No Neckties, No Cigars

The Supreme Court of the District of Columbia last week handed down a decision which, if upheld by the Supreme Court of the U. S., may deeply affect relations between the U. S. and hydroelectric companies.

Ordinarily, 50-year licenses are issued to hydroelectric plants provided that the Government audits the power company's investment so as to have data for rate-regulation and for an option of buying the plant when the license expires. Last July the old Power Commission (consisting of three Cabinet members) asked Attorney General Mitchell if it would be legal to issue to Appalachian Power Co. a special, permanent "minor part'' license omitting the Federal audit,* for its plant at New River, Va. The Attorney General forthwith declared the special license valid for plants not on navigable streams. To support his interpretation of the Water Power Act, he declared that if the law were read so as to permit no escape from Federal valuation of hydroelectric property, it would be impossible "to avoid serious questions regarding the constitutionality of this act." Thus he dealt a distinct blow to those who favor Government regulation, and even operation, of power companies.

Meanwhile, the Commission's Chief Accountant William V. King was busy at the Piney, Pa. plant of Clarion River Power Co., which the company claimed cost $11,032,816. He recommended that $6,387,731 of this amount be struck out, including such promotion items as $144 for neckties, $4,000 for cigars and dinners. The Clarion company was furious. Seizing upon the Attorney General's New River decision as precedent, it applied for an injunction to prevent the Federal audit at Piney from going into the records as true.

This application the court last week denied. Assuming the constitutionality of the Water Power Act, Justice Jesse C. Adkins gave a quite different interpretation from "General" Mitchell's, thus: "It is clear [that the Act provides] that . . . excessive profits are to be prevented by regulation of rates or a recapture of a portion of the profits. . . . [Therefore] it is of the utmost importance . . . that the actual legitimate cost . . . should be known . . . promptly."

-"Minor part" licenses are issued for parts of plants to be constructed on navigable streams, when the audit will not be made until the whole project is completed.

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