Opinion ID: 1232885
Heading Depth: 2
Heading Rank: 4

Heading: Prejudicial Error Analysis

Text: Although we find that FERC acted arbitrarily and capriciously by denying Green Island's motion to intervene without first considering whether the Offer of Settlement materially amended the School Street license application, we are mindful of the Administrative Procedure Act's admonition that due account shall be taken of the rule of prejudicial error. 5 U.S.C. § 706; see Nat'l Ass'n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 659, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007). The rule of prejudicial error typically eliminates the necessity of remand following judicial review when the error that the agency has made was not prejudicial and did not impinge on fundamental rights. N.Y. Pub. Interest Research Group v. Whitman, 321 F.3d 316, 333 (2d Cir.2003) (emphasis omitted). Thus, we will not disturb FERC's orders if we can determine that the outcome of the administrative proceedings will be the same absent FERC's error. See PDK Labs. Inc. v. U.S. Drug Enforcement Admin., 362 F.3d 786, 799 (D.C.Cir.2004) (If the agency's mistake did not affect the outcome, if it did not prejudice the petitioner, it would be senseless to vacate and remand for reconsideration.); see also Kerner v. Celebrezze, 340 F.2d 736, 740 (2d Cir.1965) (It would be fatuous to suppose that if the hearing officer had recommended a decision in [petitioner's] favor, the ultimate result would have been different, or that a remand to obtain a recommendation from him now would accomplish anything save further expense and delay. (citation omitted)). If, however, we can determine that the outcome will be different, or if there is uncertainty with respect to what the outcome will be, when FERC properly applies its regulations, then we will find that FERC's error was prejudicial and remand the case for further proceedings. See Sprint Corp. v. FCC, 315 F.3d 369, 376 (D.C.Cir.2003); cf. Sugar Cane Growers Coop. v. Veneman, 289 F.3d 89, 96 (D.C.Cir.2002) ([A]n utter failure to comply with notice and comment cannot be considered harmless if there is any uncertainty at all as to the effect of that failure.). Our prejudicial error analysis first must address whether we can determine that FERC will deny Green Island's motion to intervene upon remand, even after conducting the proper analysis. If so, there can be no prejudicial error. If not, however, then we must address whether we can determine that FERC will license the School Street Project again, even if it grants Green Island's motion to intervene. Turning to the first part of the analysis, we cannot be certain that FERC will deny Green Island's motion to intervene after applying its regulations properly, because FERC has never addressed whether the extensive proposals contained in the Offer of Settlement materially amended the School Street license application, and we lack the expertise to make this determination in the first instance. Furthermore, FERC has never given any indication that it would have denied Green Island's motion to intervene even if it had considered that motion to be timely. We therefore must consider the second prong of our prejudicial error analysisi.e., whether the outcome of the administrative proceedings will be the same even if Green Island is permitted to intervene. We are unable to conclude that the outcome of the proceedings will be the same upon remand if Green Island is permitted to intervene. During the proceedings below, FERC steadfastly refused to consider the evidence that Adirondack and Green Island submitted regarding the Cohoes Falls Project proposal. As we explain below, however, FERC has a statutory duty when conducting relicensing proceedings to consider feasible alternatives to the project under consideration, even if it ultimately cannot license those alternatives. Consequently, if Green Island is permitted to intervene upon remand, then FERC is statutorily obligated to consider its evidence regarding the Cohoes Falls Project. This statutory duty arises principally from three sections of the FPA. As an initial matter, § 4(e) grants FERC the authority to issue licenses for hydroelectric projects, but it demands that FERC consider a broad spectrum of concerns: In deciding whether to issue any license under this subchapter for any project, the Commission, in addition to the power and development purposes for which licenses are issued, shall give equal consideration to the purposes of energy conservation, the protection, mitigation of damage to, and enhancement of, fish and wildlife (including related spawning grounds and habitat), the protection of recreational opportunities, and the preservation of other aspects of environmental quality. 16 U.S.C. § 797(e). Section 10(a)(1) of the FPA, which covers the issuances of licenses generally, provides that the project adopted, including the maps, plans, and specifications, shall be such as in the judgment of the Commission will be best adapted to a comprehensive plan for improving or developing a waterway or waterways for the use or benefit of interstate or foreign commerce, for the improvement and utilization of water-power development, for the adequate protection, mitigation, and enhancement of fish and wildlife (including related spawning grounds and habitat), and for other beneficial public uses. 16 U.S.C. § 803(a)(1) (emphasis added). When the FPA was amended in 1986, Congress recognized that [FERC] and the courts have held the Section 10(a) standard to be [a] broad public interest standard, requiring consideration of all factors affecting the public interest. H.R.Rep. No. 99-507, at 12 (1986), as reprinted in 1986 U.S.C.C.A.N. 2496, 2499. Further, Congress explained that it intended § 10(a) to provide FERC with the flexibility to weight different public-interest factors differently on a case-by-case basis, so that [a]s the public interest changes over time, [FERC's] considerations under the section 10(a) standard likewise change, encompassing new criteria or reevaluating the weight given established criteria. Id. Section 10(a) does not present an exclusive list of values FERC must evaluate and address, but rather highlights the steps the Commission must take to inform itself regarding the needs and uses of the river in question. H.R.Rep. No. 99-934, at 22 (1986) (Conf.Rep.), as reprinted in 1986 U.S.C.C.A.N. 2537, 2539. Section 15(a)(2) of the FPA mandates a similar analysis with respect to applications for new licenses. It provides that [a]ny new license issued under this section shall be issued to the applicant having the final proposal which the Commission determines is best adapted to serve the public interest, except that in making this determination the Commission shall ensure that insignificant differences with regard to subparagraphs (A) through (G) of this paragraph between competing applications are not determinative and shall not result in the transfer of a project. In making a determination under this section (whether or not more than one application is submitted for the project), the Commission shall, in addition to the requirements of section 803 of this title, consider (and explain such consideration in writing) each of the following.... 16 U.S.C. § 808(a)(2) (emphasis added). The statute then enumerates seven factors that FERC shall ... consider when determining whether the project is best adapted to serve the public interest. See 16 U.S.C. § 808(a)(2)(A)-(G); see also 18 C.F.R. § 16.13(a) (In determining whether a final proposal for a new license under section 15 of the Federal Power Act is best adapted to serve the public interest, the Commission will consider the factors enumerated in sections 15(a)(2) and (a)(3) of the Federal Power Act.). The purpose of § 15(a)(2) is to ensure that FERC rigorously scrutinizes any application for a new license for an existing hydroelectric project, so that it can determine that the existing project is best adapted to serve the public interest. This is so even where there is only one applicant and that applicant is the current license holder of the existing project. Indeed, the legislative history noted explicitly that a relicensing proceeding does not include an incumbent preference, H.R.Rep. No. 99-934, at 26, and that the existing licensee will not be `rubber stamped,' but must again prove that its project qualifies as `best adapted' on power and non-power grounds. H.R. Rep. 99-507, at 15; see also id. at 33-35 (discussing the importance of a rigorous evaluation of all license applications to ensure that each is best adapted to serve the public interest). Sections 10 and 15 of the FPA place great emphasis on the requirement that FERC license the hydroelectric project best adapted to accomplish the goals of the statute. We explained what FERC must do to comply with the best adapted standard under § 10(a) when we decided Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608 (2d Cir.1965). [13] In Scenic Hudson, we reviewed, inter alia, an order issued by the FPC granting a license to Consolidated Edison (Con Ed) to construct a hydroelectric project near the Hudson River. Id. at 611. We stated that the project could be licensed only if it met the statutory requirement that it be `best adapted to a comprehensive plan for improving or developing a waterway,' id. at 612 (quoting 16 U.S.C. § 803(a)), and that the FPC was under a statutory duty to give full consideration to alternative plans, even where it `ha[d] no authority to command the alternative.' Id. at 617 (quoting City of Pittsburgh v. FPC, 237 F.2d 741, 751 n. 28 (D.C.Cir.1956)). We found that the FPC had violated this duty when it refused to receive testimony concerning the feasibility of an alternative to the Con Ed project, on the ground that the testimony was not timely. We remanded the case for the agency to supplement its record, concluding that [e]specially in a case of this type, where public interest and concern is so great, the Commission's refusal to receive the ... testimony, as well as proffered information on fish protection devices and underground transmission facilities, exhibits a disregard of the statute and of judicial mandates instructing the Commission to probe all feasible alternatives. Id. at 620 (footnote omitted). Finally, we admonished the agency that the Commission has claimed to be the representative of the public interest. This role does not permit it to act as an umpire blandly calling balls and strikes for adversaries appearing before it; the right of the public must receive active and affirmative protection at the hands of the Commission.... The Commission must see to it that the record is complete. The Commission has an affirmative duty to inquire into and consider all relevant facts. Id. Scenic Hudson makes plain that FERC is statutorily obligated, pursuant to the best adapted standard set forth in sections 10 and 15 of the FPA, to give full consideration to all feasible alternatives, even where it ultimately cannot license those alternatives. We recognize that FERC must strike a balance between complying with this obligation and ensuring the timely resolution of licensing proceedings. Given the unique circumstances of this case, however, where more than fifteen years passed between when Niagara Mohawk first submitted its application for a new license for the School Street Project in December 1991 and when FERC issued its licensing order in February 2007, and where nearly two years passed between the filing of the Offer of Settlement and the licensing order, FERC's compliance with its statutory obligation bears particular importance. Thus, if Green Island is permitted to intervene upon remand, FERC must consider Green Island's evidence regarding the Cohoes Falls Project so that it may determine whether the Cohoes Falls Project is a feasible alternative. If FERC determines that the Cohoes Falls Project is a feasible alternative, then it must give it full consideration when determining whether the School Street Project satisfies the best adapted standard of the Federal Power Act, notwithstanding the fact that FERC cannot license the Cohoes Falls Project instead of School Street. [14] Because FERC has never considered the Cohoes Falls Project proposal in any detail and, indeed, has conceded that it has no way of knowing whether that proposal has any merit, see September 21 Order Denying Rehearing, 120 F.E.R.C. ¶ 61,267, at 62,190, we are unable to determine what the outcome of this analysis might be. Therefore, we cannot be certain that FERC's error in denying Green Island's motion to intervene was harmless. In sum, FERC abused its discretion when it denied Green Island's motion to intervene without first considering whether the Offer of Settlement materially amended the School Street license application. Furthermore, we are unable to conclude that this error was not prejudicial. Accordingly, we remand this case for FERC to consider in the first instance whether the Offer of Settlement was a material amendment to the license application. If it was, then FERC must consider Green Island's motion to intervene in the relicensing proceedings as timely filed and analyze it accordingly. In the event that it grants Green Island's motion to intervene, FERC is statutorily obligated to consider Green Island's evidence regarding the Cohoes Falls Project proposal.