Opinion ID: 460174
Heading Depth: 1
Heading Rank: 3

Heading: phoenix's preliminary permit application

Text: 17 Phoenix also maintains that it is entitled to reinstatement of its preliminary permit application. We agree and find that the Commission exceeded the bounds of its authority by automatically withdrawing Phoenix's preliminary permit application, and in refusing to reinstate the application when the exemption application was rescinded. The Commission's own regulations give the Commission no authority to withdraw a preliminary permit application in this situation. The regulations provide that any accepted preliminary permit or license application submitted by a person who later applies for exemption retains its validity and priority until the preliminary permit or license application is withdrawn, or the property is exempted from licensing. 18 C.F.R. 4.104(b). The regulations contemplate that only two events will have the effect of withdrawing the preliminary permit application: withdrawal by the applicant, or the applicant's receipt of an exemption. Mere acceptance of the application for exemption does not suffice to authorize withdrawal of the preliminary permit application. 18 The function of the preliminary permit application makes it clear that the application should not be withdrawn simply because an exemption application is accepted for filing. By filing a preliminary permit application, the applicant secures priority of application for a project license, during the time that the company determines the feasibility of the project and gathers documentary support for its license application. 44 Fed.Reg. 61329 (Oct. 25, 1979). By filing applications for both an exemption and a preliminary permit, the applicant reserves a rightful place in two lines. Of course, if the applicant receives the exemption, the license is no longer necessary and the agency's regulations validly authorize the removal of the applicant from its previously established priority for a project license application. However, if the exemption is denied (as it was in this case by the revocation of the Director's acceptance of the exemption application for filing), the applicant now must obtain a license and should not lose his place in the license line. 19 The placeholding functions served by simultaneous filing of a preliminary permit application and an exemption application makes FERC's reliance on Georgia Pacific Corp., 17 FERC p 61,174 (1981), inappropriate. In Georgia Pacific, the Commission stated, When the Commission accepts a license application, it will simultaneously dismiss as impliedly withdrawn any permit application filed by the license applicant in the same proceeding. 17 FERC p 61,174 at n. 7. 20 This precedent is inapplicable to the withdrawal of a permit application when an exemption application is filed. As noted above, the purpose of a preliminary permit is to secure the permittee's priority of application for a license while the permittee gathers data to support the license application. See 16 U.S.C. Sec. 797; 44 Fed.Reg. 61329 (Oct. 25, 1979). Once the license application is filed and accorded the priority established by the preliminary permit, the preliminary permit application has no further use and may be withdrawn. In the present context, however, the acceptance of an exemption application for filing does not end the usefulness of a preliminary permit application. The preliminary permit application remains useful until the exemption is finally granted. If the exemption is denied, as it was in this case, the preliminary permit application remains in place and holds the priority of the applicant in the licensing proceedings, which have now become even more important to the applicant. 21 Because of this interdependence of the permit and exemption proceedings, the Commission's automatic cancellation of the preliminary permit application impermissably forces the applicant to choose between foregoing the possibility of an exemption at all, and staking all on the application for an exemption. If the builder does not apply for an exemption, it is assured of its proper priority in licensing proceedings. But if the builder does apply and the application is denied, it loses whatever priority it originally gained by a preliminary permit application. When the applicant fails to obtain the exemption, it not only has been forced to take the licensing route, but has lost its previously attained priority to apply for a license. This all or nothing approach is incompatible with the statutory plan to encourage exemption-seeking in appropriate cases; it penalizes unsuccessful efforts to obtain an exemption. The unsuccessful applicant for an exemption is placed in a worse position than the applicant who did not file for an exemption at all, but who filed a preliminary application and obtained licensing priority. Such unequal treatment discourages applications for exemptions and runs counter to Congress' stated policy of expediting the approval of small hydroelectric building projects. 22 Since Congress established the exemption process as an alternative route to obtain approval for hydroelectric projects, the Commission must preserve the independence of the preliminary permit and licensing process from the applicant's pending application for an exemption. Specifically, the Commission must preserve the priority of an applicant for a preliminary permit in the licensing process unless and until an exemption application is finally approved. The Commission's own regulations provide that the accepted preliminary permit application of a person, who later applies for an exemption, retains its validity and priority until the preliminary permit application is withdrawn or the project receives an exemption. 18 C.F.R. Sec. 4.104(b). We can see no rhyme or reason for ignoring these regulations when the two applications are filed simultaneously. 23 To preserve Phoenix's priority in its preliminary permit application, the Commission must provide Phoenix with the priority in licensing proceedings that it would have had if it had filed only its preliminary permit application and no application for an exemption. Phoenix's preliminary permit application should be reinstated as of the date it was filed.