Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-01206/USCOURTS-caDC-05-01206-0/pdf.json

Parties Involved:
Energie Group, LLC
Petitioner
Federal Energy Regulatory Commission
Respondent
Elaine Hitchcock
Petitioner

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted December 4, 2007 Decided December 21, 2007 

No. 05-1206 

ENERGIE GROUP, LLC AND

ELAINE HITCHCOCK, 

PETITIONERS

v. 

FEDERAL ENERGY REGULATORY COMMISSION, 

RESPONDENT

Consolidated with 

06-1141, 06-1429 

On Petitions for Review of Orders of the 

Federal Energy Regulatory Commission 

 Carolyn Elefant was on the brief for petitioners. 

 John S. Moot, General Counsel, Federal Energy 

Regulatory Commission, Robert H. Solomon, Solicitor, and 

Carol J. Banta, Attorney, were on the brief for respondent. 

USCA Case #05-1206 Document #1087724 Filed: 12/21/2007 Page 1 of 6
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 Before: HENDERSON, GARLAND and BROWN, Circuit 

Judges. 

 Opinion for the Court filed by Circuit Judge BROWN. 

 BROWN, Circuit Judge: These consolidated petitions seek 

review of the Federal Energy Regulatory Commission’s 

(FERC’s) denial of preliminary permits and licenses to 

construct and operate hydroelectric power plants on existing 

dams. In each case, FERC denied the permits and then the 

licenses because it found the responsible individuals unfit. 

We considered this case on the record from the agency and on 

the briefs filed by the parties, pursuant to D.C. Circuit Rule 

34(j). We deny the petitions. 

I 

A 

 Energie Group (Energie), L.L.C., has three shareholders, 

including Elaine Hitchcock, who has operated a number of 

hydroelectric projects in the past. This appeal involves a 

project she organized at Williams Dam in Indiana. FERC has 

already terminated an earlier project run by Ms. Hitchcock at 

Williams Dam for noncompliance, and its order in this case 

described other projects in which Ms. Hitchcock’s companies 

violated the terms of their licenses, failed to comply with 

FERC orders, or operated dams improperly and unsafely. 

Energie Group, 109 F.E.R.C. ¶ 62,225 at 64,493 (2004). 

FERC noted Hitchcock had operated one project without a 

license at all, a violation culminating in a $15,000 civil 

penalty in 1995. Id. 

 Because the Commission found Hitchcock, “as an agent 

for Energie[,] responsible for the management of the 

company,” it denied Energie’s permit application. Id. at 

64,495. Although, as a general policy, the Commission will 

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issue preliminary permits unless a permanent legal 

impediment precludes it, FERC had previously found Ms. 

Hitchcock unfit to hold a license, a fact that undermined any 

public interest in granting Energie a preliminary permit. 

Energie Group, 111 F.E.R.C. ¶ 61,072, at 61,339 (2005). 

Accordingly, FERC denied a request for rehearing submitted 

by both Energie and Ms. Hitchcock. Id. Energie also applied 

for a license while its permit application was pending, and, as 

anticipated, FERC denied the license application, [JA 173], 

and denied Energie’s and Ms. Hitchcock’s requests for 

reinstatement of the license application and for 

reconsideration. Energie Group, 116 F.E.R.C. ¶ 61,220 

(2006); Energie Group, 117 F.E.R.C. ¶ 61,124 (2006). 

 Energie timely petitioned this court to review FERC’s 

denial of a permit and denial of a license. We held the permit 

denial petition in abeyance, at Energie’s request, until the 

license proceedings concluded. 

B 

 Charles Mierek is the president and sole shareholder of 

Appalachian Rivers Resource Enhancement, L.L.C. (ARRE). 

ARRE applied for a preliminary permit to study a proposed 

hydroelectric project on the Cheoah River in North Carolina, 

and FERC denied the permit because of the noncompliance 

record of another company owned and controlled by Mr. 

Mierek. Appalachian Rivers Res. Enhancement, 113 F.E.R.C. 

¶ 61,043 (2005). That company, Clifton Power Corporation, 

had committed serious compliance violations of a compliance 

order by failing to install and monitor necessary flow gauges. 

Id. at 61,108–09. FERC imposed a civil penalty of $15,000, 

which Clifton Power still has not paid. Id. The agency 

concluded Mr. Mierek “lacks the necessary fitness to receive 

any additional licenses”; and since FERC would not issue a 

license “to any entity controlled or directed by Mr. Mierek,” 

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the Commission denied ARRE a preliminary permit. Id. at 

61,109. 

 FERC denied two further ARRE permit applications on 

the same grounds, Appalachian Rivers Res. Enhancement, 

113 F.E.R.C. ¶ 62,098 (2005); Appalachian Rivers Res. 

Enhancement, 113 F.E.R.C. ¶ 62,100 (2005), and denied 

rehearing requested by ARRE in all three cases, in which 

Clifton Power and Mr. Mierek intervened. Appalachian 

Rivers Res. Enhancement, 114 F.E.R.C. ¶ 61,145 (2006). 

 ARRE timely petitioned this court to review the permit 

denials. We consolidated the petition with Energie’s petitions 

for our consideration. 

II 

 Because we agree FERC may consider fitness in 

evaluating applications for new permits and licenses under the 

Federal Power Act, we deny the petitions. 

A 

 A license under the Federal Power Act confers both 

benefits and obligations. A licensee is authorized to operate a 

hydroelectric project on the terms and conditions imposed by 

FERC as part of the license, 16 U.S.C. § 799, and the 

government may sue to revoke a license for violation of its 

terms, § 820. To obtain a license, an applicant must submit a 

substantial amount of data, and the preliminary permit process 

helps applicants gather necessary information. § 797(f). The 

holder of a preliminary permit for a project has priority over 

other license applicants for that project. § 798. 

 In considering a license application, FERC assesses the 

public interest, broadly defined, keeping in mind that the 

license will allow the holder “to appropriate water resources 

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from the public domain.” Udall v. FPC, 387 U.S. 428, 450 

(1967). “The general fitness of the licensee-applicant” is a 

valid consideration, Cooley v. FERC, 843 F.2d 1464, 1471 

(D.C. Cir. 1988); see also Turbine Indus., Inc., 68 F.E.R.C. ¶ 

61,127 (1994) (order to show cause why FERC should not 

deny applicant a license for lack of fitness), and has 

occasionally been dispositive. See Carl E. Hitchcock, Elaine 

Hitchcock, & Energie Dev. Co., 69 F.E.R.C. ¶ 61,382, at 

62,447 (1994) (denying license after “a long-term and 

pervasive pattern of ... noncompliance with ... the FPA ....”). 

 In deciding whether to grant a permit, FERC also has 

discretion to consider the fitness of the applicant. See 16 

U.S.C. § 800(a) (FERC “may give preference to the applicant 

[whose] plans ... are best adapted ... to the public interest” 

and likely to be implemented). “Under an application for a 

preliminary permit, the Commission is concerned with the 

general fitness of the applicant and with his good faith and 

purpose to prosecute his declared intent ....” Robert P. 

Wilson, 28 F.P.C. 571, 575 (1962). Although denying a 

permit is a departure from FERC’s general policy of granting 

permits whenever there is no legal bar, FERC has deviated 

from this policy when information already available indicates 

no license will result. Symbiotics, L.L.C. v. FERC, 110 F. 

App’x 76, 81 (10th Cir., Sept. 21, 2004) (known 

environmental problems at a site were “analogous” to 

foreclosure by a permanent legal barrier). That is FERC’s 

explanation for denying permits to Energie and ARRE. 111 

F.E.R.C. ¶ 61,072, at 61,339; 113 F.E.R.C. ¶ 61,043, at 

61,109. 

B 

 Petitioners also argue FERC may not look behind a 

corporate veil to examine the individuals who will actually 

operate a hydroelectric project. They cite no authority for this 

proposition besides Mr. Mierek’s appeal of his other 

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company’s civil penalty, Clifton Power Corp. v. FERC, 88 

F.3d 1258 (1996). However, Clifton Power is inapposite; we 

simply said FERC “may not base Clifton’s penalty in part on 

the violations of another entity.” Id. at 1267. By no means 

did we suggest FERC may not, in its discretion, base a 

decision on a new license on such an important factor as who 

will actually be running the project. FERC has in the past 

looked to the individuals behind a corporation, e.g. Turbine 

Indus., Inc., 68 F.E.R.C. ¶ 61,127, at 61,611–12, and we see 

no reason it cannot continue to do so. 

III 

 Petitioners’ other claims, that FERC acted arbitrarily and 

capriciously and infringed their due process rights, do not 

merit discussion. Accordingly, the petitions are 

Denied. 

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