State of Oregon v. Federal Power Commission

STEPHENS, Circuit Judge.

The Portland General Electric Company, an Oregon non-governmental public utility corporation, applied for and has been granted a license¹ by the Federal Power Commission to construct, operate and maintain a hydro-electric plant known as the Pelton Project, numbered 2030, on the Deschutes River² in Oregon. The Project is to be located downstream from where Crooked River and Metolius River, two principal tributaries to the Deschutes, flow into the latter. The Project is designed to consist of a concrete dam approximately two hundred five feet high in connection with a powerhouse containing three 36,000 kilowatt generators and is to be built across the river on United States land. Included in the Project, and three miles below the power dam, a “re-regulating” dam is to be constructed which is designed to equate the flow of water as it is released from the upper dam. It is not claimed that the lower dam will be located upon federal land or federally controlled land. Without it the flow below the power dam would be subject to extremes as the water would be released from the power dam in much greater quantity when peak loads of electric energy were required. There will be no diversion of water from the stream, as it will flow, undiminished, through or over the dams and continue down the natural bed. The impounding of water above the upper dam will create a relatively narrow lake in mountainous terrain of five or six miles in length.

We quote from respondent Federal Power Commission’s brief (at pages 1 and 2):

“The project, if constructed, would occupy lands of the United States set aside on the west side of the Deschutes River by treaty in 1855 as the Warm Springs Indian Reservation, and additional lands of the United States on the east side of the river. All of the lands of the United States on both sides of the river which would be occupied by the project have been withdrawn from entry, location or other disposal under the public land laws and reserved for power purposes. In addition to these lands, some private lands would be affected by the project.

“The high power dam, and the powerhouse immediately below, will be located entirely upon lands of the United States set aside and reserved for power purposes. * *

The State of Oregon, The Fish Commission of Oregon, and The Oregon State Game Commission appeared before the Federal Power Commission hearing and registered objections to the granting of the license on the grounds that the dams would prevent the ascent , of anadromous fish to their spawning grounds above the dam sites, and would result in the serious curtailment of the fish population and prevent its increase, and would impair the productivity and usefulness of the extensive State Fish Hatchery on the Metolius River. They further contended that the Commission was without authority to grant the license applied for since the applicant had failed to obtain a permit from the Hydro-Electric Commission of Oregon ³ and had not complied with the Oregon law as to fish in the river,⁴ as required by § 9 (b) of the Federal Power Act.⁵

Having been unsuccessful in their contentions before the Commission, as aggrieved persons, the objectors have petitioned this court for review of the order issued ⁶ and upon such review to set aside the order granting the license.

The Izaak Walton League of America (Oregon Division) filed a brief with us as amicus curiae in support of the objectors’ plea that the license granted should be set aside.

There is conflict in the evidence as to the probable effect of the proposed Project upon the fish population of the streams affected as well as to the need for the power which the Project is designed to produce. However, there is substantial evidence in support of the Commission’s findings as to the need for power, but in our opinion the evidence practically demonstrates that the Project would seriously affect the normal population of the fish in the river and the usefulness of the State Fish Hatchery. Whether the jurisdiction of the Federal Power Commission was broad enough to authorize such findings as binding against the State of Oregon, if supported by the evidence, will presently be considered.

The Commission, in its consideration of the application for the license, based its jurisdiction to entertain and grant the application solely upon the fact that the principal or upper dam is to be built upon and affects land reservations ⁷ of the United States,⁸ inclusive of the lands of the Warm Springs Indian Reservation.⁹ The Indians of the Reservation have given their consent to the construction of the Project.

Since Congress has delegated to the Federal Power Commission the authority to license power producing dams which will occupy or affect United States land and land reservations, it is incontrovertible that a Federal Power Commission license is necessary to the construction of the proposed Project by the applicant. The extent of the right which the federal license which has been granted carries or purports to carry, is in issue here.

The aggrieved parties argue that the Commission has no legal power to grant a license unless and until the applicant has shown the Commission that it has complied with all applicable state laws, and they cite instances of conflict between the Project as it is contemplated, and Oregon state law. In support of their contention they cite § 9(b) of the Federal Power Act which reads as follows:

"Satisfactory evidence that the applicant has complied with the requirements of the laws of the State or States within which the proposed project is to be located with respect to bed and banks and to the appropriation, diversion, and use of water for power purposes and with respect to the right to engage in the business of developing, transmitting, and distributing power, and in any other business necessary to effect the purposes of a license under this Act.” 41 Stat. 1068.

The application of the quoted section of the Federal Power Act, § 9(b), to the point has been negatived by the Supreme Court in the case of First Iowa HydroElectric Coop. v. Federal Power Comm., 1946, 328 U.S. 152, 177, 178, 66 S.Ct. 906, 918, 90 L.Ed. 1143, wherein the court said: “It [§ 9(b) ] does not itself require compliance with any state laws. Its reference to state laws is by way of suggestion to the Federal Power Commission of subjects as to which the Commission may wish some proof submitted to it of the applicant’s progress. * * The need for compliance with applicable state laws, if any, arises not from this federal statute but from the effectiveness of the state statutes themselves.”

We hold that § 9(b) neither enlarges nor limits the Federal Power Commission so far as the authority to grant the application for license is concerned. It specifically gives the Commission the right to ascertain needed information which would affect the Commission’s discretion in granting or withholding the license and as to details concerning the Project, its construction, capacity, and desirability.

Our conclusion as to the meaning and effect of § 9(b) does not, however, destroy the objectors’ case, for they rely upon the more fundamental claim that the Deschutes River is a state stream and that the State of Oregon has sovereign power over it and its waters.

On the other hand, the applicant for the license and the Commission claim, under the facts of this case, that the Commission’s jurisdiction fully includes the power to authorize the construction and operation of the Project and that the Oregon State laws pertaining to dams on the Deschutes River and to the accommodation of anadromous fish in the river and the fact that the Project would greatly damage or ruin the effectiveness of an extensive state fish hatchery, constitute no bar thereto.¹⁰ It is undisputed that the United States owns the site of the upper or power dam. It does not, however, own the site of the lower dam or all of the land to be flooded by impounded water.

The claimed authority for issuance of the Commission’s license is derived from the Federal Power Act and Article IV, § 3, Cl. 2, of the United States Constitution, the latter of which reads as follows:

“The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; *• * * >> ¹¹

The Constitutional provision has been given a very broad interpretation by the courts,¹² see United States v. City and County of San Francisco, 1940, 310 U.S. 16, 29, 60 S.Ct. 749, 84 L.Ed. 1050. However, it has limitations. The Supreme Court in Ashwander v. Tennessee Valley Authority, 1936, 297 U.S. 288, 338, 56 S. Ct. 466, 479, 80 L.Ed. 688, in referring to the right of the United States to its own property, said, “The constitutional provision is silent as to the method of disposing of property belonging to the United States. That method, of course, must be an appropriate means of disposition according to the nature of the property, it must be one adopted in the public interest as distinguished from private or personal ends, and we may assume that it must be consistent with the foundation principles of our dual system of government and must not be contrived to govern the concerns reserved to the States.” Under the authority of this Constitutional provision, the Congress conferred upon the Federal Power Commission, by § 4(e) of the Federal Power Act, the right to license the construction of hydroelectric plants “upon any part of the public lands and reservations of the United States”.

The Commission, in its brief, recites the history of federal water power legislation prior to 1920, and traces it into the Federal Power Act of 1920, and deduces therefrom that “[t]he efforts of the Commission were to be ‘directed toward a constructive national program of intelligent, economical utilization of our power resources.¹³ ’ ” We agree, but the Congress did not and could not change the ownership or control of waters by the adoption of such policy. If the Deschutes River waters were state waters before the adoption of the policy, they remained so after the legislation referred to by the Commission.

We proceed to the question of the sovereign power over the waters of the Des-chutes River.

Within certain limitations, the sovereignty of the State of Oregon extends over the control of the waters located within the state as definitely as over the lands within its borders. The United States government, however, originally had the control of waters within the public domain which had not been ceded to the states and it has paramount rights in navigable streams under the Commerce clause of the United States Constitution. Art. I, § 8, Cl. 3.

A few generations ago there were large tracts of western lands in the public domain which were arid or semi-arid, but through which streams flowed. Under the doctrine of riparian rights, water could not be appropriated and conducted distances from the streams, and for that reason there was a great waste of water, and the aridity of lands to which water was physically available but to which it could not legally be conducted, was perpetuated. Congress provided the remedy by separating the title to the land from the right to the control of the water and allowed the states, within which such waters flowed, to regulate them. Acts of Congress of 1866,¹⁴ 1870,¹⁵ and the Desert Land Act of 1877.¹⁶

Most of the states to which such legislation applied, including Oregon, adopted the doctrine of beneficial use and prior appropriation. Oregon early provided that waters of that state belong to the public and cannot be appropriated without the state’s consent. Vol. 8 Oregon Compiled Laws Ann. § 116-401 et seq., see California-Oregon Power Co. v. Beaver Portland Cement Co., 1935, 295 U.S. 142, 163, 164, 55 S.Ct. 725, 79 L.Ed. 1356. The Deschutes River flows from and partially through lands to which the Congressional Act applies. The effect of the Desert Land Act of 1877 is thoroughly discussed in Kansas v. Colorado, 1907, 206 U.S. 46, 27 S.Ct. 655, 51 L.Ed. 956.

Because of its recent date and the applicability of its expressions, we quote briefly from the opinion in California-Oregon Power Co. v. Beaver Portland Cement Co., supra, 295 U.S. at page 162, 55 S.Ct. at page 731: “As the owner of the public domain, the government possessed the power to dispose of land and water thereon together, or to dispose of them separately. Howell v. Johnson, C.C., 89 F. 556, 558. The fair construction of [the Desert Land Act of 1877] is that Congress intended to establish the rule that for the future the land should be patented separately; and that all non-navigable waters thereon should be reserved for the use of the public under the laws of the states and territories named. The words that the water of all sources of water supply upon the public lands and not navigable ‘shall remain and be held free for the appropriation and use of the public’ are not susceptible of any other construction * * And again, 295 U.S. at page 163, 55 S.Ct. at page 731 of the same opinion, “Nothing we have said is meant to suggest that the act, as we construe it, has the effect of curtailing the power of the states affected to legislate in respect of waters and water rights as they deem wise in the public interest. What we hold is that following the act of 1877, if not before, all nonnavigable waters then a part of the public domain became publici juris, subject to the plenary control of the designated states * *

Long before the Supreme Court had spoken in California-Oregon Power Co. v. Beaver Portland Cement Co., supra, Judge Gilbert, speaking for this court in United States v. Hanson, 9 Cir., 1909,167 F. 881, 884, had occasion to say that “* * [a]lthough the [U.S.] government on admitting a state into the Union relinquishes its control of the disposition of the waters of the state, except in so far as the regulation of commerce is concerned, it relinquishes none of its rights over the public lands included within the territorial limits of the state. The government is still sovereign over such lands, and, in the nature of things, so long as it does not interfere with state legislation over waters of the state, it must have the same power to improve, protect, and offer for settlement or sale the public lands within a territory.” In the same opinion at the same page, Judge Gilbert quotes from Kansas v. Colorado, supra, to the same effect.

The Commission makes some claim that the anadromous fish in the Deschutes River waters do not belong to the state or that the state has no right over the federal government to legislate in regard to such fish. We disagree. We think the regulation of the river as it flows through the state is one of the powers of the state’s sovereignty and includes regulatory powers as to fish in state waters.

We fully realize that most of the eases we have cited arose from disputes over the use of water for irrigation and that the cession of the United States of control over waters in or from the public domain to the states was motivated by the Congressional desire to free such waters from the restrictive doctrine of riparian rights so that they could be applied economically to land for irrigation. Nevertheless, the cession was a surrender of all regulatory power over such waters and was not limited to their use in irrigation. Whatever, if any, limitation there was on Oregon’s complete sovereignty over the waters of the Deschutes River, was wiped out by the Desert Land Act of 1877.

Undoubtedly, the Commission has the legal right to give its approval to the Project as a whole. And we do not doubt but that it has the right to grant its permissive license to the construction of the proposed dam upon its own property. But the Commission has issued no mere permissive license. It has issued a license purporting to grant the complete legal right to the construction and operation of the whole Project. In this, we think, it has exceeded its legal jurisdiction'in that the ownership of the power dam site does not empower the United States government to use the waters of the Deschutes River either at the site of the power dam or elsewhere, contrary to Oregon state law. See State of Iowa v. Federal Power Commission, 8 Cir., 1949, 178 F.2d 421, 427. See, also, Niagara Mohawk Power Corp. v. Federal Power Comm., 1952, 91 U.S.App.D.C. 395, 202 F.2d 190, 207, certiorari granted, 345 U.S. 955, 73 S.Ct. 939, 97 L.Ed. 1376, affirmed 1954, 347 U.S. 239, 74 S.Ct. 487.

Underlying such holding is our opinion that the Commission has trenched upon the sovereignty of the State of Oregon. It is true that the Commission has gone a long way toward minimizing the harm which may result from the construction and operation of the Project, but it has done so, not as a legal requirement, but as a commendable grace which the Commission accords to the State. The fundamental principle, however, is not whether the Project will cause large, small, or any damage. It is that Oregon has the right to regulate its own waters in its own chosen way.

The order issuing the license is set aside.

1 . The original application was filed by the ■ ■ Northwest Power Supply Co. of Portland, Oregon, on May 23, 1949, for a license under § 4(e) of the Federal Power Act, Title 16 U.S.C.A. § 797(e). On June 15, 1951, a supplemental application was filed by the Northwest Power Supply Co. and the Portland General Electric Co., requesting that the license be granted to the latter.

2 . The Deschutes River drains the eastern slopes of the Cascade Range and flows northward, emptying into the Columbia River about fifteen miles upstream from The Dalles, Oregon.

3 . Yol. 8 Oregon Compiled Laws Ann. § 119-103: “From and after the taking effect of this act, no water-power project involving the use of the waters of any of the lakes, rivers, streams or other bodies of water within the state of Oregon, including waters over which this state has concurrent jurisdiction, for the generation of electricity, shall be begun or constructed except in conformity with the provisions hereof.”

But compare Yol. 8 Oregon Compiled Laws Ann. § 119-101.

4 . Vol. 5 Oregon Compiled Laws Ann. § 83-314: “(a) It shall be unlawful for any person to construct any dam or artificial obstruction across any stream in this state frequented by salmon or other food fish, or to maintain any such dam or obstruction heretofore erected without providing a passageway for such fish over such obstructions, such passageway for fish to be constructed as near the main channel as may be practicable. * * * ”

Section 12 of the Act of Congress, August 14, 1848, 9 Stat. 323, 328, establishing the territorial government of Oregon, provided as follows: “And be it further enacted, That the rivers and streams of water in said Territory of Oregon in which salmon are found, or to which they resort, shall not be obstructed by dams or otherwise, unless such dams or obstructions are so constructed as to allow salmon to pass freely up and down such rivers and streams.”

Oregon Constitution of 1859, § 7, Art. XVIII: “All laws in force in the territory of Oregon when this constitution takes effect, and consistent therewith, shall continue in force until altered or repealed.” Vol. 9 Oregon Compiled Laws Ann. p. 311.

5 . § 9(b) of the Federal Power Act, 41 Stat. 1068, Title 16 U.S.C.A. § 802(b): “That each applicant for a license hereunder shall submit to the commission—

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“(b) Satisfactory evidence that the applicant has complied with the requirements of the laws of the State or States within which the proposed project is to be located with respect to bed and banks and to the appropriation, diversion, and use of water for power purposes and with respect to the right to engage in the business of developing, transmitting, and distributing power, and in any other business necessary to effect the purposes of a license under this Act.”

6 . § 313 of the Federal Power Act, 49 Stat. 860, Title 16 U.S.C.A. § 8251 (b). Under this section an aggrieved person may petition for a review in the United States Court of Appeals, which court may “affirm, modify, or set aside such order in whole or in part.”

7 . The site of the upper dam cannot be designated “public lands” of the United States, since under ■§ 3(1) of the Act, 16 U.S.C.A. § 796(1), such lands are defined as being “subject to private appropriation and disposal under public land laws.” The upper dam is to be constructed upon reservations as defined in § 3(2) of the Act, i. e., lands “reserved, or withheld from private appropriation and disposal under the public land laws * * * ” but excluding national monuments or national parks.

8 . Title 16 U.S.C.A. § 797(e), § 4(e) of the Federal Power Act. See, also, § 23(b) of the Federal Power Act, Title 16 U.S.C.A. § 817, which makes it unlawful to build a dam or powerhouse upon federal land except under the terms of a license issued by the Federal Power Commission.

9 . We here treat the Indian lands as United States lands since, in the absence of treaty or special Act of Congress to the contrary, the fee title to Indian lands is in the United States subject to their use and occupancy by the Indians. Hynes v. Grimes Packing Co., 1949, 337 U.S. 88, 103, 104, 69 S.Ct. 968, 93 L.Ed. 1231; St. Marie v. United States, D.C.Cal.1938, 24 F.Supp. 237, 239, 240, affirmed, 9 Cir., 108 F.2d 876.

10 . In paragraph (4) of the Commission’s “Order issuing License (Major)”, which order is in fact the Commission’s findings and conclusions, we find the following: “The refusal of the Oregon Fish Commission, acting under an existing law of the State of Oregon, to issue a permit for the Pelton project, is not a bar to the issuance of a Federal Power Act license and to the construction and operation of the proposed project under such license, if that project is found to meet the standards specified for comprehensive water power development in the Federal Power Act.”

11 . If, in addition to the United States ownership of the proposed dam site, the Deschutes River were navigable, the problem presented by this review would be somewhat similar to that presented to us in State of Washington Dept, of Game v. Federal Power Comm., 9 Cir., 1953, 207 F.2d 391. But the Commission’s examiner, in his report to his principal, found the Deschutes River to be non-navigable and that the Project itself would not involve the subject of interstate commerce. The Commission itself made no conclusions on those subjects, and the Commission’s brief claims nothing as to those subjects, and consistently refers to the Deschutes River as being “allegedly non-navigable”. In a comparable situation the Supreme Court, in United States v. Cress, 1917, 243 U.S. 316, 318, 37 S.Ct. 380, 381, 61 L.Ed. 746, said: “It may be supposed that White-oak creek was not' a navigable stream, but there is no finding on the subject.”

12 . Whether the right of a licensee of the government to use government property is as broad as the government’s right to use it, is not raised in the case and we have not considered it.

13 . See House Report No. 61, 66th Congress, 1st Session, dated June 24, 1919.

14 . 14 Stat. 251, 253, Tide 43 U.S.C.A. § 661.

15 . 16 Stat. 217, 218, Title 43 U.S.C.A. § 661.

16 . 19 Stat. 377, Title 43 U.S.C.A. § 321.