Opinion ID: 218888
Heading Depth: 2
Heading Rank: 4

Heading: The Effect on Interstate Commerce

Text: Before allowing the FERC to exert its licensing jurisdiction over projects involving post-1935 construction, Section 23(b) requires the Commission to find that the interests of interstate or foreign commerce would be affected by [the] proposed construction. 16 U.S.C. § 817(1). The Commission argues that Starrett's construction meets the interstate commerce requirement because its dam is a member of a class of small hydroelectric projects that collectively have a substantial impact on interstate commerce because they produce power that would otherwise have to be produced elsewhere on the interstate grid. Starrett responds that (1) it is improper for the Commission to rely on this cumulative effect theory because it leaves the Commission's Commerce Clause jurisdiction without boundary; and (2) in any case, the Commission has not shown that Starrett's facility belongs to a class of small hydroelectric projects that collectively affect interstate commerce. We first address whether it was unreasonable for the Commission to consider the cumulative effect on commerce of many small hydroelectric facilities, and then address whether there was substantial evidence that Starrett's dam, in conjunction with others, actually has a significant impact on interstate commerce. See Habersham Mills v. FERC, 976 F.2d 1381, 1384-85 (11th Cir.1992) (first addressing whether the FERC misappl[ied] the [FPA] by considering the cumulative effect of a class of small hydroelectric projects that include[d] the two projects at issue, and then addressing whether there was substantial evidence of an effect on interstate commerce); City of Centralia v. FERC, 661 F.2d 787, 791-93 (9th Cir.1981) (first explaining that if a local activity belongs to a class of activities having a cumulative effect on interstate commerce, it may fall within the commerce power, and then analyzing whether there was substantial evidence that the hydropower facility at issue, either alone or in conjunction with other facilities, had a real and substantial effect on interstate commerce).
The Supreme Court has noted that the language of the FPA strongly implies that Congress drew upon its full authority under the Commerce Clause in enacting the statute. Union Elec. Co., 381 U.S. at 96, 85 S.Ct. 1253. Full authority under the Commerce Clause includes the power to reach a local activity whose effect on commerce, `taken together with that of many others similarly situated, is far from trivial.' Habersham, 976 F.2d at 1384 (quoting Wickard v. Filburn, 317 U.S. 111, 128, 63 S.Ct. 82, 87 L.Ed. 122 (1942)); see also Gonzales v. Raich, 545 U.S. 1, 17, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005) (noting that Supreme Court case law firmly establishes Congress' power to regulate purely local activities that are part of an economic `class of activities' that have a substantial effect on interstate commerce). Assuming there was substantial evidence supporting the Commission's factual findings, it would not be unreasonable for the Commission to regulate Starrett's dam because a small hydroelectric project that affects commerce only slightly can still be subject to congressional regulation if it is part of a class with a significant cumulative effect. Habersham, 976 F.2d at 1384. We thus turn to the second part of our analysis and ask whether the Commission's conclusion that Starrett's dam is part of a class of projects that, in the aggregate, have the required effect on interstate commerce is supported by substantial evidence. City of Centralia, 661 F.2d at 792.
Starrett contends that its situation is comparable to the one in City of Centralia, where the Ninth Circuit concluded that the record failed to support the Commission's conclusion that a hydroelectric project either (1) itself had a substantial effect on commerce, 661 F.2d at 792; or (2) was part of a class of projects that, cumulatively, had a substantial effect on interstate commerce, id. at 793, We agree with the Commission that this case is more comparable to Habersham, where the Eleventh Circuit concluded that two small dams did meet the interstate commerce requirement because the Commission presented evidence that (1) by supplying power to a factory, the two hydroelectric projects effectively displace[d] electricity that the factory otherwise would draw from the interstate grid, 976 F.2d at 1384; and (2) the Commission referred to two FERC reports that indicate[d] that the small [hydroelectric] projects [around the nation] collectively account for a substantial portion of the nation's hydroelectric generating capacity, id. at 1385. [14] Here, the Commission (1) explained that Starrett's dam produces power that Starrett would otherwise receive from the interstate grid, a point supported by the record; and (2) cited Habersham which in turn, as noted above, cited two FERC studiesto support the proposition that small hydroelectric projects that displace power from the national grid can have a significant cumulative effect on interstate commerce. Starrett III, 130 FERC ¶ 61,112, at 61,522-61,523. We believe that there was substantial evidence to support the factual findings underlying the Commission's interstate commerce conclusion.