Court Opinion

ID: 767817
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:43:01+00
Date Added: 2024-06-11T12:55:21.625098
License: Public Domain

204 F.3d 1154 (D.C. Cir. 2000)
City of Ocon to Falls, Wisconsin, Petitionerv.Federal Energy Regulatory Commission, RespondentCity of Oswego, New York and N.E.W. Hydro, IntervenorsState of Wisconsin, Petitionerv.Federal Energy Regulatory Commission, Respondent ,N.E.W. Hydro, Intervenor
Nos. 98-1594,99-1065
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 14, 2000Decided March 7, 2000

[Copyrighted Material Omitted]
On Petitions for Review of Order of theFederal Energy Regulatory Commission
Carolyn Elefant argued the cause for petitioner City of  Oconto Falls, Wisconsin.
Lorraine C. Stoltzfus, Assistant Attorney General, State of  Wisconsin, argued the cause for petitioner State of Wisconsin.James E. Doyle, Attorney General, State of Wisconsin, was  on brief for petitioner State of Wisconsin.
Judith A. Albert, Attorney, Federal Energy Regulatory  Commission, argued the cause for the respondent.  Timm L.  Abendroth, Attorney, Federal Energy Regulatory Commission, was on brief for the respondent.
Paul Vincent Nolan entered an appearance for intervenor  City of Oswego, New York in No. 98-1594.
Donald H. Clarke entered an appearance for intervenor  N.E.W. Hydro, Inc. in Nos. 98-1594 and 99-1065.
Before:  Silberman, Henderson and Garland, Circuit  Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge:

1
On November  13, 1997 the Federal Energy Regulatory Commission (Commission, FERC) issued a license order awarding the Oconto  Falls (Wisconsin) hydroelectric project to N.E.W. Hydro  (NEW).  See 81 FERC p 61,238 (1997).  Both the City of  Oconto Falls (City) and the Wisconsin Department of Natural  Resources (WDNR) challenge the Commission's action.WDNR argues that the Commission breached its statutory  obligation under section 10(j) of the Federal Power Act  (FPA), 16 U.S.C.      803(j), to give "due weight" to WDNR's  recommendations to protect fish.  The City argues that the  Commission improperly determined that:  (1) the City's license application was "essentially equal" to NEW's application under section 15(a)(2) of the FPA, 16 U.S.C.      808(a)(2);(2) the Commission's "first to file" tie-breaker procedure  applied;  and (3) NEW's application need not be dismissed for  anticompetitive activity with Wisconsin Electric Power Company, allegedly resulting from the Commission's licensure of  NEW.  In turn, the Commission challenges the court's jurisdiction over WDNR's petition for review because WDNR  identified only the rehearing order, 85 FERC p 61,222 (1998),  not the license order in its petition.  For the reasons set forth  infra, we conclude that we have jurisdiction to review  WDNR's petition and, based on our review, the Commission  satisfied its duty under section 10(j) of the FPA to give  WDNR's recommendations "due weight."  We further conclude that the Commission's factual determination that both  NEW's and the City's applications were "essentially equal" is  supported by substantial evidence, that the "first to file" tiebreaker procedure did not unfairly prejudice the City and  that the Commission correctly declined to dismiss NEW's  application.  Accordingly, we deny both WDNR's and the  City's petitions for review.

I.

2
In 1977 the Federal Power Commission issued Wisconsin  Electric Power Company (WEPCO) a license to operate a  hydroelectric project (Oconto Falls Project) located on the  Oconto River near Oconto Falls, Wisconsin, to expire December 31, 1993.  In 1988 WEPCO filed a notice of intent to  refile an application for relicensure but it failed to file its  application before the December 31, 1991 deadline.  Instead,  WEPCO initiated discussions to sell the Oconto Falls Project  to NEW.  The sale was not completed by the December 31,  1991 deadline, however, and because no other party filed a  notice of intent to file an application, the Oconto Falls Project  became orphaned.1  In February 1992 the Commission issued  a public notice pursuant to Part I of the FPA, 16 U.S.C.        791a-823a, to solicit license applications.  At that time  NEW informed the Commission of its intent to file an application.  In May 1992 the City informed the Commission of its  intent to file a competing application.  In addition the City  petitioned FERC for an order declaring that any license  application for the Oconto Falls Project was subject to a  municipal preference pursuant to section 7(a) of the FPA, 16  U.S.C.      800(a).2  The Commission ruled instead that section  15 of the FPA, 16 U.S.C.      808, governs an orphan proceeding and therefore declared the municipal preference inapplicable.3  This court subsequently affirmed the Commission's  decision.  See Oconto Falls v. FERC, 41 F.3d 671, 674-75  (D.C. Cir. 1994).

3
In the meantime WEPCO accepted NEW's offer to acquire  the Oconto Falls Project conditioned on NEW's licensure by  the Commission.  See License Order, 81 FERC at 61,982.On August 21, 1992 NEW requested the Commission to  waive the "first stage" pre-filing consultation requirement to  provide "the relevant Federal, State and interstate resource  agencies" detailed studies, data and documentation on the  Oconto Falls Project, see 18 C.F.R.      16.8(a)(1), (b), inasmuch as WEPCO had already completed the consultation requirement and had transferred all of the relevant materials  to NEW.  On September 1, 1992 the Commission Director  granted NEW's request.  In November 1992 the City requested a copy of WEPCO's Initial Consultation Package  (ICP), which contained not only WEPCO's detailed studies  and data but also the resource agencies' comments detailing  the studies and methodologies they recommended WEPCO  to use.  NEW planned to use WEPCO's ICP to prepare its  license application but WEPCO refused to make it available. The City subsequently petitioned the Commission for a copy  of WEPCO's ICP to obtain the data it needed to prepare its  application.  In August 1993 NEW filed an application for a  license with the Commission.  Two months later the Commission ordered WEPCO to make its ICP publicly available  and it did so in November 1993.  Finally, in August 1994 the  City filed a competing application for licensure with the  Commission.  Several months later, while the applications  were pending, the City filed a complaint with FERC alleging  anticompetitive activity by NEW and WEPCO, asking the  Commission both to order them to cease the activity and to  dismiss NEW's application.

4
Pursuant to section 10(j) of the FPA, the Commission must  include as license conditions any recommendations from  "State fish and wildlife agencies" unless the Commission  determines that the recommended conditions are "inconsistent with the purposes and requirements" of the FPA or  other laws.  16 U.S.C.      803(j)(1), (2).  During the licensing  process, WDNR recommended that the Oconto Falls Project  licensee be required to reduce fish entrainment, i.e., their  passage into and through the turbines of the hydroelectric project.  On November 13, 1997 the Commission issued an  order granting NEW the Oconto Falls Project license.  See  81 FERC p 61,238 (1997) (License Order).  The Commission  concluded that both NEW's and the City's license applications  were essentially equal, that the "first to file" tie-breaker  procedure was appropriate under the circumstances and that  NEW and WEPCO had not engaged in anticompetitive activity.  After finding no evidence that entrainment significantly  adversely affected the fish populations, the Commission also  declined to impose WDNR's proposed conditions to reduce  fish entrainment.  On November 13, 1998 the Commission  denied both WDNR's and the City's petitions for rehearing. See 85 FERC p 61,222 (1998) (Rehearing Order).  The City  then petitioned for review of the Commission's License Order  and Rehearing Order while WDNR petitioned the Seventh  Circuit for review of the Commission's Rehearing Order. WDNR's petition was transferred to this court and the two  cases were consolidated.

II.

5
The court upholds FERC's factual findings "if supported by  substantial evidence" and upholds its order so long as it uses  reasoned decision making.  Texaco, Inc. v. FERC, 148 F.3d 1091, 1095 (D.C. Cir. 1999).  The Commission's decision to  award NEW the license is entitled to deference so long as the  decision is supported by substantial evidence.  See Bangor  Hydro-Elec. Co. v. FERC, 78 F.3d 659, 663 (D.C. Cir. 1996).The court grants "considerable" deference to the Commission's interpretation of a statute it administers so long as its  "interpretation is permissible."  Oconto Falls, 41 F.3d at 674  (citations omitted).

A. Jurisdiction

6
The Commission challenges the court's jurisdiction to review WDNR's petition because it petitioned for review of the  Rehearing Order instead of the License Order.  Under section 313(b) of the FPA:

7
Any party to a proceeding under this chapter aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the United States court of appeals ... by filing in such court, within sixty days after the order of the Commission upon the application for rehearing, a written petition praying that the order of the Commission be modified....

8
16 U.S.C.      825l(b).  Section 313(b)'s plain language indicates  that "the order of the Commission upon the application for  rehearing" (rehearing order) which begins the sixty-day limitations period is different from the "order of the Commission"  ("aggrieving" order) which the petitioner is to identify in its  petition.  Section 313(b) provides review of the "aggrieving"  order but the rehearing order simply determines the accrual  date of the sixty-day limitations period.  It would make little  sense to provide for relief from the "aggrieving" order but at  the same time require the petitioner to specify the rehearing  order in its petition.4  Thus, in order to properly petition for  review of a Commission order, section 313(b) requires a  petitioner to identify the "aggrieving" order which in this case  is the License Order.  In its petition for review, however,  WDNR specified only the Rehearing Order.  See WDNR's  Petition for Review 1 (Jan. 11, 1999).  Federal Rule of  Appellate Procedure 15(a) requires that a petition for review  of an agency order must "specify the order or part thereof to  be reviewed."  See also Entravision Holdings LLC v. FCC, 2000 WL 2667, at *1 (D.C. Cir. Feb. 11, 2000);  Martin v.  FERC, 199 F.3d 1370, 1372 (D.C. Cir. 2000);  City of Benton  v. NRC, 136 F.3d 824, 826 (D.C. Cir. 1998).  Nevertheless,  "[a] mistaken or inexact specification of the order to be  reviewed will not be fatal to the petition ... if the petitioner's  intent to seek review of a specific order can be fairly inferred  from the petition for review or from other contemporaneous  filings, and the respondent is not misled by the mistake."Entravision, 2000 WL 2667, at *1 (citing Martin, 199 F.3d at  1371-73;  Southwestern Bell Tel. Co. v. FCC, 180 F.3d 307,  313 (D.C. Cir. 1999)).  Although WDNR identified the Rehearing Order in its petition for review, it described the order  as "[t]he final FERC order ... granting subsequent license  to N.E.W. Hydro, Inc., and denying the City of Oconto Falls'  competing application."  WDNR's Petition for Review at 1  (emphasis added).  Furthermore, WDNR's brief identified  the License Order in its certificate of rulings under review  and addressed the License Order in its briefs.  In light of  WDNR's contemporaneous filings, we believe it intended to  challenge the License Order notwithstanding its denomination  of the Rehearing Order.  The Commission can hardly claim  prejudice or lack of notice from WDNR's petition for review  and in fact acknowledged as much at oral argument.  Accordingly, we have jurisdiction to consider WDNR's petition for  review.

B. WDNR's Petition

9
Section 10(j)(1) of the FPA requires the Commission to  place a condition on a license "based on recommendations  received pursuant to the Fish and Wildlife Coordination Act  (16 U.S.C.      661 et seq.) from ... State fish and wildlife  agencies."  6 U.S.C.      803(j)(1) (Supp. 1999).  Section 10(j)(2)  of the FPA further requires that:

10
Whenever the Commission believes that any recommendation referred to in paragraph (1) may be inconsistent with the purposes and requirements of this subchapter or other applicable law, the Commission and the agencies referred to in paragraph (1) shall attempt to resolve any such inconsistency, giving due weight to the recommendations, expertise, and statutory responsibilities of such agencies.

11
Id.      803(j)(2).  We have held that section 10(j) "requires the  Commission to afford significant deference to fish protection  recommendations of state and federal fish and wildlife agencies."  Granholm ex rel. Michigan Dep't of Natural Resources v. FERC, 180 F.3d 278, 280 (D.C. Cir. 1999).  Nevertheless, the Commission "still is charged with determining the  'public interest,' i.e., balancing power and non-power values. Even where the fish and wildlife agencies make formal section 10(j) recommendations, those agencies have no veto  power."  United States Dep't of Interior v. FERC, 952 F.2d 538, 545 (D.C. Cir. 1992) (citation omitted).  WDNR argues  specifically that the Commission failed to support, as is  required under section 10(j)(2), its determinations that:  (1) a  six per cent entrainment rate would likely occur;  (2) less  entrainment would occur at the powerhouse intake;  (3) most  of the fish leaving the reservoir were excess fish;  and (4)  small fish (comprising the majority of those entrained) have a  higher natural mortality rate.  We review to ensure the  Commission's factual findings are supported by substantial  evidence.  See Texaco, 148 F.3d at 1095.

12
The Commission derived its assumptions from WDNR's  studies of the fish populations of the Oconto Falls reservoir  conducted in 1984 and 1989.  See, e.g., License Order, 81  FERC at 62,014;  Memorandum Regarding Oconto Falls 1989  Pond Survey (Feb. 28, 1990).  The studies found that the  reservoir had a diverse fish community structure and stability  with healthy and abundant fish populations.  See License  Order, 81 FERC at 61,911.  Moreover, pike and bass existed  in large numbers and with better than average growth rates.See id. at 62,014.  WDNR's studies also found that any  difficulties experienced by the largemouth bass and spawning  walleye populations resulted from a lack of appropriate habitat in the reservoir, not from entrainment.  See Pond Survey  at 2.  While section 10(j)(2) requires the Commission to give  WDNR's recommendations "due weight," WDNR's own studies belie its request.  Furthermore, the Commission's determination that the entrainment and mortality rate was approximately six per cent is consistent with WDNR's studies and  with the best available evidence of the potential range of fish  entrainment mortality.  See Electric Power Research Institute, Fish Entrainment and Turbine Mortality Review and  Guidelines (1992).  Moreover, WDNR produced no evidence  to contradict the Commission's assumptions based, as noted,  on WDNR's own studies.  The Commission met its statutory  duty under section 10(j) to give WDNR's recommendations  "due weight" and its factual findings easily meet the substantial evidence standard.

13
Finally, WDNR argues that the Commission improperly  failed to impose a barrier net requirement.  According to  WDNR, because the barrier net at a nearby project (Pine  Project) cost only $50,000, the Commission erred in estimating the cost of a barrier net at the Oconto Falls Project at  $540,000.  The Commission, however, distinguished the Pine  Project barrier net on several grounds:  the Pine Project was  located in a more sheltered area of the reservoir and in much  shallower water;  the type of net used at the Pine Project was  unsuitable for the Oconto Falls Project;  WEPCO's analysis  projected $540,000 for a barrier net for the Oconto Falls  Project;  and the Commission concluded that a fish protection  device at the Oconto Falls Project would not have a significant beneficial effect on fishery resources.  The Commission  gave WDNR's recommendation to construct a net barrier  similar to the Pine Project's barrier "due weight" but adequately distinguished the Oconto Falls Project's needs based  upon substantial evidence.

C. The City's Petition

14
The City first contends that the Commission should have  concluded that the City's ability to comply with a license was  superior to NEW's ability under section 15(a)(2) of the FPA. Under section 15(a)(2), the Commission is required to

15
consider (and explain such consideration in writing) each of the following:

16
(A) The plans and abilities of the applicant to comply with (i) the articles and conditions of any license issued to it and (ii) other applicable provisions of this subchapter.

17
(B) The plans of the applicant to manage, operate and maintain the project safely.

18
(C) The plans and abilities of the applicant to operate and maintain the project in a manner most likely to provide efficient and reliable electric service.

19
(D) The need of the applicant over the short and long term for the electricity generated by the project or projects to serve its customers....

20
(E) The existing and planned transmission services of the applicant, taking into consideration system reliability, costs, and other applicable economic and technical factors.

21
(F) Whether the plans of the applicant will beachieved, to the greatest extent possible, in a cost effective manner.

22
(G) Such other factors as the Commission may deem relevant....

23
16 U.S.C.      808(a)(2).  Applying these factors, the Commission determined that there were no environmental or economic differences between NEW's and the City's applications.

24
The City contends that its license application was superior  to NEW's because of the City's relationship to local agencies; its increased cost effectiveness;  its ability to finance the  Oconto Falls Project at a lower interest rate;  its technical  experience in operating public water and sewer operations; and its closer headquarters.5  The Commission, however,  considered the City's arguments.  It determined that:  proximity was not significant because many licensees are headquartered far from their projects with no bad effect;  the  Congress intended that municipal preference not apply in  relicensing proceedings;  NEW had experience with hydro power projects which the City lacked, including operating the  Oconto Falls Project since 1992;  both applicants had emergency plans;  and although the City's projected cost effectiveness was 8.4 per cent greater than NEW's, forecasts of  economic benefits are considered comparable unless the difference is more than 20 per cent, see City of Augusta et al.,  72 FERC p 61,114, at n.58 (1995).  The Commission's determination that the City's application was "essentially equal" to  NEW's is supported by substantial evidence.

25
Also unconvincing is the City's argument that the Commission erroneously applied a "first to file" tie-breaker to grant  NEW the license.  First, the City asserts that section 4.37(b)  of the Commission's regulations, 18 C.F.R.      4.37(b), prohibits the Commission from using the "first to file" tie-breaker.6  The Commission's interpretation of its regulations is entitled  to substantial deference.  See Associated Builders & Contractors, Inc. v. Herman, 166 F.3d 1248, 1254 (D.C. Cir. 1999).The City correctly notes that the Commission ruled, and this  court affirmed, that an "orphan" proceeding is governed by  section 15 of the FPA, see Oconto Falls, 141 F.3d at 674-75,  and that section 4.37(b) is not applicable to a section 15 new  license proceeding.7  From there, however, the City argues  that no provision of section 4.37(b) may be applied in any  proceeding governed by section 15 of the FPA.  But section  4.37(b) is inapplicable only to proceedings for a "new license  under section 15 of the Federal Power Act."  18 C.F.R.       4.37 (emphasis added).  Although an orphan proceeding is  governed by section 15 of the FPA, it is not a new license  proceeding under that section.

26
Next, the City argues that the "first to file" tie-breaker is  an impermissible retroactive policy change.  According to the  City, the Commission is bound by its prior decision "to deny  any applicant or class of applicants a preference" because  "the purpose of Congress was to place all applicants in a  relicensing on an equal footing."  Order No. 513, FERC  Stats. and Regs., p 30,854, at 31,443-445 (1989) (finding rules  of preference inappropriate in subsequent license proceedings).  Order No. 513, however, does not address orphaned  projects and does not dispense with tie-breakers in all section  15 proceedings.  As we earlier determined, "Congress never  envisioned the problem of orphaned projects.  The statute is  simply silent on the subject...."  Oconto Falls, 41 F.3d at  677.  Similarly, Commission precedent is silent on orphaned projects.  Its action here, therefore, does not constitute a  retroactive policy change.

27
More plausible, but still unconvincing, the City argues that  the "first to file" tie-breaker is unfairly prejudicial because  the Commission's delay in granting the City's petition to  obtain WEPCO's ICP prevented it from filing its application  before NEW filed.  The City's argument, however, assumes  that it had the same right to WEPCO's ICP as did NEW.  In  fact the City's rights significantly differed from NEW's.When NEW's offer to buy the Oconto Falls Project fell  through, WEPCO hired NEW to operate the project. NEW's access to WEPCO's ICP arose from its contractual  relationship with WEPCO, a relationship which the City had  every right to seek but failed to pursue.  As the Commission  recognized, "the City was free to bid on the project, when  [WEPCO] solicited offers."  License Order, 81 FERC at  61,984.  The City will not be heard to complain now.

28
Not to be deterred, the City also attacks NEW's agency  relationship with WEPCO, arguing that WEPCO improperly  acted as a co-applicant in violation of 18 C.F.R.      16.25.While section 16.25 precludes a previous license holder such  as WEPCO from filing a license application in response to the  Commission's notice soliciting applications, it does not address "co-applicant" status.8  The Commission appropriately  determined that neither the FPA nor its own regulations  prohibited WEPCO from conditionally selling the Oconto  Falls Project to NEW, from hiring NEW as its operating  agent or from initially refusing to provide the City with the  ICP.  While an agency relationship may provide some advantages in filing a license application, it does not constitute a coapplicant relationship in violation of section 16.25.  See License Order, 81 FERC at 61,984.

29
For the foregoing reasons, we conclude that the Commission did not err in granting NEW a license to operate the Oconto Falls Project and, accordingly, both WDNR's and the  City's petitions for review are

30
Denied.

Notes:

1
 An orphaned project is a facility "for which the licensee files a  notice of intent to apply for a relicense but neither the licensee nor  any other applicant files a timely relicense application."  Oconto  Falls v. FERC, 41 F.3d 671, 672 (D.C. Cir. 1994);  see also 18 C.F.R.       16.25.

2
 In issuing a preliminary permit or original license, "the Commission shall give preference to applications therefor by States and  municipalities" so long as the competing applications are "equally  well adapted ... to conserve and utilize in the public interest the  water resources of the region."  16 U.S.C.      800(a).

3
 Section 15, as amended, "makes the municipal preference inapplicable in relicensing proceedings even when the licensee is not  seeking to renew the license."  Oconto Falls, 41 F.3d at 675.Instead, the license is issued to "the applicant having the final  proposal which the Commission determines is best adapted to serve  the public interest."  18 U.S.C.      808(a)(2) (Supp. 1999).

4
 Section 313(b) of the FPA also requires a party to petition for  rehearing before it seeks judicial review.  WDNR argues that to  interpret section 313(b) to require a party to petition for review of  the "aggrieving" order effectively makes the required rehearing  order nonreviewable.  This court has previously determined that a  rehearing order does not constitute a new order unless it significantly modifies the original order.  See Southern Natural Gas Co.  v. FERC, 877 F.2d 1066, 1072-73 (D.C. Cir. 1989).  Although a  rehearing order can be challenged together with an "aggrieving"  order, as was the case in Southern Natural, a rehearing order  cannot be challenged on its own unless it is a separate order and  rehearing has been held pursuant to that order.  See 16 U.S.C.       825l.

5
 The Commission responds that the City waived its arguments  regarding cost effectiveness, inclusion of campground costs and  lower financing rate because the City failed to preserve them on  rehearing.  Although the City did not make these specific cost  effectiveness challenges, it did challenge the Commission's determination of the two applicants' relative cost effectiveness.  See City's  Rehearing Request 4-8.  In making the cost effectiveness argument, the City preserved its specific arguments related to that  challenge.  See City of Vernon v. FERC, 845 F.2d 1042, 1047 (D.C.  Cir. 1988).  In addition, not until its Rehearing Order did the  Commission weigh the City's increased recreation costs while allegedly failing to consider the City's lower financing costs.  Therefore,  the City had no opportunity to raise these points before its petition  for judicial review.

6
 18 C.F.R.      4.37(b) provides:
If two or more applications for ...  licenses (not including applications for a new license under section 15 of the Federal Power Act) are filed ... the Commission will select between or among the applicants on the following bases:
....
(b) If both of two applicants are either a municipality or a state, or neither of them is a municipality or a state, and the plans of the applicants are equally well adapted to develop, conserve, and utilize in the public interest the water re-sources of the region, taking into consideration the ability of each applicant to carry out its plans, the Commission will favor the applicant with the earliest application acceptance date.
The Commission has held that section 4.37(b) applies where, as  here, one applicant is a non-municipality and the other applicant is a  municipality ineligible for the section 7(a) municipal preference. See Idaho Water Resource Bd., 84 FERC p 61,146, at n.14 (1998).

7
 18 C.F.R.      4.37 is inapplicable to "new license [applications]  under section 15 of the Federal Power Act."

8
 When a project becomes orphaned, the Commission is required  to publish a notice "soliciting applications from potential applicants  other than the existing licensee."  18 C.F.R.      16.25.