Harold Hitz Burton

“ Section 10 (d) of the Act requires each licensee, after 20 years of operation under such a license, to establish and maintain amortization reserves out of any surplus thereafter earned and accumulated in excess of a reasonable return upon the licensee's net investment. Section 14 makes such net investment, plus severance damages, a principal measure of the price the Government is to pay when and if it takes over all or part of the property. [4] In 1942, the Commission expressly held that § 14 applied to this licensee. ”

“ In 1949, pursuant to a revised staff report, the Commission directed the holder of this license to show cause why one-half of its surplus earnings from March 2, 1941, through December 31, 1946, in the amount of $994,521.33, should not be set aside in an amortization reserve, and why a like proportion of its subsequent surplus earnings should not be set aside annually upon a comparable basis. In 1950, the Commission's presiding examiner recommended that the licensee's initial reserve be $914,432.04, and the Commission approved that figure in preference to $515,432.04 proposed by the licensee. ”

“ They must be treated in the same way as those above mentioned, except to note that the discounts allowed in return for the Pettebone-Cataract water rights ceased with the licensee's purchase of those rights in 1947. See 202 F.2d at page 196.
We are not required to determine the nature of the rights claimed by respondent except to recognize that they are usufructuary rights to use the water for the generation of power, as distinguished from claims to the legal ownership of the running water itself. ”

“ We agree with the Court of Appeals that it has not. We agree also that in computing a federal licensee's amortization reserve, required by § 10 (d) of that Act, as amended, [2] the Federal Power Commission was not justified in disallowing the expenses paid or incurred by the licensee in this case for the use of such rights.
March 2, 1921, Niagara Falls Power Company, a New York corporation, predecessor in interest of Niagara Mohawk Power Corporation, a New York corporation, respondent herein, secured from the Federal Power Commission the federal license with which we are concerned. ”

“ Neither sovereign nor subject can acquire anything more than a mere usufructuary right therein, and in this case the state never acquired, or could acquire, the ownership of the aggregated drops that composed the mass of flowing water in the lake and outlet, though it could and did acquire the right to its use.' Sweet v. ”

“ The Treaty between the United States and Great Britain relating to boundary waters between the United States and Canada, proclaimed, May 13, 1910, limited the diversion from the United States side to 20,000 and on the Canadian side to 36,000 c.f.s. 36 Stat. 2448, 2450. As to additional emergency and temporary diversions, see 55 Stat. 1276, 1380; 1 U.S. Treaties and Other International Agreements 694.↑ 49 Stat. 844-845, 16 U.S.C. § 807, 16 U.S.C.A. § 807. See also, § 16 as to compensation to be paid for temporary use of the property by the Government, 41 Stat. ”

“ Id., at 5.↑ Section 14 even provides: 'nor shall the values allowed for water rights, rights-of-way, lands, or interest in lands (used in computing a licensee's net investment) be in excess of the actual reasonable cost thereof at the time of acquisition by the licensee: * * *.' (Emphasis supplied.) 49 Stat. 844-845, 16 U.S.C. § 807, 16 U.S.C.A. § 807.↑ In § 3 (11) 'project' is said to include 'all water-rights * * * necessary or appropriate in the maintenance and operation of such unit', 49 Stat. ”