Opinion ID: 185912
Heading Depth: 2
Heading Rank: 3

Heading: Unit of improvement or development

Text: 22 Finally, the Company contends the Commission, in determining what effect the reservoir has upon the generation of power downstream, arbitrarily limited its analysis to the four projects closest to the reservoir. There are eight power plants on the Flambeau River and six more plants on the Chippewa River downstream of its confluence with the Flambeau. According to the Company, if the Commission had considered the increase in generation at all 14 downstream plants, the percentage increase in total output attributable to the operation of the reservoir would have fallen from more than seven percent to about 1.25 percent — a mere half the lowest figure the Commission has ever held sufficient to warrant its asserting jurisdiction. 23 In support of its argument that the Commission must consider all downstream benefits, the Company first notes that the Commission considers all such benefits in determining, under another provision of the Act, how much a downstream plant must pay an upstream reservoir for the benefit it receives through flow regulation. There is no inconsistency, however. For the purpose of compensating reservoirs, the Commission understandably tries to determine the full extent of direct benefits to all licensees because the Act requires each licensee to make an equitable reimbursement to the reservoir of operating costs. See 16 U.S.C. § 803(f). In setting the boundaries of a complete unit of improvement or development, on the other hand, the Commission's task is not to include every project that benefits to any degree from the reservoir; to the contrary, the Act limits the unit to those works for which the reservoir is necessary or appropriate or used and useful. 16 U.S.C. § 796(11). 24 Only somewhat more compelling is the Company's point that the Commission was unjustified in leaving out of the unit, for the first time in its final order, four of the eight downstream projects on the Flambeau River. In its first three orders the Commission considered the effect the reservoir has upon all the Flambeau projects, as the staff study had done. In the Order Denying Rehearing, however, the Commission divided those eight into more than one unit of development and concluded that, although the Staff Study found generation increments at all eight downstream projects, we need only find that Turtle-Flambeau provides a significant increment of generation at the four-project upstream unit of development. Order Denying Rehearing at 62,161. 25 The Company posits that the Commission truncated the unit of development in its final order because, if the lower Flambeau projects were considered part of the unit, their proximity to the six Chippewa River projects would require the inclusion of those projects as well (resulting in a greatly reduced percentage effect upon generation). 26 The Commission's motive is of no moment to the issue before the court. The relevant question is whether the Commission reasonably concluded that the four upper Flambeau projects comprised a single unit of development. The Commission based that conclusion upon its finding that the four uppermost projects, unlike the plants further downstream, are physically and operationally interrelated. Id. 27 The Act does not define a complete unit of improvement or development. The Commission's interpretation of that phrase to encompass all projects physically and operationally related is, therefore, entitled to our deference, as long as it is consistent with the terms of the statute and not unreasonable. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). We think it is consistent, and the Company does not argue otherwise.  Nor does the Company argue persuasively that there is not substantial evidence to support the Commission's finding the four projects are operationally integrated. The Company does not dispute that the four projects are all owned by the Flambeau Paper Company, which operates them all for the same purpose, namely, providing power to its mill. We therefore uphold as reasonable the Commission's determination that the four projects immediately downstream of the reservoir constitute a complete unit of development.