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

Heading: Necessary or appropriate

Text: 14 The Company contends that the Commission's assertion of jurisdiction was arbitrary and capricious because the Commission did not adequately explain why Turtle-Flambeau is necessary or appropriate to the maintenance and operation of any licensed project. First, the Company argues that necessary means indispensable, and there is no evidence in the record suggesting that the downstream plants would not be financially viable in the absence of the reservoir. Second, the Company maintains that the Commission failed to give weight to the countervailing consideration that no agency has identified an environmental or safety need for federal regulation. Finally, the Company protests that the Commission has adopted a standardless, we-know-it-when-we-see-it approach to jurisdiction by relying upon the percentage increase in downstream generation and its own common sense judgment, as the Commission put it, to identify the necessary or appropriate components of a power project. 15 In response, the Commission argues that it must be afforded the latitude to make case-by-case determinations whether a reservoir is necessary or appropriate to a licensed power facility. The Commission notes that its orders in this and other cases set out a series of relevant factors, including the effect of the reservoir upon downstream generation and its storage capacity, location, and purpose. By balancing these considerations in light of the facts of the present case, the Commission engaged, it says, in reasoned decisionmaking. 16 We agree. By enacting the necessary or appropriate standard, the Congress invested the Commission with significant discretion. See Towns of Concord, Norwood, & Wellesley v. FERC, 955 F.2d 67, 76 (D.C.Cir.1992) (necessary or appropriate standard in § 309 of Federal Power Act, 16 U.S.C. § 825h, leaves determination to the Commission's expert judgment). Perhaps if the statute simply required that the reservoir be necessary to the operation or maintenance of a power plant, then the Commission would have to find that the downstream plants could not operate without it. But the actual standard is necessary or appropriate, and the Commission therefore may find that a reservoir is appropriate, even if it is not necessary, to that end. 17 A grant of discretion to an agency does not, of course, authorize it to make an unprincipled decision, Pearson v. Shalala, 164 F.3d 650, 660-61 (D.C.Cir.1999), nor has the Commission done so here. In a series of cases involving the licensure of upstream reservoirs, the Commission has based its jurisdictional determinations upon the extent to which operation of the reservoir benefits downstream generation. Thus, in the order under review, the Commission quoted its decision in Union Water Power Co., 73 F.E.R.C. ¶ 61,296 at 61,824, 1995 WL 723983, 1995 FERC LEXIS 2446 (Dec. 8, 1995), to the effect that [i]f a non-federal dam and reservoir substantially benefit generation operations, for example through the timing of flow releases, these facilities are part of the complete unit of development. See also PacifiCorp, 98 F.E.R.C. ¶ 61,117 at 61,346, 2002 WL 127099, 2002 FERC LEXIS 191 (Feb. 1, 2002) (The issue here is whether the Bear Lake Reservoir, as a whole, has a significant positive impact on downstream generation such that it should be licensed). In two other, more recent decisions, the Commission held that adding 2.4 to 5 percent to the total power output of plants downstream was a sufficient effect to give it jurisdiction over a reservoir. Great Northern Paper, Inc., 91 F.E.R.C. ¶ 61,035 at 61,124, 2000 WL 377680, 2000 FERC LEXIS 793 (April 12, 2000); Georgia Pacific Corp., 91 F.E.R.C. ¶ 61,047 at 61,171-72, 2000 WL 378292, 2000 FERC LEXIS 806 (April 13, 2000). In this case, the impact was greater, reaching 7.25 percent, according to the staff study the validity of which the Company does not challenge. In the absence of any other evidence bearing upon the relationship between the reservoir and plants downstream, it was reasonable for the Commission to rely solely upon downstream benefits. 18 Although some uncertainty is unavoidable when a decision is remitted to agency discretion, we disagree with the Company that the Commission's decisions in this case and others like it leave the owner of a reservoir in the dark about the necessity to obtain a license under the Act. The Commission has reasonably interpreted the Act to require licensure of a reservoir that provides to a licensed power plant downstream benefits substantial enough to be deemed necessary or appropriate to the operation and maintenance of that plant. And the Commission has found an increase in total generation of 2.4 percent or more substantial, while considering an impact of .06 percent insufficient. Chippewa & Flambeau Improvement Co., 95 F.E.R.C. ¶ 61,017 at 61,037, 2001 WL 477663, 2001 FERC LEXIS 728 (April 2, 2001). In this case the increase was clearly above the line of demarcation, wherever it may lie between 2.4 and .06 percent. The remaining uncertainty within that range did not affect the Company. 19 The Company's countervailing consideration, namely, that neither the Commission nor any other agency has identified an environmental or safety concern not adequately addressed by state regulation, is not relevant to the statutory inquiry whether the reservoir has a substantial effect upon the generation of power. Nor does anything in the statute require the Commission to explain the need for federal regulation in each particular case. We note, however, that in light of the coordination of the power plants' operations with releases from the reservoir, as acknowledged by the Company's counsel at oral argument, regulation of the reservoir by the federal agency charged with oversight of the nation's power supply is hardly anomalous. 20 We conclude that the Commission's case-by-case approach to determining whether a reservoir is necessary or appropriate to a licensed project, with the emphasis upon the effect of the reservoir upon the generation of power, is reasonable and consistent with the purpose of the Act. The Commission adequately explained its application of that approach to the facts of this case in the orders under review. 21