GEORGIA POWER COMPANY, Plaintiff-Appellee,
v.
54.20 ACRES OF LAND, situated lying and being LAND LOTS 315
AND 326 OF the 3RD LAND DISTRICT, etc., et al., Defendants,
Jim Dodson and Patricia W. Womack, Defendants-Appellants.
J. C. HILSMAN et al., Plaintiffs-Appellants,
v.
GEORGIA POWER COMPANY, Defendant-Appellee.
Nos. 75-4448 and 77-1327.
United States Court of Appeals,
Fifth Circuit.
Nov. 28, 1977.
Denmark Groover, Jr., Macon, Ga., for defendants-appellants in 75-4448.
George D. Lawrence, Eatonton, Ga., Warren C. Fortson, Atlanta, Ga., amicus curiae, for defendants-appellants in 75-4448.
Wallace Miller, Jr., W. Warren Plowden, Jr., Macon, Ga., amicus curiae, for plaintiff-appellee in 75-4448.
Allan Abbot Tuttle, Sol., Federal Power Commission, Allan M. Garten, Washington, D. C., amicus curiae, for plaintiff-appellee in 75-4448.
George D. Lawrence, Jr., Eatonton, Ga., for Hilsman, et al.
Charles H. Ivy, Atlanta, Ga., for Elliott, et al.
James H. Rollins, W. Dan Greer, Atlanta, Ga., for Boswell, et al.
Ronald Montalto, Atlanta, Ga., Howard T. Oliver, Jr., Gainesville, Ga., for Askew.
Appeals from the United States District Court for the Middle District of Georgia.
Before WISDOM, SIMPSON, and TJOFLAT, Circuit Judges.
WISDOM, Circuit Judge:
These condemnation cases present the issue whether compensation should be determined under federal law or under the law of the state where the condemned property is located when a licensee of the Federal Power Commission exercises the power of eminent domain in federal court as authorized by Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970). We reserved this question in Louisiana v. Lindsey, 5 Cir. 1975,
I.
The plaintiff-appellee, Georgia Power Company, is a privately owned Georgia utility. It intends to operate a hydroelectric power generating facility with a dam across the Oconee River in Hancock and Putnam Counties, Georgia, at a point known as Laurens Shoals. The dam will produce a lake to be known as Lake Wallace. The appellants are Georgia landowners with property which will be inundated by Lake Wallace.1
Under the Federal Power Act, 16 U.S.C. §§ 791a, et seq. (1970), the Federal Power Commission may issue licenses to certain persons or entities to construct, operate, or maintain various hydroelectric generating facilities. 16 U.S.C. § 797(e). The F.P.C. issued a license to Georgia Power on August 6, 1969, for the Lake Wallace Project.2 As a licensee, Georgia Power may exercise the right of eminent domain under Section 21 of the Federal Power Act, 16 U.S.C. § 814 (1970), which provides:
When any licensee cannot acquire by contract or pledges an unimproved dam site or the right to use or damage the lands or property of others necessary to the construction, maintenance, or operation of any dam, reservoir, diversion structure, or the works appurtenant or accessory thereto . . . it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such land or other property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.
Exercising this right, Georgia Power brought actions in the District Court for the Middle District of Georgia. Senior Judge W. A. Bootle appointed a three-member Commission, see Fed.R.Civ.Proc. 71A, to determine the amount of compensation due the condemnees. In his instructions to the Commissioners, Judge Bootle set out the federal law of compensation. These rules differ from Georgia law. Instruction No. 20 directs the Commissioners to ignore an increase in value which the Georgia Power project has created in the condemned property; a Georgia court might recognize such value. See Hard v. Housing Authority, Ga.1963,
After these instructions were first made in 1975 several condemnees in cases other than No. 75-4448 filed motions and objections opposing the use of federal law. The district court held a pre-trial hearing on the objections. Judge Bootle made several changes in the phrasing of his instructions, but he regarded federal law as controlling.3 The Commission then heard evidence in No. 75-4448. Its report concluded that the benefits accruing to the land remaining with the landowners exceeded the value of the property taken. As a result, the Commission awarded no monetary compensation. The landowners opposed Georgia Power's motion to confirm the report on the ground that the offset of benefits was improper. The court overruled these objections and the condemnees appealed.4
No. 77-1327 began after Judge Bootle's decision in No. 75-4448 to apply federal law. The condemnees in No. 77-1327 nevertheless moved that the court incorporate Georgia law into its instructions.5 The judge conducted a pre-trial conference and heard argument on the question. He then denied the motion and adhered to his previous order that federal law applies. Judge Bootle certified the question for immediate review under 28 U.S.C. § 1292(b) (1970). This Court allowed the appeal, and consolidated it with No. 75-4448.
II.
Before a federal court may reach the question of applying state or federal common law to an issue before it, the court must determine that the source of the right or authority in question is federal. If the source is not federal, Erie Railroad Co. v. Tompkins, 1938,
We find that the source of the power to condemn property contained in Section 21 is federal. Eminent domain inheres in sovereignty. See Kohl v. United States, 1876,
Appellants argue that Section 21 does not delegate federal authority, but merely provides a federal forum for exercise of a state created eminent domain power. Such an interpretation does not accord with decisions upholding the right of a licensee to condemn property that it could not obtain under the applicable state statute. E. g., City of Tacoma v. Taxpayers of Tacoma, 1958,
We are not persuaded by the argument that the $3,000 in controversy requirement shows that Section 21 is a jurisdictional provision. It is true that this requirement parallels the amount in controversy requirement for diversity cases at the time the Federal Power Act was enacted. Congress, however, added the $3,000 requirement late in the consideration of the Federal Power Act. Compare H.R.Rep.No.715, 65th Cong., 2d Sess. 27, H.R.Rep.No.1147, 65th Cong., 3d Sess. 13, and H.R.Rep.No.61, 66th Cong., 1st Sess. 10 (original versions without the $3,000 amount in controversy requirement) with S.Rep.No.180, 66th Cong., 1st Sess. 9 and 16 U.S.C. § 814 (1970) (versions containing $3,000 amount in controversy requirement as added on the House floor). As a result, the requirement cannot be read as an indication of the original purpose of Section 21. Members of Congress do not seem to have believed the amount in controversy amendment significantly changed Section 21; the Senate and Conference Committee Reports, written after the House adoption of the amendment, do not mention it. Furthermore, the House debates establish that the amount in controversy minimum was designed to prevent inconvenience to a landowner who might otherwise need to travel several hundred miles to press a small compensation claim. 58 Cong.Rec. 2240 (1919) (remarks of Mr. Stevenson).
We have not found any congressional directive to apply state law in either the language of Section 21 or its legislative history. Therefore, the second prerequisite to our consideration of the choice of law issue is met. The language in the statute referring to state "practice and procedure" does not govern the choice between substantive rules of compensation. The Supreme Court has held that such language "(does) not, and could not, affect questions of substantive right such as the measure of compensation grounded upon the Constitution of the United States". United States v. Miller, 1943,
There is little discussion of Section 21 in the Committee Reports or the congressional debates, and none of it illuminates the choice of law issue. Appellants argue, however, that other sections of the statute, such as Sections 19 and 20, evidence a congressional respect for state law which includes state rules of compensation in an eminent domain proceeding. We are not ready to make this inference from unrelated provisions in the Federal Power Act without more support in the legislative materials. The legislative history reveals that Congress took care to preserve state rights in the regulation of power and property to forestall a constitutional attack on the Federal Power Act. See, e. g., First Iowa Hydro-Electric Cooperative v. Federal Power Commission,
The Committee Reports reveal that some members had concerns over the constitutionality of Section 21, although it is not clear whether they thought it an improper invasion of state prerogatives or an improper delegation of federal authority to private parties. H.R.Rep.No.61, 66th Cong., 1st Sess. 10. At any rate, a majority expressed belief that the provision was constitutional and appropriate, without any indication that such a conclusion would be possible only if federal courts applied state law in Section 21 cases. Id.17
The appellants also argue that Congress endorsed the use of state compensation law when it enacted a provision substantially identical to Section 21 in the Natural Gas Act, 15 U.S.C. § 717f(h) (1970), without commenting adversely on certain cases appellants read to mandate adoption of state law for all substantive issues arising in a Section 21 lawsuit. In a similar vein, the appellants urge us to follow these decisions as a matter of stare decisis. In particular, they draw our attention to a line of Eighth Circuit cases beginning with Feltz v. Central Nebraska Public Power and Irrigation District, 8 Cir. 1942,
We do not read these cases as determinative of the issue before us. In Feltz, a FPC licensee condemned land for relocation of a highway. The landowner claimed consequential losses because the property was divided and because of increased distance to the railhead. The jury gave a smaller award than the appraisers, and the court added interest from the date of the taking. Both sides appealed. Among other questions, the court of appeals ruled on the exclusion of evidence of consequential damages,
Oakland Club is not on point. In that case the federal licensee enjoyed state as well as federal power of eminent domain. It filed a condemnation in federal court which the property owner contested on the grounds that the South Carolina procedure was constitutionally defective and that Section 21 authorized the licensee to take only an easement rather than a fee.
The district court upheld the state procedure and interpreted Section 21 to authorize the taking of a fee interest. It went on to make several observations that the appellants have emphasized in this case. First, the court stated that Section 21 is not a "comprehensive, self-contained and exclusive law of eminent domain". Second, the court construed Section 21 "not as an exclusive law of eminent domain, . . . but as complementary to the State law, and as enabling the holder of a Federal Power license to exercise in the Federal courts . . . the substantive rights of eminent domain granted to it under the State law."
Insofar as the Oakland Club litigation stands for the point that Section 21 does not preempt any applicable state powers of eminent domain, it is irrelevant to the issue before us.19 Insofar as the case supports the argument that Section 21 is solely a jurisdictional provision, we reject it for the reasons already expressed. And insofar as it interprets Section 21 to grant a state rather than a federal power of eminent domain, we find it in conflict with holdings by the Supreme Court. See Federal Power Commission v. Tuscarora Indian Nation, 1960,
III.
We now proceed to the principal issue. Because the source of the power delegated by the Federal Power Act is federal, the governing law must be federal. See, e. g., Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 407 (1964); Mishkin, The Variousness of "Federal Law": Competence and Discretion in the Choice of National and State Rules for Decision, 105 U.Pa.L.Rev. 797, 798-801 (1957); Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 826-27 (1976). Of course, federal law may be fashioned by adopting parallel state rules. E. g., Clearfield Trust Co. v. United States, 1943,
Courts apply independent rules, however, when considering the specific issue of compensation in federal condemnations. E. g., United States v. Miller, 1943,
The appellants suggest that several such circumstances exist. First, they contend that we should distinguish between cases where the United States is a party and where it is not, applying federal rules of compensation only in the former situation. Since a licensee exercises the federal power of eminent domain, it is not immediately apparent why such a distinction should be made. That the property will be used privately is not reason enough. In Miller, for instance, the United States took land for use by a private railroad. Appellants, however, cite Public Utility District No. 1 v. City of Seattle, 9 Cir. 1967,
In City of Seattle the Court considered whether a licensee must compensate the owner of shorelands and, for power site values, the owner of adjoining uplands, for property needed for a licensed hydroelectric project. The United States would not have paid any compensation if it had condemned the same property. Instead, it could have relied upon the dominant navigational servitude for its power to utilize without compensation the stream bed and shorelands of navigable waters up to the ordinary high water level. See
Whether a licensee enjoys the dominant navigational servitude is irrelevant to the issue before us. The Ninth Circuit did not question that Section 21 delegates some of the federal government's powers. And the opinion does not support the contention that a licensee enjoys anything less than the full federal power to condemn private property. Significantly, when the Ninth Circuit turned to the amount of compensation due the shoreland and upland property owners it relied exclusively on federal cases. See
Tacoma holds that Section 21 does not give a licensee power to condemn state-owned land. The theory of the case appears to be that Congress could not delegate such power to a state-created entity, rather than that it did not intend to do so.
Although the Supreme Court has never ruled directly on the scope of the delegation of federal power in Section 21, Federal Power Commission v. Tuscarora Indian Nation, 1960,
But § 177 is not applicable to the sovereign United States nor hence to its licensees to whom Congress has delegated federal eminent domain powers under § 21 of the Federal Power Act.
Similarly, in Grand River Dam Authority v. Grand-Hydro, 1948,
If either the United States, or its licensee as such, were seeking to acquire this land under the Federal Power Act, it might face different considerations from those stated above.
In summary, we find no reason to ignore the general rule of following federal law to set compensation in a federal condemnation because the United States is not taking the land directly.
Second, the appellants have argued that the federal interest in the value of property taken in a Section 21 proceeding is so small that the analysis established by Clearfield Trust Co. v. United States, 1943,
A review of Clearfield, Miree, and other federal common law decisions fails to convince us, however, that state law should be followed. That review reveals a changing emphasis of factors and shifting preferences for one law or the other. In Clearfield Trust the Court chose uniform federal common law to govern an action against the United States on a federal check. The federal interest in uniformity for easier administration was sufficient to justify use of uniform federal common law. See
United States v. Standard Oil Company, 1947,
Other cases diverge from this presumption favoring federal law. For instance, Bank of America v. Parnell, 1956,
Together these cases produce a balancing test. See generally Comment, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 799 (1976). On one side is the federal interest in carrying out a program in the most efficient and effective manner possible. On the other is a state's interest in the preservation of its control over local interests, particularly traditional interests such as family law and real property transactions, and in preventing displacement of state law. Of course, the ultimate goal of the creation of federal law by the courts is to carry out the federal program in question. See United States v. Little Lake Misere Land Co.,
Each side of this controversy has provided us with weights for its side of the scale. Georgia Power points to the degree of federal involvement in a licensed project. A license is a prerequisite to construction of a project. 16 U.S.C. § 817 (1970). The design, construction, recreation facilities, and ecological impact of a project are subject to approval by the FPC. 16 U.S.C. § 803, (1970), 18 C.F.R. § 4.41 et seq. (1977). The Commission has certain powers to regulate the rates and charges of electricity generated by the project. 16 U.S.C. §§ 812-13 (1970). Georgia Power also points out that the federal government has a financial interest in minimizing acquisition costs for a licensed project since it holds an option to acquire the project when the license expires upon payment of net investment, less certain items. 16 U.S.C. § 807 (1970). In addition, Georgia Power notes that the government may acquire a project in time of national emergency, 16 U.S.C. § 809 (1970).
The landowners emphasize that this lawsuit involves private parties and that Georgia Power (or any other licensee) is likely to condemn property only in the state where it operates. They also point out that property rights are a traditional state concern and that Georgia has an elaborate law of eminent domain that reflects considered policy judgments a state would want the federal courts to respect. Finally they contend that no substantial rights and duties of the United States hinge on the outcome of this litigation.
The balance tips toward the need for federal law. That this controversy is between private parties is not determinative. Miree v. DeKalb County, --- U.S. ----, ----,
One possible reason for adopting state law as the federal rule of decision is the advantage of knowing what state law says compared with the uncertainty as to rules the federal courts would create. See McKenna v. Wallis, 5 Cir. 1965,
Most importantly, federal common law of compensation is the appropriate choice in this case because the use of state law could interfere with achievement of congressional aims. Even when Congress passed the Federal Power Act in 1920 its primary concern was to stimulate private development of America's hydroelectric power resources. See, e. g., First Iowa Hydro-Electric Cooperative v. Federal Power Commission, 1946,
The federal government's option under Section 14 of the Act, 16 U.S.C. § 807, to acquire a project at the expiration of a license creates another United States interest in minimizing the cost of licensed facilities by applying federal valuation rules. See First Iowa Hydro-Electric Cooperative v. Federal Power Commission,
For these reasons, we find that nothing in United States v. Clearfield Trust Co. and its progeny gives reason to diverge from the practice of employing federal compensation rules in a federal compensation proceeding. If anything, those cases push toward use of the federal law. As required by Wallis v. Pan American Petroleum Corp.,
The appellants have raised a third argument against federal law in Section 21 cases. They contend that if we apply federal common law, licensees such as Georgia Power will have the choice of a Section 21 suit in federal court with federal rules or a suit in state court governed by state law. This, they continue, is the type of forum shopping Erie Railroad Co. v. Tompkins condemns. See also Hanna v. Plumer, 1965,
Any broader implications of the Erie decision about the desirability of uniformity between state and federal courts do not apply here either. If a licensee were to bring a Section 21 condemnation action in a state court, that court would be required to follow the same law as a federal court even if that were federal common law. Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 405 (1964). See also P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart and Wechsler's The Federal Courts and the Federal System at 825 (1973). If the proceeding in the state court is under the federal power, the defendant may remove. 7 Moore's Federal Practice P 71A.10(2) at 71A-252 (2d ed. 1975).28 Thus, there would not be different substantive rules of decision depending upon the forum chosen. If a licensee brought a state condemnation action in state court, state law would govern. E. g., Grand River Dam Authority v. Grand Hydro,
IV.
The appellants argue to us that a decision to apply federal common law in this litigation would render Section 21, as applied, unconstitutional. The theory is that a law permitting Georgia Power to "grant" the benefits of Georgia law arbitrarily through its choice of forum denies equal protection to landowners sued under the federal rather than the state statute. This contention was mentioned (though not developed) in several of the original answers to Georgia Power's condemnation complaint, but otherwise appears to have received no attention below.30 Part of the argument rests on a disputed factual assertion that Georgia Power arbitrarily discriminates among condemnees by bringing some state suits in state court, where the court would apply the more generous compensation formula, against landowners situated similarly to appellants. The district court had no opportunity to rule on this factual dispute or the equal protection argument. Therefore, we need not consider them. See, e. g., Commercial Credit Business Loans, Inc. v. St. Louis Terminal Field Warehouse, 5 Cir. 1974,
V.
The appellants have made several other arguments in their briefs and at oral argument which we regard as unnecessary to discuss in this opinion. We have, however, considered these arguments. We find them to be without merit.
NO. 75-4448 AFFIRMED.
NO. 77-1327 AFFIRMED AND REMANDED FOR FURTHER PROCEEDINGS.
SIMPSON, Circuit Judge, dissenting:
Congress, in enacting a general scheme for the regulation of hydroelectric power, has authorized a state party licensed by the Federal Power Commission to bring a federal eminent domain action, but has failed to specify whether state or federal law should govern the measure of compensation. It is our function as a federal court to choose which law to apply, neither having been legislatively mandated. Our choice must follow the Supreme Court's pronouncements regarding federal common law. Believing that the majority in this case has wrongly chosen to apply federal law, I dissent in order to register the reasons for my disagreement.
I. WHEN AND HOW TO MAKE A CHOICE OF LAW
In exercising its commerce power to enact a comprehensive regulatory plan, Congress recognized a distinct federal interest in the use of navigable waters for producing hydroelectric power. 16 U.S.C. §§ 791a et seq. (1970) (The Federal Power Act). As is the case with any federal legislation, Congress acted "against the background of the total corpus juris of the states". Wallis v. Pan American Petroleum Corp.,
The issue that must be determined in each instance is what heed Congress intended to have paid to state law in an area where no heed need constitutionally be paid more realistically, in Gray's famous phrase, "to guess what it would have intended on a point not present to its mind, if the point had been present".2
Regardless of whether state or federal law is chosen, "the question is one of federal policy . . . . And the answer to be given necessarily is dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law". United States v. Standard Oil Co.,
Before a court plugs a statutory gap with federal law that is inconsistent with local law . . . consideration for the position of the states in the federal system suggests that the Court find congressional intent that federal common law should prevail over state law. . . . When congressional intent is unclear or when a specific congressional intent never existed, a reasonable criterion is that judge-made common law should not prevail over local law unless that result is manifestly in the national interest.
Judge Wisdom's view prevailed in the Supreme Court. In reversing the Fifth Circuit in Wallis, the Court stated: "In deciding whether rules of federal common law should be fashioned, normally the guiding principle is that a significant conflict between some federal policy or interest and the use of state law in the premises must first be specifically shown." Wallis, supra, at 68,
A review of the Supreme Court's decisions in this area reveals a far more certain direction than what the majority calls "a changing emphasis of factors and shifting preferences for one law or the other". Majority opinion, supra at 1188. Because the decision is one of federal policy, it will always be possible to identify some federal interest, and thus some conflict with state law necessitating a choice.4 The key, as stated in Wallis, is that this conflict be "significant". Thus, in the seminal case of Clearfield Trust Co. v. United States,
(t)he issuance of commercial paper by the United States is on a vast scale . . . . The application of state law . . . would subject the rights and duties of the United States to exceptional uncertainty. It would lead to great diversity in results by making identical transactions subject to the vagaries of the laws of the several states. The desirability of a uniform rule is plain. Id. at 367,
In Standard Oil Co. v. United States, supra, the strength of the federal interest argued forcefully in favor of applying federal law: "perhaps no relationship between the Government and a citizen is more distinctively federal in character than that between it and members of its armed forces".
(t)o permit state abrogation of the explicit terms of a federal land acquisition would deal a serious blow to the congressional scheme contemplated by the Migratory Bird Conservation Act and indeed to all other federal land acquisition programs. These programs are national in scope. . . . Certainty and finality are indispensable in any land transaction, but they are especially critical when, as here, the federal officials carrying out the mandate of Congress irrevocably commit scarce funds. Id. at 597,
In contrast, where the federal interest is attenuated or speculative, the cases favor application of state law absent a showing that such law is clearly inadequate to serve the federal interest. Thus, in Bank of America National Trust and Savings Association v. Parnell,
II. CHOICE OF LAW AND COMPENSATION IN FEDERAL CONDEMNATIONS
My first point of departure from the majority is in their apparent conclusion that the rules governing choice of law are different in the context of compensation in federal eminent domain actions. The majority states that "(c) ourts apply independent rules, however, when considering the specific issue of compensation in federal condemnations", and considers itself bound to follow these "independent rules" "unless there are circumstances unique to a federal condemnation under Section 21 which require the opposite result". Majority opinion, supra, at 1186. After rejecting possible distinctions based on Section 21, the majority concludes: "In summary, we find no reason to ignore the general rule of following federal law to set compensation in a federal condemnation because the United States is not taking the land directly". Id. at 1188.
With due respect, I think the majority misreads the cases dealing with choice of law in federal condemnation. The cases cited by the majority opinion, beginning with United States v. Miller,
Clearfield decided not one issue but two. The first . . . is that the right of the United States to recover for conversion of a Government check is a federal right, so that the courts of the United States may formulate a rule of decision. The second . . . is whether, having this opportunity, the federal courts should adopt a uniform nation-wide rule or should follow state law.7
In federal condemnation actions compensation is clearly a federal question. But whether it is resolved by substantive state or federal law presents a choice of law problem no different from any other: the choice "is dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law". Standard Oil, supra,
Because I view this case as presenting a traditional choice of law question, I think it is highly relevant that the federal eminent domain power here is exercised pursuant to Section 21 and that the United States is not a party to the action. These distinctions significantly color the "specific governmental interests" involved and dictate a choice of law other than that made by the majority.
I agree that the Federal Power Act delegates the full federal power of eminent domain to a licensee under Section 21, but I think the majority is off base in concluding that this full delegation renders irrelevant any distinction between the United States and licensees as parties to a condemnation. Our focus should be directed toward the interests of the parties, not toward the degree of delegation. The Act clearly expresses a legislative finding that the United States has a distinct interest, one greater than that of a licensee. Under Section 7(b) of the Act, 16 U.S.C. § 800(b), the Federal Power Commission may not issue a license where it has found that "the development of any water resources for public purposes should be undertaken by the United States itself". See Udall v. F. P. C.,
We first observe that the position of a licensee is distinguishable from that of the United States with respect to furthering the national interest. By issuance of a license the United States is not acting in the national interest through the licensee to the same extent as it would if it undertook the project itself. The United States acts in the public interest on a national scale; the licensee often on a local scale, on projects thought to be of insufficient dimensions to warrant the assertion of national power. In many cases the requirements of federal permission and regulation are all that the national interest requires. Frequently the licensee is a privately owned utility or even manufacturer, seeking the license for purposes of profit.
For these reasons, I conclude that a Section 21 condemnation does not involve the same degree of federal interest as a condemnation by the United States itself.10
The majority concedes that "(e)ven if a sharp distinction between a licensee and the United States cannot be drawn, it may be that the federal interest in the price paid for licensed hydroelectric plants is less than in other government projects. If so, use of state law would be appropriate . . ..", majority opinion at 1188. After weighing the relative state and federal interests, the majority concludes that "(t)he balance tips toward the need for federal law", majority opinion, supra at 1189. Herein lies my second point of departure.
Georgia's interest in having its compensation law applied is manifest. This case involves only Georgia parties and Georgia land. The state's law of compensation is more favorable to the landowner than is the federal law. As a federal court we are not concerned with the wisdom of that policy; all that is relevant to our consideration is that Georgia has decided how best to serve the interests of its citizens. Absent the fact that the state utility here is exercising a federal power pursuant to a federal statute, this would be a classic case of traditionally and exclusively local concern.
But the majority, in construing the Federal Power Act, finds a "significant conflict" with state law as required by Wallis : "federal common law of compensation is the appropriate choice in this case because the use of state law could interfere with achievement of congressional aims", majority opinion, supra at 1190. The majority cites two aims of the statute. Neither, I submit, is threatened by the application of state law.
The majority notes in the first place that the "primary concern" of Congress in passing the Act "was to stimulate private development of America's hydroelectric power resources", majority opinion, supra at 1190. This goal is frustrated in jurisdictions where, as here, the state law of compensation produces a substantially higher award for the landowner. This assumption I view as much too conjectural to afford a basis for application of federal law. The majority admits that the increased cost of the project involved in this case might not substantially interfere with federal goals; it is only when "all the acquisitions for a major project are grouped together, and even more so when many licensed projects are considered as an aggregate", majority opinion, supra at 1190, that the "accompanying chill" on development becomes significant. We have been presented with no data as to such aggregate costs or, for that matter, whether the laws of other states present a similar conflict with federal law. It was precisely this type of rationale to remove "obstacles to exploration for development" which led this Court astray in McKenna v. Wallis,
Secondly, the majority finds a direct federal interest "in minimizing the cost of licensed facilities by applying federal valuation rules", majority opinion, supra at 1190, because under Section 14 of the Act, the federal government has the option to acquire a project at the expiration of a license. 16 U.S.C. § 807. I cannot accept the majority's conclusion that "(u)se of federal compensation standards would reduce the option price and further this congressional desire to make government acquisition a realistic possibility", majority opinion, supra at 1191. Again, we lack the data to conclude that the additional cost imposed under Georgia law would make federal acquisition less than "a realistic possibility". Furthermore, the statute does not clearly mandate inclusion of that extra cost in the federal option price.11 Of course, we have no way of knowing at this point if the United States ever will exercise its option at all. At best, then, the effect on the fiscal interests of the United States is highly speculative.12 When this court evinced similar solicitude for the federal fisc in Miree v. DeKalb County, Ga., supra, the Supreme Court reversed because "the resolution of petitioners (sic) breach of contract claim against respondent will have no direct effect upon the United States or its Treasury". --- U.S. at ----,
Finally, there is a single, telling argument which effectively refutes the majority's reading of congressional intent. In finding that "Congress did not believe it necessary to follow state eminent domain rules or desire courts to do so," majority opinion, supra at 1183, the majority overlooks the fact that Congress left up to the licensee whether to acquire land through a Section 21 action or a state condemnation. The majority admits: "If a licensee brought a state condemnation action in state court, state law would govern.", majority opinion, supra at 1192. It is well established that "under this Act . . . the condemnor has an election to exercise the power of eminent domain either under the specified enumerations of the Federal Power Act or under" the law of the state. Oakland Club v. South Carolina Public Service A.,
Rather, "(i)n the Federal Power Act there is a separation of those subjects which remain under the jurisdiction of the states from those subjects which the Constitution delegates to the United States and over which Congress vests the Federal Power Commission with authority to act". First Iowa Hydro-Elec. Coop. v. FPC,
IV. CONCLUSION
In sum, I do not dispute that there is a great national interest in promoting the development of domestic sources of energy. But it is for Congress, in the first instance, to say how this interest is to be achieved. Where the federal regulatory scheme comes in conflict with state law and thus with a state interest, we need some affirmative indication that Congress intended the federal common law to govern before we go about displacing state law. Such an indication might be inferred from the mere presence of a conflict significant in that it substantially impedes achievement of federal aims. Otherwise, we are to presume that Congress felt the national interest adequately served by application of state law.
I do not think it can fairly be said that Congress intended the result reached by the majority. Failing that, we are left to analyze the respective federal and state interests in determining which law to apply. Against clear, substantial and immediate state interests we are met with only speculative, attenuated national concerns and offered no persuasive arguments as to why the Georgia law of compensation is unreasonable or inadequate to achieve the broad goals of the Federal Power Act. I conclude that "the application of federal common law to resolve the issue presented in this case would promote no federal interests even approaching the magnitude of those found in Clearfield ". Miree, supra, --- U.S. at ----,
To put it simply: We had to make a choice of law, but I am convinced that the majority has made the wrong choice.
I respectfully dissent.
Notes
The numerous appellants in this consolidated appeal fell into three groups for briefing purposes. In addition, Mrs. Nellie W. Larman, another landowner involved in a Lake Wallace condemnation proceeding, filed an amicus brief. Because each appellant's argument, if successful, would benefit the appellants as a group, we generally have not identified the particular party advancing an argument discussed in this opinion
42 F.P.C. 356 (1969). At that time, the project was known as the Laurens Shoals Project and the license is issued in that name
After the hearing, Judge Bootle provided a Memorandum to Counsel citing cases supporting his conclusion that federal law of compensation applies. Those cases are Clearfield Trust Co. v. United States, 1943,
During the condemnation proceedings of 75-4448 the appellant Jim Dodson conveyed his interest in the condemned property to Patricia Womack. On March 21, 1975 Judge Bootle granted Georgia Power's motion to add Patricia Womack as a defendant
The composition of the Commission and the Instructions given to the Commissioners are the same in both cases before us
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as the rules of decision in civil actions in the courts of the United States, in cases where they apply
28 U.S.C. § 1652 (1970).
The Miller opinion specifically interpreted the following statutes:
In every case in which the Secretary of the Treasury or any other officer of the Government has been, or hereafter shall be, authorized to procure real estate for the erection of a public building or for other public uses, he may acquire the same for the United States by condemnation, under judicial process, whenever in his opinion it is necessary or advantageous to the Government to do so, and the Attorney General of the United States, upon every application of the Secretary of the Treasury, under this section and section 258 of this title, or such other officer, shall cause proceedings to be commenced for condemnation within thirty days from receipt of the application at the Department of Justice.
40 U.S.C.A. § 257.
The practice, pleadings, forms and modes of proceeding in causes arising under the provisions of this act shall conform, as near as may be, to the practice, pleadings, forms and proceedings existing at the time in like causes in the courts of record of the State within which such (district court is) held, any rule of the court to the contrary notwithstanding.
Act of Aug. 1, 1888, c. 728 § 2, 25 Stat. 357. This section was codified, as amended, at 40 U.S.C. § 258 until it was superceded by Rule 71A of the Federal Rules of Civil Procedure.
The Secretary of the Army may cause proceedings to be instituted, in the name of the United States in any court having jurisdiction of such proceedings, for the acquirement by condemnation of any land, right of way or material needed to enable him to maintain, operate or prosecute works for the improvement of rivers and harbors for which provision has been made by law; such proceedings to be prosecuted in accordance with the laws relating to suits for the condemnation of property of the States wherein the proceedings may be instituted: Provided, however, That when the owner of such land, right of way, or material shall fix a price for the same, which in the opinion of the Secretary of the Army, shall be reasonable, he may purchase the same at such price without further delay: And provided further, That the Secretary of the Army is authorized to accept donations of land or materials required for the maintenance or prosecution of such works.
33 U.S.C.A. § 591.
16 U.S.C. § 797(a) and (c) (1970)
16 U.S.C. § 797(f) (1970)
16 U.S.C. § 800(a) (1970)
16 U.S.C. § 803(e) (1970)
16 U.S.C. § 807 (1970)
16 U.S.C. § 812 (1970)
16 U.S.C. § 813 (1970)
16 U.S.C. § 821 (1970)
The dissent makes much of the fact that Congress did not assure "application of a uniform, federal standard in any exercise of eminent domain power, state or federal, to acquire land on which to build these federally regulated facilities". (Emphasis changed.) This omission becomes much less telling when one realizes that it is not certain that Congress had the power to compel such uniformity
Congress could not have simply passed a statute instructing the states to apply federal rules of compensation whenever a licensee chose to exercise a state-granted power of eminent domain to take property for a licensed project. As Justice Brandeis stated in Erie : "Congress has no power to declare substantive rules of common law applicable in a state whether they be local in their nature or 'general,' be they commercial law or a part of the law of torts".
Nor could Congress have passed a law forbidding a state from delegating state eminent domain power to a federal licensee. A state has exclusive control over its power of eminent domain. Kohl v. United States,
We note that Congress passed the Federal Power Act in 1920, during the era of Swift v. Tyson, 1842,
The other Eighth Circuit cases are Central Nebraska Public Power & Irrigation Dist. v. Harrison, 8 Cir. 1942,
This Circuit has held that § 7(h) of the Natural Gas Act, 15 U.S.C.A. § 717f(h), which is almost identical to § 21 of the Federal Power Act, does not preempt state laws of eminent domain. Robinson v. Transcontinental Gas Pipe Line Corp., 5 Cir. 1970,
The other cases cited in various landowner briefs as expressing a direct or indirect conclusion that state law of compensation applies in a Section 21 condemnation are also off the mark. King v. Grand River Dam Auth., 10 Cir. 1964,
Despite the dissent's implication to the contrary, we are well aware of Judge Friendly's distinction between the question whether an issue is a federal one so that federal courts may formulate a rule of decision and the question whether the rule formulated should follow state or uniform national law. Judge Simpson reads these cases to establish only the first step, that compensation in a federal condemnation is a federal question. But the cases take the second step. They chose to apply uniform nation-wide rules
For instance, as the excerpt quoted by the dissent shows, dissenting opinion, at p. 1196 n. 6, the Supreme Court in Miller saw no need to determine local law of compensation. The reason was that the Court applied federal rules of decision.
Nowhere do we suggest that the proper analysis for a choice of law question changes because the issue is one of just compensation in a federal condemnation. Nor do we consider ourselves blindly bound by past cases in the sense of reading them to mandate federal rules of compensation in every federal condemnation. We do find, however, that these cases are helpful starting points. Other courts in federal compensation cases have balanced the state and federal interests and have concluded that federal, rather than state, law should supply the rules of compensation. Unless we find the weights on our scale to be substantively different, we see no reason to diverge from the conclusion of the Supreme Court and some of our Courts of Appeals.
Although the Supreme Court reversed Tacoma on the technical ground that the state litigation constituted an improper collateral attack on a FPC determination, the Court's opinion casts doubt on the validity of the state court's substantive holding as well. See City of Tacoma v. Taxpayers of Tacoma,
No purchase, grant, lease, or other conveyance of lands, or of any title or claim thereto, from any Indian nation or tribe of Indians, shall be of any validity in law or equity, unless the same be made by treaty or convention entered into pursuant to the Constitution
16 U.S.C. § 715 et seq. (1970)
At oral argument, appellants contended for the first time that there is no federal common law of compensation. They would limit United States v. Miller, 1943,
This contention should have been raised long ago so the trial court could have considered it. Without ruling on the propriety of the instructions actually given below an issue not properly before us, see, e. g., Commercial Credit Business Loans, Inc. v. St. Louis Terminal Field Warehouse, 5 Cir. 1974,
In First Iowa the Supreme Court wrote:
The closeness of the relationship of the Federal Government to these (licensed) projects and its obvious concern in maintaining control over their engineering, economic and financial soundness is emphasized by such provisions as those of § 14 authorizing the Federal Government, at the expiration of a license, to take over the license project . . .
Judge Simpson disputes this conclusion. He says our concern that Georgia law may interfere with the development of hydroelectric power has led us down the wrong path travelled by the panel majority in McKenna v. Wallis. Dissenting opinion, at p. 1198. We disagree. The legislative history to the Federal Power Act shows that Congress strongly sought full and rapid development of hydroelectric power. That federal interest is solid and important. The panel in Wallis relied on a federal policy against monopolization of federally owned mineral deposits as well as a policy of development. The Supreme Court reversed the panel not because those policies were abstract or unimportant, but because Louisiana law did not interfere with them
Wallis turned on whether the interstices of a federal statute making federal oil and gas leases assignable should be filled with Louisiana law which did not recognize title by parol and resulting or constructive trusts. The panel majority's conclusion that Louisiana law would frustrate important policies rested on the unusual and speculative premise that:
Trusts ex maleficio are part of the congressional scheme for carrying out the national policies on mineral resources and monopoly. In litigation between private persons over the nature of the ownership of a federal mineral lease, national policies on mineral resources and monopoly will suffer unless courts recognize beneficial title to the lease in a claimant whom the Secretary has not investigated and has not approved as lessee, and who may be unknown to the Secretary.
McKenna v. Wallis, 5 Cir. 1965,
The civil law of Louisiana was clear and both easy and inexpensive to apply. In some ways, it promoted federal interests better than the common law.
The difference in this case arises from the simple fact that people are more hesitant to pay more money for property than they are to meet inexpensive filing requirements. That Georgia provides some formula of compensation does not mean state law offers a feasible route to the federal objective if the resulting cost is substantially higher. We disagree with the dissent's assertion that any interference from the Georgia statute is conjectural. Dissent, at p. 1190. In No. 75-4448 the difference amounts to $540 an acre a substantial difference totaling almost $30,000 for that small tract alone. If Georgia law added a similar premium on every acre needed for the project the additional cost would be $11,456,100. Even if the average premium is only one-tenth of the one in No. 75-4448, the extra cost will be over $1,000,000. It is more than conjecture to conclude that such additional costs could interfere with the policy of full hydroelectric development.
A state based condemnation brought in state court by a federal licensee is not removable. 7 Moore's Federal Practice P 71A.10(2) at 71A-253 (2d ed. 1975); Algonquin Gas Transmission Co. v. Gregory, D.Conn.1952,
Since § 21 does not appear to grant jurisdiction over state based condemnations, but see Oakland Club v. South Carolina Public Service Ass'n, 4 Cir. 1940,
The district court did not mention the issue in its order denying the motion to apply federal law
Note, The Competence of Federal Courts to Formulate Rules of Decision, 77 Harv.L.Rev. 1084, 1090 (1964), cited in McKenna v. Wallis,
Friendly, In Praise of Erie And of the New Federal Common Law, 39 N.Y.U.L.Rev. 383, 410 (1964)
Judge Wisdom favored such a presumption in his Wallis dissent when he wrote: "The political logic of federalism supports placing the burden of persuasion on those urging national action".
Of course, if application of either federal or state law would yield the identical result, there is no need to make a choice. See, e. g., United States v. 3,595.98 Acres of Land,
" 'Just compensation' is a federal question, as to which the state decisions are not authoritative". United States v. City of New York,
In Miller, respondents argued that state law should be applied because Congress had so required. The Court replied:
We need not determine what is the local law, for the federal statutes upon which reliance is placed require only that, in condemnation proceedings, a federal court shall adopt the forms and methods of procedure afforded by the law of the State in which the court sits. They do not, and could not, affect questions of substantive right, such as the measure of compensation, grounded upon the Constitution of the United States.
This language is subject to many interpretations. To the extent that it may read to indicate that Congress "could not" apply state law to "the measure of compensation", it is dicta and of doubtful validity. Some courts have read Miller this broadly. See, e. g., United States v. 63.04 Acres of Land,
The majority argues that it has not misread the cases it cites because "the cases take the second step. They chose to apply uniform nation-wide rules". Majority opinion, supra, at 1186 n. 21. The issue, however, is why federal law was chosen in each of those cases what specific federal interests dictated that choice. Without analyzing those interests in depth here, see, e. g. notes 8 and 10, infra, I do note that in each of the cited cases the United States was the party condemning and paying for the land. In the instant case, a state utility will pay for the land. Surely this is relevant to determining the nature of the interests at stake. See note 11 infra.
Friendly, supra note 2, at 410. Judge Friendly applied this two-step analysis in United States v. Certain Property,
Next, says the Government, the question what the United States takes when it files a declaration of taking of real property is a question as to which federal courts may make an independent determination, free from any requirement . . . to follow state law. We fully agree. Where we break off from the Government is at its third proposition that the interest in nation-wide uniformity of federal condemnation makes it imperative for federal courts to use this freedom to ignore state property law in determining what the United States takes when it takes "real estate". Id. at 144 (citations omitted).
United States v. 93.970 Acres of Land,
Although the Ninth Circuit offered this analysis in support of its finding that Section 21 does not delegate full eminent domain power, I cite it here because of its relevance to determining state and federal interests in this case
The majority contends that simply because "the property will be used privately is not reason enough" to draw a distinction, noting that "(i)n Miller, for instance, the United States took land for use by a private railroad", majority opinion at 1186. Examination of the facts in Miller, however, reveals a significant federal interest in the taking there an interest which by traditional choice of law standards amply justified the application of federal law. The United States condemned the land in question to allow relocation of private railroad tracks which otherwise would have run directly through an area soon to be flooded by the Central Valley Reclamation Project in California. In 1935, Congress authorized the appropriation of $12,000,000 for this project, construction of which was approved by President Roosevelt in December of that year. In the next two years, Congress appropriated another $19,400,000 for the project.
In defining the option price, the statute provides that the United States "shall pay the net investment of the licensee in the project or projects taken, not to exceed the fair value of the property taken . . . " 16 U.S.C. § 807. Thus, while the concept of "net investment" is affected in the abstract by a higher price paid for a project when state compensation law is applied at the time of licensee acquisition, the statute limits the concept to "the fair value of the property taken . . . " if and when the federal option is exercised. The question here is whether "fair value" is also to be computed on the basis of state law or whether a uniform federal standard should be applied. Arguably, a stronger case for the application of federal law can be made here because there is a direct federal interest: the federal government is paying out of its own funds to acquire the project. Whether this is the construction of Section 14 that will ultimately prevail I do not forecast. These problems of interpretation are raised only to stress that whether the price paid by a state party in a Section 21 condemnation will affect the price later paid by the federal government in exercising its option under Section 14 is by no means certain.12 In Grand River Dam Authority v. Grand-Hydro,
"The point is that navigable waters are subject to national planning and control in the broad regulation of commerce granted the Federal Government. . . . (T)he plenary power of Congress over navigable waters would empower it to deny the privilege of constructing an obstruction in those waters. It may likewise grant the privilege on terms. It is no objection to the terms and to the exertion of the power that 'its exercise is attended by the same incidents which attend the exercise of the police power of the states.' The Congressional authority under the commerce clause is complete unless limited by the Fifth Amendment". United States v. Appalachian Electric Power Co.,
"As to the question whether the Federal Power Act should be interpreted as actually superseding the state law of condemnation and as restricting the measure of valuation which lawfully may be used by the courts of Oklahoma in a condemnation action for the acquisition of land for power site purposes by an agency of that State, there is nothing in the Federal Power Act to indicate that an attempt has been made by Congress to make such a nationwide change in state laws". Grand River Dam Authority v. Grand-Hydro,
"The resulting integration of the respective jurisdictions of the state and Federal Governments, is illustrated by the careful preservation of the separate interests of the states throughout the Act, without setting up a divided authority over any one subject". First Iowa Hydro-Elec. Coop., supra,