Public Serv. Comm'n of PR v. Havemeyer
Headline: Puerto Rico irrigation dispute: Court upholds commission's cancellation of a water-use franchise, reversing the federal appeals court and letting the cancellation stand, affecting landowners' water access and local flood control.
Holding: The Court ruled that the public service commission lawfully canceled the irrigation privilege because the holders' failure to keep the outlet clear caused flooding, and the appeals court's reversal was itself reversed, so the cancellation stands.
- Affirms power to cancel public-use franchises for breach of duties.
- Leaves the commission's irrigation cancellation in effect for the local area.
- Holders must maintain waterways or risk losing privileges.
Summary
Background
In 1901 Puerto Rico’s executive council granted a long-term franchise to use water from Guanica Lake for irrigation; a New Jersey company and later a local partnership, Russell & Company, held the irrigation right. The grant allowed a dam and the taking of large amounts of water but said the lake must not be raised above customary levels and required approval of work plans. After complaints from the municipality of Lajas that flooding had damaged farms and roads, the public service commission investigated and canceled only the irrigation privilege in 1929, finding the outlet obstructed and waters held back from about 1926 to 1928.
Reasoning
The Court considered whether the commission had authority to cancel and whether federal courts could review that action. Relying on the Organic Acts and local law, the Court held the commission could cancel a quasi-public franchise for breach of its conditions. It explained that federal courts may review whether the commission’s order was reasonable (not arbitrary, capricious, or confiscatory) and based on competent evidence. The Court also rejected a late procedural objection about who technically filed the appeals, finding the partnership and its members were properly before the courts. On the facts—obstruction of the outlet, long continuation of flooding, and resulting injuries—the Court found the commission’s cancellation was not unreasonable.
Real world impact
The decision leaves the commission’s cancellation in effect and confirms that holders of public-use privileges must perform duties like keeping outlets clear or risk losing rights. It affirms limited judicial review of administrative cancellations, protecting local property and road interests harmed by neglect.
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