Federal Power Commission v. Niagara Mohawk Power Corp./Dissent Douglas

Mr. Justice DOUGLAS, with whom Mr. Justice BLACK and Mr. Justice MINTON concur, dissenting.

Section 10(d) of the Federal Power Act, 41 Stat. 1069, as amended, 16 U.S.C. § 803(d), 16 U.S.C.A. § 803(d), requires licensees to set up amortization reserves out of their surplus earnings. The Commission enforced this requirement by ordering Niagara to make a book transfer of surplus earnings to an amortization reserve account. In determining the amount of earnings available for amortization the Commission refused to allow certain water-right payments as expenses. The only question before the Court is whether the Commission could lawfully disregard these expenses in computing Niagara's earnings for § 10(d) purposes.

The amortization reserve required by § 10(d) serves the function of reducing Niagara's net investment. § 3(13). Niagara's net investment is the measure of the amount of the United States must pay if it decides to recapture Niagara's plant under § 14 of the Act. By allowing these water-right payments as expenses for this purpose the Court increases the ultimate obligation of the United States.

It may be that Niagara is under a legal duty to pay for its water rights under state law. And I agree that the Federal Power Act was not intended to interfere with water rights created by state law. But it is not true that the United States can be made to pay, directly or indirectly, for the use of the waters of a navigable stream. That has been settled at least since United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 33 S.Ct. 667, 57 L.Ed. 1063. 'Ownership of a private stream wholly upon the lands of an individual is conceivable; but that the running water in a great navigable stream is capable of private ownership is inconceivable.' Id., 229 U.S. at page 69, 33 S.Ct. at page 674. If Niagara must pay for its water rights without being reimbursed by the United States, that is the price Niagara must pay for its federal license. See United States v. Appalachian Electric Power Co., 311 U.S. 377, 61 S.Ct. 291, 85 L.Ed. 243; cf. Regents of University System of Georgia v. Carroll, 338 U.S. 586, 70 S.Ct. 370, 94 L.Ed. 363. The Federal Power Act should not be construed as requiring the United States to pay for something it already owns. But that is precisely what the Court does today.