Opinion ID: 3053048
Heading Depth: 3
Heading Rank: 1

Heading: Substantial Evidence of an “Alteration” Under

Text: Section 6 of the FPA Fall River first argues that because its proposal would not substantially or materially alter PPL’s project’s configuration, mode of operations, or power generation, FERC’s orders are not supported by substantial evidence. We disagree. [1] Section 6 of the FPA states that licenses “may be altered . . . only upon mutual agreement between the licensee and the Commission . . . .” 16 U.S.C. § 799. The term “altered” is not statutorily defined; however, both parties agree that in order to violate Section 6, a proposed project must substantially alter an existing license. As neither party disputes the relevant standard, for purposes of this appeal we assume without deciding that in order for Section 6 of the FPA to apply, a proposed project must substantially alter an existing license. Cf. Pac. Gas & Elec. Co. v. FERC, 720 F.2d 78, 90 n.36 (D.C. Cir. 1983) (“We do not, however, adopt FERC’s view that only ‘substantial alterations’ in a license engage 12642 FALL RIVER RURAL ELECTRIC v. FERC section 6 protections . . . .”). Under this standard, FERC may authorize “de minimis interferences with the operation of an existing plant”—i.e., “[s]mall encroachments on a license, comparable in their adverse impact to variations in conditions that investors might expect from other causes such as, for example, annual fluctuations in water supply.” Id. at 90. FERC may not, however, issue a license which “will significantly interfere with operations already licensed, whether the interference will adversely affect the prior licensee’s physical plant, its ‘project works,’ or its supplies of water.” Id. at 89 n.31. Under FERC precedent, “[w]hat constitutes an ‘alteration’ for Section 6 purposes is primarily a factual issue to be determined in each case.” Universal Elec. Power Co., 92 FERC ¶ 61,242, 61,768 (2000). Therefore, FERC’s conclusion that Fall River’s proposed project would substantially alter PPL’s license is “conclusive” if supported by substantial evidence. 16 U.S.C. § 825l(b). In this case, FERC concluded that both Fall River’s proposed physical modifications to the Hebgen Development and the possible operational impacts to the Missouri-Madison project constitute “substantial alterations” of PPL’s license. 114 FERC ¶ 61,152, at 61,509; see Gas & Elec. Dep’t of Holyoke, 21 FERC ¶ 61,357, 61,927 (1982) (“[T]here are essentially two types of interference with the licensed project that we must consider: (1) physical alterations to existing project works; and (2) impacts on the operation of the project.”). FERC first explained in its Rehearing Order that the “proposed project requires alterations of the existing project’s facilities that are much greater than the kind of physical alterations the Commission has previously found to be insubstantial.” 114 FERC ¶ 61,152, at 61,509. In reaching this conclusion FERC specifically relied on “the installation of new gates and screens on the intake tower, excavation of a large area of the dam in order to reconfigure and reline the FALL RIVER RURAL ELECTRIC v. FERC 12643 outlet conduit, and installation of a valve house and a new penstock at the dam.” Id. Fall River first objects to FERC’s finding that its proposal includes installing screens on the intake tower. Though screens were mentioned on multiple occasions in the documents supporting Fall River’s license application, Fall River is correct that screens were not part of its final license application. Nevertheless, Fall River does not dispute that it proposes making physical alterations to the intake tower, namely removing the timber stoplogs from the two presently-closed intake openings and installing two new intake gates in their place. Fall River next notes that excavation would be limited to a relatively small area on the downstream toe of the dam, and would not amount to the “excavation of a large area of the dam” described by FERC. Fall River asserts that the excavation would be limited to the hillside over the downstream sixty feet of the conduit. There is no dispute, however, that the proposed excavation requires removing approximately 3,100 square feet of soil for construction of the new powerhouse and valve house. Fall River simply prefers to characterize this as excavating a “relatively small area” rather than a “large area.” Next, while conceding that it proposes relining the conduit, Fall River objects to FERC’s finding that the outlet conduit will be “reconfigured.” However, the license application explicitly proposes bifurcating the outlet conduit, installing a new penstock, and constructing a new concrete valve house, in addition to pressure-grouting and steel-lining the conduit. After discussing the aforementioned physical alterations, FERC also concluded that in this case the potential for “jointuse operational problems would be a substantial alteration of the existing license.” 114 FERC ¶ 61,152, at 61,509-10. Specifically, FERC identified: (1) use of the spillway for all dis12644 FALL RIVER RURAL ELECTRIC v. FERC charges during approximately three months of the construction period as potentially impacting PPL’s ability to meet its flow requirements; (2) releasing water below the tailwater’s surface rather than allowing the water to drop into the tailwater as potentially affecting PPL’s ability to maintain appropriate dissolved oxygen levels; and (3) the possibility of having to install finer screening at the intakes as potentially impacting PPL’s ability to meet its flow requirements. Id. Fall River contends that FERC’s conclusion with respect to PPL’s operations is purely speculative and has no basis in evidence. Again, we disagree. It is undisputed that Fall River’s license application proposes closing the intake gates and conduit during approximately three months of the construction period, with all discharges being made via the spillway during this time. It is also undisputed that Fall River proposes discharging water below the tailwater’s surface rather than allowing the flow to drop into the tailwater, as it currently does. Finally, in its “official response” to Fall River’s draft license application, Montana Fish, Wildlife and Parks recommended that Fall River incorporate the following language into its license: “If future monitoring results indicate that significant entrainment is occurring and that screening is a necessary and effective option for reducing entrainment, then screening the intake may be required at some future date.” (Emphasis added.) [2] Choosing to focus on the impact of each of these proposed modifications individually, Fall River apparently does not appreciate the cumulative impact of its proposed project. Fall River proposes doubling the number of intake openings used and installing new gates on the intake tower, thereby increasing pressure within the conduit. Fall River proposes steel-lining and pressure-grouting the conduit because it “was not designed to withstand the full reservoir pressure which would be required for power generation.” Rather than using the existing conduit outlet, Fall River proposes bifurcating the conduit and installing a new penstock. Rather than having disFALL RIVER RURAL ELECTRIC v. FERC 12645 charges drop into the tailwater below the conduit outlet as they currently do, Fall River proposes releasing water below the tailwater’s surface. During approximately three months of construction, Fall River proposes making all discharges via the spillway, which is not ordinarily used for discharges and has no backup, as it is the backup. Collectively, these alterations fundamentally change the physical characteristics and operation of the Hebgen Development. Admittedly, FERC cannot know whether certain operational problems will arise, but neither can Fall River ensure that they will not. However, FERC’s ability to accurately predict the future is rather beside the point. Here, there is much more than a “mere scintilla” of evidence supporting FERC’s conclusion that Fall River’s proposal would substantially alter PPL’s license; therefore, it is supported by substantial evidence. In sum, we conclude that each of FERC’s factual findings with respect to Fall River’s proposed physical alterations and operational interferences with PPL’s license are supported by substantial evidence, and that FERC’s conclusion that Fall River’s proposal would substantially alter PPL’s existing license is also supported by substantial evidence.