City of Kaukauna, Wisconsin v. Federal Energy Regulatory Commission

No. 99-1770 (214 F.3d 888) (7th Cir. June 6, 2000)

ELR Digest

The court reverses a lower court decision and holds that private operators of hydropower projects at federally owned dams on the Lower Fox River in Wisconsin do not owe the Federal Energy Regulatory Commission (FERC) $ 338,984 in charges for headwater benefits realized at the projects as a consequence of improvements to the Menasha Dam's storage-and-release capability made in 1937. After an 1872 deed, the United States owned all the dams and controlled the waterway under its paramount interest in navigation on the Lower Fox River. The predecessor-in-interest to the project operators owned all the water power rights created by the dams. The court first holds that the headwater benefits for which FERC charged the project operators are merely part of the water power and surplus water the project operators own as a result of the reservation in the 1872 deed. The project operators' predecessors-in-interest held the same property and rights along the Lower Fox River as the state had claimed under the original grant of land, which was ownership of all water power. In the 1872 deed, the United States claimed only property necessary for the purpose of navigation, and the deed reserved to the predecessors-in-interest the water power created by the dams and by the use of surplus water not required for the purpose of navigation. What have now been identified as headwater benefits were in 1872 part and parcel of the larger category of water power and surplus water. A headwater benefit is, therefore, essentially an enhancement of what is conventionally referred to as water power at various dams.

The court next holds that the reservation of water power and surplus water contained in the 1872 deed is not limited to the particular dam sites. The predecessors-in-interest had ownership of water power created by reason of any dam or improvement. Water power created by reason of any dam or improvement suggests a more expansive category than merely water power at particular sites. The term water power as used in the 1872 deed includes an enhancement of flow as well as the energy contribution of the corresponding head. The fact that headwater benefits were later identified as a discrete concept and separated from the comprehensive notion of water power in the Federal Power Act does not undermine the effect of conveyances made many years before its enactment.

The full text of this opinion is available from ELR (20 pp., ELR Order No. L-234).

Counsel for Petitioners
Douglas B. Clark
Foley & Lardner
Verex Plaza
150 E. Gilman St., Madison WI 53701
(608) 257-5035

Counsel for Respondent
Leona Perry
Federal Energy Regulatory Commission
825 N. Capitol St. NE, Washington DC 20426
(202) 208-0200

[30 ELR 20637]

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]