Opinion ID: 2801043
Heading Depth: 3
Heading Rank: 3

Heading: Commerce Clause Determination

Text: Finally, the Districts challenge FERC’s finding that the La Grange Project is subject to FERC’s mandatory licensing jurisdiction based on Congress’s “authority to regulate commerce with foreign nations and among the several States.” 16 U.S.C. § 817(1). In order to assert jurisdiction based on Congress’s Commerce Clause authority, FERC must find that the project (1) is located on Commerce Clause waters, (2) affects interstate commerce, and (3) was “constructed” or enlarged after 1935. See L.S. Starrett Co. v. FERC, 650 F.3d 19, 23 (1st Cir. 2011) (citing 16 U.S.C. § 817(1)). FERC interprets “construction” as any increase in a project’s generating capacity, i.e., an increase in either the installed capacity or actual capacity of a project. See id. at 27 (upholding FERC’s interpretation of “construction”). The installed capacity is the “maximum potential generating capacity of a turbine generator,” whereas the actual capacity is the “measured capacity upon installation, which is affected by various site conditions.” Id. at 21 n.3. FERC found that La Grange is located on Commerce Clause waters, that the Project affects interstate commerce through its connection to the interstate electrical grid, and that the Project’s generating capacity increased in 1989 when the Districts replaced the Powerhouse’s turbines and generating units. FERC relied upon an engineering report submitted by the Districts to support these findings. Turlock Irrig. Dist., 144 FERC ¶ 61,051, PP 87–103. The Districts do not dispute that the Project is located on Commerce Clause waters and affects interstate commerce. Instead, they challenge FERC’s finding that “post-1935 21 construction . . . occurred when the Project’s generating capacity increased in 1989.” Id. at P 87. Before we address the Districts’ specific challenges, however, some background is necessary. A hydroelectric project generates energy using a turbine, which converts flowing water to mechanical power, and a generator, which converts the mechanical power to electric energy. Id. at PP 90–91. With unlicensed projects, FERC determines whether there has been an increase in the generating capacity of a project by looking to whether the project’s “installed capacity” has increased. The “installed capacity” of a unit is the lesser of the rating output of the unit’s generator, determined by looking at the nameplate or manufacturer’s rating, or the unit’s turbine. Id. at PP 91–92. FERC determined that La Grange’s original generators were rated at 1,000 kW and 3,750 kW, for a combined total of 4,750 kW, while the replacement generators were rated at 1,231 kW and 3,693 kW, for a combined total of 4,924 kW. Id. at PP 94–95. Because the combined rated output of the replacement generators was 174 kW higher than the combined rated output of the original generators, FERC concluded that the 1989 rehabilitation increased La Grange’s installed capacity, and thus, La Grange required licensure. Id. at PP 95–103. The Districts present three arguments for overturning FERC’s determination. First, the Districts argue that FERC never demonstrated that 4,750 kW was the correct prerehabilitation rating for the old generators. Second, the Districts assert that FERC erred in comparing the generating capacity of the new turbines to the generating capacity of the generators. Such an “apples to oranges” analysis, they argue, is flawed because it assumes the generators are 100 percent efficient, instead of taking into account the “standard efficiency factor” of the generators. Lastly, the Districts argue that even if FERC’s finding was correct, FERC abused its discretion in asserting 22 jurisdiction over such a de minimis increase in generating capacity. All three of the Districts’ arguments lack merit. First, FERC adequately demonstrated that 4,750 kW was the correct pre-rehabilitation rating for the old generators. FERC based the 4,750 kW number on an engineering report prepared by the Districts’ contractor, Bechtel (“Bechtel Report”), and submitted to FERC by the Districts. The Bechtel Report notes that La Grange is made up of two turbine generator units, a smaller unit “with two-500 kW generators coupled to each side,” and a larger unit “with one directly coupled 3750kW Allis-Chalmers generator.” Joint Appendix 103. The Districts contend that the Bechtel Report never explicitly refers to those ratings as the nameplate or manufacturer’s rating, and thus, they reason, it was arbitrary for FERC to rely on those ratings as if they were the nameplate rating. Conspicuously absent from the Districts’ brief is an alternative explanation for the ratings listed in the Bechtel Report. The Districts never explain what those ratings refer to, or why Bechtel would provide ratings other than the nameplate rating. The Districts note that because the original units were taken from another site, the generators’ capacity “may have been different from what may have been stated on the units.” Districts’ Br. 26. However, speculation as to the actual capacity of the generators is irrelevant to a determination of the rated output of the generators. See L.S. Starrett Co., 650 F.3d at 21 n.3 (noting difference between installed capacity and actual capacity). In the absence of proof to the contrary, it was reasonable for FERC to assume that the ratings listed in the Bechtel Report were the manufacturer’s ratings for the generators. Second, the Districts argue that FERC erred by comparing the generating capacity of the old generators to the generating capacity of the new turbines rather than the new generators—an erroneous “apples to oranges” comparison, in the Districts’ 23 view. This argument fails. FERC’s analysis followed standard industry practice and was based on the information the Districts provided. The chart upon which FERC relied to find the rated output of the new generators listed the capacity of the new units (pairs of turbines and generators) in kilowatts, the standard expression of generator capacity, and horsepower, the standard expression of turbine capacity. Joint Appendix 108; see Districts’ Rehearing Request at 29, Joint Appendix 456 (noting that “[t]urbines are rated as horsepower,” and “[g]enerator capacity is . . . rated as kilowatt output”). FERC’s comparison of the old generators to the new generators rests on FERC’s finding that the kilowatt values in the chart reflected the capacity of the generators, while the horsepower values reflected the capacity of the turbines. Turlock Irrig. Dist., 144 FERC ¶ 61,051 PP 96–98. That finding is reasonable in light of standard unit-labeling practice. The Districts argue that this finding is wrong, as evidenced by the fact that the kilowatt figures and the horsepower figures match when horsepower is converted to kilowatts. The Districts emphasize that generator capacity cannot actually match turbine capacity because no generator is 100 percent efficient, and that the figures FERC used thus must not be generator figures at all, but are alternate expressions of turbine capacity in kilowatts and horsepower. However, “[s]tandard engineering practice . . . require[s]” that a generator’s capacity be matched to the capacity of a turbine. Report of Turlock Irrigation District to FERC on the La Grange Project at 8 (Oct. 11, 2011), Joint Appendix 79; Turlock Irrig. Dist., 144 FERC ¶ 61,051 P 90 (“[T]he rated output of a generator is chosen to match the output of the turbine . . . .” (citing Engineering and Design, Hydropower, at 5-20, Department of the Army, Corps of Engineers, Engineer Manual EM1110-2-1701 (Dec. 31, 1985))). The fact that the turbine and generator figures were reported as matching therefore appears unsurprising. The Districts failed to provide any clearer or better data requiring a contrary conclusion. Thus, it was 24 reasonable for FERC to assume that the kilowatt values in the chart reflected the capacity of the new generators. Lastly, we reject the Districts’ argument the FERC should have declined to exercise jurisdiction over La Grange because the increase in generating capacity was minimal. FERC contends that it does not have the discretion to decline to exercise jurisdiction over a hydroelectric project that meets the statutory requirements. We need not go that far to resolve this issue. It is sufficient to find, as we do here, that FERC did not abuse its discretion in asserting jurisdiction over the La Grange Project on the basis of post-1935 construction that resulted in an increase in generating capacity of 174 kW. See L.S. Starrett Co., 650 F.3d at 21–22 (affirming FERC’s assertion of jurisdiction over a project that increased in generating capacity by 86 kW).