Opinion ID: 781485
Heading Depth: 2
Heading Rank: 1

Heading: FERC's Legal Analysis

Text: 11 We start, as we must, with the statute and with FERC's understanding of its meaning. FERC is empowered to, among other things: 12 issue licenses to citizens of the United States ... or to any corporation organized under the laws of the United States ... for the purpose of constructing, operating, and maintaining dams, water conduits, reservoirs, power houses, transmission lines, or other project works necessary or convenient ... for the development, transmission, and utilization of power across, along, from, or in any of the streams or other bodies of water over which Congress has jurisdiction.... 13 16 U.S.C. § 797(e) (emphasis added). As the emphasis shows, the statute directs regulation of reservoirs and other project works. In a magnificent exercise in periphrasis, the FPA then defines project works as the physical structures of a project, and defines project as including, among other things, all water-rights, rights-of-way, ditches, dams, reservoirs, lands, or interest in lands the use and occupancy of which are necessary or appropriate in the maintenance and operation of [a complete unit of improvement or development]. 16 U.S.C. § 796(11)-(12) (emphasis added). 14 Periphrasis aside, the sections use two slightly different locutions regarding FERC's authority. They refer to reservoirs which are necessary or convenient 3 and to reservoirs which are necessary or appropriate 4 to a power generating project. While convenient and appropriate are not exactly synonyms, if one rummages about in dictionaries, one finds that the words do overlap in some of their meanings, and one definition of convenient is appropriate. See, e.g., Webster's Third New International Dictionary 497 (1986). At any rate, neither FERC nor Bear Lake Watch suggests that anything turns on the nuanced difference between the words in some other contexts. We will treat them as equivalent in this context and will hereafter use the single phrase necessary or appropriate. 15 It is clear enough, then, that FERC must take jurisdiction over the operations of Bear Lake by PacifiCorp, if that facility is necessary or appropriate to the operation of PacifiCorp's hydropower facilities downstream. But Congress has not directly said what necessary or appropriate means. Its failure to do so means that it has left the complex policy decision about how far FERC should extend its regulatory tentacles up to FERC itself. See Navellier v. Sletten, 262 F.3d 923, 945 (9th Cir.2001) (authorization to grant exemptions when `necessary or appropriate in the public interest ...' reflects the Congressional intent to entrust certain policy decisions to the SEC.). Put another way, it has left that decision to the discretion of the agency. See Concrete Tie of San Diego, Inc. v. Liberty Const., Inc., 107 F.3d 1368, 1371 (9th Cir.1997) (The SBA need only award a contract `whenever it determines such action is necessary or appropriate' — a determination within the agency's discretion.). We, in turn, must respect that congressional choice, and must accord deference to FERC. See City of Seattle, 923 F.2d at 715; see also Dillingham v. INS, 267 F.3d 996, 1004 (9th Cir.2001). 16 What FERC has quite reasonably decided is that when a reservoir is located far away from a power generating facility — here at least 55 miles — it is not necessary or appropriate to that facility, if it does not provide any significant generating benefit. That seems to comport with common sense; how can a reservoir be necessary or appropriate to a hydroelectric plant, if its regulation of water does not confer a significant generation benefit upon that plant? It certainly makes little sense to say that it is necessary or appropriate when, as here, its effect on the flow of a river is to decrease the water otherwise available to the plant. As we have said in another context, [t]he term `necessary' imposes only the minimal requirement that the expense be appropriate and helpful for the development of the ... business. Smith v. Comm'r, 300 F.3d 1023, 1029 (9th Cir.2002) (some internal quotation marks omitted); see also 9 to 5 Org. for Women Office Workers v. Bd. of Governors of Fed. Reserve Sys., 721 F.2d 1, 10 (1st Cir.1983). If something is not helpful to the business, and is even detrimental, it is not unreasonable to say that it is not necessary. Thus, FERC has ruled that when a reservoir, here Bear Lake, does not have a significant beneficial impact on power generation but, rather, has the opposite effect, it is not a necessary or appropriate part of the generation project. Again, we see nothing about that rule that would violate congressional intent. See Dillingham, 267 F.3d at 1004. 17 But, says Bear Lake Watch, we should accord less deference to FERC's decision because it conflicts with earlier FERC decisions. See Young v. Reno, 114 F.3d 879, 883 (9th Cir.1997). That is a worthy enough principle, but it does not apply here. In fact, FERC has previously looked to see if a dam or reservoir provided a significant increase in generation at a downstream power project. Georgia Pac. Corp., 91 FERC ¶ 61,047 at ¶ 61,172 (2000). When it did, FERC took jurisdiction. Id. And in another case decided before the one at hand, FERC outlined its position with even more clarity. In a proceeding before it, FERC was concerned with two reservoirs — Rest Lake Reservoir and Turtle-Flambeau Reservoir. Chippewa and Flambeau Improvement Co., 95 FERC ¶ 61,017, reh'g denied, 95 FERC ¶ 61,327 (2001). FERC stated that the operative principle was this: 18 [T]he Commission must examine the facts of each case, and fashion reasonable results based on the record. In the absence of other factors bearing on the question of necessary or appropriate, we must make a common sense judgment whether the impact on generation of an upstream storage reservoir is such that it is part of a complete unit of development. 19 Id. at ¶ 61,036-37. FERC applied that principle and declared: 20 Rest Lake by itself increases generation by only 0.1 GWh, which amounts to approximately 0.06 percent of total downstream generation. We therefore concluded that Rest Lake is neither used and useful nor necessary or appropriate to maintain or operate the downstream projects. Accordingly, we ... concluded that we have no jurisdiction over this reservoir. 21 Id. at ¶ 61,035. But, as to Turtle-Flambeau, FERC said: 22 Given that that reservoir increases generation at the downstream projects by almost 9 GWh, which amounts to almost 6 percent of total downstream generation, we found that Turtle Flambeau Reservoir provides significant benefits to downstream licensed projects, and thus is part of the complete unit of development that includes those projects. 23 Id. FERC took jurisdiction over that reservoir. 24 Nor is Escondido Mut. Water Co. 5 to the contrary. There, the project in question had two hydroelectric generating stations which were operated as a part of the whole. FERC, and we, determined that even if the primary purpose of the project was something else, FERC could take jurisdiction. Id. at 1230. The project did not generate a lot of electricity, but we said that FERC could assume jurisdiction over it, even if the amount of power was not a significant part of the project as a whole. Id. We reserved judgment on the question of whether FERC could assume jurisdiction if the generating elements were so exceedingly slight as to constitute a sham. Id. at 1230-31. Thus, Escondido Mut. Water Co. dealt with a situation where the reservoir was part of the project itself, and at least some added electricity was generated on account of it. Here, of course, FERC decided that Bear Lake was situated very remotely from the actual projects, and that the contribution of Bear Lake was actually a negative one. That is not inconsistent with its earlier approach. 6 25 In fine, FERC's legal approach does not bespeak an abuse of its discretion to determine what is necessary or appropriate.