United States v. 42.13 Acres of Land

The issue in this case is whether a federal condemnation award has to include the value of an expectation of renewal of a federal license.

I

FACTS

The Federal Power Commission issued a license pursuant to the Federal Power Act, 16 U.S.C. §§ 791a, 797(e), et seq., to Pacific Gas & Electric Company (PG & E) in 1929, to use federal land on the Stanislaus River for a dam, reservoir and plant to generate electricity. The license would by its express terms expire June 1, 1977. This was then called the Melones dam and reservoir, and subsequently became known as the Old Mel-ones hydroelectric project.

In 1944, Congress authorized a new and bigger project at the same site, called “New Melones.” Flood Control Act of 1944, P.L. No. 78-534. Even though it was authorized and planned, this New Melones project was not funded or built in the 1940’s. In the 1950’s, the irrigation districts nearby arranged with PG & E to assist them in building three dams separate from the Melones *955 project. To enhance its ability to get long term financing, PG & E sought to extend its license on Old Melones. The Federal Power Commission was willing to do that, but sought to protect its flexibility…