possesses necessary water rights pursuant to applicable State law, or a showing of cause why such evidence cannot be submitted, and a statement as to the relationship of the proposed use to any State or municipal plans or orders which may have been adopted with respect to the use of such waters.”

Basic to a consideration of petitioner’s contentions is a full understanding of what Article 31 provides. Since we find it less than clear in some respects, we undertake to examine certain clauses in detail.

1. “On the application of any person, association, corporation, Federal agency, State or municipality * * *” (lines 1-2) (hereinafter, applicants). Petitioner contends that this includes applicants who do not “possess necessary water rights pursuant to applicable State law” (lines 23 and 24) because the article permits applicants to show, in the alternative, “why such evidence cannot be submitted.” Although petitioner raised this matter in its petition for reconsideration, the Commission responded only indirectly, citing, largely, cases dealing with specific provisions elsewhere in the license, not objected to by petitioner, and expressly authorized. In its brief, Commission counsel state that the clause, “necessary water rights pursuant to applicable State law,” indicates an “intention to harmonize multiple uses in a unified, comprehensive plan.” The brief neglects, however, to mention the alternative clause. We note, also, that in the order of April 7, 1965 (fn. 2, supra) the Commission, in speaking of the article, states that “necessary water rights for such non-project purposes must be acquired pursuant to applicable State law. * * *” In spite of these observations, Article 31 may be considered broad enough to constitute the licensee’s acceptance of takings, not elsewhere provided for, in favor of applicants not possessing the necessary State rights. Certainly the overall impression created by the article is not one of diffidence on the part of the Commission, and certainly, too, in some respects, the Act does permit takings in favor of parties not possessing state property rights.

2. “* * * utilization of water resources of the region for water supply for steam-electric, irrigation, industrial, municipal or similar purposes. * * *” Petitioner suggests that this clause is broad enough to include private, nonmunicipal uses. The Commission does not respond. Petitioner’s apprehension has seeming merit. As opposed to it, however, this clause appears to have been derived from section 10(a) of the Act, 16 U.S.C. § 803(a), which would appear to limit the Commission’s power to “beneficial public uses.” (Italics ours.)

3. “* * * consistent with the primary objective of the project.” This is, perhaps, the nub of petitioner’s concern. Although it is not clear what might be considered “secondary” objectives, and the Commission’s memorandum opinion fails to identify the primary one, its brief is replete with assertions that the primary objective is the manufacture of power. This we accept. The brief is equally replete with assurances that the Commission can do nothing under Article 31 which could in any way diminish petitioner’s use (which we take to mean at maximum capacity) of its generating machinery.[4]

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This construction is considerably more restricted than we would, with full confidence, be willing to read into the phrase “consistent with the primary objective of the project.” Certainly one explanatory clause in the article, or one sentence in its opinion, would be worth more than six in the brief.[5] In its absence we do not know whether the Commission, acting under Article 31, would be limited absolutely, or limited only to what it might determine to be reasonable consistency.

4. “The Licensee shall receive such reasonable compensation as shall be appropriate. * * *” What the standard of appropriateness is, is in no way indicated. While under other circumstances the term “present fair value” might be inferred, no particular inference seems warranted in a milieu where, for at least some purposes, a licensee is required to evaluate its property on the basis of written down cost. Federal Power Act § 14, 16 U.S.C. § 807. We do not find it unambiguously apparent that for a taking for the benefit of someone applying under Article 31 the licensee is to be compensated on the basis of a Commission-supervised condemnation proceeding. Rather, it would seem that the licensee might receive what is reasonable in the opinion of the then members of the Commission, subject to court review on a standard not presently known to the court.[6]

A fundamental objection which petitioner raises to Article 31 is that it unsettles its license, where Congress intended that it be secure;[7] that it does not know what it may have to surrender, or to what extent it will be compensated. Being uncertain as to the proper interpretation of the article, we find it peculiarly difficult, as, indeed, must petitioner,

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to deal with this issue. It is regrettable, particularly in view of the general importance which the Commission itself attaches to the article, that it saw fit to answer the substantial points[8] that petitioner raised in its initial petition by, essentially, an assertion that the article is within its powers and in the public interest.[9]

We find ourselves unable to give proper consideration to the article when we are in doubt as to what it means. Accordingly, we remand the case to the Commission for clarification, either by a revision of the article itself, or by way of an opinion responsive to the questions we have raised herein.

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