Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01173/USCOURTS-caDC-00-01173-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Respondent
Fourth Branch Associates (Mechanicville)
Petitioner
Niagara Mohawk Power Corporation
Intervenor

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 8, 2001 Decided June 19, 2001

No. 00-1173

Fourth Branch Associates (Mechanicville),

Petitioner

v.

Federal Energy Regulatory Commission,

Respondent

Niagara Mohawk Power Corporation,

Intervenor

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Ben Finkelstein argued the cause for petitioner. With him

on the briefs were Frances E. Francis, William S. Huang

and Andrea G. Lonian.

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Monique L. Watson, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With her on

the brief was Dennis Lane, Solicitor.

William J. Mertens was on the brief for intervenor.

Before: Edwards, Chief Judge, Sentelle and Randolph,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: The Federal Energy Regulatory

Commission ("FERC") issued a joint license to Fourth

Branch Associates (Mechanicville) and Niagara Mohawk Power Corporation to redevelop the Mechanicville Hydroelectric

Plant, owned by Niagara Mohawk. The relationship between

the co-licensees eroded, and a spate of litigation ensued.

Within two years of receiving the license, Fourth Branch filed

a complaint with the Commission alleging that Niagara Mohawk was engaging in anticompetitive conduct in violation of

the Federal Power Act, see 16 U.S.C. s 803(h), in attempting

to limit the power output of the Mechanicville plant by

refusing to purchase power from the plant.

After efforts to mediate the dispute failed, the Commission

issued an order dismissing the complaint because Fourth

Branch had not articulated facts sufficient to establish a claim

for anticompetiveness. See Fourth Branch Assocs. (Mechanicville) v. Niagara Mohawk Power Corp., 89 F.E.R.C.

p 61,194 (1999). Explaining that the two parties were unable

to continue operating the plant--because one is unwilling

(Niagara Mohawk) and the other unable (Fourth Branch)--

the Commission gave notice of its intent to accept the parties'

implied surrender of the Mechanicville license. See id. at

61,598. The Commission subsequently denied Fourth

Branch's request for rehearing. See Fourth Branch Assocs.

(Mechanicville) v. Niagara Mohawk Power Corp., 90

F.E.R.C. p 61,250 (2000).

Fourth Branch petitions for review of these orders. First,

it contends that the finding of implied surrender is unreasonable, arbitrary and capricious, and unsupported by substantial

evidence. Second, it maintains that the dismissal of its

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anticompetitiveness complaint was arbitrary and capricious

and not supported by substantial evidence. Because there

has been no final agency action, we do not have jurisdiction to

consider the implied surrender finding. Additionally, for

reasons more fully set out below, we hold that the Commission did not err in dismissing Fourth Branch's complaint.

I. BACKGROUND

The Mechanicville Hydroelectric Plant, located on the Hudson River in New York, is listed on the National Register of

Historic Places. In fact, until recently it was the oldest

continuously operating hydroelectric plant in the country.

The Mechanicville plant is also at the heart of a protracted

battle between Fourth Branch and Niagara Mohawk.1 At

various times, this battle has been waged before the New

York Public Service Commission, the Albany County Supreme Court, the Third Department of the Appellate Division

of the New York Supreme Court, the U.S. Bankruptcy Court

for the Northern District of New York, the U.S. District

Court for the Northern District of New York, the Federal

Energy Regulatory Commission--and now this Court.

The relationship between Fourth Branch and Niagara Mohawk began peacefully in 1987, when they applied jointly to

redevelop the Mechanicville plant under a new FERC license.

In August 1989, the two companies entered into several

contracts under which Fourth Branch agreed to operate the

plant and Niagara Mohawk agreed to purchase power from

the plant. Almost immediately the relationship began to

deteriorate.

In 1990, the New York Public Service Commission rejected

the power purchase agreement. Three years later, when the

__________

1 A more complete history of the two companies' troubles is

recounted in Niagara Mohawk Power Corp., 74 F.E.R.C. p 61,352,

62,079-81 (1996); Fourth Branch Assocs. (Mechanicville) v. Niagara Mohawk Power Corp., 89 F.E.R.C. p 61,194, 61,589-93 (1999),

reh'g denied, 90 F.E.R.C. p 61,250 (2000); and Fourth Branch

Assocs. (Mechanicville) v. Niagara Mohawk Power Corp., 90

F.E.R.C. p 61,250, 61,837-39 (2000).

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companies' efforts to renegotiate the purchase agreement

collapsed, Niagara Mohawk terminated the operation agreement. These actions are the basis of ongoing litigation in

New York's state courts.

Meanwhile, in 1993, FERC issued the license to Fourth

Branch and Niagara Mohawk. The following year, after

Niagara Mohawk stopped paying Fourth Branch for power it

received from the Mechanicville plant, Fourth Branch filed

for Chapter 11 bankruptcy. Fourth Branch asked the bankruptcy court to require Niagara Mohawk to accept and pay

for power from the plant. After initially granting the request, the court authorized Niagara Mohawk to "cease accepting electricity" from Fourth Branch. In re Fourth

Branch Assocs. Mechanicville, No. 94-10972, slip op. at 2

(Bankr. N.D.N.Y. Nov. 22, 1995) (order granting motion in

part and denying motion in part). By 1996, the bankruptcy

court dismissed Fourth Branch's Chapter 11 claim for lack of

prosecution.

In 1995, Fourth Branch filed a complaint with FERC

alleging that Niagara Mohawk was engaging in anticompetitive conduct by attempting to limit the power output of the

Mechanicville plant. In March 1996, after asking the parties

to apply either for a license transfer or surrender, the

Commission ordered that a settlement judge mediate the two

companies' dispute. Niagara Mohawk Power Corp., 74

F.E.R.C. p 61,352, 62,081 (1996). Initially, the mediation

seemed to be successful: Fourth Branch agreed to purchase

Niagara Mohawk's interest in the Mechanicville project. Niagara Mohawk Power Corp., 78 F.E.R.C. p 63,004 (1997).

Unfortunately, the success was short lived--Fourth Branch

was unable to obtain funding to make the purchase. See id.

at 65,127. FERC staff responded by again asking for a plan

to transfer the Mechanicville license or surrender it. By that

time, Fourth Branch had vacated the Mechanicville plant,

"apparently as the result of an eviction action brought by

Niagara Mohawk in a New York court." Fourth Branch

Assocs., 89 F.E.R.C. at 61,590.

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In 1997, Niagara Mohawk moved to dismiss Fourth

Branch's complaint. In its motion, Niagara Mohawk contended that the complaint was moot in light of the bankruptcy

court's ruling that Niagara Mohawk was not obligated to

purchase power from the Mechanicville project. Around this

same time, Niagara Mohawk completely stopped producing

power at the plant.

The following year, Fourth Branch submitted a unilateral

settlement offer, proposing to pay Niagara Mohawk fair

market value for its interest in the Mechanicville project.

(The value was to be determined by a federal district court in

a condemnation proceeding initiated by Fourth Branch.)

Within five months, Fourth Branch amended its offer, now

proposing that Niagara Mohawk transfer its interest in the

plant to Fourth Branch at no cost and then purchase power

produced there by Fourth Branch. Not surprisingly, Niagara Mohawk opposed this offer and instead asked the Commission to deem the Mechanicville license impliedly surrendered.

On November 9, 1999, the Commission dismissed Fourth

Branch's complaint and unilateral settlement offer. See id. at

61,589. In its decision, the Commission found that the Mechanicville license had not been violated and that the plant

was being adequately maintained. See id. at 61,596-97 &

n.64. The Commission also concluded that Fourth Branch

had not "set forth any facts that warrant a further investigation of its allegation that Niagara Mohawk has engaged in

anticompetitive behavior under the Mechanicville license."

Id. at 61,597.

Finally, the Commission determined that the "public interest will be best served if the Mechanicville Project license is

terminated." Id. It explained that "the doctrine of implied

surrender" offered an appropriate resolution to the "exceptional circumstances" of this dispute. Id. at 61,597-98. Consequently, the November 1999 order gave Niagara Mohawk

and Fourth Branch notice that the Commission "intend[s] to

accept surrender of the license." Id. at 61,598. Accordingly,

the Commission instructed its staff to "initiate a proceeding

to prepare an environmental analysis, which will include

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consultation on the disposition of the historic property, to

determine what restoration measures are appropriate before

an order is issued accepting surrender of the license." Id. at

61,598 n.73.

Fourth Branch requested a rehearing. On March 16, 2000,

the Commission denied this request. See Fourth Branch

Assocs. (Mechanicville) v. Niagara Mohawk Power Corp., 90

F.E.R.C. p 61,250 (2000). In its denial, the Commission reiterated its earlier conclusions. The Commission also clarified

that it will not make a "final decision on whether to accept the

implied license surrender until" it has conducted analyses and

consultations required under the National Environmental Policy Act, 42 U.S.C. s 4332, and the National Historic Preservation Act, 16 U.S.C. s 470f. 90 F.E.R.C. at 61,840 n.17. In

addition, the Commission declared that it would examine

"reasonable alternatives to license surrender." Id. at 61,840.

Fourth Branch petitions for review of these orders. In its

petition, Fourth Branch primarily argues that (1) the finding

that the co-licensees had impliedly surrendered the Mechanicville license is unreasonable, arbitrary and capricious, and

unsupported by substantial evidence; and (2) the dismissal of

its complaint alleging that Niagara Mohawk had engaged in

anticompetitive behavior is arbitrary and capricious and unsupported by substantial evidence. In response, the Commission contends that we lack jurisdiction over Fourth Branch's

petition. We must address this contention first.

II. JURISDICTION

Although the Commission maintains both that Fourth

Branch lacks standing and that its petition is not ripe for

review, we "need not identify every ground for holding that a

claim is not justiciable." Indep. Petroleum Ass'n of Am. v.

Babbit, 235 F.3d 588, 594 (D.C. Cir. 2001). Indeed, we have

no trouble dismissing a claim "based on one jurisdictional bar

rather than another." Louisiana Envtl. Action Network v.

Browner, 87 F.3d 1379, 1384 (D.C. Cir. 1996). Here, Fourth

Branch's challenge to the implied surrender proceeding is not

a challenge to any final agency action.

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A party may only petition for judicial review of a final

agency action. See 5 U.S.C. s 704; 16 U.S.C. s 825l(b);

Papago Tribal Util. Auth. v. FERC, 628 F.2d 235, 238-39

(D.C. Cir. 1980). If the agency's action is not final, we cannot

reach the merits of the petition. See Public Citizen v. Office

of the U. S. Trade Representatives, 970 F.2d 916, 918 (D.C.

Cir. 1992). When assessing whether an agency action is final,

we consider "whether the agency's position is 'definitive' and

whether it has a 'direct and immediate ... effect on the dayto-day business' of the parties." Ciba-Geigy Corp. v. U.S.

EPA, 801 F.2d 430, 436 (D.C. Cir. 1986) (quoting FTC v.

Standard Oil Co. of Cal., 449 U.S. 232, 239 (1980) (internal

quotes omitted)).

The initiation of an implied surrender proceeding is not a

final agency action. The Commission has merely "issue[d]

notice of its intent to accept the implied surrender of the

project license." Fourth Branch Assocs., 89 F.E.R.C. at

61,589. In its order denying Fourth Branch's rehearing

request, the Commission expressly stated that it has made

"no final decision on whether to accept the implied license

surrender." Fourth Branch Assocs., 90 F.E.R.C. at 61,840

n.17. There is nothing definitive in an agency's intending to

do something, and an agency that has made "no final decision" could not possibly have taken a final action. Pending

completion of the proceeding, the Commission may or may

not accept implied surrender of the Mechanicville license.

We do not have jurisdiction to become entangled in "uncertain and contingent future events that may not occur as

anticipated, or indeed may not occur at all." Metzenbaum v.

FERC, 675 F.2d 1282, 1289 (D.C. Cir. 1982) (internal quotes

omitted).

Furthermore, we do not detect what effect the Commission's action has had (or could have) on Fourth Branch's

business. The Commission's decision to initiate an implied

surrender proceeding has not imposed any obligation, denied

any right, or formalized any legal relationship. See Alabama

Power Co. v. FERC, 993 F.2d 1557, 1566 (D.C. Cir. 1993). If

we conclude that the license was impliedly surrendered,

Fourth Branch obviously would remain exactly in the same

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position it is now--and the Commission still might not accept

the implied surrender. Likewise, even if we were to conclude

that the license had not been impliedly surrendered, the

Mechanicville plant would continue to sit in the same condition, and Fourth Branch would remain in the same position, a

co-licensee who is unable to enter the plant, let alone produce

power there. Plainly, our abstention will not "result in

irreparable injury" to Fourth Branch. Papago Tribal Util.

Auth., 628 F.2d at 238. Until the Commission reaches a final

decision--either accepting the surrender or coming to some

alternative resolution--Fourth Branch's challenge is not fit

for review.

Fourth Branch argues that pursuant to Rule 27(g) of this

Circuit, the Commission should have raised its jurisdictional

objection within 45 days of this case being docketed. The

Commission first contended that we lack jurisdiction in its

response brief, which it filed 271 days after this case was

docketed. The Commission's foot-dragging certainly

"leave[s] something to be desired." Mississippi Valley Gas

Co. v. FERC, 68 F.3d 503, 510 (D.C. Cir. 1995). Nevertheless, it does not confer jurisdiction on this Court or compel us

to consider a claim based on an agency action that is not final.

See Fed. R. App. P. 1(b).

In contrast to its initiation of the implied surrender proceeding, the Commission's dismissal of Fourth Branch's complaint against Niagara Mohawk is unquestionably a final

agency action. In its order denying rehearing, the Commission was clear that its decision was final: although it will

consider alternatives to implied surrender in the ongoing

proceeding, it unequivocally stated that it would not reconsider Fourth Branch's complaint. See Fourth Branch Assocs.,

90 F.E.R.C. at 61,840. The Commission's brief does not

explain why the dismissal of Fourth Branch's complaint is not

ripe for review nor why Fourth Branch lacks standing to

challenge it. The dismissal of such a complaint is a final

agency action that we are empowered to review, and there is

no reason to refrain from considering the merits of the

remaining claims in Fourth Branch's petition. See Papago

Tribal Util. Auth., 628 F.2d at 239.

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III. THE MERITS OF FOURTH

BRANCH'S PETITION

Section 10(h)(1) of the Federal Power Act prohibits "[c]ombinations, agreements, arrangements, or understandings, express or implied, to limit the output of electrical energy, to

restrain trade, or to fix, maintain, or increase prices for

electrical energy or service." 16 U.S.C. s 803(h)(1). Relatedly, under s 10(h)(2), "conduct under the license" that conflicts with "the policies expressed in the antitrust laws" and is

"not otherwise justified by the public interest ... shall be

prevented or adequately minimized." Id. s 803(h)(2).

In its complaint, Fourth Branch alleged that Niagara Mohawk attempted to "coerce [Fourth Branch] into an agreement or arrangement to limit the electrical energy available

from the Mechanicville Project." The only fact that Fourth

Branch offered to support its allegation is that Niagara

Mohawk "refus[es] to accept Project power" from the Mechanicville plant, knowing that Fourth Branch's "existence

depends" on the revenue from such sales. The Commission

refused to investigate this complaint, explaining that Fourth

Branch had failed to "set forth any facts that warrant a

further investigation." Fourth Branch Assocs., 89 F.E.R.C.

at 61,597. Specifically, the Commission concluded that

Fourth Branch had "not suggested that Niagara Mohawk

engaged in" activities barred by s 10(h)(1) and had not

complained about any conduct under the license as required

by s 10(h)(2). In its petition, Fourth Branch argues that the

Commission's decision is (1) arbitrary and capricious because

it represents an "unexplained about-face" from a previous

statement in which the Commission noted the seriousness of

Fourth Branch's allegations and (2) unsupported by substantial evidence because the record demonstrates that Niagara

Mohawk violated the license.

Our precedent is clear: the Commission "need not launch a

full investigation just because a party cries 'anticompetitive

behavior.' " Michigan Pub. Power Agency v. FERC, 963

F.2d 1574, 1583 (D.C. Cir. 1992). Here, the Commission did

not act arbitrarily or capriciously in concluding that Fourth

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Branch's vague assertions did not establish adequate grounds

for investigating Niagara Mohawk's conduct. Although there

is no question "the co-licensees are at loggerheads," Fourth

Branch Assocs., 89 F.E.R.C. at 61,596, Fourth Branch did not

allege any collusive behavior by Niagara Mohawk as required

to establish a claim under s 10(h)(1). If anything, Niagara

Mohawk's refusal to take power from Fourth Branch might

be a violation of their contracts, not an effort to restrain trade

"under the license." See 16 U.S.C. s 803(h)(2). If Fourth

Branch believes that Niagara Mohawk's actions interfere with

its ability to operate the project as they agreed, Fourth

Branch should proceed with contract claims in state court (as

it has done). Indeed, the Commission came to this conclusion

in the orders now under review. See Fourth Branch Assocs.,

90 F.E.R.C. at 61,839; Fourth Branch Assocs., 89 F.E.R.C. at

61,597. The Commission properly concluded that far from

reflecting anticompetitive conduct, Niagara Mohawk's divestiture of its hydroelectric projects was ordered by the New

York Public Service Commission as part of an industry

restructuring. See Fourth Branch Assocs., 89 F.E.R.C. at

61,597. These conclusions represent a reasonable basis for

not investigating Niagara Mohawk's conduct.

Fourth Branch's claim that the Commission's orders represent an "unexplained about-face" is based on a statement in

the Commission's order requiring the parties to mediate their

dispute. In that order, the Commission wrote that it was

"concerned with the seriousness of the antitrust allegations in

the complaint." Niagara Mohawk Power Corp., 74 F.E.R.C.

at 62,081. Despite what Fourth Branch now suggests, the

Commission was not endorsing the viability or validity of

Fourth Branch's claims. Rather, it was explaining that mediation seemed appropriate in light of: (1) Fourth Branch's

complaint (and subsequent request for mediation) and (2) the

Commission's concern with the "safe operation of the Mechanicville Project over the 47 years remaining in the term of

its license." Id. The Commission never ruled that Fourth

Branch actually articulated an anticompetitiveness claim worthy of investigation. Rather, the claim--in conjunction with

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licensees"--simply justified the Commission's attempt "to

mediate a reasonable and workable solution to the problems

presented by the Mechanicville Project." Id. This attempt

is not inconsistent with the Commission's ultimate conclusion

that Fourth Branch had not "set forth any facts that warrant

a further investigation." Fourth Branch Assocs., 89 F.E.R.C.

at 61,597. The Commission never held anything different. It

simply had stated that the Fourth Branch's allegations were

serious enough to merit mediation, but only when considered

in tandem with the myriad other disputes between the parties

and the Commission's concern with the "safe and efficient

performance" of the project. Niagara Mohawk Power Corp.,

74 F.E.R.C. at 62,081.

In its petition, Fourth Branch raises several other ancillary

issues. We have considered each of these and find them

meritless. The Commission's orders are supported by substantial evidence and do not represent abuses of discretion.

IV. CONCLUSION

For the foregoing reasons, the petition for review is denied.

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