States directly concerned has not provided a commission or other authority to enforce the requirements of this section within such State or to regulate and control the amount and character of securities to be issued by any of such parties, or such States are unable to agree through their properly constituted authorities on the services to be rendered or on the rates or charges of payment therefor, or on the amount or character of securities to be issued by any of said parties, jurisdiction is hereby conferred upon the commission, upon complaint of any person aggrieved, upon the request of any State concerned, or upon its own initiative, to enforce the provisions of this section to regulate and control so much of the services rendered, and of the rates and charges of payment therefor as constitute interstate or foreign commerce, and to regulate the issuance of securities by the parties included within this section, and securities issued by the licensee subject to such regulations shall be allowed only for the bona fide purpose of financing and conducting the business of such licensee."

The second paragraph of section 20 reads as follows:

"The administration of the provisions of this section, so far as applicable, shall be according to the procedure and practice in fixing and regulating the rates, charges, and practices of railroad companies as provided in the act to regulate commerce, approved February 4, 1887, as amended, and that the parties subject to such regulation shall have the same rights of hearing, defense, and review as said companies in such cases."

The second paragraph refers not only to the act of February 4, 1887, but to all amendments thereto, and requires that the procedure and practice of the Federal Power Commission in the administration of section 20 shall be in accordance with the procedure and practice under the interstate commerce act so far as they are applicable; and that the parties subject to such regulation shall have the same rights of hearing, defense, and review as are accorded to railroad companies under the administration of the interstate commerce act. I think this provision requires the commission to follow in principle, but not necessarily in detail, the procedure and practice, so far as applicable, under the interstate commerce act, in the regulation of corresponding provisions of that act. Answering the question more directly, I would state that the procedure and practice referred to in the provision under consideration are in substance the procedure and practice prescribed by the interstate commerce act in the regulation of corresponding matters under the provisions of that act, as amended, in so far as same are applicable.

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Question 2. To what extent are the provisions of section 20 (a), or other sections, of the interstate commerce act applicable in the administration of section 20 of the Federal water power act by this commission?

Answer. Section 20a of the interstate commerce act deals with the issuance of securities by common carriers and the assumption of liability by them with respect to the securities of others. The interstate commerce act is not, of course, binding upon the Federal Power Commission, but it is to be regarded as a statute in pari materia and may be referred to in determination of the meaning of corresponding terms used in section 20 of the Federal water power act.

For instance, the definition of the term "securities" may be referred to in defining the same term as used in section 20 of the Federal water power act. The requirement of section 20 is that the commission shall follow the procedure and practice under the interstate commerce act as amended, not the substantive provisions of that act. Section 20a of the interstate commerce act expressly makes it unlawful for carriers “to assume any obligation or liability as lessor, lessee, guarantor, indorser, surety, or otherwise, in respect of the securities of any other person, natural or artificial," etc. This provision is a

substantive provision and is not binding on the Federal Power Commission, but the commission may, I think, provide by regulation against such assumption of liability as reasonably necessary to make effective its regulation of securities. I would, therefore, answer this question by stating that the provisions of section 20a or other sections of the interstate commerce act are binding only in so far as they prescribe or authorize procedure and practice, and that they may be referred to as statutes in pari materia in determining the meaning of corresponding terms used in section 20 of the Federal water power act. In so far as they prescribe procedure and practice they confer on the classes of persons subject to regulation under section 20 of the Federal water power act analogous rights, substantive in character, and are, therefore, binding to this extent.

Question 3. To what extent is this commission (a) required or (b) authorized in its administration of section 20 of the Federal water power act to conform to or to adopt the "Instructions to carriers in relation to the issuance of securities, etc., under section 20a of the interstate commerce act," issued by the Interstate Commerce Commission by its order of July 22, 1924?

Answer. The instructions to carriers in relation to the issuance of securities, etc., under section 20a of the interstate commerce act, issued by order of the Interstate Commerce Commission July 22, 1924, prescribe rules of procedure and practice in the administration of that section of the interstate commerce act which confers authority on the Interstate Commerce Commission to regulate securities, etc., issued by carriers subject to that act. In so far as they are applicable to the regulation by the Federal Power Commission of securities under section 20 of the Federal water power act and are in accord with the provisions of the interstate commerce act as amended, they are, in my opinion, binding on the Federal Power Commission in principle but not necessarily in detail. The commission is authorized to make its procedure and practice conform, in substance, to said instructions so far as they are applicable and conform to the statute under which they were issued.

Question 4. What are the "rights of hearing, defense, and review which this commission is required to accord to its licensees in administering the provisions of section 20 of the Federal water power act?

Answer. The interstate commerce act requires, in various connections, that the decisions of the commission shall be made only after full hearing of the parties in interest. Thus, in section 15, subparagraph (3), the commission may establish through rates, etc., only "after full hearing upon complaint or upon its own initiative without a complaint"; and in section 13, subparagraph (4), it is provided that "whenever in any such investigation the commission, after full hearing, finds that any such rate," etc., is unreasonable or discriminatory, it may prescribe the rate, etc. And, with respect to the exercise by the Interstate Commerce Commission of its authority over the issuance of securities under section 20a the commission is required "to cause notice" of the application "to be given to and a copy filed with the governor of each State in which the applicant carrier operates"; and it is provided that the commission may hold hearings, if it sees fit, to enable it to determine its decision upon the application for authority." While it is provided that the commission may "from time to time, make or amend such general rules or orders as may be requisite for the order and regulation of proceedings before it" (sec. 17, interstate commerce act), such authority must, of course, be subordinate to the statutory provisions requiring its decisions be reached only after full hearing of the parties in interest. In section 16a it is provided that "after a decision, order, or requirement has been made by the commission in any proceeding any party thereto may at any time make

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application for rehearing of the same, or any matter determined therein, and it shall be lawful for the commission in its discretion to grant such a rehearing if sufficient reason therefor be made to appear." In my opinion, the provision under consideration requires the commission in the exercise of its authority under section 20 to give notice to the parties in interest and to give them full opportunity to be heard either before the commission or a member or representative thereof, with the right to apply for a rehearing of any decision reached, rehearing to be granted or denied in the discretion of the commission. It also subjects the decisions of the commission to judicial review as in the case of decisions of the interstate commerce act.

Question 5. To what extent, if any, does the paragraph quoted apply to the regulation by this commission of rates, services, or securities under the authorization of section 19 of the Federal water power act?

Answer. The provision under consideration is expressly limited to the administration of the provisions of section 20. The commission may, however, in its discretion, apply the same procedure and practice to the regulation of services, rates, and securities under the authority of section 19 of the Federal water power act. Whether or not the commission follows such procedure, it must exercise its authority under section 19, subject to the usual requirement that judicial or quasijudicial authority can only be exercised after according parties in interest reasonable opportunity to be heard. As a practicable matter, the same procedure and practice should be adopted for the administration of the provisions of both sections. Approved by the commission May 23, 1925. (Fifth annual report, p. 145.)

APPLICATIONS FOR LICENSE UNDER SECTION 23-RIGHTS NECESSARY THEREFOR

Where application was made by the Southern California Edison Co. for a license under section 23 of the Federal water power act for its Tule River project originally authorized by permit under the act of February 15, 1901 (31 Stat. 790), which act made any permit issued thereunder revocable in the discretion of the authority granting it and provided that it should not be "held to confer any right or easement or interest " in the lands authorized to be used, the applicant having acquired the project by assignment from the permittee: Held, That applications for license under the provisions of section 23 are not authorized unless the applicant "holds or possesses a permit, right of way, or authority of such a nature that it may, at its option, continue to maintain and operate its project or projects under such permit, right of way, or authority in lieu of applying for and receiving a license under the provisions of said section"; that the permit, in view of its terms, the provisions of said act of February 15, 1901, and the regulations issued thereunder was personal to the permittee and not assignable, and the applicant therefor did not hold or possess such permit, right of way, or authority as would entitle it to apply for a license under said section 23. Held, further, That while the applicant was not entitled to apply for and receive a license for its project under the provisions of section 23, the commission may issue it a license under the provisions of section 4 of the act; that is, under the general authority to issue licenses for power development. Held, further, That the provisions of section 23 making the fair value of the project, as of the date of the license the amount to be allowed as the net investment is applicable only to constructed projects licensed under that section, and that, as to other constructed projects, the commission must have the net investment determined under the general provisions of the statute; that is, on the basis of the actual legitimate original cost as provided in the definition of net investment as set forth in section 3 of the act.

Chief Counsel to the Executive Secretary, February 23, 1927.

Approved by the commission March 15, 1927. (Seventh annual report, p. 142.)

DECLARATION OF INTENTION-FORMAL REQUISITES

With respect to certain questions arising out of the conflicting applications of Holston River Power Co. and Tennessee Eastern Electric Co. for power development on the South Fork of Holston River above Kingsport and on the Watauga tributary thereof, streams not navigable within the definition in the Federal water power act: Held, That it is the first duty of the commission to inquire into its own jurisdiction and to determine whether the stream or part thereof where the project will be located is or is not "navigable waters" as defined in the act or, with respect to applications or declarations involving a stream or part thereof not navigable within the definition, whether the interests of interstate or foreign commerce would be affected by the proposed construction; that no particular form of determination with respect to either finding is prescribed in the act, but the commission's determination in both instances should be in the form of a finding of fact based on evidence to support it and opportunity given for hearing if desired; that the legal effect of such determination is to establish jurisdiction administratively, and a recital of the determination should be made a part of the order authorizing the issuance of the permit or license; that determination or finding with respect to navigability being a judicial question is not conclusive, but may be subject to judicial review; and that a finding respecting the effect upon interstate or foreign commerce of the project upon a stream not navigable within the definition would appear to be conclusive if reached in an orderly manner after investigation and hearing, and if reasonably supported by the evidence. Held, That the filing of a declaration of intention or its equivalent, the investigation, and the finding are jurisdictional steps which must be taken before the commission has authority to issue a license for the project or, if it shall find that the interests of interstate or foreign commerce are not affected, before the declarant is authorized to proceed upon compliance with State. laws; that the finding is not with respect to the stream as such or to dams or project works in general, but to a certain "proposed construction" which the declarant intends to erect; that the finding, when made, must be held to relate solely to the particular works involved in the particular declaration; and that for the commission to acquire jurisdiction over any proposal by any other declarant, even though involving the same site and substantially identical works, requires a separate finding by the commission in each such case. Held, That, as no form is prescribed in the act, any language which contains the essential elements of a declaration must be held to meet the requirements of the act; that it must be voluntary and notify the commission of the purposes of declarant to construct project works and be sufficiently definite as to location and character to enable the commission to determine after the required investigation whether or not such works will affect the interests of interstate or foreign commerce; and that if these essential elements are present any form of notice or declaration would satisfy the requirements of the act, although not specifically filed as a declaration of intention under section 23. Held, That both applications are adequate for the purpose, since they have been voluntarily submitted and are sufficiently definite as to purposes of the applicants and as to location and character of the structures to enable a finding to be reached as to the effect on interstate or foreign commerce; that both applications are based on the assumption that the streams are not navigable within the definition of the act and both applications in effect call upon the commission to make a finding with respect to the effect on interstate or foreign commerce; and that they may, therefore, be treated as involving declarations of intention. Chief Counsel to the Executive Secretary, May 11, 1927.

Approved by the commission June 1, 1927. (Seventh annual report, p. 149.)

LICENSES FOR CERTAIN CONSTRUCTED PROJECTS OF UTAH POWER & LIGHT CO.

With respect to certain constructed projects of Utah Power & Light Co.: Held, That license can not be issued under the provisions of section 23 of the Federal water power act for the reason that the applicant did not have at the time of the passage of the act and does not now have such "permit, right of way, or authority" as is described in that section, reference being made to decision of the commission of March 15, 1927: Held, further, That a license may be issued under the general provisions of the act for constructed projects not having such permit, right of way, or authority as described in section 23, but that, as to projects so licensed, the basis

for the net investment is not the fair value of the project as of the date of the license, but is the legitimate cost thereof determined in accordance with the provisions of the act applicable generally to projects licensed thereunder. Chief Counsel to the Executive Secretary, May 20, 1927.

(Seventh annual report, p. 161.)

REGULATION OF RATES, SERVICES, AND SECURITIES

1. When the interstate commerce consists in importation from without a State by a corporation or other agency which itself sells and delivers the imported energy to its customers within the State, on the authority of Pennsylvania Gas Co. v. Public Service Commission of New York (252 U. S. 23), the State may regulate the rates of charges made locally to such customers until the subject matter is regulated by Congress, provided that in so doing the State does not directly regulate or burden interstate commerce; that if the State has not provided a commission or other regulating agency the jurisdiction of the Federal Power Commission applies in full, and if the authority of the State commission or agency applies to a part only of the matters specified in section 20, the jurisdiction of the Federal Power Commission extends to the remainder of such matters.

2. If the power is not distributed in public service by the corporation or other agency importing it, neither the State from which nor the State to which the power is transmitted has any regulatory jurisdiction in the matter (Kansas Gas Co. case, 265 U. S. 298; Attleboro case, 273 U. S. 83); that having no individual jurisdiction, they can not acquire it jointly by agreement between themselves, except by compact entered into with the consent of Congress as provided in paragraph 3, section 10, Article I of the Constitution; and that in the absence of such compact the only agency with authority to regulate the matters specified as to commerce of this character is the Federal Power Commission; that, subject to the limitations imposed, the jurisdiction extends to licensees of the commission, its subsidiary corporations, if stock is owned or controlled directly or indirectly by the licensee, persons, associations, and corporations purchasing power from the licensee for distribution or use in public service.

3. As to intrastate commerce, the authority of the commission under section 19 to regulate rates, services, and securities may be exercised only to the extent and as long as the State has not provided its own agencies of regulation, and only to the extent that the acceptance of such jurisdiction is a contractual obligation enforcible on the parties. The jurisdiction under this section extends to licensees of the commission and to their customers only in so far as they are engaged in the public service.

4. As to filing of a complaint by any person aggrieved, or of a request by any State concerned: Held, That upon the filing of such complaint or request, it is the duty of the commission, and not a matter within its discretion, to exercise jurisdiction to regulate rates, services, or securities; that the character of grievance which entitled any person to invoke the jurisdiction of the commission must be direct and pecuniary; that as to rates charged, or services rendered, any person whose pecuniary interests are directly affected would be entitled to file complaint, and as to the issuance of securities, any person would be entitled to file complaint, if such issuance would have the effect of increasing the rates or impairing the services, or of impairing the earning power or market value of the securities of such corporation owned by such person; that any State concerned is one of the States from which, through which or to which the said power or any part thereof is transmitted or delivered in interstate commerce, and that the request must be directed toward the performance by the commission of some act within the commission's jurisdiction and that the request must be by the officer or agent of the State authorized to make it.

5. If complaint or request of the character contemplated by sections 19 and 20 be filed with the commission with regard to the issuance or proposals for issuance of securities, upon notice of such complaint or request, or upon notice from the commission of its intention to exercise the jurisdiction conferred upon it with respect to securities, it will thereafter be unlawful for any parties served with such notice to issue the proposed securities unless and until the commission shall have dismissed the complaint, refused the request, or withdrawn its notice. Chief Counsel to the Executive Secretary, December 20, 1928.

Subject: Regulation of rates, services, and securities by the Federal Power Commission under sections 19 and 20 of the Federal water power act.