FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FALL RIVER RURAL ELECTRIC 

COOPERATIVE, INC.,

Petitioner,

No. 06-71944

v. 

OPINION

FEDERAL ENERGY REGULATORY

COMMISSION,

Respondent. 

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Argued and Submitted

March 11, 2008—San Francisco, California

Filed September 10, 2008

Before: Stephen Reinhardt, Melvin Brunetti, and

Raymond C. Fisher, Circuit Judges.

Opinion by Judge Brunetti

12631
COUNSEL

Peter C. Kissel and Paige Bullard, Law Offices of GKRSE,

Washington, D.C.; Ray W. Rigby and Jerry R. Rigby, Rigby,

Thatcher, Andrus, Rigby & Moeller, Rexburg, Idaho, for the

petitioner. 

Samuel Soopper and Beth G. Pacella, Federal Energy Regulatory Commission, Washington, D.C., for the respondent. 

OPINION

BRUNETTI, Circuit Judge: 

Fall River Rural Electric Cooperative, Inc. (Fall River)

petitions for review of two Federal Energy Regulatory Commission (FERC) orders. Fall River applied for a license to

construct, operate, and maintain a new hydroelectric power

generating facility at Hebgen Dam on the Madison River in

Gallatin County, Montana. In its orders FERC dismissed Fall

River’s license application and denied Fall River’s request to

hold the proceeding in abeyance, Fall River Rural Elec.

Coop., Inc., 111 ¶ FERC 62,333 (2005), and it denied Fall

River’s request for rehearing, Fall River Rural Elec. Coop.,

Inc., 114 FERC ¶ 61,152 (2006). Fall River timely petitioned

for review of both orders. We have jurisdiction pursuant to 16

U.S.C. § 825l(b), and we deny Fall River’s petition for

review. 

I. Facts and Proceedings Below

The Missouri-Madison Hydroelectric Project develops

hydropower on a 324-mile stretch of the Madison and

12634 FALL RIVER RURAL ELECTRIC v. FERC
Missouri Rivers in southwestern Montana. The project is

licensed to Pennsylvania Power and Light Montana, LLC

(PPL) under FERC Project No. 2188. PP&L Montana, LLC,

92 FERC ¶ 61,261 (2000). The project consists of nine hydroelectric developments, eight of which have power generating

facilities. Id. at 61,830. The Hebgen Development is the one

development without a power generating facility and is

instead used as a water storage and release facility. Releases

from Hebgen Reservoir provide head and flow to the

Missouri-Madison Hydroelectric Project’s eight other downstream developments. Id.

Hebgen Dam is an earth-filled structure with a concrete

core wall and is 721 feet long and 85 feet high. Discharges

from Hebgen Reservoir are controlled by outlet works consisting of an intake tower, a conduit through the dam, and a

conduit outlet. The intake tower includes four openings, two

of which are presently closed with timber stoplogs, while the

other two are used for reservoir discharges. Water passes from

the intake tower through the dam structure in a woodstavelined conduit, which has an unreinforced concrete encasement

and is approximately 785 feet long and twelve feet in diameter. The conduit outlet is an irregularly-shaped concrete box

structure at the toe of the dam that directs discharges into the

Madison River. The Hebgen Development also includes a

spillway, which is located on the right abutment of the dam.

In 2001, FERC granted Fall River a three-year preliminary

permit to conduct investigations and to secure data necessary

to determine the feasibility of a hydroelectric development

project at Hebgen Dam. Symbiotics, LLC, 95 FERC ¶ 62,265,

64,400 (2001).1 PPL did not oppose Fall River’s preliminary

permit application and in fact cooperated with Fall River’s

feasibility studies and engaged in negotiations with Fall River

regarding a possible site use and operations agreement. 

1FERC subsequently replaced all references to Symbiotics, LLC with

“Fall River Rural Electric Cooperative, Inc.” 

FALL RIVER RURAL ELECTRIC v. FERC 12635
In May 2004, Fall River filed its Final License Application

for the proposed Hebgen Dam Hydroelectric Project No.

11882. In its application, Fall River proposed several modifications and additions to the existing Hebgen Development.

First, Fall River proposed constructing a powerhouse with a

single turbine generator unit eighty feet downstream from the

toe of the dam and immediately north of the present conduit

outlet. Discharges would be made through a submerged

concrete-lined draft tube below the surface of the tailwater.

Second, Fall River proposed pressure-grouting and steellining the conduit because it was not designed to withstand

the full reservoir pressure required for power generation.

Third, Fall River proposed bifurcating the conduit approximately 50 to 60 feet upstream of the current conduit outlet.

Fall River proposed installing a steel penstock ten feet in

diameter to direct the flow from the existing conduit to the

proposed powerhouse. The bifurcation and isolation valves

would be located in a new concrete valve house upstream of

the proposed powerhouse. Fifth, a new power transmission

line would be installed to connect the plant electrical output

to Fall River’s existing Hebgen substation near Grayling,

Montana. Sixth, and finally, Fall River proposed using all four

of the existing intake tower’s openings by removing the timber stoplogs from the two currently unused openings and

installing intake gates in their place. 

While Fall River’s license application did not propose modifying the existing spillway, PPL would have to use the spillway for all discharges during approximately three months of

the construction period. Once completed, the powerhouse

would operate in “run-of-river mode,” and would utilize flow

releases from Hebgen Dam as determined under PPL’s

license. Fall River would not have access to reservoir storage

for additional power generation. 

In July 2004, FERC informed Fall River by letter that its

license application potentially conflicted with Section 6 of the

12636 FALL RIVER RURAL ELECTRIC v. FERC
Federal Power Act (FPA), 16 U.S.C. § 799.2

 Specifically,

FERC stated that it “cannot, without [PPL’s] concurrence,

approve a development proposal that would materially affect

or modify the licensed project. Without PPL’s consent to [Fall

River’s] proposed modifications to Project No. 2188, [Fall

River’s] application would be precluded by the requirements

of FPA Section 6 and therefore would be subject to rejection

under 18 C.F.R. § 4.32 (e) (2).”

3

 However, because Fall River

was in the process of negotiating a site use and operations

agreement with PPL, FERC stated that it would “continue to

process [Fall River’s] application, conditioned on [Fall River]

filing . . . additional information showing that PPL has not

ruled out an agreement to the modifications to its Project No.

2188.” FERC required Fall River to provide this information

within thirty days and by the end of each subsequent sixty-day

period. Fall River did so, filing five status reports between

August 2004 and May 2005. 

Just before Fall River filed its last status report, however,

PPL sent a letter to Fall River terminating negotiations. The

letter stated that “the negotiations with [Fall River] over an

extended period have not been successful” and that PPL was

“not interested in proceeding any further with negotiations.”

PPL also filed a copy of the letter with FERC. 

2Section 799 provides in pertinent part: “Licenses may be revoked only

for the reasons and in the manner prescribed under the provisions of this

chapter, and may be altered or surrendered only upon mutual agreement

between the licensee and the Commission after thirty days’ public notice.”

16 U.S.C. § 799. 

3Section 4.32(e)(2) provides in pertinent part: 

If, within 90 days of its filing date, the Director of the Office of

Energy Projects determines that an application patently fails to

substantially comply with the requirements of paragraph (a), (b),

and (c) of this section and of § 4.38 of this part or § 16.8 of this

chapter, or is for a project that is precluded by law, the application will be rejected as patently deficient with the specification of

the deficiencies that render the application patently deficient. 

18 C.F.R. § 4.32(e)(2). 

FALL RIVER RURAL ELECTRIC v. FERC 12637
In its final status report, after noting PPL’s letter and recognizing that “it appear[ed] that negotiations ha[d] come to a

stalemate,” Fall River declared its “intent to continue it’s [sic]

efforts to resolve there [sic] difference’s [sic] with PPL in the

hopes of coming to an acceptable financial arrangement.” Fall

River further noted that “prior to PPL’s letter of January 17,

2005 there ha[d] been no objection by PPL for the licensing

and development of additional generation at the Hebgen

Dam,” and therefore requested that FERC “continue to move

forward with the licensing of the Hebgen Dam project.” Alternatively, if FERC “fe[lt] it [was] unable to proceed with the

licensing” in the absence of PPL’s consent, Fall River

requested that FERC “hold the licensing process in abeyance

until such time that Fall River and PPL have resolved there

[sic] differences.” 

PPL then sent a letter to FERC to “supplement and clarify”

certain issues in Fall River’s status report. PPL stated: “[O]n

April 29, 2005, PPL Montana notified Falls River [sic] that it

was terminating negotiations for a site agreement. As PPL

Montana has already communicated to Falls River [sic] and

NPSI, we do not intend to resume these negotiations for the

installation of additional generation at the Hebgen Development by Falls River [sic] or NPSI.”

4

Shortly thereafter, the Director of FERC’s Division of

Hydropower Licensing dismissed Fall River’s license application and denied its request to hold the application in abeyance.

Fall River Rural Elec. Coop., Inc., 111 FERC ¶ 62,333 (2005)

(the Dismissal Order). The Director concluded that Fall

River’s proposed project is barred under FPA Section 6

because it “would substantially alter PPL Montana’s licensed

project works” without PPL’s consent. Id. at 64,733. The

Director specifically noted Fall River’s proposals to modify

4

“NPSI” refers to Northwest Power Services, Inc., which Fall River designated as its project liaison for correspondence. Accordingly, most if not

all of Fall River’s correspondence in the record is by or to NPSI. 

12638 FALL RIVER RURAL ELECTRIC v. FERC
the “existing intake structure by inserting new gates and

screens in two presently-closed intake openings,” to bifurcate

the outlet conduit, to install a penstock extending to a new

powerhouse, and that “installation of its valve house to bifurcate the Hebgen outlet conduit . . . will require extensive

excavation of the earth fill covering the conduit.” Id. The

Director concluded, “[t]hese are the types of modifications to

a licensed project that the Commission has found require the

licensee’s consent under Section 6 of the FPA.” Id. Therefore,

“[w]ithout PPL Montana’s consent for these alterations, the

application must be dismissed . . . without prejudice to Fall

River re-filing its application, in the event it is able to obtain

PPL Montana’s consent for use of the Hebgen Development.”

Id. The Director further concluded that because of PPL’s

intention not to resume negotiations, “[n]o public purpose

would be served by continuing to process the application or

to hold the application in abeyance.” Id.

Fall River then filed a request for rehearing, which a panel

of three commissioners denied. Fall River Elec. Coop., Inc.,

114 FERC ¶ 61,152 (2006) (the Rehearing Order). The panel

concluded that “[t]he proposed project requires alterations of

the existing project’s facilities that are much greater than the

kind of physical alterations the Commission has previously

found to be insubstantial.” Id. at 61,509. In reaching this conclusion, the panel specifically noted the “installation of new

gates and screens on the intake tower, excavation of a large

area of the dam in order to reconfigure and reline the outlet

conduit, and installation of a valve house and new penstock

at the dam,” and the fact that “[c]onstruction of the proposed

project would also require PPL to enter into an agreement

with Fall River regarding coordination of activities, and

responsibility for operation and maintenance of joint use facilities.” Id. Therefore, the panel concluded, “the physical

changes to the existing structures are not minor” and that such

coordination obligations are not “insubstantial.” Id.

After explaining that “a substantial alteration may result . . .

from significant alterations to project works” alone, id. at

FALL RIVER RURAL ELECTRIC v. FERC 12639
61,509, the panel also concluded that “the potential for . . .

joint-use operational problems would be a substantial alteration of the existing license,” id. at 61,510, thereby requiring

PPL’s consent. The panel specifically noted that: (1) “PPL’s

ability to meet its flow requirements . . . could be compromised” during the three months of construction when all

flows would be released via the spillway; (2) after construction, PPL’s ability to maintain appropriate dissolved oxygen

levels could be compromised because under Fall River’s proposal, water would be released below the tailwater surface

rather than dropping into the tailwater as it currently does; and

(3) “it might be necessary to require finer screening at the

intakes” to guard against turbine entrainment mortality of salmonid, thereby “potentially compromis[ing] PPL’s ability to

satisfy the flow release requirements of its license.” Id. at

61,509. 

The panel also concluded that FERC’s prior issuance of a

preliminary permit was not inconsistent with its dismissal of

Fall River’s license application, in light of the limited purpose

of the preliminary permit and the intervening breakdown in

negotiations between PPL and Fall River. Id. at 61,510.

Finally, the panel rejected Fall River’s arguments that PPL

either expressly consented to future modifications of its

license by accepting Standard Articles 9 and 10 in its

Missouri-Madison license, or had “impliedly consented” by

expressing no opposition to Fall River’s preliminary permit

application or its final license application, or by cooperating

with Fall River for years before abruptly terminating negotiations. Id. at 61,510-11. 

Fall River timely petitioned for review of both the Dismissal Order and the Rehearing Order.

II. Standards of Review 

Under the Administrative Procedure Act, this court reviews

decisions by FERC to determine whether the agency action

12640 FALL RIVER RURAL ELECTRIC v. FERC
was arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law. 5 U.S.C. § 706(2); Cal. Dep’t of

Water Res. v. FERC, 489 F.3d 1029, 1035 (9th Cir. 2007).

Under the FPA, FERC’s factual findings are conclusive if

supported by substantial evidence. 16 U.S.C. § 825l(b); Bear

Lake Watch, Inc., v. FERC, 324 F.3d 1071, 1076 (9th Cir.

2003). “Here, as elsewhere, [s]ubstantial evidence constitutes

more than a mere scintilla. It means such relevant evidence as

a reasonable mind might accept as adequate to support a conclusion. If the evidence is susceptible of more than one rational interpretation, we must uphold [FERC’s] findings.” Id.

(internal quotation marks and citation omitted; alterations in

original). FERC’s interpretation of the FPA is entitled to

Chevron deference. Am. Rivers v. FERC, 201 F.3d 1186, 1194

(9th Cir. 2000). 

III. Discussion

A. Substantial Evidence of an “Alteration” Under

Section 6 of the FPA 

Fall River first argues that because its proposal would not

substantially or materially alter PPL’s project’s configuration,

mode of operations, or power generation, FERC’s orders are

not supported by substantial evidence. We disagree. 

[1] Section 6 of the FPA states that licenses “may be

altered . . . only upon mutual agreement between the licensee

and the Commission . . . .” 16 U.S.C. § 799. The term “altered” is not statutorily defined; however, both parties agree

that in order to violate Section 6, a proposed project must substantially alter an existing license. As neither party disputes

the relevant standard, for purposes of this appeal we assume

without deciding that in order for Section 6 of the FPA to

apply, a proposed project must substantially alter an existing

license. Cf. Pac. Gas & Elec. Co. v. FERC, 720 F.2d 78, 90

n.36 (D.C. Cir. 1983) (“We do not, however, adopt FERC’s

view that only ‘substantial alterations’ in a license engage

FALL RIVER RURAL ELECTRIC v. FERC 12641
section 6 protections . . . .”). Under this standard, FERC may

authorize “de minimis interferences with the operation of an

existing plant”—i.e., “[s]mall encroachments on a license,

comparable in their adverse impact to variations in conditions

that investors might expect from other causes such as, for

example, annual fluctuations in water supply.” Id. at 90.

FERC may not, however, issue a license which “will significantly interfere with operations already licensed, whether the

interference will adversely affect the prior licensee’s physical

plant, its ‘project works,’ or its supplies of water.” Id. at 89

n.31. 

Under FERC precedent, “[w]hat constitutes an ‘alteration’

for Section 6 purposes is primarily a factual issue to be determined in each case.” Universal Elec. Power Co., 92 FERC

¶ 61,242, 61,768 (2000). Therefore, FERC’s conclusion that

Fall River’s proposed project would substantially alter PPL’s

license is “conclusive” if supported by substantial evidence.

16 U.S.C. § 825l(b). 

In this case, FERC concluded that both Fall River’s proposed physical modifications to the Hebgen Development and

the possible operational impacts to the Missouri-Madison

project constitute “substantial alterations” of PPL’s license.

114 FERC ¶ 61,152, at 61,509; see Gas & Elec. Dep’t of Holyoke, 21 FERC ¶ 61,357, 61,927 (1982) (“[T]here are essentially two types of interference with the licensed project that

we must consider: (1) physical alterations to existing project

works; and (2) impacts on the operation of the project.”). 

FERC first explained in its Rehearing Order that the “proposed project requires alterations of the existing project’s

facilities that are much greater than the kind of physical alterations the Commission has previously found to be insubstantial.” 114 FERC ¶ 61,152, at 61,509. In reaching this

conclusion FERC specifically relied on “the installation of

new gates and screens on the intake tower, excavation of a

large area of the dam in order to reconfigure and reline the

12642 FALL RIVER RURAL ELECTRIC v. FERC
outlet conduit, and installation of a valve house and a new

penstock at the dam.” Id.

Fall River first objects to FERC’s finding that its proposal

includes installing screens on the intake tower. Though

screens were mentioned on multiple occasions in the documents supporting Fall River’s license application, Fall River

is correct that screens were not part of its final license application. Nevertheless, Fall River does not dispute that it proposes making physical alterations to the intake tower, namely

removing the timber stoplogs from the two presently-closed

intake openings and installing two new intake gates in their

place. 

Fall River next notes that excavation would be limited to a

relatively small area on the downstream toe of the dam, and

would not amount to the “excavation of a large area of the

dam” described by FERC. Fall River asserts that the excavation would be limited to the hillside over the downstream

sixty feet of the conduit. There is no dispute, however, that

the proposed excavation requires removing approximately

3,100 square feet of soil for construction of the new powerhouse and valve house. Fall River simply prefers to characterize this as excavating a “relatively small area” rather than a

“large area.” 

Next, while conceding that it proposes relining the conduit,

Fall River objects to FERC’s finding that the outlet conduit

will be “reconfigured.” However, the license application

explicitly proposes bifurcating the outlet conduit, installing a

new penstock, and constructing a new concrete valve house,

in addition to pressure-grouting and steel-lining the conduit.

After discussing the aforementioned physical alterations,

FERC also concluded that in this case the potential for “jointuse operational problems would be a substantial alteration of

the existing license.” 114 FERC ¶ 61,152, at 61,509-10. Specifically, FERC identified: (1) use of the spillway for all disFALL RIVER RURAL ELECTRIC v. FERC 12643
charges during approximately three months of the

construction period as potentially impacting PPL’s ability to

meet its flow requirements; (2) releasing water below the tailwater’s surface rather than allowing the water to drop into the

tailwater as potentially affecting PPL’s ability to maintain

appropriate dissolved oxygen levels; and (3) the possibility of

having to install finer screening at the intakes as potentially

impacting PPL’s ability to meet its flow requirements. Id.

Fall River contends that FERC’s conclusion with respect to

PPL’s operations is purely speculative and has no basis in evidence. Again, we disagree. It is undisputed that Fall River’s

license application proposes closing the intake gates and conduit during approximately three months of the construction

period, with all discharges being made via the spillway during

this time. It is also undisputed that Fall River proposes discharging water below the tailwater’s surface rather than

allowing the flow to drop into the tailwater, as it currently

does. Finally, in its “official response” to Fall River’s draft

license application, Montana Fish, Wildlife and Parks recommended that Fall River incorporate the following language

into its license: “If future monitoring results indicate that significant entrainment is occurring and that screening is a necessary and effective option for reducing entrainment, then

screening the intake may be required at some future date.”

(Emphasis added.) 

[2] Choosing to focus on the impact of each of these proposed modifications individually, Fall River apparently does

not appreciate the cumulative impact of its proposed project.

Fall River proposes doubling the number of intake openings

used and installing new gates on the intake tower, thereby

increasing pressure within the conduit. Fall River proposes

steel-lining and pressure-grouting the conduit because it “was

not designed to withstand the full reservoir pressure which

would be required for power generation.” Rather than using

the existing conduit outlet, Fall River proposes bifurcating the

conduit and installing a new penstock. Rather than having dis12644 FALL RIVER RURAL ELECTRIC v. FERC
charges drop into the tailwater below the conduit outlet as

they currently do, Fall River proposes releasing water below

the tailwater’s surface. During approximately three months of

construction, Fall River proposes making all discharges via

the spillway, which is not ordinarily used for discharges and

has no backup, as it is the backup. Collectively, these alterations fundamentally change the physical characteristics and

operation of the Hebgen Development. Admittedly, FERC

cannot know whether certain operational problems will arise,

but neither can Fall River ensure that they will not. However,

FERC’s ability to accurately predict the future is rather beside

the point. Here, there is much more than a “mere scintilla” of

evidence supporting FERC’s conclusion that Fall River’s proposal would substantially alter PPL’s license; therefore, it is

supported by substantial evidence. In sum, we conclude that

each of FERC’s factual findings with respect to Fall River’s

proposed physical alterations and operational interferences

with PPL’s license are supported by substantial evidence, and

that FERC’s conclusion that Fall River’s proposal would substantially alter PPL’s existing license is also supported by

substantial evidence.

B. FERC Precedent

Fall River next argues that FERC’s orders are inconsistent

with its precedents and are therefore not entitled to deference.

In its Rehearing Order FERC analyzed Fall River’s proposed

project by applying both cases involving a substantial alteration of an existing license, and cases where it found no substantial alteration. 114 FERC ¶ 61,152, at 61,508-09. Fall

River challenges FERC’s application of these cases.

1. Cases Finding a Substantial Alteration 

[3] In Niagra Mohawk Power Corporation, FERC rejected

a license application that proposed a two-phase modification

of an existing development. 29 FERC ¶ 61,005, 61,010

(1984). The first phase involved modifying an existing headFALL RIVER RURAL ELECTRIC v. FERC 12645
gate structure, rehabilitating an existing portion of an abutment, and constructing a powerhouse and penstocks. Id. The

second phase involved preventing all flows from entering the

existing plant, effectively closing down its operation. Id.

FERC concluded that “this amount of construction work

requires fundamental alterations to [the] licensed project

works, and places it in clear violation of Section 6.” Id. Fall

River contends that its proposed modifications to the Hebgen

Development are not remotely similar in scale to the proposed

alterations in Niagra Mohawk. However, as in Niagra

Mohawk, Fall River’s proposal includes more than an insubstantial amount of construction, namely building a powerhouse, installing a penstock, and excavating around a portion

of PPL’s existing conduit. 

In JDJ Energy Company, FERC rejected a preliminary

license application that proposed modifying approximately 75

feet of an existing dam and modifying an existing powerhouse

to accommodate construction of a new powerhouse. 41 FERC

¶ 61,354 (1987). FERC explained that “JDJ’s proposal would

involve significant structural modifications to the project dam

and to project works in the area immediately adjacent to the

dam.” Id. Fall River notes that it does not propose any modifications to an existing powerhouse and “very little” modifications to the existing dam. However, Fall River does propose

constructing a powerhouse, modifying the intake tower and

conduit, and installing a penstock. 

In Green Island Power Authority, FERC rejected a preliminary license application that proposed constructing a new dam

that would inundate an existing dam, decommissioning various other facilities, thereby rendering an existing project inoperable. 110 FERC ¶ 61,034, 61,109 (2005). Fall River notes

that its proposed project bears no similarity to the project proposed in Green Island. Admittedly, Fall River’s proposal

would not render PPL’s project inoperable, but that does not

necessarily make FERC’s orders in this case inconsistent with

Green Island. FERC never represented Fall River’s proposal

12646 FALL RIVER RURAL ELECTRIC v. FERC
to be on all fours with the proposed project in Green Island.

FERC’s citation to Green Island simply illustrates an extreme

example of a substantial alteration.

2. Cases Finding No Substantial Alteration

In Weber Basin Water Conservancy District, FERC granted

a license that proposed installing a penstock underneath an

existing canal. 50 FERC ¶ 61,409, 62,263 (1990). Construction of the penstock involved making an opencut excavation

through the canal, approximately eight feet wide and eight

feet deep, placing the penstock in the excavation, backfilling

the excavation, and restoring the disturbance to the canal lining. Id. n.13. In concluding that these proposed modifications

did not amount to a substantial alteration, FERC explained

that “once constructed [the penstock] will not physically interfere with [prior licensees],” and that “construction should take

approximately three to seven days to complete.” Id. As noted,

and unlike in Weber Basin, Fall River’s penstock would physically interfere with PPL’s license because it would fundamentally alter the flow of water through Hebgen Dam.

Furthermore, Fall River’s proposed construction schedule

spans an estimated eight months, not three to seven days. 

In Howard W. Bair, FERC granted a preliminary permit

that proposed utilizing an existing fish water release pipe and

constructing a powerhouse. 20 FERC ¶ 61,092, 61,194

(1982). The only proposed modification to the existing iron

pipe was to extend it by forty feet, id. at App. A, which FERC

noted was only a “small scale development.” By contrast, Fall

River’s proposed modifications to the intake tower and conduit are far more extensive than simply extending the existing

conduit by forty feet. Further, Bair involved an application for

a preliminary permit, not a final license. FERC will issue a

preliminary permit unless “it is clear at the preliminary permit

stage” that the license would require an existing licensee’s

permission under Section 6. See Kamargo Corp., 53 FERC

¶ 61,411, 62,439 (1990) (emphasis added). 

FALL RIVER RURAL ELECTRIC v. FERC 12647
Finally, in both PG&E, 720 F.2d at 89, and Fluid Energy

Systems, Inc., 24 FERC ¶ 61,298, 61,615 (1983), FERC concluded that a 0.3% reduction in power generation did not

amount to a substantial alteration of an existing license. Fall

River notes that similar to these cases, its proposed project

will not reduce power generation at the Hebgen Dam. This is

undoubtedly true, as the Hebgen Development currently has

no power generating facilities. However, neither PG&E nor

Fluid Energy Systems involved physical modifications to an

existing project comparable to those now proposed by Fall

River. 

[4] In sum, we disagree with Fall River’s argument that

FERC’s orders are inconsistent with its precedents. In citing

these cases, FERC did not suggest they are on all fours factually with Fall River’s proposed project. Instead, FERC used

these cases as examples of instances where alterations were

substantial and where they were not. As FERC explained in

its Rehearing Order, “[t]he degree of encroachment that

makes an alteration ‘substantial’ is a case-specific determination.” 114 FERC ¶ 61,152, at 61,508. These cases served as

guideposts in FERC’s evaluation and analysis of Fall River’s

proposal. Therefore, FERC’s conclusion in this case that Fall

River’s proposed project amounts to a substantial alteration of

PPL’s license under Section 6 of the FPA is entirely consistent with its precedents and is entitled to deference.

C. Preliminary Permit

Fall River next argues that FERC’s orders are inconsistent

with its regulations and with its issuance of a preliminary permit in this case because Fall River’s Preliminary Permit

Application was substantially identical to its Final License

Application. Fall River contends that this change in policy

must be supported by a reasoned explanation. See generally

Flagstaff Med. Ctr., Inc. v. Sullivan, 962 F.2d 879, 886 (9th

Cir. 1992) (explaining that “changes in agency interpretation

must be supported by a ‘reasoned analysis’ ”). 

12648 FALL RIVER RURAL ELECTRIC v. FERC
[5] FERC’s preliminary permit regulations provide: “The

Commission will not accept an application for a preliminary

permit for project works that . . . [w]ould interfere with a

licensed project in a manner that, absent the licensee’s consent, would be precluded by Section 6 of the Federal Power

Act.” 18 C.F.R. § 4.33(a)(2). FERC’s practice is that “where

it is clear at the preliminary permit application stage that the

development proposed in the permit application would cause

impermissible alterations of an existing license under section

6, the Commission will not grant the permit.” Kamargo

Corp., 53 FERC ¶ 61,411, at 62,439. However, “[w]here it is

not clear at the permit stage that the proposed development

would involve an impermissible alteration of an existing

license, the Commission will issue the permit.” Id. In other

words, “[t]he preliminary permit is actually only a minor

threshold hurdle for the applicant, and the grant of a preliminary permit is in no respect an indication of the merits of a

license proposal.” Town of Summersville v. FERC, 780 F.2d

1034, 1038-39 (D.C. Cir. 1986). Therefore, “[u]nless a permanent legal barrier precludes FERC from licensing the project,

FERC will issue a preliminary permit.” Id. at 1038. 

[6] We cannot say that it was “clear” at the preliminary permit stage that Fall River’s proposed project would substantially alter PPL’s license, nor can we say that there was a

“permanent legal barrier” to Fall River’s proposed project

when FERC issued the preliminary permit. In fact, Fall River

discussed developing Hebgen Dam with PPL in early 2001,

and at that time PPL agreed that Fall River could and would

make an application for a preliminary permit, and that it

would negotiate a site use agreement with Fall River. 

[7] In granting Fall River’s preliminary permit, FERC

noted Fall River’s representation “that they will not impact

[PPL’s] project.” 95 FERC ¶ 62,265, at 64,400. Had Fall

River and PPL reached a mutually acceptable site use agreement, there is no indication that Fall River’s preliminary permit application would have otherwise been precluded by a

FALL RIVER RURAL ELECTRIC v. FERC 12649
“permanent legal barrier.” When PPL ultimately informed

FERC that it “[did] not intend to resume these negotiations for

the installation of additional generation at the Hebgen development,” FERC promptly dismissed Fall River’s license

application. Therefore, we conclude that FERC’s orders are

consistent with both its regulations on issuing preliminary

permits and its prior issuance of a preliminary permit in this

case, and that FERC has not made any change in policy that

requires justification.

D. Consent 

Fall River’s final argument is that FERC failed to adequately consider whether PPL impliedly consented to Fall

River’s proposed project by not intervening in, protesting, or

commenting on either the Preliminary Permit Application or

the Final License Application. 

In its Rehearing Order, FERC noted Fall River’s argument

that “PPL has impliedly consented by expressing no opposition to Fall River’s preliminary permit or filing no comments

in response to its license application proposal.” 114 FERC

¶ 61,152, at 61,510-11. FERC did not, however, include a

separate analysis addressing this argument. 

[8] Nevertheless, Fall River does not cite a single case

requiring FERC’s orders to thoroughly analyze each and

every argument in order to engage in reasoned decision making, nor have we found one. We would not expect FERC to

have spent much time addressing Fall River’s implied consent

argument in this case, as Section 6 of the FPA unequivocally

provides that a license “may be altered . . . only upon mutual

agreement between the licensee and the Commission.” Fall

River cites no authority indicating that this agreement may be

implied rather than express, and our research has uncovered

only cases where FERC had an express agreement with the

prior licensees. See, e.g., PG&E, 720 F.2d at 91-92 (explaining that FERC expressly retained broad authority to permit

12650 FALL RIVER RURAL ELECTRIC v. FERC
future development under existing license). We harbor no

doubt that FERC recognized Fall River’s implied consent

argument and rejected it. 

Finally, because Fall River did not argue its express consent argument specifically and distinctly in its opening brief

we deem it waived. See Diaz v. Eagle Produce Ltd. P’ship,

521 F.3d 1201, 1208 n.3 (9th Cir. 2008).

IV. Conclusion 

In sum, we conclude that substantial evidence supported

FERC’s conclusion that PPL’s license would be substantially

altered under Section 6 of the FPA by Fall River’s proposed

project, that FERC’s orders were consistent with its precedents and with its issuance of a preliminary permit, and that

PPL did not impliedly consent to Fall River’s proposed modifications. Therefore, Fall River’s petition for review is

DENIED. 

FALL RIVER RURAL ELECTRIC v. FERC 12651