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CALIFORNIA OREGON POWER COMPANY v. The People of the State of California, Real Party in Interest.

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District Court of Appeal, Third District, California.

The CALIFORNIA OREGON POWER COMPANY, a corporation, Petitioner, v. The SUPERIOR COURT of the State of California, in and for the COUNTY OF SISKIYOU, Respondent,* The People of the State of California, Real Party in Interest.

Civ. 8383.

Decided: February 10, 1955

Brobeck, Phleger & Harrison, San Francisco, for petitioner. Edmund G. Brown, Atty. Gen., Ralph W. Scott, Deputy Atty. Gen., for respondent.

Petitioner above named filed in this court a petition for a writ of prohibition to restrain and prohibit the Superior Court of the State of California in and for the County of Siskiyou from proceeding to try an action filed by the State of California against petitioner in the superior court of said county. We issued an alternative writ of prohibition and a return thereto was filed by the State of California on behalf of itself as the real party in interest and of the respondent superior court.

The facts, which appear from the petition and the return, and which are not in substantial dispute, are as follows:

Petitioner is a public utility electric company serving a part of northern California and a part of southern Oregon. Its principal business is in manufacturing, generating and selling electric energy to the public in intrastate and interstate commerce. It owns and maintains two hydroelectric generating plants along and across the Klamath River in the County of Siskiyou, State of California, Copco No. 1, erected prior to 1918, and Copco No. 2, erected prior to 1925. These plants are what are known as ‘peak-load plants,’ in that they are not designed or used to produce power continuously at a high output for meeting the basic, around-the-clock demand for power. While these plants never completely shut down, they operate much of the time at a low rate of output, conserving the water supply available for their operation behind a storage dam. When a ‘peak’ demand for electrical energy exists on the system, the ‘load’ on the lines actuates a mechanism which automatically causes water to be released from the reservoir behind the dam and to flow through the turbines, thus generating electricity to supply the load. When the peak demand decreases the water is automatically withheld behind the storage dam, where it will be available for meeting future peak loads.

Since variations in the peak load occur daily in the system, the result is a daily variation in the amount of water flowing through the plants. Thus, there occurs a periodic fluctuation in the level of the Klamath River below the Copco plants. Apparently these fluctuations are not unusual or extraordinary, and have been occurring in the Klamath River for about a third of a century in the normal course of the petitioner's operations.

In 1947 the Assembly of the State of California adopted the following resolution, House Resolution No. 162:

‘That a request be directed to the Public Utilities Commission of California, asking it to prepare and supply a report as to whether it would be more practical and economically feasible to require the California-Oregon Power Company [sic] to modify their operations or to construct a regulating dam to reduce the present average daily range of artificial fluctuations of the flow of the Klamath River by not less than 50 per cent, and that the Public Utilities Commission be requested to submit a report in response to the above request to the Assembly Interim Committee on Fish and Game not later than January 1, 1948.’

In response to this request the Public Utilities Commission published its Study No. S–605, dated December 10, 1947. Petitioner summarizes this study thusly:

‘1. If the fluctuations were reduced at the Copco plants, the Power Company and its customers would be deprived of badly needed peaking capacity;

‘2. Construction of a regulating dam by the Power Company could be justified only if some public agency assumes liability for damages to downstream riparians;

[This conclusion was based on the Supreme Court's decision in Moore v. California Oregon Power Co., 22 Cal.2d 725, 140 P.2d 798. See report, page 55.]

‘3. Cost of a regulating dam must be borne in equitable part by those who believe they will benefit from it—which does not mean power-users.’

This seems to be a fair summary of the report.

After the receipt of this report by the Assembly, by Resolution No. 98 the Senate of the State of California requested a report on the same subject from the Fish and Game Commission:

‘The feasibility of a regulatory dam at Iron Gate on the Klamath River and the advantages of such a dam are matters upon which this Senate needs to be informed in order that it may act advisedly in the premises.’

The report submitted by the Fish and Game Commission largely quoted the prior report furnished the Assembly, and concluded by asking for further time to complete the investigation. The Senate, by Resolution No. 151, gave the Fish and Game Commission nearly two years more for further study. The Commission then prepared and submitted to the Senate a second report, dated December 14, 1950, but before it was submitted the Attorney General of the State of California, at the request of the Commission filed suit against the petitioner, so the Commission refused to make any recommendations to the Senate when the time for its report arrived.

The suit above referred to was instituted in the Superior Court of the State of California, in and for the County of Siskiyou, against petitioner in the name of the state. The complaint was verified by an official of the Division of Fish and Game. The theory of the action was abatement of a public nuisance. The basis for this was that the fluctuations in the level of the Klamath River caused by petitioner's operations endangered and destroyed the life, health and property of the state by (1) killing each year large numbers of fish owned by the state, and (2) causing drownings and otherwise endangering the lives of persons on the river.

The relief sought by the state as pleaded was an injunction against the operation of the plants, and an injunction against interfering with the normal and continual flow of the Klamath River. The state suggested an alternative to this cessation or modification of the operations by the erection of the Iron Gate Dam, downstream from Copco No. 1 and Copco No. 2.

Petitioner interposed a demurrer to the complaint upon the ground, among others, that the court was without jurisdiction to hear or try the cause because (1) this was a matter subject to federal jurisdiction, to wit, the Federal Power Commission, and (2) that, apart from the question of federal jurisdiction, the issues were within the exclusive jurisdiction of the State Public Utilities Commission. The demurrer was overruled on all grounds, and the petitioner made answer on July 11, 1951, to the complaint, again raising the jurisdictional issue. In the answer petitioner also alleged the filing of an application for license to construct the Big End No. 2 Development on the Klamath River in Oregon, before the Federal Power Commission, which proceeding involved essentially the same issues as those before the Superior Court, County of Siskiyou.

On November 27, 1951, the Federal Power Commission initiated a proceeding before itself by issuing and serving upon petitioner an order to show cause why it should not be required to apply for licenses for its existing plants, Copco No. 1 and Copco No. 2, and thereafter consolidated the license application proceeding with the show cause proceeding.

On June 15, 1952, the State of California petitioned to intervene in the Federal Power Commission proceeding, in which petition the state incorporated all of the allegations of the complaint filed by it in the Superior Court, County of Siskiyou. In filing an answer to this petition the petitioner here incorporated into it all the allegations of its answer in the suit filed against it in the Superior Court, County of Siskiyou. A hearing was held before the Federal Power Commission from June 30 to July 3, 1952, wherein the State of California appeared and was, as a result of that hearing, granted the status of a tentative intervener. At the same hearing the State of California also introduced evidence and testimony for the purpose of proving the allegations contained in the complaint in the state court suit, which were incorporated by it into its petition for intervention. On July 3, 1952, the federal proceeding was closed, and the issues presented therein were left pending and undecided. On August 12, 1952, the Federal Power Commission entered its order granting intervention, and the state became a formal party to the proceeding.

On August 6, 1952, the petitioner here gave notice that it would move the Superior Court, County of Siskiyou, for leave to file its amendment to its answer and a supplemental answer, and would also move to dismiss the complaint in the state court suit; further providing that if the motion to dismiss were denied it would move to stay all proceedings in the state court suit until the conclusion of the federal proceeding. All of the motions were heard on September 12, 1952, in the Superior Court, County of Siskiyou, and were denied on September 16, 1952. The state subsequently filed in the Superior Court, County of Siskiyou, a motion to set the suit for trial, and petitioner thereupon sought a writ of prohibition to have the superior court restrained and prohibited from proceeding to try the cause.

The grounds upon which petitioner relies in support of its petition for prohibition are:

1. The superior court is without jurisdiction;

2. The petitioner will be subjected to irreparable loss and damage and to oppression, harassment and vexatious litigation in that it will be compelled to proceed to trial in the state court suit of the same controversy and the same issues that are the subject of the federal proceeding.

The major contentions urged by petitioner are as follows:

1. Respondent court is without jurisdiction because Congress has occupied the field by a grant of exclusive primary jurisdiction to the Federal Commission and the State has failed to exhaust its remedy before the Commission.

2. Respondent court is without jurisdiction because the State Commission has exclusive state jurisdiction over the subject matter.

3. Respondent court is without jurisdiction in equity because there is an adequate remedy at law.

Petitioner first argues that the respondent court is without jurisdiction to try the action filed by the state because Congress has occupied the field by a grant of exclusive primary jurisdiction to the Federal Power Commission, and the state has failed to exhaust its remedy before the Commission. The state in reply states that none of the cases cited by petitioner which deal with the scope and purview of the Federal Power Act, 16 U.S.C.A. § 791a et seq., hold that a state court of equitable jurisdiction is precluded from abating a nuisance committed by a public utility corporation which is subject to the licensing provisions of the Federal Power Act.

As to the jurisdiction of the Federal Power Commission petitioner cites the following sections of the Federal Power Act:

Section 4. ‘The Commission is hereby authorized and empowered—* * *

‘(e) To issue licenses to * * * any corporation organized under the laws of the United States or any State thereof, * * * for the purpose of constructing, operating, and maintaining dams * * * [and] power houses * * * for the development * * * of power across, along, from, or in any of the streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce * * * among the several States * * *;

‘(g) Upon its own motion to order an investigation of any occupancy of, * * * for the purpose of developing electric power, * * * streams or other bodies of water over which Congress has jurisdiction under its authority to regulate commerce * * * among the several States by any person, corporation, State, or municipality and to issue such order as it may find appropriate, expedient, and in the public interest to conserve and utilize the navigation and water-power resources of the region.’

Section 23(b). ‘It shall be unlawful for any person * * * for the purpose of developing electric power, to construct, operate, or maintain any dam, * * * power house, or other works incidental thereto across, along, or in any of the navigable waters of the United States, * * * except under and in accordance with the terms of * * * a license granted pursuant to this Act. * * *’

Also, in respect to matters of life, health and property, a specific provision of the Federal Power Act is cited by petitioner:

Section 10. ‘All licenses issued under this Part shall be on the following conditions: * * * (c) That the licensee * * * shall conform to such rules and regulations as the Commission may from time to time prescribe for the protection of life, health, and property. * * *’

In support of its contention that the field has been occupied by Congress through its grant of exclusive primary jurisdiction to the Federal Power Commission, petitioner cites the case of First Iowa Hydro-Electric Coop. v. Federal Power Commission, 328 U.S. 152, 66 S.Ct. 906, 90 L.Ed. 1143, which case involved a writ of certiorari to review a judgment affirming a dismissal of an application for a license to construct a water power project by the Federal Power Commission. The Commission had dismissed the application because the applicant had not complied with section 9(b) of the Federal Power Act in submitting satisfactory evidence to the Commission that it had met all necessary requirements of the laws of the state in which it contemplated constructing the project. In reversing the affirmance of the dismissal the Supreme Court said, 328 U.S. at pages 167–168, 66 S.Ct. at page 913:

‘In the Federal Power Act there is a separation of those subjects which remain under the jurisdiction of the states from those subjects which the Constitution delegates to the United States and over which Congress vests the Federal Power Commission with authority to act. To the extent of this separation, the Act establishes a dual system of control. The duality of control consists merely of the division of the common enterprise between two cooperating agencies of Government, each with final authority in its own jurisdiction. The duality does not require two agencies to share in the final decision of the same issue. Where the Federal Government supersedes the state government there is no suggestion that the two agencies both shall have final authority. In fact a contrary policy is indicated in §§ 4(e), 10(a)(b) and (c), and 23(b). In those sections the Act places the responsibility squarely upon federal officials and usually upon the Federal Power Commission. A dual final authority, with a duplicate system of state permits and federal licenses required for each project, would be unworkable. ‘Compliance with the requirements' of such a duplicated system of licensing would be nearly as bad. Conformity to both standards would be impossible in some cases and probably difficult in most of them.’

And 328 U.S. at page 181, 66 S.Ct. at page 920:

‘The detailed provisions of the Act providing for the federal plan of regulation leave no room or need for conflicting state controls.’

At page 182 of 328 U.S., at page 920 of 66 S.Ct. the court also quoted from the case of United States v. Appalachian Electric Power Co., 311 U.S. 377, 405 and 426, 61 S.Ct. 291, 85 L.Ed. 243, which case had to do with the general problem before us and the one before the Supreme Court in the Iowa case:

“The states possess control of the waters within their borders, ‘subject to the acknowledged jurisdiction of the United States under the Constitution in regard to commerce and the navigation of the waters of rivers.’ It is this subordinate local control that, even as to navigable rivers, creates between the respective governments a contrariety of interests relating to the regulation and protection of waters through licenses, the operation of structures and the acquisition of projects at the end of the license term. But there is no doubt that the United States possesses the power to control the erection of structures in navigable waters.

“The point is that navigable waters are subject to national planning and control in the broad regulation of commerce granted the Federal Government. The license conditions to which objection is made have an obvious relationship to the exercise of the commerce power. Even if there were no such relationship the plenary power of Congress over navigable waters would empower it to deny the privilege of constructing an obstruction in those waters. It may likewise grant the privilege on terms. It is no objection to the terms and to the exertion of the power that ‘its exercise is attended by the same incidents which attend the exercise of the police power of the states.’ The Congressional authority under the commerce clause is complete unless limited by the Fifth Amendment.”

Subsequent to the issuance of the alternative writ of prohibition by this court, after a hearing in which the State of California participated as an intervener, the Federal Power Commission determined that ‘the Klamath River in Oregon and California is a navigable stream of the United States' and that ‘By reason of the occupancy of navigable waters of the United States and use of surplus waters from a government dam, each and all of the five hydroelectric developments of the California Oregon Power Company, on the Klamath or Link River [including Copco No. 1 and Copco No. 2], are subject to the licensing authority of the Commission, as set forth in Section 4(e) of the Federal Power Act.’ The Federal Power Commission ordered that petitioner herein file applications for license for the existing plants of Copco No. 1 and Copco No. 2, and the Commission also reserved the right to determine at a later date whether all of the power developments constructed, operated and maintained by petitioner on the Klamath River shall be encompassed by a single license, and also ‘Whether or not such single license, if required, should contain a provision reserving the Commission's authority in the interests of protection of life, health, and property, to require the installation of reregulating facilities at or near the Iron Gate site on the lower Klamath River, in California, after notice and opportunity for hearing.’

It is therefore clear not only that the Klamath River is a navigable stream and that all power installations in or on said river are within the exclusive jurisdiction and control of the Federal Power Commission under the Federal Power Act but it is also clear that the Federal Power Commission has assumed jurisdiction over all power installations in said river. The State of California, in the action filed in the Superior Court in Siskiyou County, is seeking to interfere with, regulate, alter or control the power installations of petitioner. To be sure the state asserts that it is only seeking to abate a nuisance and prevent destruction of life and property, but the indisputable fact remains that what the state asserts is a nuisance can only be abated by the cessation of the operations by petitioner of plants Copco No. 1 and Copco No. 2 or the installation of a regulating dam at Iron Canyon. Under the Federal Power Act it appears that in no event could petitioner erect this dam without a license from the Federal Power Commission so to do. If, pursuant to a state court decree the petitioner did undertake to construct the Iron Gate Dam, it could be enjoined from so doing without a license, or a determination by the Commission that one is not needed. United States v. Appalachian Electric Power Co., supra; 16 U.S.C.A. §§ 820, 825m. Of course, the state suggested an alternative to erecting Iron Gate Dam, namely, that petitioner could modify or cease its operations in order to stop the fluctuation in the level of the Klamath River. We are convinced that the subject matter of the action filed by the state against petitioner is one within the exclusive jurisdiction of the Federal Power Commission and that no duality of control exists. The Federal Power Act gives the Commission broad power to prescribe the operations of plants licensed by it. See 16 U.S.C.A. § 799. The Commission has taken under consideration Copco's entire operation. If it licenses petitioner and directs the manner of operation to continue as it now is, and a state court enjoins petitioner from operating as it now is so as to stop the fluctuation in the level of the Klamath River, the petitioner in obeying that mandate would be acting in violation of the terms of its license. Again it would be subject to action by the Commission for this violation, causing a possible suspension or revocation of its license, or an injunction ordering petitioner to resume operations pursuant to the terms of the license. 16 U.S.C.A. §§ 820, 825m.

We are therefore of the opinion that the state court is not entitled to proceed with the action filed by the state in the Superior Court when the Federal Power Commission has already taken the matter under submission and will conceivably grant a license with conditions of operation therein that may nullify the force of the state court decree, even if the court had jurisdiction to grant it. Viewing the comprehensive nature of the Federal Power Act, and considering that the Act and orders of the Commission are the supreme law of the land, we entertain no doubt that the matter is solely within the jurisdiction of the Commission. As stated in Bethlehem Steel Co. v. New York Labor Relations Board, 330 U.S. 767, 772, 67 S.Ct. 1026, 1029, 91 L.Ed. 1234:

‘It long has been the rule that exclusion of state action may be implied from the nature of the legislation and the subject matter although express declaration of such result is wanting.’

As stated in Adler v. Chicago & Southern Air Lines, Inc., D.C., 41 F.Supp. 366:

‘* * * when Congress has created an administrative commission, board or other agency with jurisdiction over and power to regulate some particular field of endeavor, the courts, both state and federal, are without jurisdiction or power to grant relief to any person complaining of any act done or omitted to have been done, if the act or omission is of such a nature as to be within the sphere of regulation of the administrative agency involved, until such time as the person complaining has exhausted his remedies before such administrative body.’

We agree with the contention of petitioner that before the state would be entitled to proceed with any action such as the instant action it must first exhaust its administrative remedy before the Federal Power Commission. As stated by Chief Justice Gibson in Abelleira v. District Court of Appeal, 17 Cal.2d 280, at page 292, 109 P.2d 942, at page 949, 132 A.L.R. 715:

‘In brief, the rule is that where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act. The authorities to this effect are so numerous that only the more important ones need be cited here as illustrations. [Citing numerous cases.]’

And as stated in United States v. Superior Court, 19 Cal.2d 189, at page 194, 120 P.2d 26, at page 29:

‘It is now firmly established in this state that a litigant must invoke and exhaust an administrative remedy provided by statute before he may resort to the courts. Jurisdiction to entertain an action for judicial relief is conditioned upon a completion of the administrative procedure. Abelleira v. District Court of Appeal, 17 Cal.2d 280, 109 P.2d 942, 132 A.L.R. 715.’

The Federal Power Act gives a broad remedy in matters such as those in issue. See 16 U.S.C.A. § 825e, to the effect that ‘Any person, State, municipality, or State Commission complaining of anything done or omitted to be done by any licensee or public utility in contravention of the provisions of this chapter may apply to the commission * * *.’ The Act goes on to provide for investigation and hearings. Thus it is clear that the state is given a remedy before the Commission, and it also appears that the state has appeared and intervened in the proceedings before the Commission. We cannot assume that the state will not obtain, from the Federal Power Commission and the federal courts, any relief to which it is entitled.

We therefore conclude that because the Klamath River is a navigable stream and by reaon of the provisions of the Federal Power Act all power installations in or on said river are within the exclusive jurisdiction of the Federal Power Commission, and that until the proceedings before the Federal Power Commission are concluded the State of California is not entitled to bring to trial in the Superior Court the action which it has filed in Siskiyou County.

It is unnecessary to discuss the other contentions urged in the briefs.

Let the writ of prohibition issue.

SCHOTTKY, Justice.

VAN DYKE, P. J., and PEEK, J., concur.

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