Precluding Government Relitigation of Statutory Interpretations: Clark-cowlitz Joint Operating Agency v. Federal Energy Regulatory Commission

• Publication year: 1986

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 10, No. 2WINTER 1987

Precluding Government Relitigation of Statutory Interpretations: Clark-Cowlitz Joint Operating Agency v. Federal Energy Regulatory Commission

Bradley Bishop Jones

I. Introduction

Within the judiciary and the fields of administrative law and civil procedure, a debate continues concerning the applicability of the preclusion doctrines of res judicata and collateral estoppel(fn1) against the government. In general, the government argues that it should have full use of these procedural doctrines, but that the role and function of the government sufficiently distinguish it from private litigants such that the preclusion doctrines should have no force against the government.(fn2) Conversely, others argue that the doctrines should be applied uniformly against either private parties or the government.(fn3) As for the judiciary, the courts have failed to propound any reasoned analytic approach for determining when the preclusion doctrines may be applied against the government and have instead vacillated between the two extremes on a case-by-case analysis.(fn4)

This Note explores the issue of the applicability of the preclusion doctrines against the government. Specific focus will be placed upon the doctrines' application in cases where the government has previously litigated a question of statutory interpretation. The exploration begins with the recent case of Clark-Cowlitz Joint Operating Agency v. Federal Energy Regulatory Commission(fn5) (Clark-Cowlitz), a classic factual setting for analyzing this issue. The Note will then proceed to briefly examine the historical developments of the preclusion doctrines and the United States Supreme Court's recent and continuing struggle with the application of the doctrines against the government. It is the position of this Note that the Court's struggle stems from a failure to analyze the doctrines within the context of the conflicts between the policies served by the application of preclusion doctrines and the policies and purposes underlying government administration. From an analysis of these competing policies, this Note will then propose a functional standard for determining when the preclusion doctrines should be applied against the government to preclude relitigating questions of statutory interpretation. Applying this standard to the facts presented by Clark-Cowlitz demonstrates that the holding of the District of Columbia Circuit Court of Appeals, while ultimately correct, was flawed in its analysis.

A. Clark-Cowlitz Joint Operating Agency v. FERC

The factual setting from which Clark-Cowlitz arose is complex. At the center of the controversy is the interpretation of a provision of the Federal Water Power Act, passed by Congress in 1920.(fn6) The Act, designed to promote the orderly development of the nation's hydroelectric power potential,(fn7) authorizes the federal government to issue licenses for limited periods of duration (usually 50 years) for the construction and operation of dams on the nation's waterways.(fn8)

A key provision of the Act made public utility entities(fn9) preferred applicants in the licensing process.(fn10) If a particular hydroelectric generating site was sought by both a public and a private utility,(fn11) the Act provided that if the competing public entity was "equally well adapted, to conserve and utilize in the public interest the water resources,"(fn12) then "the [Federal Energy Regulatory] Commission shall give preference" to the public utility in the issuance of the license.(fn13)

During the 1970's, some of the initial licenses granted by the federal government began to expire. Most of these original licenses had been issued to private utilities. However, since the 1920's the number of public utilities within the country has grown enormously.(fn14) Many of these public utilities were located adjacent to or had taken over private utility service territories. Thus, as the old licenses expired, some public utilities filed competing applications to become the new licensees of existing hydroelectric projects held by private utilities. This placed FERC in the position of having to determine whether the Act's public preference provision applied to relicensing proceedings.

In the mid-1970's, the public utility of Bountiful, Utah filed the first competing application for a license held by a private utility. Shortly thereafter, in 1976, the Clark and Cowlitz Public Utility Districts (PUDs) of Washington formed a joint operating agency for the express purpose of filing a competing application for another existing project, the Merwin Dam, located in southwestern Washington State.(fn15) The Merwin Dam was originally constructed by a private utility pursuant to a 50 year license issued by the Federal Power Commission(fn16) in 1929, and was scheduled for a relicensing in 1979.(fn17)

FERC recognized the critical nature of the issue of whether the Act's public utility preference provision applied to relicensing as well as original licensing cases. In September of 1978, FERC announced the initiation of a generic proceeding to resolve this issue of statutory interpretation by declaratory order.(fn18) Because of the national implications of this issue, intervention was sought by both the public and private utility industry, en masse.(fn19) In May, 1979, FERC granted the interventions and established a briefing schedule for the "resolution of a purely legal issue, a question of statutory construction which in no way hinges upon the facts of a particular case."(fn20)

Following the filing of briefs by all interested parties, FERC conducted an unprecedented full day of oral argument.(fn21) Then, in June, 1980, FERC issued an order (hereinafter the Bountiful decision) declaring that preference did apply in relicensing cases so long as the public utility applicant's plans were first found "equally well adapted."(fn22)

Disappointed by FERC's Bountiful decision, the private utilities appealed to the Eleventh Circuit Court of Appeals.(fn23) Approximately two years later, on September 17, 1982, the Eleventh Circuit rendered its decision affirming FERC's interpretation in the case of Alabama Power v. FERC.(fn24) The Alabama Power court held that FERC's interpretation of the Act, that public utility preference applied in relicensing cases, was "consistent with the statute's language, structure, scheme, and available legislative history."(fn25)

Between the time of FERC's initial ruling in Bountiful and the Eleventh Circuit's affirmance in Alabama Power, President Reagan was elected. Within the first two years of office, President Reagan appointed four new members to the five member FERC Commission.(fn26) The new Commission members' disdain for public utilities in general, and the Federal Water Power Act's preference provision in particular, soon became apparent.(fn27) On April 25, 1983, the Commission met in secret session(fn28) to assess available methods for reversing the Commission's prior ruling in the Bountiful decision.(fn29)

Prior to the Commission's secret meeting, the actual Mer-win Dam relicensing case was tried before an administrative law judge. During this proceeding, the existing Merwin Dam license holder, the Pacific Power and Light Company, conceded that the Bountiful decision was controlling on the issue of whether the Act's preference provision applied to the specific Merwin Dam case.(fn30) At the conclusion of the Merwin Dam proceeding, the administrative law judge ruled that Clark-Cowlitz was as "equally well adapted" to operate the project as the current private utility license holder; "preference shall therefore be given, pursuant to section 7(a) of the Act, to the application of [Clark-Cowlitz] and a license should be issued to" Clark-Cowlitz.(fn31)

When the administrative law judge's decision in the Merwin Dam case came before the FERC Commission, the Commission chose to utilize this individual case as the vehicle for reversing the statutory interpretation issue decided in Bountiful.(fn32) The Commission stated:

Today, in the perspective of this adversary relicensing proceeding, we have come to the conclusion that Bountiful was wrong and should be overruled. We believe that Bountiful's conclusion was legally erroneous and that [public utilities] have a relicensing preference against all adversary non-preference applicants other than the "original licensees" in possession [of the existing project] . . . .(fn33)

The Commission also stated that "no legal impediment" to overruling Bountiful existed.(fn34) It hinted that the Eleventh Circuit may have been "misled" by the prior FERC Commission when it decided the Alabama Power case and, therefore, its decision did not bind FERC.(fn35)

Clark-Cowlitz then filed suit against FERC in the District of Columbia Circuit Court of Appeals. Since Clark-Cowlitz was one of the first entities to file a competing license in a relicensing proceeding before FERC, Clark-Cowlitz was a party in each of the proceedings designed to resolve the statutory construction of the Act's preference provision. Clark-Cowlitz appeared before FERC in the Bountiful case and intervened as a defendant with FERC when the private utilities challenged FERC's Bountiful holding in Alabama Power.(fn36) Accordingly, Clark-Cowlitz's suit alleged, among other things,(fn37) that the preclusion...