United States v. Twin City Power Company

PETITIONER:United States
RESPONDENT:Twin City Power Company
LOCATION:

DOCKET NO.: 21
DECIDED BY: Warren Court (1955-1956)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

ARGUED: Oct 18, 1955
DECIDED: Jan 23, 1956

Facts of the case

Question

Audio Transcription for Oral Argument – October 18, 1955 in United States v. Twin City Power Company

Earl Warren:

Number 21 on the docket, United States of America versus Twin City Power Company, et al.

Mr. Spritzer.

Ralph S. Spritzer:

Mr. Chief Justice and Your Honors.

This case involves an issue of just compensation arising out of eminent domain proceedings which were instituted by the United States in 1947 in the Western District of South Carolina.

The taking was made necessary by the building of a dam on the Savannah River, which forms the border between South Carolina and Georgia, at a location known as Clark’s — Clark Hill.

The Clark Hill Dam is a vital part of a comprehensive plan which is pictured on this map which has been reproduced by the engineers from the engineers’ studies.

The Clark Hill Dam is a central part of the Savannah River Basin project and it’s located at this point here, right at the tip of this brown area which represent the reservoir basin.

The project has as its declared purposes flood control, navigation improvement, and hydroelectric development.

The condemned lands, whose value is in question in this proceeding, are located some miles upstream from the Government’s dam at Clark Hill.

They have been flooded as a result of the backing up of the river by the dam or, otherwise stated, they are now part of the reservoir basin.

Now, for this taking of its fast lands adjacent to the river, respondent is, of course, entitled to compensation.

Respondent, however, has been awarded what we believe to be a special increment of value to which it is not entitled.

Whether we are right in that view is — is the issue here.The increment has been for the so-called water power value or dam site value of the lands condemned.

I might say that the award for water power value so-called was approximately eight times what the condemnee would have received under special findings which were made by the Commissioners if it had been concluded that such element was to be excluded from consideration.

I’d like to state very briefly, in summary form, without elaborating any of the propositions of this point and without discussing any of the cases which we think bear upon the propositions, the Government’s legal position.

The Clark Hill project, we say, was undertaken in the exercise of the paramount authority of the United States over navigable waters.

The respondent’s land, it is true, was suitable for the possible development of a power project, though the Government had, in fact, built its dam at a different location which is mutually exclusive.

We say, however, that respondent had no legal, no established, no vested right to throw a dam across a navigable stream of the United States.

Indeed, such action on its part, in the absence of expressed federal authorization, in the form of a likeness, would have been in direct violation of a statute which has penal sanctions.

Therefore, we say, respondent cannot assert as against the United States exercising its dominant reserved powers.

A claim of land value which is predicated upon a use of the waters which it is not entitled to make.

Here, the United States, far from delegating its prerogative, as it might have done, has chosen directly to exercise them by a public project.

Now, before attempting to go further with — with the argument, I am — would like to go back to treat some of the geography and history, the history of the proceedings and some of the physical facts.

We do so in some little detail because respondent, in its brief, has made a major attack upon the determination by Congress that this was a navigation project.

They argue that the Court should not so considerate.

And, consequently, I think, it’s necessary to go into some of the background which led to congressional authorization and out of which these proceedings arose.

Felix Frankfurter:

I don’t — I’m not sure I understand.What’s the effect?

Ralph S. Spritzer:

They claim that the Court should not regard this as being within the navigation power.

They say that this is not, in fact, a navigation improvement.

Felix Frankfurter:

And, from there, the — it was suggested that there was no power to condemn this?

Ralph S. Spritzer:

No.

Oddly enough, the concession is made that the Government could build the project.

On the other hand much stress is laid upon the contention that it’s not a navigation project.

In respondent’s view, that, apparently, might lead to a different measure of compensation.

At least, it would take respondent away from the many cases dealing with the navigation servitude and its character upon which the Government relied.

Felix Frankfurter:

Is it — as a matter of law, is this an endeavor to — to ask us to reconsider the affirmation of the case, being that it is here?

When it was —

Ralph S. Spritzer:

I think 311 — the 311 is correct.

It’s not — the contention is not so phrased.

It’s —

Felix Frankfurter:

You’ll get the remedy.

I suppose I will when I hear that.

Ralph S. Spritzer:

Well, I think that the claim — its — the claim is made that it is not, in fact, a navigation project, and then, the claim is further advanced that, therefore, the rules of compensation which have been applied in cases the Government relies on, such as Chandler-Dunbar, do not control here.

That, at least, I understand the respondent’s position that I don’t need further elaboration to respondent’s counsel.

Harold Burton:

Does that include a claim that the river is not navigable?

Ralph S. Spritzer:

No, it’s conceded that the river is a navigable stream.

Felix Frankfurter:

And Congress has provided for this project that some — some strength is derived from suggesting that it’s not navigable, is that it?

Ralph S. Spritzer:

Yes, by respondent.

Earl Warren:

The Act — the Act providing for the project, did Congress state whether it was for navigation or not?

Ralph S. Spritzer:

Congress stated at the outset of the Act that it was only approving projects which had substantial navigation and flood control benefits.

Then, it restated in the particular section with author — which authorized this project that all projects, here and after, listed and authorized are for flood control and other purposes.

And, the Act also defined flood control as including canal improvement, which is partly involved here.But, we —

Felix Frankfurter:

Did I understand your opening — your opening to say that they got eight times the value of what the fast lands would be as land abstractly considered because this was valuable for navigation purposes?

Ralph S. Spritzer:

Because it was suitable for water power development.

The Commissioners made special findings as to the agricultural and timber value of the lands which would have been their highest use, apart from use in connection with the waters.

The Commissioners also included in that valuation a certain allowance for assembling all of these parcels.

Respondent’s lands covered some thousands of acres.

Felix Frankfurter:

Does the Government generate water power at this project?

Ralph S. Spritzer:

Yes, water power is —

Felix Frankfurter:

And they say this land has special value for water power purpose?

Ralph S. Spritzer:

Yes.

Felix Frankfurter:

And they also say that Congress didn’t condemn — authorize a condemnation of navigation purposes whereby water power is generated, is that right?

Ralph S. Spritzer:

I think that is a —

Felix Frankfurter:

All right.

Ralph S. Spritzer:

— their analysis.

Harold Burton:

Well, it is true, isn’t it, that the Government is taking, here, something much more than is covered by its rights of servitude, is it not, for navigation?

It goes way beyond isn’t — it’s —

Ralph S. Spritzer:

We’re taking —

Harold Burton:

— upon a certainty —

Ralph S. Spritzer:

— fast lands which border the river and, consequently, there’s no issue that respondent is to be entitled to their — to the full value of those fast lands, as fast lands, the full value of those lands for any purpose, as we put it, to which the condemnee or buyers from the condemnee were entitled to put it.

Well, what we claim is objectionable.

It’s granting, in effect, the water power value of the stream by attributing it to the lands through the device in saying that the lands are suitable for the generation of water power.

Perhaps it might be well to — to go ahead just a moment to help focus the issue and indicate just what the Commissioners did, and what they did was approved in the District Court and in the Court of Appeals.

Stanley Reed:

I take it that these were a private company that was condemning this hydroelectric power site itself.

They’d have to pay this extra price.

Ralph S. Spritzer:

Well, assuming that there were — that two persons, the buyer and the seller, were both free to make the use and then one got condemnation powers, it’s certainly so.

But, our whole point is premised on the fact that neither Twin City nor anyone else was entitled to throw a dam across the river which was the necessary preliminary to appropriating the energy which, in here, is in the flow of the stream.

Felix Frankfurter:

May I get your answer to Justice Reed’s question.

If a private company condemned this site, what is your — what is your answer to Justice Reed’s question —

Ralph S. Spritzer:

I —

Felix Frankfurter:

— as to the — as to the value that may be attributed to this site for developing water or surfacing water power as a private concern even though, at the time, it may not have a license of the power but the land is concededly serving for that purpose.

Is it true?

Ralph S. Spritzer:

No, there would not be.

And, I would — in answering Justice Reed’s question, I have said, putting aside any question of the necessity of a license and assuming availability to both buyer and seller, in other words, that it’s not this case but a case on a non-navigable water, matter of fact, no licensing problem.

Felix Frankfurter:

I mean, this very case.

Assume this very case —

Ralph S. Spritzer:

Yes, sir.

Felix Frankfurter:

— that a private concern wants to condemn it and, as toggling before, the hope to buy and consider power from this is an application for a license where the measurement of the criteria for waters bear that if the condemnation would be different.

Ralph S. Spritzer:

No.

Felix Frankfurter:

But that would be without knowledge.

Ralph S. Spritzer:

No, I don’t think it would.

I don’t think the Court has yet had before it a case involving a water power licensee which involved this precise question.

Indeed, that — that was the question which the Court did not reach or have to reach in the Grand-Hydro.

Stanley Reed:

Offered as a private off-the-door that was taking to develop the power place prior to the time that we had the Federal Power Act, they certainly would have to pay the extra price of the — the suitability of the land that they acquired.

Ralph S. Spritzer:

I think the — the — yes, I think so.

I think the case which probably illustrates that is the old Boom Company against Patterson case.

Stanley Reed:

Yes.

Well, now, the same — the same company seeks the same land after the Federal Power Act was passed.

Then — then, it doesn’t count anymore.

Ralph S. Spritzer:

No, I’m sorry.

I would not agree that that was true at all as to a — a throwing a dam across the navigable stream where you have that situation.

I don’t think that anybody could claim that he had a right to put up a project.

And, that’s true before, as well as after the Power Act because the Government’s navigation servitude goes far back in Congress since 1890 has an affirmative prohibition on placing any structure in the stream without —

Felix Frankfurter:

Except that —

Ralph S. Spritzer:

— federal authorization that —

Felix Frankfurter:

— except with the Secretary of War.

Ralph S. Spritzer:

Secretary of War, yes.

So, my answer would be that the Boom Company versus Patterson rule would apply only in a situation where the use was not prohibited such as, perhaps, a — an inland lake or a non-navigable water in which the Federal Government’s prohibitions did not come into play.

Basic, we think, here, is the consideration, both from the standpoint of the navigation cases and from the standpoint of general eminent domain principle, this is a use which was not available to the condemnee or to buyers from the condemnee.

It was within the scope of the Federal Government’s navigation powers.

And, the Federal Government may not be required when it properly exercise — it exercises those powers to make special compensation because it has chosen to do that instead of delegating a privilege as it might also done within its discretion or within the determination and the wisdom of it by Congress.

Earl Warren:

Mr. Spritzer, after the 1944 Flood Control Act which called for the development of this — of this project, —

Ralph S. Spritzer:

Yes, sir.

Earl Warren:

Suppose the state wanted to put a highway through — through that canyon, one that is covered by the — by the proposed lake.

Would — would it have to pay the reservoir price for that or — or would it be entitled to — to take it for the normal value of the land?

Ralph S. Spritzer:

Well, the — this entire reservoir now becomes part of the federal project, Your Honor.

And, that’s —

Earl Warren:

Well, it is — it isn’t until they purchase it.

What I was — what I was thinking, if before.

Sometimes, these projects are — are authorized by an Act and nothing is done for a great many years.

Earl Warren:

Suppose the state came in and said, “we want to build a highway through that canyon” and they have to condemn that land.

Would they have to pay the — the reservoir site value for that land or — after the Government had preempted the use of navigable stream for that purpose or — or would it still have any value after the 1944 Flood Control Act for reservoir purposes for anybody?

Ralph S. Spritzer:

Well —

Earl Warren:

Maybe it isn’t a fair question, but we’re speculating on some of these situations and —

Ralph S. Spritzer:

Yes, I’m trying to address myself to it.

What — what troubles me is that I don’t think the federal — the State Government could build a highway through after it became a part of the federal project.

Earl Warren:

I don’t suppose — I don’t suppose it would, but I suppose it — it could, unless — unless the Federal Government proceeded to — to condemn the land itself.

Sometimes, you find that in the Act —

Ralph S. Spritzer:

Yes.

Earl Warren:

— and, maybe — maybe, the project will be built for 25 —

Ralph S. Spritzer:

Yes.

Earl Warren:

— 25 years and, in the mean — in the mean time, it’s the property of a private property and the state could be excess of it.

Ralph S. Spritzer:

I would say —

Earl Warren:

That’s what I mean.

Ralph S. Spritzer:

I would say no, Your Honor, because I think the whole function of eminent domain proceedings is to eliminate special value which the property may have to the taker and to compensate the condemnee for what he has lost.

And, so, the value of land in the area of this project became suddenly inflated because it appears that there was going to be a federal project.

I take it that the courts would attempt to exclude that inflation which would represent, I take it, speculation that the necessities of the Government might result in a higher war.

I take it, the Court would attempt to exclude that and say, “Now, what is this worth normally, under normal conditions, for the uses to which — which are generally available to a land owner?”

I wanted to say a few words about the specific navigation and flood control purposes which the project has.I do attach some importance to that because we find that the cases which are most precisely in point, as we view them, are cases which involve exercised by the Federal Government of its navigation powers.

The Savannah flows generally through the whole area that I trace with my stick.

The head waters form on the southern slopes of the Blue Ridge Mountain here, and they flow generally in an easterly direction all the way down to the deep water in the Port of Savannah.

There is no issue that the Savannah is a navigable river.

The area with the stretch of the river which has been important from the navigation and transportation standpoint is the stretch from Augusta down to Savannah.

There’s been as much as 130,000 tons of traffic — water traffic in a single year on that stretch and the potential is estimated at something over a million tons.

It’s also important to mention that this area here, this whole valley particularly below Augusta, has been highly vulnerable to floods in the two decades.

Between 1923 and 1942, there were more than 80 floods in that valley and flood peak — flood peaks occurred in Augusta some-130 odd times, as we are told by the district engineer’s report which Congress, in the 1944 Act, ultimately approved and, on the basis of which, it authorized Clark Hill.

Now, the respondent has placed a great deal of emphasis upon the fact that the Government stand here at Clark Hill.And, likewise, the Government stand at Park Ground, which was later authorized, do not have locks.

In other words, they don’t provide for the passage of boats.

It’s also true that certain private dams, which previously vested in this area, indicated in black here, that they don’t have locks.

The reason that the Government has not attempted to provide for locks in the dams upstream of Augusta is that, though the entire river is a navigable river, as it’s conceded by respondent, all of the significant traffic takes place between Augusta and Savannah.

Ralph S. Spritzer:

We think it was largely on the basis of this emphasis that respondent convinced the Court of Appeals for the Fourth Circuit and, also, the Court of Appeals for the Fifth Circuit, which has the companion case which arises out of the condemnation of the lands from Georgia side of the river, that this was not a navigation improvement project, in fact.

The argument is that the Government that the points where the dam is built is blocking any prospective navigation.

Now, we think it’s clear under the decisions of this Court and, notably, under South Carolina against Georgia, and United States against Commodore Park that the Government can block navigation at one point on a navigable river in order to improve it on another.

And, that is what is done, here, for these purposes.

Prior to the building of Clark Hill —

Stanley Reed:

Do we know whether there are going to be locks in the proposed new dam?

Ralph S. Spritzer:

Well, all of the other proposed sites which are indicated in this map in shading are also upstream.

Clark Hill is the furthest downstream and was the first dam built.

It’s the keystone of land.

Stanley Reed:

But where is — where is this present — this dam is in litigation here, where is it going to be?

Ralph S. Spritzer:

That’s right here.

It is built in this little black line, right at the tip of this large brown area which represents the reservoir basin.

It is the furthest dam downstream that will be built.

The only other one which is actually been authorized is Hartwell.

Whether or not appropriations will ever be made for the remainder, we don’t, with certainty, know.

Earl Warren:

Well, Mr. Spritzer, now that flood — the control of floods is a matter of national policy, does it make any difference to your case whether — whether this project is for the control of floods or whether it is to improve navigation?

Ralph S. Spritzer:

We think it does not, though, we also think that we have both purposes served.

Now, apparently, the court of appeals thought it did make a difference for reasons which it does not explain in its opinion.

Thus, it stated, at Record 143, it is well settled that the right of the United States in the navigable waters, etcetera, is limited to the control thereof for purposes of navigation.”

Just above that, but relating to that same point, the Court had stated that it’s taking them here not for purposes of navigation but for the primary purposes of flood control and the development of water power.

Now, as we understand the appellation power decision and the successor cases, there is no room any longer for the contention that flood control is not comprehended by the navigation power.

Indeed, it seems to us, as we take it, it seemed to the Court in that case that keeping a — a river within its banks and thus avoiding the threat which would — which it would otherwise pose, not only to transportation and navigation, but to life and property generally, is one of the most compelling reasons for exercising the navigation power.

Felix Frankfurter:

You don’t think that all that is meant by that is the negative or — suggestion — the suggestion of what was taken from believing that the water that the Government to call it even.

Ralph S. Spritzer:

Yes.

Felix Frankfurter:

What was taken comes from what the Government already had, namely, the use of the water.

Isn’t that all that’s meant by this?

Ralph S. Spritzer:

Well, it —

Felix Frankfurter:

And that’s for the stream because that’s the excess that the law are going to give them, namely, free flow of the stream.Of course he can be compensated.

Ralph S. Spritzer:

Well, I don’t think —

Felix Frankfurter:

Is that what is meant by that sentence?

Ralph S. Spritzer:

If so, I would go ahead and say, further, that we don’t think that it’s possible to say that the landowner has the right to appropriate the waters for power purposes when a necessary preliminary to his doing so involves placing a dam in the middle of a navigable river.

And, if we are right in that, then it follows, we think, on eminent domain principles, that he can’t claim a value based upon such use because —

Felix Frankfurter:

Isn’t — isn’t the question kind of, actually, whether it’s what I think, on your side, is considered what you call “place value,” whether this parcel of land is to be the territory at place value?

Ralph S. Spritzer:

Well, I —

Felix Frankfurter:

It’s a little like the — little spite house from another — different story in New York as place value because we think you’d like to get it.

Ralph S. Spritzer:

Well —

Felix Frankfurter:

Isn’t that what it’s meant by that sentence?

Isn’t that the same question we’ve got —

Ralph S. Spritzer:

I — I think it can be framed in terms of place value or some courts had sometimes said strategic value.

Felix Frankfurter:

Anything of course.

Ralph S. Spritzer:

And, I would say —

Felix Frankfurter:

Isn’t that the controversy of this case?

Ralph S. Spritzer:

Yes, that’s certainly a fair way to formulate it.

Felix Frankfurter:

And, our position, meeting — meeting the issue so framed is that nobody can claim strategic value in relation to the use of the waters of a navigable stream as against the United States exercising its navigation powers.

Ralph S. Spritzer:

In other words, if this piece of property, as in five miles away or 500 yards away, whatever it is, the — the compensation, you say, would be different — would be grave to be different than the cost of its strategic position.

Felix Frankfurter:

Yes, it’s strategic.

That is precisely, that the Court framed it in terms of its special value by virtue of proximity to the river.

I also think it may be helpful to show just how this valuation was arrived at to point to the process which the Commissioners used, the method which I think informs the whole nature of the decision below.

On page 38 of the record, I’d just like to refer briefly to a single paragraph which I think illuminates the whole case.

“These expert hydroelectric engineers,” the Commission has stated, “first, computed the annual cost of producing a definite amount of electric power by water, and then, computed the annual cost to producing the same amount of electric power by steam.

Then,” as the paragraph goes on, “the experts took the difference and they capitalized it at 6%.

And then, this capitalized value of the difference,” the report goes on to state, “between producing power by steam and by water was never taken as the true value of the hydroelectric site, but was considered as being of controlling influence.”

In other words, we think that what the Commissioners have done, as a practical matter, is to take the economic advantage represented by a hydro plant as compared to a steam plant in that area and say that the landowner is entitled to a valuation fixed on the basis of that economic advantage.

We think, in practice, this is to afford the landowner compensation based upon the power potential of the stream which the landowner, here, had no authority to appropriate.

Has the value of this condemned land of the Government got anything to do with the measure of value?

Felix Frankfurter:

I would say no, Your Honor.

I think the special value to the taker is what is to be excluded in the eminent domain proceeding.

I think that Justice Holmes so phrased it in practically those terms in the McGowan case where the claim was made that the condemnees there ought to get some special value because of the suitability of their land to reservoir purposes when New York City was building the Shelton Reservoir.

You would just clarify —

Stanley Reed:

It’s the detriment to condemnees?

Ralph S. Spritzer:

Yes, sir.

Felix Frankfurter:

Would you clarify that, Mr. Spritzer, unless the taker in one other class represents the class, if they could take it, or unless it should have been available for that purpose or another, —

Ralph S. Spritzer:

I — I most —

Felix Frankfurter:

— they make your property —

Ralph S. Spritzer:

I most certainly would qualify it that way and I’ve been assuming throughout that the basic consideration here is the exclusive governmental prerogative to control the navigable waters.

I agree that it might well be different if they were a large group, all of whom were in a position to bid for property for a particularly use, and that certainly might affect its market value.

But, we would say that special value to the condemnor is to be excluded and, indeed, if it is not excluded, the whole valuation process simply becomes a circle because if the market is free to speculate upon how much strategic value it may have to the Government, then I suppose, whenever the Government needs a particular piece of land, let us say, a strategically located link for a right of way, if the condemnees are going to be entitled for compensation based on the public necessities of the situation, that piece of land might go up a hundred fold.

Now, if the Court’s function is not to exclude that, but merely to determine how the market or how the speculators have estimated the necessities of the public, then, I suggest that the valuation process would simply become a matter of the courts attempting to find out how much the speculators thought the Court would grant.

And, I think that the — when this Court says that market value is to govern, that must necessarily exclude the special needs of the public represented by the Government as condemnor which, alone, can make and particularly use the property involved.

The navigation improvement benefits, and I have not yet specifically mentioned what they are, are these.

The control of the river flow, which is made possible by this dam, will enable the engineers to increase substantially the channel back between Augusta and Savannah.

They will also have other benefits, such as the reduction of penetration of salt water.

There’s no dispute, as I’ve already indicated, that flood control purposes are going to be served by the project.

Much of the attack which is made by respondent upon the congressional determination, that this is serving flood control and navigation purposes, is based upon the fact that the annual benefits from the production of hydroelectric power are very large.

Respondent says they completely overshadow the flood control and the navigation purposes.

The flood control and navigation purposes were estimated by the engineers as providing benefits of approximately $300,000 a year, and it is said that the power yield is going to be something like $7 million a year.

And, the suggestion, I take it, is that the Court should, therefore, regard the flood control and navigation purposes as being completely unimportant as de minimis in this case.

You haven’t mentioned anything about water power yet.

Supposing the — that Congress, here, had decided to abandon this as a navigable stream, flood control out and they’re interested solely in the water power, the hydroelectric power aspect of this.

Would your case be different?

Ralph S. Spritzer:

Well, I’ve been trying to emphasize that that — that the case Your Honor poses is not this case.

I’m —

But supposing it were?

Ralph S. Spritzer:

Well, I’m not sure —

As I understand it, —

Ralph S. Spritzer:

— that the result would be different.

As I understand it, your opponents don’t dispute the right of the Government to engage in all or any of these announced purposes.

Ralph S. Spritzer:

I — I think it’s their position that it’s stated in the brief that the navigation purposes and the real one, which we vigorously dispute, and we think the Court could not find on this record that such purpose is not being served because we think the engineers’ studies show that navigation improvement purposes are being served and there is nothing whatever in this record to impugn that determination.

As a matter of fact, some of the navigation benefits contemplated have already been achieved in fact.

The increased river flow, which will provide an improved channel, has been obtained as a result of the construction of the Clark Hill Dam.

Ralph S. Spritzer:

I don’t know if I answered the question Your Honor had in mind, but our purpose in emphasizing the — the navigation of the flood control aspects of the project is that we don’t think that this Court could possibly find that Congress lacked a rational basis for concluding that those purposes will be served.

Well, all I was trying to get at was whether your position as to the measure of compensation necessarily hinged to either the navigational purpose of this project or — or the flood control aspects.

Ralph S. Spritzer:

I don’t think it necessarily does but, since the many decisions in this area have all been cases in which the Court has found that the navigation power was involved, we’ve deemed it important to set before the Court facts which we think indicate that that power is being exercised here.

If these were a project which had nothing to do with navigation improvement but was, perhaps, justifiable on — on some other constitutional basis, not the Commerce Clause but perhaps some general emanation from the general welfare clause, I don’t know that the result would necessarily be different.

But, I think that it would be a case in a different area from those of the precedence upon which we rely, and we prefer to rely upon, what seems to us, an established course of decision rather than to ask the Court to go on relatively unchartered waters perhaps.

Sherman Minton:

You left that navigation ground and went under the general welfare clause.

That would put you where no property could have any special value for post offices, and so forth.

Ralph S. Spritzer:

Well, we — we can see that there might be many more problems when — if one were to consider projects under the general welfare of law.

Sherman Minton:

You admit there’s a location value to the property, don’t you?

Ralph S. Spritzer:

Yes, but that location value —

Sherman Minton:

If it depends on —

Ralph S. Spritzer:

— of course, strategic value must be in here.

Sherman Minton:

I understand that if it depends on the water power and navigation, then —

Ralph S. Spritzer:

That’s right.

We think —

Sherman Minton:

There were some —

Ralph S. Spritzer:

— the navigation cases are a very special class of cases because, nature having fixed the — the streams in one place, everyone is, in effect, on notice as — as this Court has stated it that his use, if he’s a riparian owner of the waters, and his right of access to the waters might become valueless if the Government, exercising its navigation powers, does something which — which blocks them all.

Most of the history, in the — in the 19th century, of cases involving the relationship of the navigation servitude to riparian owners have been cases in which the Government effectuated some improvement on the river, which impaired access of the riparian owner to the stream.

Scranton against Wheeler is — is typical of those cases.

The Government built a pier on the river.

That pier would cut off completely the riparian owner’s frontage on the stream and it cost him serious economic law.

He brought suit against the Government.

The case ultimately came to this Court.

And, Justice Harlan, speaking for the Court in that case, said that the riparian owner’s right of access was always subject to the contingency that it might become valueless by — as a result of the Government project undertaken in the exercise of the navigation powers.

He went on to state that the authority of Congress to exercise these powers was not to be crippled, which is the language of the Court’s opinion, by compelling some special compensation because expectant fees had been defeated or established uses by the riparian owner had been terminated.

The case, of course, upon which we think is most closely in point and even more closely than the cases involving impairment or loss of access to a stream is Chandler-Dunbar because of the peculiar similarity of the — of the facts in — in that case and this.

Chandler-Dunbar was, of course, a company which, at one time, had a license to put works in the stream.

It had operated under that license that it put works in the stream.

It had drawn power from it.

The license, however, was revocable by Congress.

Ralph S. Spritzer:

Congress passed a statute which revocated Chandler-Dunbar’s license, and directed a public project in the interest of improving navigation.

Now, one of the claims which Chandler-Dunbar made was that the federal project was depriving it of the flow of the river, which it said was very valuable.

The Court rejected that basic claim, stating that Chandler-Dunbar had, perhaps under state law, a technical title to the bed of the stream, but the private ownership of the flow of the river was inconceivable.

Chandler-Dunbar had another claim and, that, we think, has special pertinence here.

It said that certain of its fast plans which were being taken for the Government’s project had special value by virtue of their proximity to the power inherent in the river.

It said they had special value as factory sites because of the nearby power available, which we think is the exact analogue of the claim which is being made here.

And, I’d like to refer to what the Court stated in rejecting that contention.

The Court stated, “That the Government always had dominion over the water power of the rapids and falls,” which is the end of the quotation.

And, went on to reason that it could not be required to pay either directly or indirectly for what was already within the Government’s prerogatives.

And, I think that that particular aspect of the Chandler-Dunbar decision was again emphasized by this Court in its Willow River decision.

I’d like to quote just one sentence from that opinion of Mr. Justice Jackson.

Referring to the Chandler-Dunbar case, he said, “It held that the shore owner had no pertinent property right in two natural levels of water in front of its lands or to the use of the natural difference between as a head for power production.”

Now, that, again, seems to be — seems to us to be a precise description of this case.

If as sure, Twin City had no right to the use which forms the basin for its assertion of value, that value, we say, is not includable in the compensation for loss of property taken which is provided by the Fifth Amendment.

Sherman Minton:

I’m a little unclear about the Willow River.

Was anything taken there?

Ralph S. Spritzer:

No, there was an impairment of the operation of the power —

Sherman Minton:

Suit — suit for damages?

Ralph S. Spritzer:

Yes.

It was impairment of the efficiency of Willow Rivers works as a result of the Government’s change in the level of the river.

Sherman Minton:

So nothing was taken?

Ralph S. Spritzer:

Well —

Sherman Minton:

That’s my recollection, no land was taken.

Ralph S. Spritzer:

No.

No fast land.

And, this reference to Chandler-Dunbar — this — which I’ve been quoting is their discussion of what Chandler-Dunbar held, which appears in the Willow River opinion.

Earl Warren:

Are you going to discuss that Kansas City Insurance Company case?

Ralph S. Spritzer:

Well, I’d be happy to.

The —

Earl Warren:

Alright.

Ralph S. Spritzer:

In Kansas City, the — the damage was done to a riparian owner on a non-navigable stream.

Tom C. Clark:

Non-navigable stream.

Ralph S. Spritzer:

And, hence, we don’t think it departed.

Stanley Reed:

Is Dunbar the raising of the water level of the Mississippi River?

Ralph S. Spritzer:

Well, the riparian owner was not on the Mississippi.

Stanley Reed:

No, but he —

Ralph S. Spritzer:

He was on a non-navigable —

Stanley Reed:

Tributary.

Ralph S. Spritzer:

— tributary.

Stanley Reed:

And, because it is non-navigable, is that your point?

Ralph S. Spritzer:

The — the majority in that Court rested upon the fact that the riparian owner who was, there, affected didn’t have his property on a navigable stream, but it was on a non-navigable tributary.

The dissenters were of the view that that ought to make no difference where the raising of the level of the waters on the navigable stream necessarily had, since water seeks its own level, the effect of raising the waters on a non-navigable stream as well.

But, I think the — the difference between the majority and the dissenters in that case has — has no bearing here since we have no issue that this is property adjacent to a navigable river.

We have no issue that, being a navigable river, this is not a use which the riparian owner could have made.

I think that’s the basic consideration here.

This is a navigable river.

Accordingly, it would have been a violation of law for the riparian owner of these fast lands to put a stream across it and to — and to appropriate, for commercial use, the energy in the stream.

If that is so, and we don’t see how there can be any denying that, then we think it follows that, since this was a use not available to the landowner, that he cannot rest upon it in making claim against the United States which has the power to control the navigable streams and has, here, exercised it.

To do so is simply to confer upon the owner of the fast lands value which inheres in the flow of the river.

Felix Frankfurter:

Mr. Spritzer, I’ll be obliging you to tell me with the same cantor with which I ask you whether you think I am over simplifying this problem in this instance if I put to one side as I have put to the one side, I don’t mind to say, all questions that, looking behind the purpose of this project, that it can’t be given a value because the Government had all the other considerations.

And, it can’t get down to the applicability on the fact, in this case, on the record in this case, applicability and its decision in the Boom case, which Chandler-Dunbar reaffirmed and, more particularly, the one there you read Chandler-Dunbar, although it is not proper, estimate land condemns the public purposes by the public assessments or excludes to the public interest, it is proper to consider the fact that the property is so situated that it would probably be desired and available so they can build it.

Isn’t that the problem, Mr. Spritzer?

Ralph S. Spritzer:

I — I agree that that is a — a fairway to state it, and I think —

Felix Frankfurter:

You’re dependent on what the record shows as to whether a — the latter —

Ralph S. Spritzer:

No, not is to what the record shows because, we say, the use which is the premise upon which this claim of value is made clearly could not have been availed of by the respondent in the absence of a license.

That, to us, is crucial.

Felix Frankfurter:

Wasn’t that immaterial?

I think the question is whether it’s in — it’s so situated that it will probably be desired and availed of for such a purpose.

It doesn’t make any difference if the landowner himself can’t use it for a dam or can’t use it for the generation of water power without the provision now of the Federal Power Commission to formally change the rule.

Ralph S. Spritzer:

I think I would have to differ there, —

Felix Frankfurter:

You do?

Ralph S. Spritzer:

— in stating our position.

I think the unavailability of this use to the condemnee or buyers from him is a crucial consideration.

Felix Frankfurter:

But that is true as Chandler-Dunbar.

That’s why it is important here.

Ralph S. Spritzer:

When Chandler-Dunbar, the Court rejected the claim of special value for this property by virtue of its proximity.

And, I think the whole point is clarified by reference to what Boom Company actually held.

In the Boom Company case, we had a corporation organized under state law, authorized to construct Boom’s which are, of course, for the storage of logs.

The Boom Company having this condemnation power under state law, preceded to condemn a shoreline along the Mississippi River which was owned by a man named Patterson.

The case was removed on diversity grounds from the federal courts, and it came up here on the question whether Patterson was entitled to some allowance by virtue of the adaptability of his lands to Boom purposes.

And, the Court said yes, and it said so on two grounds, both of which are important, I think.

It said, in the first place, from its examination of state law, that it was perfectly clear that the condemnor was not the only one entitled under the laws of Minnesota to construct Boom’s.

Hence, it said this land had value for Boom purposes when it was held by the condemnee.

Then, the Court said there was no obstacle, as a matter of federal law, to the construction of a Boom on the navigable river, so long as the Boom does not impede or interfere with navigation.

Now, that — that illustrates what I think is the basic difference between the case where adaptability or place value may properly be allowed and the case where it can’t.

The question is, as we see it, whether the use is one which was available to the condemnee or buyers from him, not necessarily whether he was using it, in fact, for that purpose, but whether he was free to do so.

Felix Frankfurter:

But free doesn’t mean that it may not be necessary to get a license from the Government.

It doesn’t exclude that.

The fact that this — that this site which he availed of, if permission was given by a federal authority as permission to constitute this for this purpose, it doesn’t take it out as a category of availability.

Ralph S. Spritzer:

Well, it’s available certainly on condition and we say that that condition is the grant of a license, and we say, further, that when the Government elects to reserve the prerogative which it has always had in — concerning which the landowner is fully unnoticed, it need not pay special compensation for the denial of a privilege which it was the Government’s either to grant —

Felix Frankfurter:

My suggestion is —

Ralph S. Spritzer:

— or to withhold.

Felix Frankfurter:

— when you include or put in the word “special,” you already fought the argument of the case.

Ralph S. Spritzer:

Well, I think the Court has also dealt with this in — in the sentence from Commodore Park, which I think is entirely pertinent here.

There, the Court said riparian rights of access cannot, as against the Government power to control commerce, be bought and sold.

Now, this case involves something which goes far beyond mere access.

In the many cases which this Court has held — have had in which it held that loss or impairment of access to the navigable river is not compensable.

It is always subject to the contingency that it might become valuable.

Felix Frankfurter:

Then, you have no taking of land.

Ralph S. Spritzer:

You have damage.

Felix Frankfurter:

That makes it certain you have an exercise by the Government of its overwriting power to deal with potentially navigable streams.

Ralph S. Spritzer:

You have damage, however, in those cases.

Felix Frankfurter:

Yes.

Ralph S. Spritzer:

Nonetheless, that —

Felix Frankfurter:

There’s no taking —

Ralph S. Spritzer:

— damage is not —

Felix Frankfurter:

There’s no taking —

Ralph S. Spritzer:

— compensable.

Felix Frankfurter:

No taking, not — not whether it’s compensable.

You have no taking there for the purpose of compensation of your rights.

Ralph S. Spritzer:

Well, the — the point I was endeavoring to make was that, if it be true, as the Court, I think, has often said, that loss of access is not compensable because there is no right as against the Government to access, then, it seems to me to follow necessarily that value cannot be predicated upon something which depends upon far more than access, not only continuing access, but appropriation of the very flow of the river.

I’d like to reserve my time, if I may.

Earl Warren:

Mr. Robinson.

David W. Robinson:

If the Court please, if I may take a few moments with the facts before we get in to the law.

Twin City, in 1901, formed these two corporations.

One in South Carolina and one in Georgia, and obtained the necessary state authority to build dams in this area of the Savannah River, comprising about 11 miles.

They bought something less than 5000 acres of land and obtained six Acts of Congress between that date and 1919 authorizing the construction of dams at the lower end of the site, Price’s Island and the other places there.

This land was the gorge of this Savannah River.

It is the steepest portion of that involved in the 37-mile lake which is Clark Hill, about 60 feet of the fall that owns Twin City property on the mainstem of the river.

Its reservoir area included no buildings, houses, roads, anything that would add to the cost of development.

It composes about 88% of the drainage area which goes by Clark Hill.

And, on the Twin City property, some 45% of the fall in the river, which Clark Hill has gathered in its 130-foot head dam, is involved.

For many years, Twin City itself attempted to develop this profit.

It also, from time to time, negotiated with other parties.

It was considered in 1912 when Stevens Creek was built just below.

It was considered in 1916 when the nitrate plant was finally put at Muscle Shoals.

The record shows that the Secretary of War proved the Twin City plants.

A preliminary permit was tendered to it by the Power Commission.

And, then, in the area between 1928 and 1932, when the Savannah River Electric had a federal power license to build, they negotiated and condemnation proceedings were started by Savannah River Electrics.

Savannah River Electric was one of the Commonwealth and Southern Companies.

David W. Robinson:

The depression caused it to surrender its license.

The — the property is well located with reference to a river.

Twin City owned the land to come out to the sea in W. C. Railroad.

It owned its transmission right away into Augusta.

And throughout the last 20 or 25 years, all the Government agencies who have checked this have treated this property as being best used for hydroelectric purposes, either by itself or in conjunction with larger areas which, now, go to make up the Clark Hill reservoir.

And, the courts below have found that this hydroelectric use was its best use, that its probability for use in that was so probable as to affect the market value under the usual definitions of eminent domain law, and that a party would have taken that into consideration if it had engaged in negotiations with the party.

As a matter of fact, in 1947, when the Government started these condemnation proceedings, Twin City was negotiating again the Savannah River Electric to sale to it.

Savannah River Electric had applied to the Federal Power Commission for a license.

The Commission had held that, because of the Flood Control Act of 1944, that it should not issue a license to Savannah River, but should permit the Government to build.

It was different from the Chapman case in that respect.

And, the Fourth Circuit affirmed the Federal Power Commission’s determination.

Twin City’s —

Earl Warren:

Did it have — did it have the power to do it in view of the 1944 Act, Mr. —

David W. Robinson:

The Fourth Circuit did not pass on the power of the Federal Power Commission to grant the license, but held that the Power Commission had properly exercised its discretion in not doing it.

The — the Twin City properties alone were economically feasible for development at various heads.

The Government did not dispute that.

We brought in expert engineers who testified on that basis.

The Government’s testimony was that a better project was to put Twin City in as a part of Clark Hill.

And, their witnesses testified that Clark Hill, at that time, was one of the two best projects east of the Mississippi, the other being the Buggs Island project with which this Court had some reference in the ronographics case.

We approach this as our testimony and the Court so held on the basis of market value, taking into consideration the usual definition of market value which includes, not merely the use to which the property is already put, but any potential use which is so probable as to affect the market value.

Now, that language was used by you in the Olson case, which is a case on all-fours with us, involving, as you probably recall, the lake of the wood, and in which the United States was interested in navigation.

The — the dam was to be in Canada and the United States was condemning an aid of that project, but its interest was navigation.

The Court held that the landowner had not made out the factual showing, of showing probability.

But, they laid down the law which the lower courts followed then.

That is to say that if the factual situation is that of this potential use, being so reasonable as to affect market value, it is a part of the market value.

And, that is the approach which we have.

Now, the award here is not excessive.

It’s less than one-half of the acre value which was awarded in Grand Dam.

It’s about the national average of land value per kilowatts, as the Federal Power Commission approached this.

It’s about 50% less for a kilowatt in stock of kilowatt than the same T-system, just North of the Savannah River and which is the most comparable system there.

David W. Robinson:

Now, we don’t dispute the right of the United States to build this project.

What we are talking about here is the Fifth Amendment.

There are probably several powers under the Constitution under which the Government could build.

Certainly, they could build under the general welfare since United States against Butler and some of the other decisions.It probably can also build under the commerce power, which is not limited to navigation.

But, we say that, in this case, the issue is whether the Government is relieved from paying just compensation or that part of the just compensation attributable to this feasibility for use with the river for power development because of the navigation servitude.

The navigation servitude is much narrower than the commerce power, as you said in the Kansas City case.

And, to relieve the Government of the requirement of the Fifth Amendment to pay just compensation requires something more than a finding that United States is entitled to build this project and to operate.

And, so, we go into the Army Engineer’s report, copies of which we have had reproduced in Court, which is involved in the statute to see what the United States actually did here.

You have the entire document before you and, so as — I don’t want to go into detail, but I do call your attention to the fact that the chief of engineers, in making this report, says that the Clark Hill project is to be operated primarily for hydroelectric development, on page 3 of the report, with incidental flood control and navigation of benefits.

In paragraph 8, that he also finds that perspective benefits would not justify the provision of reservoir storage space exclusively for flood control, but that Clark Hill, if suitably constructed and operated primarily for hydroelectric power, would incidentally reduce downstream flood damages and improve low water flows below Augusta.

Now, on the cost basis, the estimate cost was $37 million.

And it actually cost about $77 million.

The engineers and sales allocated 96% of the cost to power and 4% to navigation and flood control.

Hugo L. Black:

May I ask you a —

David W. Robinson:

Yes, sir.

Hugo L. Black:

— question on this, just on your argument to the relevance.

Suppose it was clearly on them and the statute had said, and you admit, that the main purpose of this word is for navigation, and they had condemned the — the same problem.Would you say that the value that the Government had to pay would be different?

David W. Robinson:

I — I would say that, there, if the main purpose of this was navigation, real navigation, the Government would be relieved of one branch of our argument, being — that is to say, there would be an execution of the navigation servitude.

It would not answer the other problem we have that the navigation servitude doesn’t apply to lands above high water mark.

Hugo L. Black:

But I —

David W. Robinson:

But, it would —

Hugo L. Black:

I don’t quite understand that argument.

What I want to find out was, do you think that the Government would have to pay less if it is clear beyond doubt that this work it’s doing on the river was for navigation purpose?

David W. Robinson:

No, sir.

Hugo L. Black:

You think it would be the same?

David W. Robinson:

Yes.

Yes, sir.

Hugo L. Black:

Then, what is the relevance?

David W. Robinson:

The relevance of it is that we have a two-pronged position.

One taken by the Fifth Circuit and one taken by the Fourth Circuit, if I may —

Hugo L. Black:

Yes, that, I —

David W. Robinson:

That’s what the —

Hugo L. Black:

I quite understand.

David W. Robinson:

The Fourth Circuit, in effect, said that this is highland that the Government took and, therefore, the navigation servitude applying to the bed of the stream only, these people are entitled, Twin City is entitled to the market value of the highland which includes this potential for use with the used proximity value to the river.

The Fifth Circuit said, and the companion case is here on petition, the Fifth Circuit said this is not a navigation project and, therefore, there is no navigation servitude whatsoever.

We submit that if either Court is right, we are entitled to prevail on him.

And, for that reason, I was making the Fifth Circuit argument which is really and technically not before you but is here on petition.

Stanley Reed:

Well, I —

Felix Frankfurter:

I don’t understand.

That’s what Mr. Spritzer was really arguing against the Fifth Circuit.

David W. Robinson:

I — I think, in this respect, he was and, because we know that you have the opinion of Judge Hudson, as well of Judge Parker’s, opinion that both of the — propositions should be argued.

Now, we say that, to execute the navigation servitude in the sense that the Government is relieved from pain, there must be a real practical navigation purpose affected, not merely enough to justify Government construction or Government operation.

And, that’s the reason I call attention to the percentages.

We also call attention to the fact that Clark Hill is to be operated at a 25% load factor.

The Army Engineer Report show so — shows a Government witness of the case so testified.

That means that the water would be released to the equivalent to 25%, at the time during the times of high demand when power is worth more.

Now, of course, any project as large as Clark Hill can benefit navigation downstream, depending on its operation.

But, a 25% load factor hurts navigation or, if you’re going to operate it that way, it rather than helps it, unless you can do something about it.

Now, the Government proposed that they would require this privately owned Stevens Creek Dam to reregulate the flow from Clark Hill.

Then, it would be too big a sacrifice in the interest of navigation for Clark Hill to operate around the clock.

Many of those hours, the power wouldn’t be worth anything.

So, the fact that Clark Hill is to operate at 25% load factor is an indication that the practical navigation is not important.

Also, in the report, these seven other projects upstream are all referred to as hydroelectric projects.

They have no navigation phases in it themselves.

And, there’s very little flood control in it, as you will find on page 3 here of the Army Engineers report.

They didn’t even think it’s important enough to have any reservoir space for flood control.

The practical reason is that Augusta is already a dike.

That’s taken care of, and the swamp land down there where the river floods out has no sufficient value to justify this kind of expenditure by the Federal Government.

And, then, we call attention in our brief to the fact that there’s very little practical navigation to Augusta.

In 1954, there’s only 24,000 tons.

David W. Robinson:

That’s about 1 ton round trip for a month.

It had dropped from a 150,000 tons in 1937.

Now, with reference to the law, as I say, we don’t dispute the Federal Power to build, construct, and to operate.

The question is whether the Federal Government is taking private property.

Government concedes that our highlands are being taken, and they wish to subtract from the value of those highlands the potential use with the stream for water power purposes, what we call our proximity value.

Now, having found this potential use, the courts below applied the law, which you declared in the Olson case and you repeated in the Powelson case, that this potential use, if it affected market value, must be considered as an element of value.

In Olson, you said the facts didn’t justify that application.

And, in Powelson, you reversed and sent it back because they had capitalized earnings and they had valued North Carolina’s right of eminent domain which is not private property.

In the Grand Dam case, which was between a licensee of the Federal Power Commission, not the United States, you reserved this question in Grand Dam, this potential was bagged by the Supreme Court of Oklahoma and you affirmed here, saying that it was a value to be considered.

And, we submit that that case, in principle, applies here because it’s not the value to be taken.

I agree with Mr. Spritzer on that.

It’s what the owner losses.And, if the owner lost private property in Grand Dam to the state authority, which was the condemning body there, then it has lost property of the same character here to the United States.

As a matter of fact, the condemning authority must be either the United States or state or some corporation to whom one of the two has delegated the power.

Now, there is — there is a line of cases involving the navigation servitude which I’d like to address myself to a moment.

Probably, that came out of English common law, the fact that the public had a right to use the stream for passage but, in any event, it has become a part of the federal law under the commerce clause for the protection of the United States when — when the Constitution was adopted.

This protection of this public easement for navigation became a part of the protection for the Federal Government on navigable streams, and you have applied it.

You applied it in Chandler-Dunbar, to say that the Chandler-Dunbar Company had no right to build these wing dams in this important St. Mary’s River draining Lake Superior and had no right to the lower water.

You applied it in the Willow run case to say that there was no compensation where no fast land was taken because the upper dam would have lost something of its head.

You applied it in the Chicago Railroad case, dealing with one of the Mississippi River navigation dams, to say that, as to that part of the Railroad property below high water mark, there could be no compensation.

As to that above, there could be compensation.

And, you cited it again in the Kansas City case.

Now, those cases all involved real navigation and all involved property rights below high water mark.

And, we say this navigation servitude in the sense that it permits the United States to use property without compensation is limited by two factors.

First, there must be — it’s limited to the bed of the stream.

You said that in the Kansas City case, in the Chicago case, in the — and, I believe, in the dissenting opinion in Willow run is Kansas City two, that its limited to the land below high water mark.

Now, we are not here arguing about the 1400 acres which Twin City owns in the bed of the Savannah River.

The Government didn’t describe that in its condemnation papers.

We haven’t made any claim about it.

That is the kind of land that they would be entitled to take provided this were a navigation easement.

And then, the second thing is that there must be clear showing of congressional intent to take without compensation.

David W. Robinson:

You said it most recently in Niagara Mohawk.

Now, let’s go back to that bed of the stream and take this Chandler-Dunbar case which the Government principally relies on in that case.

There were three issues in Chandler-Dunbar.

First, whether Chandler-Dunbar was entitled to compensation for the water itself and for its structures, its wing dams which it had put below high water mark, and the Court said no.

Then, the question was whether Chandler-Dunbar was entitled to an industrial value for a piece of upland of that potential which Chandler-Dunbar said, “We are going to use with the water which we generate, the surplus water we generate at this dam.”

The Court said, “No, you’re not going to have any surplus water with which to make power and, therefore, this upland does not have any use in connection with non-existing power.”

The important thing in Chandler-Dunbar, as the Fourth Circuit emphasized, was what they said about the lock and dam.

Chandler-Dunbar had a piece of uplands which the lower court found was useful for lock and dam purposes.

And, at that use was so probable as to affect its market value and they made an award for that use for lock and dam purposes, and this Court affirmed.

Now, what difference — what legal difference is there between the potential use of uplands for lock and dam purposes, which require use with the water of the stream, and the use of uplands for hydroelectric purposes.

We submit to you that the lock and dam use is closer to the navigation servitude than is the water power use.

The counsel’s interpretation of federal —

Sherman Minton:

My —

David W. Robinson:

— excuse me.

Now, the Federal Power Act, it seems to me, would interpret that statute as having taken property without due process and taken property without just compensation by the passage of the Act itself because, as we understand their argument, because we haven’t got a Federal Power Commission license and because nobody can get it except by permission of a federal agency, the property has lost all of its value.

You rejected that argument in the Grand Dam case and you said there, as you did in First Iowa, that the Federal Power Act has conferred great benefits on licensees.

It’s true, it has attached conditions but it has conferred benefits.

We also find support, we think, in the Monongahela case in which the Government — United States condemned the navigation project on a navigable river, authorized by the State of Pennsylvania.

And, this Court approved an award which included the franchise for the navigation tool.

Now, with reference to the second phase of this case dealing with whether the Congress has, in the Flood Control Act of 1944, attempted to exercise this navigation servitude.

We call attention to the fact that there must be clear authorization because you’re getting into the feel of confiscation here.

You’re getting into the feel of whether the United States can take without payment and, as both the Fourth and Fifth Circuit said, “That’s just not fair.”

And, so, you have required clear authorization.

That is your language in Niagara Mohawk.

In Kansas City, you narrowly construed that easement to require the Government to pay for the subsoil, the interference with the subsoil drainage, even though the improvement of the Government did not go beyond high water mark.

You didn’t put any water back on this man’s land.

You just prevented his water draining out.

The Gerlach case is an example of where, even though they were general references to navigation and flood control and, unquestionably, in that big central valley project out there, there are many legitimate navigation and flood control benefits.

When it came to the question of whether these owners of the bed of the stream below the Friant Dam, who depended for their value on these floods, whether they were entitled to compensation.

You found that Congress did not intend to take from them that bed of the stream even though it had the power to do it because it was below a high water mark.

David W. Robinson:

And, you treated it under the Reclamation Act rather than under the other statutes.

I may incidentally say that a part of the authorization for that Central Valley project is contained in the same Flood Control Act of 1944, under which, Clark Hill was built.

Of course, it’s a continuing process and it’s authorized many other places also.

What do you say about their evaluation argument that anybody purchasing — interested in purchasing this land would have been, of course, in — from — primarily concerned with his chances of getting a license to use the water —

David W. Robinson:

But —

— and that the — at the time of this taking, the intention of the Federal Government to go forward with this project was such that no third party would have recognized any possibility of being able to use the water for that purpose?

David W. Robinson:

Well, the Savannah River Electric was willing to try.

They applied, actually, at that time for a license and carried it to the Fourth Circuit to attempt to get a license to build their concerns.

So, we actually had two purchases.

Of course, they were mutually exclusive.

Savannah River Electric, actually, was going to build the identical project which the Government did build.

Under slight or different circumstances, I believe Savannah River Electric, rather than the Government, would have built it, but it turned out that they went in first, just like the Roanoke Rapids case.

United States built Buggs Island and then the private company came along and obtained a license to build one of the other projects on the Roanoke River.

But, they were two better as action trying to get out from.

Of course, we couldn’t sell to both of them because they were mutually exclusive and, had the license been granted to Savannah River Electric, they, rather than United States, would have been the purchaser or the condemnor had we not been able to agree here.

Now, there’s another phase of this case.

In all of the navigation servitude cases where the Government has taken without a compensation, and I’m not dealing now with the damage cases, there has been a navigation improvement in the very stretch of the road which is being taken.

It’s not a headwater proposition.

In the Gerlach case, in stating the Government’s argument, Mr. Justice Jackson, I believe wrote that opinion, pointed to it in this fashion.

The Government relies on the rule that it does not have to compensate for destruction of riparian interest over which, at the point of conflict, it has a superior navigation easement to exercise what it gauge as the damage.

Now, the Government claims here that they can take our property uptown for a navigation benefit found below Augusta 25 miles downstream.

In none of the taking cases, under the navigation easement, has there been taking property at one side on the river for a navigation benefit to a dam.

Logically, that means that they can take all of the lands up here, 100 miles away, for navigation help below Augusta.

Now, I realize that, in your — in the damage cases, that you have said that there may block navigation at one point to help another, South Carolina against Georgia, the Scranton case, the Gibson case in the Ohio River and, more recent, Commodore Park cases.

But, damage by the United States is not protected by the Fifth Amendment and, in the absence of statute, the Government can do pretty much as they please with reference to it.

Now, I’d like to say a word about the absence of a license.

As a matter of fact, that was the defense in the District Court.

Now, the Government came in with a witness, an engineer from the Federal Power Commission, who testified that, after 1926 and 1928, the Federal Power Commission thought that a dam at this point was a better development of the entire river system than a dam at Price’s Island above the mouth of Little River where we proposed to put it.

And, they made the point that, since our identical project could not be licensed, wouldn’t be licensable because, under the Federal Power Commission criteria, it was not the best development of the river.

We had lost all power value.

David W. Robinson:

The courts rejected that argument and, instead, merely treated the Government’s evidence, as it should be treated, as saying that our property were not only was economically feasible for development itself, but was even more of value as a part of a larger interest below, and we submit that that is correct, nor do we think there’s anything in the argument that nobody but the Government can build because the Federal Power Commission has the right to license these projects.

Your Grand Dam decision said that.

As a matter of fact, that argument can be made that there is more navigation benefit to the United States through the application of the Federal Power Act in some of these cases than results to United States from this Act.

Now, take the Ford case, for instance, up on the Hudson River.

I believe the decision here is 1930.

Mr. Justice Stone’s case wrote the opinion.

In that case, there was a navigation dam on the Hudson with a lock in it, a real part of the navigation easement.

Forged out a license to put a powerhouse on that dam and to rent the water from the Government and permission to put flashboards to raise the level, as a result of which, he raised the level on the tailrace of a dam on the Mohawk which run into the Hudson just above that.

And, New York court enjoined his maintaining those flashboards and you affirmed him.

Now, in that case, those flashboards action would have more navigation benefit than the 4% of this project which is devoted to flood control and to navigation.

You have — you have in the — in the Niagara Mohawk decision, you have permitted water rights, totally unconnected with fast land, to be evaluated in the federal power processes which means, ultimately, higher price to the Government if they exercised the option because you found in that case that the Federal Government had not — Congress had not intended to exercise the servitude.

Now, we submit that, in these cases, we go right back to fundamental eminent domain law.

We have concurrent findings of Commissioners, two district courts, and six court of appeal judges, all unanimous that this property had such a potential for water power purposes, because of its proximity to the river, that it had affected market value, that this hydroelectric use was the best use possible for the property, and we approached it entirely from the market value view which the courts have found was the price which a willing buyer would have paid a willing seller for this very property.

Felix Frankfurter:

What kind of evidence was produced to establish market value?

David W. Robinson:

We offered three top flight engineers who took the history of the project, the geological and the geographical features with the engineering plans which Twin City had maintained over the years.

They made a study of those plans, involved what it would cost to do it, compared that with other sources of power, made computations of that kind, and came up with what, in their opinion, the buyer would pay for, having in mind that he would — he would have to have a profit, too.

Felix Frankfurter:

Were hydraulic engineers the experts on —

David W. Robinson:

Yes, sir.

Felix Frankfurter:

— the value to be paid?

David W. Robinson:

They were, and the Government witnesses so conceded, yes.

They — we had Mr. Krieger who is now there to — of buffalo who, perhaps, was the leading hydroelectric engineer who had vast experience in advising bankers about loans on hydro projects and by advising sellers and buyers a great deal.

As a matter of fact, he had testified in your Grand Dam case, which came here on the same basis.

We had Mr. Courtney of Philadelphia of the just — the Court affirmed that, also, it had vast experience in that Pennsylvania area with reference to this water power matter.

Felix Frankfurter:

There’s no specialist on land values in South Carolina?

David W. Robinson:

Yes, sir.

We had land — we had land value as to testify as to timber value and things of that kind.

But, of course, they couldn’t testify on hydraulic matters.

We also offered in evidence a comparison with the land cost of the sancti projects, the 11 projects developed on the sancti.

Our engineers compared that on a land cost per installed kilowatt on the basis of land cost per kilowatt-hours of generation and on the basis of percentage of land cost to the total cost, and the award to us for the land value is less substantial than in the sancti system.

We used the Federal Power Commission’s published report which shows that, on a project of this size, the average cost per kilowatt is — per land is $28.

David W. Robinson:

I think it works out between $28 and $30 as what the award for us is there.

We were not able to get into evidence the question of our negotiations values and the Government objected and we were afraid to press as to whether unaccepted offers were proper.

Well, assuming your legal position is right, there’s no question as to the amount of the valuation, is there?

David W. Robinson:

No, sir.

As a matter of fact, Twin City is the one that appealed from the amount from the Commissions to the District Court.

The Government hasn’t questioned the amount.

As I say, it’s one half of the value you affirmed in the Grand Dam case on a — on an acreage basis.

They got 800,000 for 1400 acres.

We got a million two — 1,000,250 for 4700 acres, 4500 acres, about $260 an acre or something of that kind.

I don’t see how you still answer the Government’s argument as to there not being a willing purchaser unless that purchaser had to get a license from the Federal Power Commission.

David W. Robinson:

Well, if that were true, the passage of the Federal Power Act would eliminate all of this fact, and you said it didn’t in the Grand Dam case.

I think I’ve got that quoted in my brief on page 27.

It is clear that the Federal Power Act cannot be said to have, so far, affected the use of this land for power site as to destroy or otherwise render valueless the owner’s right to use it for that purpose.

That Act merely has attached conditions to the use of the land for power site.

The Act seeks to encourage rather than to prohibit the development of power sites.

That’s on page 27 of our brief.

As a matter of fact, there was a Federal Power Commission license in 1928 for this project at Clark Hill.

My recollection is that it was, perhaps, a 90-foot project instead of a 130-foot project, but it was substantially at the same dam site and would have taken the Twin City lands.

And, but for the fact that the army engineers had started, I believe, in 1947, it would have been licensed again to the Savannah River, which was a subsidiary and affiliate of Georgia Power Company, a ready user.

I believe that —

Earl Warren:

I wonder — before you finish, I — I wonder if you ever minimized the navigation features of this because of the allocation of the army engineers as to the cost.

That the cost must be attributed to navigation, to flood control, and hydroelectric power, as I understand it, that — that’s only for that — those allocations are only for the purpose of determining which feature shall pay and how much because flood control and navigation are non-reimbursable items and hydroelectric is reimbursable, and they make hydroelectric pay as much as the traffic will bear, namely, as much as it can earn through — through the project.

But, does that necessarily minimize the effect upon navigation?

David W. Robinson:

Well, this is the way that they arrived at it, Mr. Chief Justice.

They took the potential navigation below Augusta and figured out what it was worth in dollars.

Then, they estimated that if Clark Hill operated on a 58% load factor and Stevens Creek, which is below it, operated on a 100% load fact so as to level out the river, it would result in certain losses of power for Stevens Creek to operate on this high load factor.

They capitalized that saving.

They — they subtracted from the navigation benefit this loss of power on Stevens Creek, and then they capitalized the difference and arrived at a million-and-three, as I recall.

That’s the way they did.

Now, when the army engineer testified before Congress in a footnote which we have in the brief, he went at it a different way.He went at it from the viewpoint of benefits and he took these same benefits and figured the power benefit at eight million, or whatever it was, and he worked that it happened to come out about the same percentage as capital cost, and so forth.

David W. Robinson:

But, I don’t think we have minimized navigation.

And, unquestionably, the stream flow could be further improved if there’s any occasion to do it, but actual navigation has dropped from a 150,000 tons to 24,000 tons over about an eight-year period.

And, the 24,000 tons is after Clark Hill went into operation.

The first unit went in, in the late 1952 and the last unit in 1954.

As I recall it, they have 280,000 kilowatts and 740,000 units.

We are not saying that there isn’t an incidental benefit to navigation.

We are not saying that it isn’t an incidental benefit to flood control.

The army didn’t think it was worthwhile to put any extra storage and buy him a landfill, but any, with — rather reporting what it is today, a dam of that size would certainly be let down in advance of heavy rains and would catch some of the flood control waters.

But, we are saying that it isn’t the clear authorization, as you said in Niagara Mohawk was necessary, to permit the Federal Government to take property without compensation.

Now, we agree that when you are finding a federal authorization — a federal power to do this or that, you must engage in all the presumptions of validity but out of deference to the Congress.

But, here, what we are doing is we’re talking about confiscation.

Should this value be there?

Unquestionably, the value is here.

Now, these people weren’t just a dog in the manger.

They had been working on this.

They’d spent a great deal of money on the project and a private company, as Judge Potter said in the Fourth Circuit, certainly would have had to pay this kind of a value.

It’s not a — it’s not an excessive value.

It represents, out of the $77 million, only less than 2% of the cost of the entire project.

And, yet, on our property was 45% of the falling river.

This was the heart, the waste of the project.

We also say that, in connection with the consideration of the navigation thing, the emphasis throughout this engineer’s report, we must operate Clark Hill at 25% load factor.

Your remark in Powelson that that’s the way the peaking energy is used in the southeast.

It takes the top of the peak and saves so much generation capacity.

Stanley Reed:

Mr. Robinson, even though you maximize, instead of minimize, the proportion of this, it real use is to go to navigation.

You still would demand the same amount of compensation for your power site, would you not?

David W. Robinson:

Yes.

We think that we are getting fast land here and we’re entitled to the full market value of fast land.

It happens to be near the river, just like the Washington Hotel is near Pennsylvania Avenue, which the owners of that hotel do not own or control.

Now, proximity is the crux of most value.

I agree that mineral rights or fertility occasion, but its proximity to the stream and our highlands have.

David W. Robinson:

They have taken our riverbed and they haven’t even described it in the condemnation proceedings and we’ve made no claims of it.

We don’t think they ought to take the great majority of our value about highlands.

Hugo L. Black:

May I ask you, what was the amount per acre that it was figured to be worth without the power?

David W. Robinson:

The Commissioners found $37 in South Carolina and $31 in Georgia.

The district court did not pass on it because they said you only have one value, and this —

Hugo L. Black:

What — what value did they give it first?

David W. Robinson:

They give — they gave it the value that you have here, the million —

Hugo L. Black:

How much is the figure?

David W. Robinson:

$265 per acre is what this works out.

They made a lump sum valuation than pro rating.

There were about six condemnation proceedings, three in Georgia and three in South Carolina.

Earl Warren:

Mr. Spritzer.

Ralph S. Spritzer:

I’d like to point out to the Court that, at page 26 of the record, the Commissioners found that, as of recent years, I’m reading about three-fourths in the page down, of recent years, and then I’m going on a little, it is practically certain that it, meaning Twin City, could not have obtained a license to construct such project on the Savannah River.

As early as 1939, this project had been strongly endorsed by the Federal Power Commission.

And, it certainly seems clear as of that time, if not, considerably earlier, that this could hardly be considered a licensable project.

I emphasize that because the keystone of our position, I think, is that, while potential use affecting value is to be considered, that potential — that use is a use to which the landowner or buyers from him were free to put — to put the land while in the condemnee’s possession.

Here, we say, that use was foreclosed.

Here, we say, additionally, the Government had expressly exercised.

I haven’t dealt with the language of the 1944 Act but it seems to us completely explicit as manifesting an intention to invoke in the full measure of the Federal Government’s navigational powers.

Mr. Robinson has suggested that the obligation to compensate Twin City, and we agree that they’re entitled to compensation for their property, the question is measure of compensation.

Mr. Robinson suggests that if the Government had licensed Savannah Electric, that Twin City would have been entitled to much more.

Well, if Savannah Electric had gotten condemnation powers, I certainly don’t know that that would flow and, certainly, Grand River Dam, upon which Mr. Robinson relies for that statement, doesn’t say that it is so.

In fact, Mr. Robinson has assumed the answer to the question which the Court expressly reserved in Grand River — in the Grand River case.

The Court stated in that case, at page 373 of this opinion, that if either the United States or its licensee, as such, were seeking to acquire this land under the Federal Power Act, different considerations might apply.

Now, —

Sherman Minton:

Well, why did —

Ralph S. Spritzer:

— Congress could —

Sherman Minton:

You’re right at that point.

Why — why would he?

Ralph S. Spritzer:

Might the Court, today, may apply.

Sherman Minton:

That — that means that a private operation such as they had their state, where it gets the license from the Federal Power Commission, then it has to take for the value of the land that they take.

Ralph S. Spritzer:

Well, the — that —

Sherman Minton:

And, if we assume that you’re correct, the Government would not have to pay.

Ralph S. Spritzer:

Well, in the Grand River Dam case, the majority of the Court, and the Court was as evenly divided as it could be and still reach a decision in that case, the majority of the Court took the position that the case was controlled by Oklahoma law because the authority had proceeded under the condemnation powers granted by Oklahoma in the Oklahoma courts.

And, the Court accepted the valuation figure reached by the Oklahoma court.

The dissenters were of used that the determinative factor became the institution of suit in the state, rather than the federal courts, to which they objected.

But, what I want to emphasize is that even the majority in that case made clear that it was not undertaking to decide what rule would be if a water-power licensee was proceeding under the Power Act.

Now, this case —

Sherman Minton:

I understand that.

Ralph S. Spritzer:

Yes.

Sherman Minton:

But if the rule is — of the state was that — if it would eliminate — the Grand River eliminates the license they made, in effect, would change to — of the decision, doesn’t it?

Ralph S. Spritzer:

I’m sorry, I didn’t follow that.

Sherman Minton:

If the Grand River had a license from the Federal Power Commission.

Ralph S. Spritzer:

The dam, yes.

Yes, it did.

Sherman Minton:

Grand River Dam.

Ralph S. Spritzer:

It did.

Sherman Minton:

Now, if — then, it wasn’t the license alone that makes a difference as to whether you have paid for the value of the location because they had a license.

Ralph S. Spritzer:

Yes.

Sherman Minton:

And, yet, they had a license.

Ralph S. Spritzer:

Well, the Grand River had to pay the value which was determined in that case in accordance with Oklahoma law.

Now, I’d like to go —

Sherman Minton:

Even though it had a license —

Ralph S. Spritzer:

Yes, —

Sherman Minton:

— from the Power Commission?

Ralph S. Spritzer:

— because they could.

The majority said because they weren’t proceeding as a licensee.

They weren’t proceeding as such.

Now, that brings up one further point, which I think, perhaps, is important to make.

Whether or not the Federal Power Act should be construed in the event that such a case comes to this Court as requiring certain obligations on the part of the licensee, we would not — we would submit that that is not necessarily determinative in a case in which the United States is directly exercising its on powers rather than exercising regulatory powers to license someone else —

Sherman Minton:

Do you think that —

Ralph S. Spritzer:

— because Congress —

Sherman Minton:

Do you think there might be a difference between a private user of the license and the public as to the United States?

Ralph S. Spritzer:

Well, I’m thinking of Niagara Mohawk in which the Court — and Little Falls, in which the Court said that certain state-created rights, water rights, may be an appropriate subject of legislative protection if Congress sees fit to provide it.

And, in those cases, this Court found that the Power Act did not immunize the federal licensees, did no intend to immunize them from the duty to make compensation for certain types of state-created water rights.

Now, that — here, we don’t have a regulatory statute.

We have the United States directly invoking its navigation powers.

There is, finally, this one final difference between Niagara Mohawk and this situation.

In Niagara Mohawk, there was an established use.

Here, there was no right to throw a dam across the stream.

Earl Warren:

Thank you, Mr. Spritzer.