Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-01162/USCOURTS-caDC-99-01162-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Respondent
Trout Unlimited
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 20, 2000 Decided June 23, 2000

No. 99-1035

Conservation Law Foundation, et al.,

Petitioners

v.

Federal Energy Regulatory Commission,

Respondent

State of Maine; Great Northern Paper, Inc.,

Intervenors

Consolidated with

Nos. 99-1159, 99-1161 & 99-1162

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Sean H. Donahue, Attorney, U.S. Department of Justice,

argued the cause for the federal petitioners. With him on the

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briefs were Lois J. Schiffer, Assistant Attorney General,

Peter Coppelman, Acting Assistant Attorney General, James

C. Kilbourne, Ellen Durkee, and M. Alice Thurston, Attorneys. Ellen D. Katz, Attorney, entered an appearance.

Carol A. Blasi argued the cause for petitioner Conservation

Law Foundation, et al. With her on the briefs was Alexander W. Sierck. Mona M. Janopaul entered an appearance.

Kaighn Smith, Jr. argued the cause for petitioner Penobscot Indian Nation. With him on the briefs was Mark

Chavaree.

Beth G. Pacella, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With her on

the brief were John H. Conway, Acting Solicitor, and Timm

L. Abendroth, Attorney.

Andrew Ketterer, Attorney General, and Paul Stern, Deputy Attorney General, were on the brief for intervenor State of

Maine.

Catherine R. Connors and Matthew D. Manahan were on

the brief for intervenor Great Northern Paper, Inc.

Before: Randolph, Tatel, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: The Department of the Interior

and the Environmental Protection Agency, conservation

groups,1 and the Penobscot Indian Nation petition for review

of the Federal Energy Regulatory Commission's relicensing

of a hydroelectric project in north-central Maine. The issues

presented go mainly to the adequacy of the Commission's

consideration of the various factors governing license renewals. Because the Commission gave sufficient attention to

these factors and carefully explained its conclusions, the

petitions are denied.

__________

1 American Rivers, American Whitewater Affiliation, Appalachian

Mountain Club, Conservation Law Foundation, and Trout Unlimited.

I

Located on the West Branch of the Penobscot River, the

Ripogenus and Penobscot Mills Hydroelectric Projects produce approximately 108 megawatts of power for Great Northern Paper mills in Millinocket and East Millinocket, Maine.

The projects consist of a series of reservoirs, dams, and

powerhouses. This case focuses on one of the dams--the

1262 foot long Stone Dam, which is part of the Penobscot

Mills Project.2 Constructed in 1899, Stone Dam diverts

water through a canal to a 37 megawatt powerhouse. This

diversion blocks the main channel of the Penobscot's West

Branch for a 4.5 mile stretch known as the "Back Channel."

Because of Stone Dam, the Back Channel receives only

leakage flows of 2 to 5 cfs (cubic feet per second), except for

occasional "spillage" when flows exceed power requirements.

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The Penobscot Mills Project, like any project used for the

"development, transmission, and utilization of power across,

along, from, or in any of the streams or other bodies of water

over which Congress has jurisdiction," requires a license from

the Federal Energy Regulatory Commission. 16 U.S.C.

s 797(e). When the original license for Penobscot Mills

expired at the end of 1993, Great Northern applied for a new

one. The Commission issued a Final Environmental Impact

Statement analyzing three different proposals regarding the

new license: the "Applicant's Proposal," in which Great

Northern would "operate the project[ ] nearly as it has over

the past 50 years" with some new environmental and recreational enhancements but no increased flows in the Back

Channel; "Alternative 1," which reflected the Interior Department's recommendations for enhancements including

minimum flows of 350 to 500 cfs in the Back Channel;3 and

__________

2 Petitioners raise no specific objection to the Commission's order

relicensing the Ripogenus Project, see 77 F.E.R.C. p 61,316 (1996),

though that order was also listed in the petitions for review.

3 Interior initially recommended flows of 500 cfs and later increased the recommendation to 945 cfs. See 85 F.E.R.C. at 62,242

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"Alternative 2," recommending "enhancement measures intermediate between those proposed by GNP and those in Alternative 1." FEIS at xix. As a baseline for comparison, the

Commission adopted the terms and conditions of the existing

license as the "no action" option. The impact statement

recommended a modified version of Alternative 2 that did not

include flow requirements for the Back Channel. See FEIS

at xxiii.

Shortly after issuance of the final impact statement, the

Commission granted a new license for Penobscot Mills.4 See

77 F.E.R.C. p 61,068 (1996). The order conditioned the license on Great Northern's commitment to wetland enhancements, project boundary expansion, and increased flows into

Millinocket Stream. See id. at 61,275-79. As to the Back

Channel, the Commission decided not to order minimum flows

"given the modest fisheries benefit likely to occur and the

significant adverse impact on the project's energy benefits,"

id. at 61,276, a decision it affirmed on rehearing, see 85

F.E.R.C. p 61,316 (1998), and reconsideration, see 86 F.E.R.C.

p 61,184 (1999).

II

"In deciding whether to issue any license [for hydroelectric

projects,] the Commission, in addition to the power and

development purposes for which licenses are issued, shall give

equal consideration to the purposes of energy conservation,

the protection, mitigation of damage to, and enhancement of,

fish and wildlife (including related spawning grounds and

habitat), the protection of recreational opportunities, and the

preservation of other aspects of environmental quality." 16

U.S.C. s 797(e). The Federal Power Act also requires the

Commission to include conditions for the "protection, mitigation and enhancement" of fish and wildlife affected by the

__________

n.6. In its petition for rehearing before the Commission, however,

Interior only "argue[d] for a minimum flow 350 cfs." Id. at 62,242.

4 During the interim, the Commission had issued annual renewals

of the Penobscot Mills license under the same terms as the expired

license. See 16 U.S.C. s 808(a).

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project, such conditions to be "based on recommendations

received pursuant to the Fish and Wildlife Coordination Act

(16 U.S.C. 661 et seq.) from the National Marine Fisheries

Service, the United States Fish and Wildlife Service, and

State fish and wildlife agencies." 16 U.S.C. s 803(j)(1). The

Commission retains authority to decide that recommended

conditions are "inconsistent with the purposes" of the FPA or

other laws, in which event it shall of course reject them. 16

U.S.C. s 803(j)(2); see United States Dep't of the Interior v.

FERC, 952 F.2d 538, 544 (D.C. Cir. 1992). While the Commission must give "equal consideration" to environmental

factors, those factors do not have "preemptive force." 952

F.2d at 545. The Commission "still is charged with determining the 'public interest,' i.e., balancing power and non-power

values." Id.

The petitioners contend that the Commission's rejection of

minimum flow requirements in the Back Channel violates

these Federal Power Act provisions and the National Environmental Policy Act, see 42 U.S.C. s 4321 et seq. Their

arguments can be grouped into two categories: that the

Commission did not fully recognize the recreational and environmental (i.e., nonpower) benefits that would have resulted

if it had imposed minimum flow requirements; and that the

Commission inflated the economic costs Great Northern

would incur from increased Back Channel flows.

A. Nonpower Issues

The main argument of the federal petitioners is that the

Commission should not have treated existing conditions at

Stone Dam as the baseline "no action" option because this

caused "the Commission to ignore ongoing impacts directly

attributable to the new license...." Brief for the Federal

Petitioners at 29. We think there is nothing to this objection.

The statute--16 U.S.C. s 803(j)--invites a comparative inquiry. It charges the Commission with the duty of protecting,

mitigating the damage to, and enhancing "fish and wildlife

(including related spawning grounds and habitat) affected by

the development, operation and management of the project."

To do this properly the Commission must compare what

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might occur to fish and wildlife if the license does not include

protection for nonpower resources against what will occur

with conditions imposed. The statutory words "fish and

wildlife ... affected" by the project seems to refer to the

fish and wildlife currently existing in the vicinity of the

project, which supports the Commission's choice of existing

conditions as a baseline. The quoted language surely cannot

refer to the animals inhabiting the area in 1899, when the

project came into being. They are long gone and so cannot

be "affected" by a Commission licensing decision in the 1990s.

Granted, it is possible to treat the words "fish and wildlife"

generically, so that it is not just the animals currently residing in the region that get protected or enhanced, but different

species that might be introduced or reintroduced. But this

view of s 803(j) does not help petitioners because it says

nothing about whether the baseline for the Commission's

comparative inquiry should be today or sometime other than

today. In other words, even if the statute refers generally to

all "fish and wildlife" it hardly follows that the Commission

must imagine the Back Channel as it existed before 1899 and

assess the effect of relicensing by pretending that Stone Dam

does not exist--at least when no one advocates decommissioning the Penobscot Mills Project and tearing down the dam.

Given the language of s 803(j), the Commission certainly

had the leeway to conduct its comparative assessments using

existing conditions as a baseline. To the reasons just mentioned, we incorporate by reference those given in American

Rivers v. FERC, 201 F.3d 1186, 1195-99 (9th Cir. 2000),

which sustained the Commission's use of an existing conditions baseline as a reasonable construction of s 803(j).

In any event, the baseline business has the whiff of a red

herring. Baseline or no baseline, the question is whether the

Commission has fully examined options calling for greater or

lesser environmental protection. Here the Commission spoke

of environmental "benefits" and the economic "costs" to Great

Northern of options calling for stronger environmental protection. It could just as easily spoken of economic "benefits"

to Great Northern from licensing the project and environmental "costs." So long as the Commission adequately examUSCA Case #99-1162 Document #525302 Filed: 06/23/2000 Page 6 of 14
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ines both the power and nonpower impacts of recommended

licensing conditions, we do not see why it matters on which

side of the equation environmental concerns are placed. In

issuing the new licenses in these proceedings, the Commission

adopted twelve of Interior's fourteen recommended environmental enhancements while using an existing conditions baseline. See FEIS tbls.5-8 to 5-9, at 5-20 to 5-21, adopted at 77

F.E.R.C. at 61,275. This in itself proves that the federal

petitioners are mistaken in thinking that an existing conditions baseline preordains the rejection of any new conditions

for the protection of fish and wildlife. So long as the Commission examines options that include recommended environmental enhancements, its choice of a baseline will not prevent

it from giving "equal consideration" to nonpower values.5

Petitioners also argue that the Commission did not give

"equal consideration" to nonpower values because it refused

to assess in economic terms the nonpower benefits that would

result from restoring significant flows to the Back Channel.

Restored flows, petitioners believe, would attract anglers and

whitewater rafting enthusiasts to this 4.5 mile stretch of river.

In the rehearing order, the Commission explained its refusal

to quantify these nonpower benefits: "[T]he public-interest

balancing of environmental and economic impacts cannot be

done with mathematical precision, nor do we think our statutory obligation to weigh and balance all public interest considerations is served by trying to reduce it to a mere mathematical exercise.... [F]or non-power resources such as aquatic

habitat, fish and wildlife, recreations, and cultural and aesthetic values, to name just a few, the public interest cannot be

evaluated adequately only by dollars and cents." 85 F.E.R.C.

at 62,244-45. Certainly nothing in the statute requires the

Commission to place a dollar value on nonpower benefits.

Nor does the fact that the Commission assigned dollar figures

to Great Northern's economic costs require that the Commission do the same for nonpower benefits: " 'Equal consider-

__________

5 We also agree with the American Rivers court, see 201 F.3d at

1199-2001, that the Commission's thorough examination of a range

of licensing alternatives satisfies NEPA's procedural requirements,

see 42 U.S.C. s 4332(2)(C)(iii).

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ation' is not the same as 'equal treatment.' " State of California v. FERC, 966 F.2d 1541, 1550 (9th Cir. 1992). The

refusal to quantify nonpower benefits did not "stack the deck"

against those concerns. The Commission approved "a variety

of enhancements related to instream flows for fisheries and

recreation, stabilization of impoundment levels, wetlands, recreational facilities, shoreline protection, and cultural resources." 85 F.E.R.C. at 62,245; see also id. at 62,245 n.31.

A critical factor in the Commission's refusal to impose minimum flows was the increased power expenses that would

result, not the Commission's failure to appreciate nonpower

values. Minimum flows of 350 cfs in the Back Channel would,

the Commission concluded, increase annual power expenses

by $916,300; the total increase in annual power costs of the

enhancements the Commission approved for Penobscot Mills

was $262,600. See FEIS tbl.5-3, at 5-13.

Petitioners' final complaint under this heading is that the

Commission did not focus on the possibility of a brook trout6

fishery in the Back Channel. In its original order, the

Commission observed that "fish species such as brook trout,

eels, minnows and suckers would benefit slightly from the

recommended flows, [but] the Back Channel would at best

only produce several hundred adult land-locked salmon." 77

F.E.R.C. at 61,275. The order then explained why the Back

Channel would not be a desirable habitat for land-locked

salmon, but did not mention brook trout again. See id. On

rehearing, the Commission stated that there was "a low

likelihood of re-establishing limited habitat" for brook trout.

85 F.E.R.C. at 62,243. It relied, at least in part, on "a Maine

Department of Inland Fish and Wildlife priority to maintain

and protect fishery resources elsewhere in the project area."

Id. "During dry years, requiring minimum flows above leakage in the Back Channel could affect the ability to maintain

__________

6 A "brook trout" (Salvelinus fontinalis) is actually a char.

"Chars are distinguished from trout by their mouth structure; the

vomerine bone in the center of a trout's mouth has teeth all along it,

while the vomer of the char has only a few teeth on the front end of

the bone." A.J. McClane, ed., McClane's New Standard Fishing

Encyclopedia and International Angling Guide 207 (1998 ed.).

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constant flows in the West Branch and Millinocket Stream,

and lake level in the North Twin reservoir, which could cause

stress and potential damage to salmon and trout populations

in those areas." Id. Given the plentiful brook trout fisheries

in the Penobscot Mills-Ripogenus area, the Commission cannot be faulted for believing that adding another 4.5 mile

stretch would have little benefit. See id.

The Federal Power Act requires the Commission to consider the recommendations of the United States Fish and Wildlife Service and State fish and wildlife agencies.7 See 16

U.S.C. s 803(j)(1). Even when the recommendations of federal and state agencies are in concert, those agencies do not

have "veto power" over Commission licensing decisions. Department of Interior, 952 F.2d at 545 (citing National Wildlife Fed'n v. FERC, 912 F.2d 1471, 1480 (D.C. Cir. 1990)). In

this case the federal and State agencies disagreed about the

desirability of promoting a brook trout fishery in the Back

Channel. The Commission adequately explained why Interior's recommendation was inconsistent with the purposes of

the FPA. See 16 U.S.C. s 803(j)(2). Not only would Interior's proposal curtail power production from the Penobscot

Mills Project, but the Commission had reason to believe a

Back Channel brook trout fishery would actually do more

harm than good to the region's fish habitats.

B. Power Issues

The Commission stated that the "reduction in the project's

... annual energy benefits for the Back Channel flows outweighs the enhancement in aquatic resources that the flows

would produce." 77 F.E.R.C. at 61,276. The Commission

calculated this annual reduction as $916,0008 (6% of the

__________

7 The same provision requires the Commission to "attempt to

resolve any inconsistency" between its proposed license and other

agency recommendations. See 16 U.S.C. s 803(j)(2). The Commission did so in a "dispute-resolution meeting with representatives

from Interior on February 8, 1996." 77 F.E.R.C. at 61,274.

8 The Commission concluded that the annual cost of Interior's

request for 950 cfs would be $2.5 million, or 16% of the project's

power production. See 77 F.E.R.C. at 61,274-75.

project's total benefits), see id., based on the price of purchasing replacement power from the least-cost alternative

source--Bangor Hydro & Electric Company,9 see FEIS

s 2.4.4, at 2-33 to 2-34.

Petitioners complain that the Commission failed to consider

the alternative of Great Northern conserving energy, something the statute requires the Commission to consider. See

16 U.S.C. ss 797(e), 808(a)(2)(C); see also 42 U.S.C.

s 4322(2)(E); 40 C.F.R. s 1502.14. They put it this way:

"By considering conserved power as the least cost alternative

to hydropower, rather than the more expensive purchased

power used by the Commission, the cost of environmental

enhancements, such as Back Channel flows, are much lower."

Final Brief for Petitioners Conservation Law Foundation, et

al. and Trout Unlimited at 12. But the Commission did

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consider the alternative of energy conservation. After examining Great Northern's plant data, the Commission concluded

that the mills had recently increased energy efficiency as the

result of plant modernization efforts and the use of steam

generation and that no reliable evidence supported petitioners' view that "enormous conserved power potential" still

existed at the mills. See FEIS E-3, cited in 77 F.E.R.C. at

61,269 n.16; id. at E-24. The final impact statement also

noted that Great Northern, "operating as a private for-profit

enterprise, would have a strong economic incentive to maximize savings from conservation and not waste electric power,

particularly as it manufactures an energy-intensive product."

Id. at E-23, cited in 85 F.E.R.C. at 62,243 n.14. Any

conservation that did occur would be "used to displace highercost fossil fuel power ... [s]ince the entire output from the

two projects supplies only a portion of GNP's total annual

power needs...." Id., cited in 85 F.E.R.C. at 62,243 n.14.

We see no ground for disagreeing with this reasoning. The

Penobscot Mills (31% of energy needs) and Ripogenus (19%

of energy needs) Projects supply only half of the energy

__________

9 The Commission (as well as the parties) assume that Great

Northern would purchase fossil fuel power--not hydro power--from

Bangor.

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needed for Great Northern's paper manufacturing. See 77

F.E.R.C. at 61,242, 61,270. Until the company's conservation

measures achieved a 50% reduction in its energy needs

(something no one contends is likely), the consequence of

increased energy efficiency would be a decrease in the company's purchase of other, more expensive, sources of power.

Thus, the "replacement cost" of reduced hydroelectric power

would still be the price of power from Bangor, namely

$916,000.10

Petitioners' other cost-side argument is that the Commission relied on unsupported claims that the increased cost of

Back Channel flows would result in job losses at the Great

Northern mills. This misinterprets the Commission decision.

In the original order, the Commission recognized "Great

Northern's need for inexpensive power to remain competitive

in its paper making operations." 77 F.E.R.C. at 61,275.

Then, in a footnote, the Commission stated that it could not

verify the company's claim that flows in the Back Channel

"would result in the loss of approximately 238 jobs," so the

Commission was just relying on what it did know--that

"Great Northern's operating costs are high compared to other

paper manufacturers, and cost increases could reduce the

company's competitiveness." Id. at 61,275 n.31 (italics added). On rehearing, the Commission once again indicated that

it was only relying on the risk of economic harm: "A 350-cfs

minimum flow would reduce the annual energy benefit of

Penobscot Mills substantially, with the possibility of causing

Great Northern to further curtail operations at, or close, its

paper mills...." 85 F.E.R.C. at 62,242 (italics added) (footnotes omitted). There is ample evidence in the record to

support the Commission's findings. Papermaking is a highly

competitive industry, see FEIS s 5.3.5, at 5-14, cited in 77

F.E.R.C. at 61,275 n.31; Great Northern is a high cost

__________

10 Although conservation would not change the $916,000 replacement cost of increased Back Channel flows, it would reduce Great

Northern's total energy costs. But it was the magnitude of the

replacement cost, not the impact it would have on the company's

overall economic condition, that led the Commission to reject the

proposal for increased Back Channel flows. See infra note 11.

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producer compared to other paper manufacturers, see id.,

cited in 77 F.E.R.C. at 61,275 n.31, and Great Northern

recently closed some Millinocket facilities, resulting in the

elimination of about 350 jobs, see 85 F.E.R.C. at 62,242 n.9.11

III

The Penobscot River Basin is "home to the Penobscot

Indian Nation (PIN), much of whose cultural heritage is

closely associated with the river and the resources it provides." FEIS s 3-1, at 3-1. Under the Maine Indian Claims

Settlement Act, the " 'Penobscot Indian Reservation' " is defined as "the islands in the Penobscot River reserved to the

Penobscot Nation by agreement with the States of Massachusetts and Maine consisting solely of Indian Island, also known

as Old Town Island, and all islands in that river northward

thereof that existed on June 29, 1818...." 25 U.S.C.

s 1722(i) (incorporating 30 Me. Rev. Stat. Ann. s 6203(8)).

__________

11 Petitioners' pre-argument motion to remand the case to the

Commission for the taking of additional evidence, see 16 U.S.C.

s 825l(b), is denied. In November 1999, Great Northern Paper

submitted an application to the Commission seeking the transfer of

the Penobscot Mills license to a new subsidiary, Great Northern

Energy. A subsidiary of Duke Energy Corporation has a minority

interest in Great Northern Energy. Petitioners believe these developments affect two of the Commission findings: that Back

Channel flows could threaten the mills' economic viability and that

expanded conservation efforts are not plausible. We do not see,

however, how these developments could alter the two dominant

factors in the Commission's decision: the replacement energy cost

of $916,000 and the minimal (perhaps even detrimental) effect on

fisheries. See 77 F.E.R.C. at 61,275 ("Interior's recommendations

... would entail a significant reduction in energy benefits on behalf

of only marginal improvements to aquatic habitat...."); id. at

61,276 ("Given the modest fisheries benefit likely to occur and the

significant adverse impact on the project's energy benefits, we are

not requiring minimum flows for the Back Channel."). It does not

"clearly appear that the new evidence would compel or persuade to

a contrary result," so we deny the motion. Friends of the River v.

FERC, 720 F.2d 93, 99 n.6 (D.C. Cir. 1983) (quoting Rocky Mountain Power Co. v. FERC, 409 F.2d 1122, 1128 n.21 (D.C. Cir. 1969)).

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The Penobscot Nation claims that its reservation includes the

islands in the West Branch of the Penobscot. The State of

Maine disagrees, contending that nothing "even remotely

suggests that any land or islands in any branches or tributaries of the Penobscot River were being reserved" to the Tribe.

FEIS s 4.11.1.2, at 4-69.

The land issue is of some consequence to this case. The

Tribe believes it should have been a consulting party to the

"programmatic agreement" the Commission adopted in fulfilling its duty to take "into account the effect of [the licenses on

any site] that is included in or eligible for inclusion in the

National Register" of Historic Places. 16 U.S.C. s 470f; see

also 36 C.F.R. s 800.13 (authorizing agencies to delegate this

responsibility to "programmatic agreements"). An Indian

Tribe must be named a concurring party to a programmatic

agreement when the agency "undertaking will affect Indian

lands." 36 C.F.R. s 800.1(c)(2)(iii). But the Penobscot Nation

had not established legal title to the islands in the West

Branch, and so the Commission did not confer consulting

party status on it. See 85 F.E.R.C. at 62,245. The Commission made clear on rehearing that it was not determining the

merits of the Tribe's land claims and that, should the Tribe

establish legal title to the lands, it would be added as a

consulting party. See id. at 62,245 & n.35. We agree that

the Commission was under no obligation to make the Penobscot Nation a consulting party; nor was its failure to do so an

abuse of discretion.

The Tribe also contends that increased flows in the Back

Channel would provide its members with canoe access to

religious sites, which means that the Commission violated the

American Indian Religious Freedom Act. This statute requires the "United States to protect and preserve for American Indians their inherent right of freedom to believe, express, and exercise the traditional religions of the American

Indian ... including but not limited to access to sites...."

42 U.S.C. s 1996. The Commission's response is conclusive:

even with flows of 350 cfs, canoe navigation of the Back

Channel would not be possible. See 77 F.E.R.C. at 61,275

n.39. The Commission also noted that "there is a nearby

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canoe route on the Penobscot that permits canoe passage to

the same sites"--presumably the route the Tribe has used

since 1899. See 85 F.E.R.C. at 62,243. Federal agencies are

to consider, "but not necessarily to defer to, Indian religious

values." Wilson v. Block, 708 F.2d 735, 747 (D.C. Cir. 1983).

The Commission has performed its duty under this legislation. 12

The petitions for review are denied.

__________

12 The Tribe raises several other arguments that do not warrant

written exposition. These have been considered and rejected.

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